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back to index backASIAtalk September,  2005

Asia: Taking the Lead

Globalization is forcing the Asian business world, long characterized by autocracy and rigid processes, to become more agile. It may have taken several decades to get here, but the promise of significant and sustainable growth in Asia is now more tangible than ever before. While issues such as currency instability, fundamental economic structures and political turmoil still concern many economists, with US$1 billion a week flowing into China alone, it is becoming increasingly apparent that more and more organizations are betting on Asia to counter slower growth elsewhere in the world.

It's probably safe to say that the world's dominant economies will not lie in the western hemisphere for much longer. A recent Goldman Sachs report notes that India's economy could be larger than Japan's by 2032 and China's could be larger than the U.S. by 2040. The World Bank estimates that by the year 2020, Indonesia will boast the world's fifth largest economy and Thailand the eighth. As these markets grow stronger they are opening up a wealth of new opportunities, but many companies simply can't find the leaders they need to bring them to fruition.

Paul Carter, Area President, GlaxoSmithKline China explains, We are definitely facing a leadership shortage in Asia Pacific, and this is especially true 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 people with experience are fiercely pursued.”

While not every country faces a leadership challenge of the same scale as China, it is becoming an increasingly common complaint throughout the region. From Mumbai to Melbourne, Beijing to Brunei and Seoul to Singapore, companies are worried about where they are going to find their future leaders.

Facing the Crisis

Concerns about a leadership shortage are prevalent throughout the region because a lack of effective leadership in any business has a dramatic impact on the performance of the organization. Alec Bashinsky, National Partner, People & Performance with Deloitte Touche Tohmatsu in Australia says, 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. We have developed a strategy called the Three G's: Grow the Business—Grow the Team—Grow Yourself.”

Bashinsky does not stand alone in his views on leadership impacting business results. Hewitt research demonstrates a strong relationship between leader effectiveness, organizational culture, and employee Engagement, which are the foundations for reliability and consistency in execution. Having spent many years consulting with companies in Asia, we have learned that it is best to tackle this issue in a systemic fashion rather than a piecemeal approach. While this might seem obvious, the reality is that most organizations still fragment their leadership capability activities with one group responsible for pay and performance decisions, another responsible for assessment and development, and another taking the lead on selection decisions.

The Total System

Your organizational strategies and objectives have serious implications for your leaders. Andrew Bell, Leader of Hewitt's Talent and Organization Consulting practice, explains, Companies vary in terms of the behaviors and capabilities they are looking for in their leaders, how many leaders they require, and what measures and rewards will be implemented. The biggest problem for many organizations is a lack of flexibility in the alignment of their practices. These companies try to stick to one competency model, a standard development program, and traditional methods of attracting and sourcing leaders, which often do not translate to the specific needs of their existing and potential employees.”

Bell believes many of these problems can easily be solved by implementing a clear leadership strategy that answers questions such as how will we ensure we match the capabilities of our leaders to the current and emerging needs of the business? Are we committed to developing talent from inside or hiring from outside? How aggressive should our investment in leadership be?

Build a Leadership Brand

Whether you realize it or not, your company has a leadership brand, which is the implicit promise you are making to your current and prospective leaders: your leadership rhetoric. This is what sets your organization apart from other companies as a good place for leaders to work and give their best.

Diane Morgan, GlaxoSmithKline's HR Director believes their leadership brand grew not only from the fact that the company is one of the biggest in the industry but also its ability to help employees build their careers and progress through the organization. Some companies try to build their brand from their HR policy and processes, but we have an edge over that because our leadership and talent management policies and processes are firmly embedded within our global organizational culture. For example, there is a clear link between business goals, individual objectives, remuneration, development and talent management. Our people development process is the first step in our talent management program. This helps establish career discussions which are linked to talent reviews among others. We must be doing something right because I actually have line managers here who approach me saying they want to conduct reviews and see where their people are at and what development can enhance their performance.”

At Hewitt, we believe the task of leaders in our organization is to connect employees to the organization's goals and strategy, excite and engage employees in those goals, and implement processes and practices that ensure alignment and execution of the strategy. Bell comments, Our leaders must demonstrate both the expertise needed to produce the results required and the behaviors that encourage employee Engagement. One or the other on its own is simply not enough. Deep technical expertise in a particular field without the ability to excite employees about the future will not deliver the strongest results. And similarly, great communicators who build strong relationships with employees yet make poor business decisions will not deliver the performance your strategy requires. As Jim Collins said, Being charismatic and wrong is a dangerous mix.” That's not to say every leader is the utopian renaissance person of course, but our assessment and development processes allow our clients to take a comprehensive and flexible approach to this most important element of the leadership system.”

The concept of employee Engagement is now understood in most organizations. Engagement goes beyond thinking about whether or not employees are happy and satisfied with their workplace, and rather measures the deeper idea of real emotional and intellectual commitment to the organization. Senior executives are attracted to and stay with organizations where specific challenges and opportunities exist. Recent Hewitt research reveals that there are, however, additional factors that influence the Engagement of senior executives, and understanding and managing these factors can provide a significant advantage.

In a highly competitive and turbulent leadership talent environment, we must not take the Engagement of our leaders for granted. Hewitt's research shows only too clearly that many organizations don't meet their full potential when it comes to the effectiveness of their leadership talent, because at least 25 percent of their executive population is not passionate about the organization's goals and strategy. Despite this, organizations are relying on these very people to lead other employees in achieving company goals. If your leaders aren't passionate and committed to your objectives, do you really expect your employees to be?

Richard Li, HR Manager with Caterpillar in China, says, It is just as important for company leaders to be engaged as it is for employees, because leaders need to take the initiative and lead the change. We have a very clear idea of what is needed, and we focus on managing employee Engagement from both an organizational and a personal perspective. At the end of the day this is not a one-way ticket.”

What Can Go Wrong?

It is sometimes more instructive to consider the common pitfalls, barriers and constraints to success rather than trying to benchmark and copy best practices, and there are several obvious examples of areas in which many organizations fall short in terms of their leadership systems.

Theory Not Practice

In an era that places such a strong emphasis on execution, surprisingly a major gap exists between theory and practice in many organizations. This can manifest itself in many ways, but consider these examples*:

* Less than half the organizations who claim to have a developed leadership competency model actually use those competencies in their succession decisions; and

* A little over one-third of companies have programs in place to help new leaders assimilate into their new roles. Less than half of these companies believe their programs.

Bell takes a firm stand on this, saying, Theory is important, but it's not enough. All too regularly we have to help companies understand that re-designing their leadership expectations model for the third year in a row may well not make any difference. Holding people accountable to those expectations, even if they are only 80 percent right will have much more impact than re-wording the expectations with no accountability.”

Talent Hoarding

One business unit manager recently complained, It just doesn't make any sense to have my best people out of the business for days at a time, developing them to get even better so they can get headhunted by another department or even a competitor.” We see the development of so many potential leaders frustrated by their managers who are more committed to today's operational issues than tomorrow's sustainability.

Sweet Rhetoric and Delinquent Accountability

All too frequently in today's business world, managers say the right things about their commitment to leadership development, but simply don't take it seriously. In quiet moments, they complain they don't have the time to really focus on people management while running the business nor the skills necessary to properly develop the leaders of tomorrow, and it is easier and safer for them to abdicate the responsibility back to HR. This is particularly true of leaders who have reached a plateau in their own development.

Bashinsky believes that in order to guarantee your leaders provide the support that high-potential future leaders need, you must ensure that they themselves are actually engaged. At Deloitte we use EOC studies to grab the attention of leaders. We measure the success of these studies using 360° feedback, and by looking at turnover rates and overall employee Engagement. We also measure this through a partner annual performance review,” he explains.

Deloitte have the right idea. At the end of the day, the Board, CEO and senior executives should be holding leaders accountable for leadership development and as such must ensure they are fully on board. Allowing them to wash their hands of this responsibility results in poor resourcing of development, which is one of the largest barriers to effective leadership advancement.

Poor Resourcing of Development

Ultimately development is about learning new things and doing things differently. If you've ever tried to improve your golf swing, be a better parent, or a better communicator, you know that personal change can be difficult. It takes learning, focused effort and practice, yet few organizations provide the resources, support and structure to allow for this, preferring instead to have future leaders sit in classroom training sessions. Even where leaders are exposed to more useful development programs such as action learning projects or rotational assignments, the necessary support is rarely in place to help them reflect on their experiences and incorporate what they learn into everyday use.

Li takes a different approach, At Caterpillar we place a strong emphasis on leadership development and have a very good succession management process in place to help this along,” he explains. If somebody has been in the same position for more than a certain number years, we try to find them something new to do. We also build mentoring programs that are not directive in nature; rather they take the form of coaching across the business. And we also feature a program we developed in association with Hewitt called the Caterpillar Leadership Development Program, which provides tools for assessment on how and why we behave in certain ways, and how to change for the better and greater.”

The Road Ahead

The quality and availability of leaders is a major constraint on Asian businesses today, and it will continue to be so for many years to come. Ensuring your company has the leaders you need is not an easy task, but it is a necessary one. It requires clear thinking, careful design, and diligent execution. It takes strong collaboration between senior leadership and human resources, and demands a bias toward action and results, and a constant re-assessment and responsiveness to the emerging needs of the business. Again Bell is emphatic on this, saying, Theory and practice, common sense and discipline, strong processes and clear accountability; these are the ingredients of your success, and they should be addressed quickly and effectively if your company is to emerge as an industry leader in the next decade.”

Source: Hewitt Associates - GAI

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