The Human Capital Leadership Institute (HCLI), in partnership with global executive search firm Egon Zehnder International (EZI), recently embarked on a research initiative to better understand the human capital challenges faced by top business leaders in Asia. The research included 25 in-depth interviews with CEOs and regional presidents. Upon analysing the responses of these senior executives, five major challenges were identified.
In response to these five challenges, HCLI and EZI assembled a select team of 25 senior human resources (HR) leaders to participate in a round table discussion. The objective was to present the five challenges faced by the CEOs, and to solicit best practices and ideas from the HR leaders. The following is a summary of the conclusions arrived at during the discussion.
Challenge No. 1: Winning the war for talent
Despite the recent economic turmoil sweeping most of the world, CEOs in Asia see no signs of the war for talent abating. They emphasized that in Asia, business growth is largely contingent on talent growth, and organisations that are able to attract and retain top talent will have an important competitive advantage.
The HR leaders at our roundtable believed it was more important to focus on talent retention than talent attraction. Whilst the latter remains a pertinent issue, the HR leaders agreed that it was more important to focus on retaining the talent that you already have. This avoids a disruptive lose-lose situation, where rival organisations poach from each other’s key talent pools. Instead, they recommended focusing on developing and retaining existing talent, as this is an area that organisations have greater control over.
Other points raised include:
Measure and reward talent retention
Upon agreeing on the strategic importance of talent retention, it is logical to measure and reward managers who are best able to retain their top talent. A number of the round table participants discussed how they have built in retention as a key performance indicator for business unit managers. This helps reinforce managerial accountability.
Focus on rehires
The HR leaders confirmed that high turnover remains a large problem in Asia.At the same time, this fact could also provde to be an opportunity. Organisations that rehire can benefit greatly from the returning employees accumulated experience and existing understanding of the company. As an example, an organisation in the round table discussed how they created an alumni programme that was designed to encourage former employees to remain connected with the company. The objectives of this programme were to foster mutual learning and — most importantly — to make it easier for alumni to return.
Challenge No. 2: Communicating with impact
Whilst the CEOs in our study viewed Asian leaders to have strong technical and functional expertise, their inability to communicate with impact was seen as a major constraint. This was particularly voiced by CEOs of Western-based multinational corporations. The ability to communicate with poise, confidence and clarity was seen as particularly lacking in Asia.
The HR response from our round table emphasised that English proficiency was just one factor that may constrain the ability of many Asians to communicate effectively. Culture was another important factor. For example, whilst decision-making in the West is dominated by a linear thinking, cyclical and holistic thinking is more common in Asia. Such decision-making style is not often well-understood in the West as it is usually difficult to communicate cyclical and holistic thinking in a succinct manner. Thus, leaders in Asia may appear to — but not necessarily lack — the poise, confidence and clarity valued by the West. Other points that were raised included:
Get Asians to teach Asians
A theme that emerged from the round table was the idea of Asians teaching Asians. Our HR leaders discussed the value of identifying Asian role models to help other Asians develop their own communication skills. The benefits of this are twofold. Firstly, it involves the demonstration of communication techniques that are more likely to resonate with other Asian leaders. For example, Asians tend to emphasise listening more than articulating, and to value understatement as a communication style. Secondly, it helps instill confidence in Asian leaders, with confidence itself being a key factor in effective communication.
Do not overemphasise communication skills
Whilst our HR respondents agreed that strong communication skills are desirable, they also point out that there is a risk that communication skills have been overemphasised by many organisations. The danger is that leaders are judged more on what they say, rather than what they do. Unilever, for example, has worked hard to de-emphasise communication skills. Instead, it emphasizes that business leaders be judged on two aspects: the ability to deliver business results and the ability to develop and retain talent.
Challenge No. 3: Unleashing employee empowerment
Some of the CEOs expressed frustration that too many of the staff who report directly to them seem to lack initiative. The CEOs wanted their staff to have a greater willingness to take ownership of issues, and to make decisions without frequently checking with their superiors. In a world that is increasingly becoming complex and volatile, organisations require employees to be empowered, nimble and proactive.
Our HR leaders agreed that the most important action businesses can undertake in order to encourage employee empowerment is to create and sustain a culture of risk-taking. This is highly important in much of Asia, where there is a strong fear of failure, and a need to preserve face. A common assumption in the region is that it is better to be silent than to be wrong. However, there is a growing realisation that making mistakes and learning from them is critical for leadership growth. It is, therefore, important for organisations to encourage a culture where risk-taking is rewarded, and learning from mistakes is encouraged. Other points raised include:
Define clear boundaries of autonomy
To encourage greater ownership and employee empowerment, our HR leaders recommend organisations clearly state the boundaries of employee autonomy. For example, the Tata Group has a clear set of non-negotiable rules that deal with values and ethics. Employees understand that they have autonomy to make decisions as long as they do not violate Tata’s code of ethics. Our HR leaders also stressed the need for clear checks and balances, such as whistle-blowing mechanisms, to ensure that risk-taking does not become excessive.
Build supportive HR systems
Another best practice highlighted by our HR leaders was the role of HR systems support in supporting a culture of empowerment. Performance management systems, leave management systems, and flexible benefits systems can be designed to reinforce the message of employee empowerment, with the first allowing each employee latitude on how he or she would go about attaining their end objectives.
The perils of strong leadership
Our participants raised an interesting paradox about strong leaders. While there are many benefits of having strong, intelligent and confident leaders, this can inadvertently foster passivity amongst their followers. Their followers may feel that decisions made by these leaders are so much better than decisions they can make for themselves. Hence, it is critical for strong leaders to send a message about the importance of developing the capability of making great decisions (rather than simply relying on current leaders to make the right decisions).
Challenge No. 4: Building leaders across borders
As Asia becomes more globalised, the ability of the region’s leaders to lead across borders becomes ever more critical. The CEOs commented in their interviews that there was a dearth of Asian leaders capable of leading outside their home markets. Notably, many Asian leaders seem reluctant to accept international assignments, thereby hampering their ability to develop as leaders across borders. One question our HR professionals raised was: How important is it to develop Asians for global roles, when the biggest need for talent today is in Asia? They also clarified that building a global mindset was more important for certain functions. Arguably, local knowledge is more critical for the sales function. In contrast, marketing or IT functions may require leaders that can operate across borders. The following lists some other tips to building leaders across borders in Asia:
Start early
Building leaders across borders takes time and it helps to start early. Our HR professionals emphasised the importance of deploying talent overseas early in their career. Not only will they be more willing to move, they will also be more malleable to change.
Celebrate diversity
To effectively lead across borders, one must be able to suspend judgment and appreciate cultural differences. Hence, it is helpful for organisations to create environments that celebrate diversity. Instead of focusing on which cultures are right or better, it is more helpful to encourage the appreciation of positive aspects in all cultures.
Take risks in people decisions
Our HR professionals encouraged risk-taking with regards to people deployment. This is especially important in Asia. In this region, should companies not offer employees opportunities ahead of time, their competitors surely will. There was a consensus that companies cannot wait for their talent to be completely ready for regional and global roles. The promoting of talents ahead of their time can lead to the acceleration of their development as leaders across borders.
Challenge No. 5: Bridging the strategy-implementation gap
This particular challenge resonated with both the CEOs interviewed and the HR professionals at the round table. Everyone agreed that having a great business strategy, alone, is not enough. Often, companies struggle, not because they had bad strategies, but because they were unable to execute their strategic imperatives. The HR professionals at the round table emphasised the importance of communicating a strategy effectively, and of gaining employee buy-in into this strategy. To this end, it would be helpful to provide employees with some latitude in order to achieve their strategic imperatives. In this way, employees will feel greater ownership and ensure that the strategic initiative succeeds. Other ideas raised include:
Encourage strategic execution in our leaders
According to the round table discussions, traditionally, only the best and brightest were asked to develop strategies, and the rest were tasked to deliver on those strategies. Such an approach will only deepen the strategy-implementation gap. Instead, companies such as Diageo emphasise the importance of strategic operators — top leaders who are expected to develop strong strategies and ensure these are put into action.
Summary
In high-growth Asia, business challenges and human capital challenges are intrinsically connected. Our research indicates that there are common challenges that keep CEOs in Asia awake at night. Fostering greater communication between CEOs and the broader HR community is important in addressing these challenges. We believe this research initiative is step in that direction.