The need for organisations to become more productive is as acute as ever. A recent CEB study revealed that a formidable 21% increase in workforce productivity is needed to achieve organisational growth goals in 2013. Increasing productivity is even more important in Asia, where leaders say that organisations must become on average 29% more productive in 2013 in order to achieve their corporate goals and remain competitive.

CEB’s research shows that achieving greater productivity is unlikely to be accomplished through incremental performance improvements alone, be they organisational, technological or process-driven. A solution to making Asia companies more productive is transformative leadership, where leadership teams drive the strategy and mobilisation of the workforce.

The stakes are especially high for leadership teams in Asia. They will face increasing pressures over the next 15 years as the economic expansion of emerging markets is estimated to account for nearly 75% of global Gross Domestic Product (GDP) growth. However, most leaders in Asia do not plan to stick around, with only 25% of Asia-based leaders intending to stay with their current company this year, compared to nearly 50% of leaders throughout the rest of the world.

This is not a new trend. Over the last decade, organisations in Asia have waged a seemingly unending war against leadership turnover. To cope, organisations continue to overinvest in executive recruitment and individual development and retention programmes. That makes sense, but for one detail: it’s not working!

A Band-Aid approach

To win, organisations need leadership teams who can manage risk, minimise uncertainty and capitalise on present and future business opportunities. Most organisations in Asia use a typical ‘buy and build’ leadership offensive. This involves the two-part process of first incentivising leaders to join an organisation, followed by investing in their skill development. However, this strategy has one fatal flaw: it solves the symptom of Asia’s leader demand-supply imbalance, but not an organisation’s immediate need for leadership.

Asia’s developing markets have seen rapid economic growth, but these markets also face demographic imbalances, such as ageing populations or low economic participation by women, which constrain the supply of experienced leaders. This has resulted in leaders in Asia possessing significantly less experience than their counterparts in more developed markets.

Each year, CEB conducts its Asia Labour Market Survey of more than 30,000 professionals across the region’s key markets. Results consistently show that the average Asia-based leader is five years younger than their peers in other regions; has six fewer years of professional experience; switches employers more frequently; and has significantly shorter tenures with their companies. This is a recipe for under-performance.

Attracting leaders through increasingly attractive packages – the ‘buy’ aspect of a conventional ‘buy and build’ leadership strategy – intensifies the problem. The pay premium commanded by leaders in Asia to change employers is twice as high as other regions. This results in top management switching jobs without developing the skills and producing the results that organisations need.

Building leaders is a necessary investment, but one that takes too long, as typical high-potential development programmes, rotational assignments and coaching interventions are usually multi-year propositions. Furthermore, CEB research shows that more than one-in-four leaders in Asia feel significantly disempowered in their role and question their own productivity. In Western multinational corporations, leaders are often ‘out of the loop’ on strategic decisions, while leaders in local firms wait to execute strategic orders made by family-dominated boards or government stakeholders.

As one HR executive in Asia says, “We keep investing in developing new local leaders, but even when we make progress, it’s only a matter of time before the investment walks right out the door.”  

Leadership offence in Asia is an enabled defence

In Asia, leadership investments tend to focus on individual leader interventions, but overlook organisational levers that drive performance. CEB reports that when organisations enable leadership teams in Asia – by distributing work across the region, and providing leaders with the decision-making tools and expertise needed to produce leadership outputs – profitability rises by up to 17% and workforce productivity by 24%.

Furthermore, focusing resources on organisational – not simply individual – aspects of leadership productivity improves not only organisational performance, but it can accelerate the development of next-generation leaders by up to 30%.

The best companies realise that following the leadership development herd will only get you so far in Asia. Therefore, don’t just invest in helping individual leaders grow, but hedge against the market and invest in an organisational capability that enables Asia-based leaders to co-produce today.

1. Don’t let regional leaders hoard leadershipEnabling effective leadership teams – three tips:

Nearly two-thirds of ineffective leadership teams are ‘hoarders’ who restrict leadership decisions to a few senior people. American Express India used objective principles – scale, speed, revenue and cost synergies – to better distribute decisions globally and delegate authority within Asia. This ensured leadership happened at the right place and pay grade, and allowed younger leaders to develop and senior leaders to focus on higher-value work.  

2. Share the knowledge

Only 17% of leaders in Asia believe that new or younger leaders have the information, tools and connections needed to take companies forward. Less-experienced leaders can be supported through facilitating connections with internal and external peers who possess relevant expertise, and by embedding execution-focused support resources into workflows. InterContinental Hotels Group (IHG) created a leader-led online community. This enabled IHG to capitalise on the expertise of both its global senior leadership population and external experts and thought leaders, as well as the scalable sharing of best practice and innovation.  

3. Expect leadership teams to co-produce

The typical performance process cascades goals down through the organisation. However, top-down goals are usually too vague to facilitate leadership. The best Asia-based leadership teams share objectives designed specifically for collaborative purposes, and are twice as likely to collaborate towards productive ends. Mphasis, an India-based IT services company owned by Hewlett Packard, uses speed-networking sessions with leaders to uncover overlooked interdependencies, identify areas for collaboration, and create public commitment to leadership co-production. This top-down facilitation of conversations is an effective way of encouraging organisation-wide buy-in and accountability.

This article was first published in HQ Asia (Print) Issue 06 (2013)