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back to index backGLOBALtalk May,  2007


Finding senior executives in Asia

Recent years have seen Australian organisations return to Asia in a major way. Whilst Australia’s trade relationships with Japan and China has always remained strong, there is a clear sense of broadening across the region in the form of investments and trade. Much of this could be attributed to a recent sense of resurgence in Asia.

China, of course, has never stopped. In FDI terms, out of the US$100 billion or so of investment inflow into Asia per year for the last 10 years or so, China had accounted for half of this total. India is now the potential second China”. Even South East Asia with its eclectic combination of nations is rebounding. Indonesia particularly has always been seen as an important neighbour to Australia but no less is the interest of Australian organisations in countries further North including Indo-China.

But for many years now, Asia is the wild east” of the world where multinationals and entrepreneurs alike jostle. The rush to put a stake in the ground, build a brand or factory in anticipation of the growing middle class is palpable. This intensity is even more pronounced when it comes to senior executive resourcing.

In a nutshell, there is one major problem with trying to fill top management roles in Asia at the moment :- There is too much demand going after too little supply.

This is indeed ironic, given that the region has in excess of 3 billion people! But therein lies the issue : The fast-growing middle-class, potentially numbering in the hundreds of millions creating a gigantic consumer base, does not have the matching number of world standard high quality executives to cope with this. There are several reasons for this shortage. The first is simply the pace of growth itself. Asia has industrialised far faster and more consistently than any other region in the world. The structural shift from predominantly agricultural to manufacturing and then to the service economy means that the demand for more sophisticated and structured corporate management is significant. There simply has not been enough time for society and education policy-makers in Asia to react.

Secondly, the Confucianist philosophies of social hierarchy that is so prevalent among the ethnic Chinese in the region and influential across many other ethnicities emphasises societal good over the individual. Traditionally therefore, rote learning at schools and universities and conformity has been highly valued. Arguably this has led to a lack of home-bred executives who would feel comfortable with the type of robust challenge and debates that would be valued, and indeed expected, in western management. Thirdly, the language and political barriers in the region have for a long time hindered the movement of executives in the region. It is ironic that the current cache of Asian senior executives, be they Chinese, Indians, Koreans, Japanese, etc all speak vastly different languages at home, but are united in business by a foreign language - English.

But human beings are nothing, if not creative and adaptive. As the scarcity of supply of senior executives prevailed, large corporates became less risk averse and more creative with their top executive decisions. Some, of course, have done the traditional thing by bringing in teams of expatriates from outside the region. However, a growing number has been more willing to promote younger executives earlier and complement those gaps through teaming, or other support. Some others have looked ahead, and recruited a more diverse workforce in their home countries and are now reaping the rewards of being able to expatriate ethnic Asians back to the region. Still others have dared to recruit young locals with a significant investment in training and education as a long-term strategy. As a result, there is a relatively fast-growing (albeit still scarce) pool of senior talent in Asia.

While the promise of the future is bright, the challenge to fill the roles of top executives in Asia is today still fraught with difficulties. Quite often, companies are faced with less than ideal choices. Sometimes, the need to compromise results in a suboptimal decision, which, in hindsight could have been better thought through. How then should companies cope with recruitment for these roles?

Firstly, there is a need to carefully scope the role in line with the realities of the marketplace. This would mean asking some strategic questions that will give clarity to the choices that could be made if faced with a need for trade-off. For example,

1. Who are you competing against? If the types of products or services that are to be provided in a region are not sufficiently differentiated in the local marketplace, then cost-competitiveness become the main game. In these instances, the need for cost effectiveness alone would drive the need to have a largely localised management team.

2. How complicated is the business and to what extent does the role require specialist technical knowledge? Businesses that have a high knowledge content and require leaders who are technically capable will more likely need to be staffed with expats or western trained talent. Similarly, business with multiple facets of complications that is, for example, breaking new ground while implementing a new business model will have the same need.

3. How important are local networks and knowledge to the business? Some businesses lend themselves significantly to the ability of management to know local customs, government and business people. In such businesses, the placement of an expatriate is usually complemented by having someone in the team with strong local connections, whether they are a part of the management team or a JV partner or non-executive director.

4. Is there an organisational competitive advantage that is not easily replicable? Businesses that rely extensively on global networks, or a unique process or capability, or perhaps one that has significant branding or intellectual property may fall into this category. Such businesses are relatively protected by IP or other forms of barriers of entry such that they are able to be more flexible in their people decisions.

Secondly, it is critical that organisations work closely with internal or external recruiters who understand the lay of the land”. The senior executive market in Asia is extremely transient in nature that one could waste a lot of time learning and re-learning the market. Organisations need their search partner to know exactly where to target and to be able to reach in there effectively.

Thirdly, partnership with the search firm is crucial to success. Because it is often not straight-forward, a good search consultant should be able to brainstorm, discuss and determine the appropriate trade-offs and combination of skills required with the company. Sometimes, all the stars align and a square peg is found for a square hole. Other times, there may be a need to restructure the scope of the role to fit a candidate.

Finally, be prepared for the long-term. Despite the challenges, the prospects are exciting. History has shown that organisations that have been prepared to wear the short-term volatility of the region and stay the course are now benefiting the most. The same lesson is applicable to any new entrant into the region today.

Source: Egon Zehnder International - GAI


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