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Leadership transformation powers growth

for firms in Asia

As the center of economic gravity shifts to


November 2011
Asia, the region’s corporate leaders have come
The economic shift towards under the spotlight—and under the gun.
Asia created new demands for Competition for talent is fierce, and good
corporate leaders. Cultivating
a sustainable pipeline of
senior management is hard to find. The
learning agile talent that can demands placed on those managers,
drive innovation and operate meanwhile, are rapidly changing as Asia moves
in a global, multicultural
up the value chain. Cultivating leaders that
environment is crucial to
success in this region. Only by can drive innovation is now critical to success.
making talent development
the top agenda will companies Chief executives and human resource leaders from a diverse
be able to reap the enormous group of companies, including Johnson & Johnson, Sony
opportunities. Electronics, Aviva, SAP, Estée Lauder, Google and The Dow
Chemical Company, delved into these issues at Korn/Ferry
International’s annual Leadership Transformation conference,
held for the first time in Singapore in August. The conclusion:
pursuing ‘talent management by accident’ will prevent companies
from riding Asia’s trajectory. Asia is now the engine of global
growth and human resource executives play a critical role: they
must have a solid game plan in place to develop the human
capital needed to fuel their company’s growth.

“The economic shift to Asia has critical nuances for leaders,” said
Charles Tseng, President, Asia Pacific, for Korn/Ferry. “Companies
need leaders who have the capability to lead innovation, have
capability in people and culture, and who can really tap into the
consumer in Asia.”
A new breed of leaders are needed in Asia 2.0
For decades, Asia served as the workshop for the world and exports
drove growth; that was Asia 1.0. The nature and role of Asia’s economies
has now dramatically changed. Asia’s consumers now drive growth, a
role that has become pivotal as the rest of the world enters a second
slowdown in the wake of the global financial crisis. Asia has entered a
new growth model which Korn/Ferry calls Asia 2.0, and it’s marked by
several fundamental shifts: companies are now focusing squarely on
Asia’s increasingly powerful consumers, particularly as Western
consumers pare spending. R&D investment is also moving to Asia as
companies strive to create and tailor products for the region’s diverse
consumer base. With that comes a workforce shift: companies need
creative talent who can drive that innovation.

Asia’s new growth model requires a new breed of leaders. Today, they
need the skills to craft strategies to generate new growth in underserved
markets; they need to use disruptive innovation to create entirely new
categories of products and services; and they must put together high-
performance teams that can operate in a global, multicultural
environment.

Consider the challenges faced by The Dow Chemical Company, which is


investing heavily to scale up both its research and production
capabilities in the region. The company plans to grow Asia earnings to
the point where revenue growth is double the respective GDP growth
rate by 2015. That will represent more than a 60 percent jump in
revenue from Asia over a five-year period. First, they need to develop
their 2.0 talent to deliver to those mega ambitions.

Figure 1
Asia 2.0 – Asia’s new growth model

Asia 2.0
Asia 1.0
Market shifts The impetus for change (2006 – 2020)
(1985 – 2005)

Consumer shift Made in Asia - Reduced Western consumer Made for Asia
spending
- Emerging consumerism in Asia

Innovation shift The world’s factory and - Shifting R&D investments The world’s
back office - Asia’s drive to innovate laboratory and
- Asia’s need to move up the value knowledge office
chain

Jobs shift Cheap and productive - Unemployment in the west Creative and
workforce - Western companies Asianizing innovative talent
- Asian companies globalizing

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“Our leaders have strong competencies and are successful in their field
of expertise. What we want to do is elevate them to the next level,” said
Melissa Kee, Asia Pacific Director of talent management and diversity
and inclusion for The Dow Chemical Company. “We need more leaders
who can manage with vision and purpose, and who can step up, take
some risks and help define what the future will look like. That’s an area
where there still are some gaps.”

The hotel industry, meanwhile, offers a snapshot of the consumer shift.


In 1990, 75 percent of guests in high-end hotels in Asia were from out of
the region; today the opposite is true. Just 25 percent of hotel guests are
not from Asia. The number of hotel rooms, meanwhile, has grown
twelve-fold. Leaders must have the insight and expertise to tap into
consumers in Asia, said Patrick Imbardelli, CEO of the Pan Pacific Hotels
Group. “If we look at Asia 1.0 versus Asia 2.0, the biggest difference is
that it’s now about Asia, for Asia. It’s no longer about Asia for someone
else. We have to move the needle.”

That has a profound impact on the kinds of leaders and employees


companies need. Yesterday’s general manager needed technical and
functional talent to ensure the business ran smoothly. Today’s GM has
to be innovative and able to find new ways to distinguish the brand in
the minds of local consumers. Pan Pacific wants to decentralize its
leadership structure to put decisions closer to the customers—and needs
local talent to drive those connections. “We are very much focused on
acquiring and developing talent on a local basis, with a global mindset,”
said Imbardelli.

Figure 2
Asia 2.0 leadership skill sets

Asia is becoming the economic center of gravity in the world. This calls for distinct shifts in leadership skills. Korn/Ferry’s research
and experience with organizations in Asia Pacific have found the competencies below represent the desired list of leadership skills
to succeed in the Asia of today and tomorrow.

Creativity Emotional intelligence


Breakthrough thinking Coaching/mentoring
Innovation management People and Inspiring others
Innovation
culture Cross-cultural savvy
Personal learning cluster
cluster
Collaboration Learning Building effective teams
Dealing with ambiguity agility Influencing without authority

Customer
and market
cluster
Customer insight Managing vision and purpose
Business acumen Silo-busting/integrating
Building relationships

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That kind of talent is in short supply. In China, just one percent of
executives and one percent of managers are ready to succeed in Asia 2.0,
according to a 2010 Korn/Ferry study. In India, just eight percent of both
executives and managers have these skills. The gap stretches across the
entire spectrum, from leaders to front line staff. A resounding 97
percent of participants at the Leadership Transformation conference said
they are facing a talent shortage; 50 percent said it was ‘reasonably
likely’ that key talent would leave their organization over the next six
months.

HR executives have a role to play in bridging this talent gap, said


Korn/Ferry’s Tseng. They need to help their organization create a
program to foster talent and build capabilities from within; they need to
help create succession plans for key leaders
and managers—and put programs in place to
Learning agile individuals are f lexible, foster the kind of learning agility these
adaptable, and resourceful [and] are best leaders need to succeed in Asia today.
Learning agile individuals are flexible,
positioned to deal with the complexities of adaptable, and resourceful; they excel at
making and marketing products for absorbing information from their experiences
consumers across Asia’s diverse, and using that to navigate unfamiliar
situations. People with this core skill are best
fragmented and fast-growing economies. positioned to deal with the complexities of
making and marketing products for
consumers across Asia’s diverse, fragmented and fast-growing
economies. “Learning agility is the key to maximizing the changes going
on in Asia, and dealing with these new complexities,” added Tseng.

Figure 3
Factors of learning agility

Learning agility is a critical indicator of potential and should be used to differentiate talent.
Korn/Ferry’s new self-assessment viaEDGE™ provides scores on:

> People agility—skilled


> Mental agility—ability
communicator who can
to examine problems in
work with diverse types of
unique and unusual
people
ways
Learning > Change agility—likes to
> Self-Awareness—
agility experiment and comfortable
extent to which an
with change
individual knows his or
her true strengths and
> Results agility—delivers
weaknesses
results in challenging first-
time situations

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Talent management in Asia:
the professional, portfolio approach
Winning companies don’t manage their talent by accident. They create
and deploy a professional talent management program to attract the
best employees, get the most out of the people they already have, and
nurture their high potential staff. All that adds up to a sustainable
pipeline of talent.

According to Pushp Gupta, Managing Principal with Korn/Ferry’s


leadership and talent consulting business for Asia Pacific, “talent
“You have to manage
management has to be professional and it has to be integrated and your talent like a
aligned across the entire organization.” It also needs to be anchored in portfolio. Different
science. Assessment tools designed by industrial psychologists, like types of talent will
Korn/Ferry’s viaEDGETM, can help HR professionals gauge the skills,
result in different
abilities, and learning agility of their talent pool. Armed with that data,
executives can create a “talent matrix” to rate performance and learning
kinds of yields for an
agility, and create a portfolio of different types of talent that can be organization. Some
deployed in different parts of the business. represent a future
dividend, and some a
An employee may be a subject expert, for example, but is not very
more present
adaptable – yet still highly valuable. Another might be earmarked as a
budding talent with strong leadership potential, and needs to nurtured dividend.”
and coached. A thorough assessment might discover that another
Pushp Gupta
employee is in the wrong job entirely and could perform better Managing Principal, Korn/Ferry International
elsewhere, with the right training. Managers can use this matrix to
guide development programs to get the best out of each employee,
pinpoint high-potentials, and create a talent pipeline from within. “You
have to manage your talent like a portfolio,” said Gupta. “Different
types of talent will result in different kinds of yields for an organization.
Some represent a future dividend, and some a more present dividend.”

Taking a professional approach to talent management is quite critical in


places like China, where supply is short and competition is fierce. “It’s
the ultimate retention challenge,” said Lisa Alvarez-Calderon, Vice
President Human Resources for Janssen Asia Pacific, the
pharmaceuticals arm of Johnson & Johnson. “You can attract great
talent, but you can’t rest for a minute, thinking they are locked in once
they join you.”

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Janssen worked with a HR consulting firm in Singapore to create a talent
management program to address this trend. One prong was to promote
learning and career development as part of its ‘employer brand.’ This
also serves to counter the growing trend of Chinese employees turning
to local private companies because of perceived better career prospects—
particularly in the wake of the 2008 financial crisis, which hit many
Retaining talent multinationals hard. MNCs, however, are widely viewed as offering
better development programs, an area that global companies need to
According to attendees at the Leadership
Transformation conference, the top factors promote and make good on. Johnson & Johnson took steps to raise its
that worked best in engaging and retaining profile as an employer of choice through university and MBA recruiting,
key talent in their organizations were:
highlighting the career and training potential, according to Alvarez-
> Compensation and benefits
Calderon.
> Development opportunities

> Employer brand Research has shown that 10 percent of development comes through
> Great work opportunities
training, 20 percent through coaching, and 70 percent from experience.
Johnson & Johnson has a strong e-university platform and coursework
> Quality of leadership
model in place to take care of the training; the next step in China was to
> Recognition work with front line managers to foster coaching and mentoring skills.
“We believe that focusing on the front line manager is key to making
Attendees’ biggest focus in the areas of
engaging and retaining talent were: this 10-20-70 formula work. It’s about the interaction, the coaching, and
the feedback that happens after the skill building is done. We are
> Career pathing
spending a lot of time on this,” said Alvarez-Calderon.
> Coaching

> Development opportunities The company also put a robust assessment program in place to map out
> Employee engagement employee’s competencies and skills. Janssen then created rotational
> Employer branding
assignments for high-potential employees to ensure they had a chance
to develop and grow. “Transparency and visibility of career opportunity
> Employer value proposition
is a critical part of how we build our team at J&J,” Alvarez-Calderon
> Greater collaboration added.
> Internal communication

> Leadership effectiveness Ignoring high-potential talent development is particularly risky in Asia
right now; not only is there competition for talent, but the global
> Onboarding and mentoring
slowdown will push individuals into the most secure jobs with the best
> On the job stretch
future prospects.
> Succession planning

Putting transformation into practice


A core part of talent management is leadership development—a task
that is particularly challenging in Asia. Now, more than ever, companies
need to make sure they have a pipeline of local leaders who can connect
with this critical market—and are committed to the company. This is
not easy to manage: many multinationals continue to be plagued by the
ongoing economic turmoil in Europe and the U.S. and companies need a
good game plan to keep leaders motivated during these volatile times.

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Conference survey results
Surveys find action learning, succession planning
among the best leadership development practices
Every company has what it takes to develop world-class leaders—they just need to know how to tap the
resources and knowledge that already exist within, according to the findings of surveys Korn/Ferry conducted
during the Leadership Transformation conference in Singapore. Action learning projects and one-to-one
coaching are the two most impactful leadership development tools, according to more than eighty HR
executives and CEOs who attended the conference (Figure 4, below). Leaders who act as teachers also have a
high impact on the development curve.

When asked to list the best practices in leadership development, over 80 percent of conference participants
ranked succession planning as number one. Putting a coaching and mentoring system in place was the second
best practice, followed by identifying high-potential employees. Assessments play a big role in helping
executives identify, and nurture, the leaders of tomorrow. A quarter of conference participants cited 360
degree feedback as their assessment tool of choice (Figure 5, below). Psychometric personality tests and self-
reports ranked second and third.

HR executives widely agreed on a list of five core competencies they need in order to win support for talent
management and leadership development programs: an effective HR change-agent is one who understands the
business, communicates effectively, inspires others and acts with honor and character. HR executives who fail
to build a team, or are unable to adapt to differences, are most likely to fail. Focusing a talent management
program around the business process is critical to gaining that support, survey respondents said.

Figure 4 Figure 5
Most impactful leadership development as ranked by Preferred assessments as ranked by Leadership
Leadership Transformation conference attendees Transformation conference attendees

Percentage of respondents Percentage of respondents


40% 40%

25% 25%
21%
20% 18% 20% 18%
17% 17%
13%
11%
8%
6% 7% 7%
4%
3%
0% 0%

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Dow Chemical, for one, had to work hard on this after it acquired Rohm
and Haas in 2009, making it the world’s leading specialties chemicals
and advanced materials company. The deal took place during the worst
of the financial crisis and the HR team had to figure out how to help
manage the integration, shed staff to achieve cost synergies, and bring
the remaining staff and managers on board at the same time. Against
this backdrop, the company moved quickly to assess whether it had the
right leadership talent in the place to grow the business—was there
enough ‘2.0-ready’ talent in the pipeline to achieve its Asia growth
goals?

“The question was: how do we assess them, and how do we create that
self-awareness?” said Dow Chemical’s Kee. “It is not about telling a
senior leader what to do; it is about them wanting to make that
change.” So they embarked on an assessment of thirty existing and
potential general managers which Korn/Ferry designed to benchmark a
broad range of competencies and leadership skills.

“We need a strong general manager capability: they need to be experts


in their field, grow the business, lead with vision and passion, and have
the ability to manage a team and motivate them, and drive collaboration
at the same time,” said Kee. The company also wanted to increase the
number of Asian managers who can better connect with local markets.

Dow Chemical is now in the process of creating a ‘GM development


curriculum’ to accelerate the learning of this core group. “Because they
are a very senior targeted group, we recognize that their development
needs may differ. Each one has different gaps. Our plan is to focus on
their unique, individual development needs,” Kee added.

In step with the leadership plan, the company also pinpointed a slate of
high-potential staff and put a career development plan in place for each.
A number of high-potentials are sent to head office in the U.S. to run
projects and moved periodically around the region to build experience
and visibility. Kee calls it “purposeful development intervention,” and
this—more than pay—helps attract and retain high-caliber staff in Asia
today.

Figure 6
Dow Chemical’s general manager capability

General management capability is a strong play to


Dow’s future success.

Build leadership capabilities and create development


opportunities for existing and future General Managers.

Benchmark business and country leaders against


industry best-in-class

Customize development curriculum to meet individual


leader's improvement needs.

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The program is still a work in progress, but efforts have paid off. Today,
two-thirds of the top leadership team in Asia Pacific consist of local
talent, and more than 90 percent of critical roles have local talent who is
ready now, or will be in two years, to step up to the plate. Two-thirds of
the high-potentials, meanwhile, are slated into that succession plan.
“We can buy capabilities
Dow is also putting a company-wide leadership effectiveness survey into and borrow people
play, which will ultimately hold managers accountable for developing from other regions and
their leadership skills. “We’re two years into our transformational New York, but this isn’t
journey, but we’re starting to see success. I’m already hearing leaders sustainable. In two to
say ‘OK, I have to take this on board. The company is serious,’” said Kee.
three years’ time, we
Two years ago, Estée Lauder Companies in APAC, gripped by the need to may need to replace a
prepare the next generation of leaders, and to cope with the growth number of key leaders.
strategy of the region, created a leadership development program that We need to build from
was so successful that it’s being taken to other regions by the company.
within.”
"With a challenging need to raise the skills of our leaders, and build a Figin Seng
strong pool of ready successors for the sustainability of the organization, Regional director of learning and talent
development, APAC
there is a real sense of urgency," said Figin Seng, regional director of Estée Lauder Companies
learning and talent development, APAC, for Estée Lauder Companies.
“We can buy capabilities and borrow people from other regions and New
York, but this isn’t sustainable. In two to three years’ time, we may need
to replace a number of key leaders. We need to build from within.”

Estée Lauder Companies, together with Korn/Ferry, created an intensive


nine-month transformative leadership development program that its
APAC future leadership team—including all the brand general
managers, heads of departments and unit directors—must go through.
So far, 60 of 180 senior managers have completed the course, with
another 80 embarking on the learning journey this fiscal year.

It's a steep investment: it costs $15,000 to $18,000 per person—including


design and course fee, travel and accommodation, project expenses—but
it’s already paying off. Three of these leaders have already progressed to
more senior roles on the back of the program, and several role rotations
have taken place to cross-pollinate top talent. “It’s a very tough
journey,” according to Estée Lauder’s Seng. “But we’ve created interest,
buy-in, and thirst. People want to get involved now.”

While one of the core challenges companies in Asia face is creating an


Asian leadership team with a truly global outlook and skillset, another
challenge—particularly for Japanese companies—is globalizing a
Japanese-dominated team. Sony Electronics, for one, has worked hard to
diversify its senior management team in the Asia, Middle East and Africa
region.

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Sony’s future goal: to have a broad mix of tier-one global senior
management, from any nationality, running individual markets and
regions. “At that point, we will be a truly global company with a
Japanese heritage,” said Virendra Shelar, head of recruitment for Sony
AMEA. To do that, the company has invested time and effort into
identifying the top five percent of high-potential employees within the
region, and deploying that cadre into roles and projects to develop their
leadership capabilities.

Taking leaders out of their comfort zone and putting them into
situations where they have to innovate to adapt is a critical part of an
integrated leadership development program, according to Jacqueline
Gillespie, Managing Principal with Korn/Ferry leadership and talent
consulting. “We really have to immerse and align leaders in a future
world—they need to be immersed in the unfamiliar and pushed a little
bit.” Executives learn 25 percent of their skills through hardship
situations, yet most companies invest nothing in hardship support, and
invest the bulk—80 percent—on training, with just 10 percent on
deployment and 10 percent on coaching.

The innovation challenge in Asia

The most valued leadership qualities in Asia Marketplace innovations could include new HR, meanwhile, can support specific
today are creativity and the ability to drive packaging or ingredients that give an types of innovation by moving the right
innovation. These are the big differentiators existing product a fresh appeal; and people across divisions, and help
for many organizations in Asia, and operational innovation is about doing things managers create cross-functional teams
executives are looking to their human faster, better and cheaper. of people with the right skillset. It all
resources leaders for help on this, comes back to assessing, developing
according to Jane Stevenson, Vice “Companies have largely focused on and deploying your talent pool in the
Chairman, Board & CEO Services at operational and marketplace innovations in most effective way.
Korn/Ferry. Different types of innovation Asia for years. Now they need to create
require different types of leaders, and a new products and categories—and do it “It’s about matching a portfolio of talent
company also needs to pursue different faster, cheaper and better too,” said to a portfolio of innovation. Just as you
types of innovation at the same time. Stevenson. Executives also need to would manage a portfolio of
understand which type of leader can best investments, you wouldn’t just have all
There are four core types of innovation. push these different levers. An inventor bonds. You have a mix—that’s how you
Transformational innovations—like the would make a good transformational should think about this,” added
Internet—that are big-risk, disruptive and leader—but might not be the kind of Stevenson. “The more we have people
change society as we know it. Category consumer-focused, team-oriented focused on doing the right thing, the
innovations cascade from that: eBay, for marketplace innovator a company actually more we will be successful.”
example, created a new online auction needs to promote growth in a place like
category that leveraged the Internet. India, or create new categories in China.

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Leadership development needs to be a lot more strategic—and Asia
offers a competitive advantage to companies that want to pursue this.
Learning experiences are everywhere in the fast-moving growth market:
leading a cross cultural project team, for example, or managing a crisis
provides future leaders these critical must-have skills. “In Asia, we have
such an opportunity to develop leaders. It’s not hard to find a situation
to test a leader: learning experiences are everywhere,” said Gillespie.
“In Asia, we have such
an opportunity to
The road ahead develop leaders. It’s
not hard to find a
The opportunities in Asia are extremely lucrative from a marketplace situation to test a
perspective. To make the most of them, organizations need to define
leader: learning
what success looks like, manage talent, develop leaders and foster
innovation. HR practitioners are expected to be at the forefront of this experiences are
agenda. They need to up-skill themselves, their teams, and then deliver everywhere.”
fast. All this has to be done professionally. There is no room for
accidental talent management and development. Jacqueline Gillespie
Managing Principal, Korn/Ferry International

The future of talent management in Asia is a bright one...but only for


the most prepared.

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About the Korn/Ferry Institute
The Korn/Ferry Institute generates forward-thinking research and
viewpoints that illuminate how talent advances business strategy. Since
its founding in 2008, the institute has published scores of articles,
studies and books that explore global best practices in organizational
leadership and human capital development.

About Korn/Ferry International Asia Pacific


Korn/Ferry International, with a presence throughout the Americas, Asia
Pacific, Europe, the Middle East and Africa, is a premier global provider
of talent management solutions. Korn/Ferry was the first major global
executive search firm to operate in Asia Pacific when it opened its doors
in Tokyo in 1973 and today has 18 offices in key business centers
throughout the region. Based in Los Angeles, the firm delivers an array
of solutions that help clients to attract, deploy, develop and reward their
talent.

Visit www.kornferry.com for more information on the Korn/Ferry


International family of companies, and www.kornferryinstitute.com for
thought leadership, intellectual property and research.

About the Leadership Transformation conference


Korn/Ferry’s Leadership Transformation conferences and events present
the Firm’s research and viewpoints on how talent advances business
strategy. Korn/Ferry hosted the 2011 conference series in Singapore and
Scottsdale, Arizona. The first 2012 conference will be in Madrid, Spain.
Visit http://leadershiptransformationconference.com for more
information.

12 © 2011 The Korn/Ferry Institute