Human Resources

Rwandan Business Owners Embrace New Ideas for Managing Employees

When the William Davidson Institute at the University of Michigan, Dearborn, partnered with Rwanda's School of Finance and Banking in Kigali and Goldman Sachs to educate women entrepreneurs through the 10,000 Women program, the institutions knew they were up against a significant challenge. Ripped apart by civil war in the 1990s in which millions were killed or displaced, Rwanda is recovering but continues to suffer from a low gross domestic product -- at $9.8 billion, it ranks 150th among 228 nations tracked by U.S. agencies -- and high mortality rate.

Instructors in the 10,000 Women program say they have been encouraged by the participants' progress during the first two sessions in 2008 and 2009. Some 30 women are now taking part in the third Entrepreneur Certificate Program which runs from September 2009 through January 2010. Julie Anne Felker, an assistant professor of organizational behavior at the University of Michigan's College of Business, worked with entrepreneurs like Peace Mukankusi Kabera during the certificate program's second session. The focus was on organizational management and employee relations.

A Little Self-Evaluation

Kabera, a 45-year-old owner of Pioneer Supermarket in Kigali City, says many entrepreneurs like herself had never learned human resources strategies and organizational management skills. "It has been difficult for me to manage my employees as well as handle my customers and my competitors," she says.

Rwandan entrepreneurs typically don't know much about managing their staff in a professional manner, according to Agnès Uzarerwa, the 10,000 Women program manager at the School of Finance and Banking. "For example, many of the women limited their hiring efforts to friends and family, neglecting the wider pool of talent that might be available."

Kabera, who opened her supermarket in 1994, says she now realizes how important it is to use standardized recruitment procedures. "This has helped me [find] workers who are qualified and have experience in doing business. I now also know the importance of creating a positive work environment, delegating, training my workers, giving them time to speak out about their grievances and empowering them."

As part of the educational process, instructors saw a need for the participants to first understand themselves as entrepreneurs and business owners, Felker says. "We also wanted them to understand the way that their human resources management activities, including hiring and managing employees, could affect their business operations." Through evaluation of their personal skills, adds Felker, "we helped [the entrepreneurs] identify the values and styles that were important to them and to the success of their enterprises. Then we helped them determine how those values would impact the way they recruited, retained and managed their employees." The diverse backgrounds within the groups of participants posed an initial challenge. "Some were still thinking about becoming entrepreneurs, while other women already had mature businesses," notes Felker. "We had to determine how to be meaningful to all of them at once."

One exercise in particular helped the women scholars think differently about the way they hire employees. "I asked the women to tell me about a typical job description," says Felker. "They said that the typical candidate they wanted was a single woman, age 25 to 30. But when I asked the entrepreneurs how many of them fit that description, very few hands went in the air. I then asked them to think about why they did things a certain way, and whether they would be open to considering other approaches."

Embracing a New Mindset

In addition to her active teaching role in 10,000 Women, Felker is also gathering information for a research project that examines the effect of organizational behavior and human resources management training on Rwandan women's approaches to managing employees. She says that while many employers subscribe to the "Theory X" form of management -- one that assumes employees do not really want to work and are unlikely to voluntarily put forth more than the minimum effort needed to keep their job -- others have a more optimistic management style. "A different mindset, the 'Theory Y' approach, assumes that employees do want to contribute to a business's success," Felker says. "The key is to help employees understand how their success can be linked to the company's."

Implementing such a concept can be challenging, she acknowledges, since it means that business owners have to embrace a new mindset -- empowering and including employees in the decision making process instead of maintaining the traditional command-and-control model.

Kabera, for one, says that the organizational management skills she learned have given her more insight into human behavior, which in turn has led to more understanding of the way her employees identify with their job roles and participation at work. "It also let me see how their [job-related] performance was an important factor in their own self worth," Kabera notes. As a result, she now tries to delegate more of the work to her employees, further adding to their sense of empowerment.

As her employees take on more responsibility, Kabera can focus on strategic issues. "For example, I no longer have to rush to fill inventory because my employees already know what is missing and can decide to buy without waiting for orders from me," she says. "They can also directly contact our customers to answer questions or to clear up misunderstandings."

To help motivate her employees, Kabera modified their compensation packages drawing on the knowledge she gained from the 10,000 Women program. "Before the training, I believed that compensation consisted only of salary," she says. "But now I realize that I can supplement it with other benefits, like providing some gifts to the best workers or giving some bonuses at the end of the year."

The changes she has implemented have clearly driven an increase in customer traffic, Kabera adds, "due to having qualified workers who are customer friendly. I am also seeing an increase in sales and profits."

It is still too early to come to sweeping conclusions about the 10,000 Women program's effect on Rwandan entrepreneurs, suggests Felker, but she is encouraged by the preliminary results. "We are helping to develop an environment that fosters motivation," Felker says. "And we have found that women in general tend to be very interested in learning new approaches."