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Trouble at the top

(China Daily)
Updated: 2006-02-21 14:56

China Inc may be riding the wave of a robust economy, soaring exports and rising spending, but it faces a building storm in the boardrooms: a lack of leadership.

A series of reports by international consultancies from Hewitt Associates to Goldman Sachs, Deloitte and DII, show that many companies are acknowledging that some of their leaders lack certain skills. Yet the studies also reveal that they also simply do not have enough experienced people coming up through the ranks to assume key roles.

Unfortunately, this leadership shortage is likely to get worse before it gets better, says Simon Keeley, head of Hewitt Associates' new Hewitt Asia Leadership Centre, explaining that over the next 10 years or so we can expect to see a relative population decline in the age groups associated with leadership in the past.

Paul Carter, president of the China operations of leading global pharmaceutical company GlaxoSmithKline, is pleased with the progress in the world's fastest growing market, but worries about inspiration at the top.

"We are definitely facing a leadership difficulty in China, where it is very hard to find local leaders. It all boils down to supply and demand."

There are many extremely talented people here, but unfortunately they lack the necessary experience for senior roles. Those with the right blend of pizzazz and experience are fiercely pursued, says Carter.

But what defines a good leader in a company operating on a global scale?

"Effective leadership has an absolute effect on the business achievements of any organization, and leaders are clearly those people who motivate, inspire and engage their teams through a strategy designed to grow the business," says Alec Bashinsky, national partner of People & Performance with Deloitte Touche Tohmatsu.

"We have developed a strategy called the Three G's: Grow the Business, Grow the Team, Grow Yourself."

The Best Employer 2005 survey by Hewitt Associates, one of the world's top human resources outsourcing and consulting companies, shows that a strong grasp of corporate vision, sound communication with employees, transparent executive procedures, explicit development strategies and the capacity to develop talent over the long term are the most sought-after abilities in a leader.

Traits such as operational wisdom, an ability to engage employees, a passion and belief in the individual, corporate vision and loyalty to employees are indispensable, says Li Xiujuan, vice president of Cheung Kong Graduate School of Business.

A survey last year by Heidrick & Struggles - the first executive search firm licensed to conduct business in China - covered 109 multinationals in the Asia-Pacific region. Forty per cent had Chinese mainland nationals leading their China operations, 30 per cent had an Asia Pacific expatriate at the top, and the remaining 30 per cent had Westerners.

If a mainland Chinese executive were in the top position, 65 per cent said a Western-based education was critically important or very important. Half also valued Western-based work experience as either critically important or very important.

Companies are clearly aware of the problem and are working on ways to address it, especially in terms of nurturing internal talent.

Looking outside to fill the vacuum at the top might be expedient, but it would be just as convenient for managers to hop to other opportunities. The focus is increasingly moving to the much-hyped option - organic growth.

One US-based chain retailer, for example, is going to great lengths to emphasize managerial staff localization, because the industry thrives on local knowledge.

Most of the company's senior executives for its China business are Westerners, Hong Kong residents, Taiwanese or overseas Chinese returnees, according to the company's HR department.

"We, of course, hope local people get to the top," says an HR official from the firm. "However, talent with international experience, insight and the ability to work with global headquarters is scarce on the mainland."

Fifty-two mid-level managers, locally headhunted by the company amid much fanfare, get regular training to upgrade their executive abilities and broaden their range of experiences.

Another multinational, US-invested auto parts supplier ASIMCO, began its Leadership Development Programme (ALSP) in 2001 to expand its talent base locally and prepare individuals for career advancement.

"There is a large pool of underutilized talent in the organization that needs to be identified and trained as future leaders of ASIMCO. It is expected that graduates of the programme will provide ASIMCO with a proprietary management talent base in an environment where the major threat to success is a shortage of qualified, professional managers," says Michael Cronin, executive vice president of ASIMCO responsible for HR management.

Every year, 25 employees and managers are selected to take part in the year-long programme.

It includes four closed training courses drawing on a wide range of subjects including finance, purchasing, marketing, human resources, quality, lean manufacturing, exports, and logistics.

Trainees apply their new skills and experiences to their own projects to practice what they have learnt. Leaders help the trainees finish their goal-oriented projects.

Cronin says ASIMCO leaders are clear about the direction of the company vision. They emphasize team development and customer satisfaction, are able to motivate people, and are effective leaders.

They should be models of respect and credibility, people who do what they say and say what they do. Leaders need to have positive attitudes and be able to quickly put together cohesive teams.

"So far, 75 have graduated, around one-third have become mid-level executives, such as general managers of subsidiaries and managers of headquarter departments," says Cronin.

"We are designing post-graduate programmes for them for further promotion to the top level."

Multinationals such as GlaxoSmithKline, Caterpillar and Johnson & Johnson are also striving to cultivate their leadership pool.

"Internal leadership is practical and effective. It strengthens employee loyalty and facilitates the consistency of the corporate culture, so it helps us realize our corporate vision," says Simon Li, general manager of Johnson & Johnson Medical (China) Ltd.

Of course, HR consultancies are working to fill this void, specifically by filling the talent gap internally.

Hewitt Associates, for instance, launched the Hewitt Asia Leadership Centre (HALC) last October. It is aimed at helping multinationals confidently address chronic leadership problems.

The centre serves the entire region from its hub in Shanghai by supporting companies through corporate-tailored and overall leadership development solutions.

HALC works with companies that are looking for a planned approach to assessing their people for leadership potential, offering challenging and meaningful development experiences for current and future leaders, and putting in place the necessary systems to support these programmes.

The centre also collaborates with academics and universities to conduct focused research on emerging leadership challenges in the region and the nature and drivers of successful leadership in Asia.

Keeley says that HALC works closely with companies to conduct individual leadership assessments and design development programmes.

It identifies barriers to team effectiveness, builds strategies to enhance effectiveness, and facilitates shared understanding of organizational goals and strategies.

It also explores what is expected of leaders themselves and their people, in line with those goals and strategies. It works with leaders and HR teams to ensure that their leadership strategies are aligned with overall business plans.

(China Daily 02/21/2006 page1)