Lessons from the Asian C-Suite: Building Global Talent and a Culture for Success by Korn Ferry

Lessons from the Asian C-Suite: Building Global Talent and a Culture for Success By Michael Bekins

t is a big leap from being dominant in one’s own country to becoming a worldwide leader in a rapidly shifting and highly competitive global landscape. But this is exactly what Samsung,

LG, SK, Huawei, Haier, Lenovo and a host of other emerging Asian multinationals are striving to accomplish. The most successful of these aspiring multinationals are doing it ‘their way’ – with long-term vision, home-grown capabilities, Asian management practices, and an almost messianic sense of urgency and purpose. While all of these companies generally focus on growing their own talent, there is a small cadre of invited best-in-class talent who reside at the senior levels of each of these Asian corporate success stories who are assigned the task of helping to ‘globalize’ key elements of the business. Reporting to the CEOs, these foreign executives, by and large, don’t speak the local language and many have never worked in Korea or China. But their impact has been felt throughout the global enterprise and most of these Asian conglomerates expect to hire more foreign talent as CEOs recognize the importance of building global capabilities, beginning with the head office.

These executives, recruited by the CEO to augment the existing leadership team, are asked to fill critical functional roles and build capabilities around global best practices. After participating in a number of these highly visible hires and collecting meaningful data on the success of these recruitment efforts, Korn/Ferry sought to define the success profile, including the ideal leadership competencies, of these executives. The goal of this analysis is to enable companies to make more informed hiring decisions, ensure the success of these globalization initiatives, and help create an environment for the executives to achieve their personal and professional goals. What follows is the result of our research and Korn/Ferry’s view of the ‘success profile’ of these high-profile hires. We surveyed 39 executives, a combination of Asian hiring managers and western-trained foreign executives who hold C-level positions with Korean- and Chinese-based multinational corporations which produce revenues of at least US$5 billion. Many are well known to Korn/Ferry and were personally interviewed for this article. All the foreign executives in our survey have management experience outside of Asia; 70 percent have worked in four or more countries, and 62 percent speak at least two languages fluently. Most have worked in Asia prior to joining their current employer.

Key Takeaways Include:

For a foreign candidate to be considered, he or she needs to demonstrate professional credibility - senior level experience with leading global multinationals, outstanding educational credentials, and a track record of corporate success on more than one continent. Once hired, however, these executives need to adapt to the local environment, demonstrate relevant on-thejob leadership competencies, and live the basic values of the organization. Said one executive, “Don’t rush in even when there is an expectation of quick action. Understand the context of why something is the way it is.” The practice of hiring western expatriates for C-level positions is fairly new, with most Asian corporations having less than ten years experience in assessing, deploying, reviewing, and promoting these top-flight foreigners. Most hiring managers (though not the CEOs) we surveyed are wary about defining these recruitment initiatives as a success, cautioning us that it is too early to tell.

The vast majority of these foreign executives, all highly successful in competitive western multinational cultures, advise that humility is by far the most important personal quality required for success in an Asian organization. This quality can help the executive avoid political or cultural miscalculations and foster more immediate and stronger personal relationships. (See Figure 1). Apart from humility, the top on-the-job leadership competency, as advised by these executives, is interpersonal savvy – the ability to relate well to all kinds of people, build rapport, and successfully navigate the organization. (See Figure 2)

Figure 1 Top Ranked Personal Values Essential to an Executive’s Success in Asia 11.1%

37%

Most foreign executives believe that their organization’s expectations of their performance are different from the expectations of performance of their local colleagues. The hiring managers agree that there is certainly more pressure for the newcomers to add value and deliver hard results. As one foreign executive said, “there is a sense that my contributions will be exponential, whereas the [contributions of] others are more linear.” It is both an advantage and a disadvantage to be a foreigner, depending on the situation. It is an advantage in pushing change. One executive said that “you can act in unconventional ways without violating cultural norms or the management hierarchy.” However, at the onset, it may be difficult to gain trust, to communicate, and can be a handicap in efficient decision-making.

Cultural training in and of itself will not determine a Western expatriate’s success in an Asian company. While one-on-one coaching can speed up the on-boarding process, the executive needs to arrive with cultural sensitivity already embedded in his or her DNA. As one executive in China said, “Do not try to change the company into something that is based on your own culture. Learn how to extract the principles of your experience and inject them effectively into the local reality.” Another executive, revealing perhaps one of his underlying motivations to join a Korean company, said, “Do it (take the position) for the growth, not the money, it will show.”

14.8%

12.9% 24% Humility Energy and Drive Business Ethics and Values Courage Empathy

Figure 2 The Top Ranked Job Related Leadership Competencies Critical for Success in Asia 7.4%

13.6%

3.7% 7.4% 6.2%

27.2%

21% 13.6%

Strategic Agility Managing Vision and Purpose Interpersonal Savvy Drive for Results

Building Effective Teams Command Skills Creative/ Innovation Management Dealing with Ambiguity

The Success Profile for Incoming Foreign Executives Best-in-class functional experience in a leadership role with world-class companies in Europe and/or the US. Experience living and working in Asia. A demonstrated ability to create new business models and solutions for different situations, drawing from experience and an ability to accurately assess the environment.The right executives will tend to thrive in each new situation thrown at them; these high performers are what we call “learning agile.” Leadership competencies that fit the unique needs of the role, with particular strengths in interpersonal savvy, high tolerance for ambiguity, humility, and energy and drive. One executive added, “Trust and personal commitment are very big words in Asia – in fact they are everything.” A supportive family.

Putting Their Own Stamp on Globalization

Aspiring enterprises with a distinctly Asian culture, workforce, and set of organizational practices and processes are going global in a highly compressed time frame, especially when compared to such western powerhouses as P&G, Unilever and GE, which have a 50 or 100-year head start. Far from being disadvantaged, these successful organizations use their Asian experience to their advantage, bringing to the international stage distinct competitive strengths and capabilities honed during their remarkable rise to the top within their home markets. Their corporate cultures differ from company to company as it does in the west. They can be top-down or bottom-up, long-term or short-term focused, quick to make decisions or highly deliberative, decentralized or centralized – just as western companies are. As these foreign C-level executives are discovering, there is no easy definition of Asian-style management. Samsung is quick-to-market in the US, exploiting capabilities derived from years of experience in the highly competitive Korean market where technological and product innovation is highly valued. In the US, LG’s mobile handset business built a reputation for being customer-centric from its ability to quickly adjust their business model and products to meet the needs of local operators and consumers – a success that would not be possible with an overly centralized and less entrepreneurial decision-making apparatus. Haier, a global leader in mini-refrigerators, after suffering from insufficient margins in the US, demonstrated local innovation by transforming their US offering into wine fridges at higher prices and margins, and is now a leader in a new category. Huawei, a telecom solutions provider, is winning market share in developed markets by offering competitive technology for lower prices than its competitors. Just as Nokia’s rapid transformation and growth into a multinational mobile communications powerhouse produced, over time, a distinct global culture and set of practices that differ markedly from its global competitors, each of these emerging Asian enterprises is building a

unique culture and set of practices, drawing on their core strengths and experience. Yet as they build their global organizations “their way,” values commonly associated with Asia do kick in, complicating the picture for executives new to Asian organizations. Most Asian companies have a teaming culture; a long-term view, combined with speed of implementation; a culture that puts the success of the enterprise ahead of the needs of any one person; and decisionmaking processes that emanate from the local culture. Aside from their firm’s globally competitive assets, these CEOs recognize that long term global success – as measured by return on invested capital, market share, revenue, margin, and other wellaccepted metrics – requires more in the toolbox – and fast. This urgent need is driving CEOs to foster a more global mindset, acquire brands and companies abroad, and build best-in-class capabilities in mission-critical functions like finance, HR, marketing, supply chain, R&D, and strategic planning. The practice of hiring top foreign executives to assist in the transition is part of this move. Although they are not looking to build another GE, they may in fact seek talent with experience in GE, for the knowledge and practices they can impart to their headquarters in Asia. LG Electronics (LGE) has been particularly bold in its efforts to build global capabilities, recruiting a team of C-level functional executives from among the best multinationals around the world, several reporting directly to the CEO. In doing so, LGE’s CEO, Yong Nam, has been emphatic about preserving the best of LGE’s teaming and entrepreneurial culture. “These are the qualities that made us a great company. Adaptability is very important,” he told us. One of the executives also made this very clear, “When it comes to cultural adaptation, the executive should not expect to be met halfway. The executive should arrive with an open mind, embracing the differences.”

Outside of Asia too, this step by step globalization of the management ranks requires making fundamental decisions about the role and responsibilities of Asian expatriates and local hires in key operating roles in places like the US and Europe. Asian-based multinationals, like western multinationals before them, are evolving toward some mix of Asian expatriates and local hires in overseas markets. This process takes time, care, experience, and a roadmap that puts talent and capabilities-building at the top of the strategic agenda. A small, hand-picked cadre of best-in-class global talent at the top sends a strong message to the field.

Best Practices for the CEO and Hiring Managers at Asian Companies The stakes are high for these executives and their CEOs. Both the executive and the hiring manager need to understand how the position will impact the strategic objectives of the company. The executive and the CEO should be realistic with respect to the foreignerâ&#x20AC;&#x2122;s expected impact on the organization, the speed of change, the authority residing in the role, and the potential impediments, recognizing that every organization takes occasional steps back as it moves the ball forward.Over time, experience, will lead to more informed hiring decisions and enriching careers for foreign executives, a win-win for both the company and the executives. The following practices were developed in part from our discussions with hiring managers:

Demonstrate visible sponsorship from the top. The CEO must be prepared to strongly support change implementation and deal with internal integration challenges as they emerge. Consider the bigger career issue for the executives. Are these foreign expatriates being hired for a specific contract period or is the company willing to help chart a career? Fine-tune the roleâ&#x20AC;&#x2122;s objectives once the executive has had time to assess the situation. Gain alignment with other stakeholders within the organization and agree on a set of performance measures and a process of evaluating performance.

Assess executives on their strategic and learning agility by probing for their experience in adapting business solutions to different situations and cultures. Assess a candidateâ&#x20AC;&#x2122;s level of personal flexibility, tolerance for ambiguity, humility and interpersonal savvy.These qualities can be assessed. Look for ways to provide practical help such as providing language support, including simultaneous translation during group meetings. Consider assigning a local mentor to guide the executive during the first 90 days or longer.

An Ongoing Process: Resolving the Internal Challenges

While most hiring managers say that it is too early to judge the success of these initiatives, many see more selective hiring of seniorlevel foreign executives in the future, notwithstanding the current economic downturn. Said a senior staffing manager at one of China’s largest multinational, “[Our company] is on the road to globalization; there’s no way back.” Yet internal challenges remain and the issue can be controversial, even with companies experienced in hiring high-powered executives from the outside. Integrating foreigners into the C-suite can be disruptive for the organization with cost, language barriers and lack of local knowledge often cited as reasons against hiring foreign talent. At a strategic level, this is not a temporary skills-transfer exercise lasting two or three years after which time the task of capabilitiesbuilding is done. Foreign expatriates will come and go for different reasons and needs, as they do in multinationals around the world, but the demand for these executives will likely continue. Over time, HR policies pertaining to compensation, performance management, and succession planning need to be created and refined. It is one thing to appoint a senior foreigner into a top staff or specialist role at head office, and quite another to appoint the executive into a P&L role overseeing hundreds or thousands of Chinese or Korean executives, managers and staff. Most Asian organizations, for good reasons, are taking it step by step, taking care to tackle the challenging HR issues with fairness and common sense. In time, these issues influenced by language, culture, and the hard realities of global competition, will continue to evolve, leveling out the playing field for all nationalities. The result can be enriching for all concerned. The executives themselves see it positively. Virtually all of the executives we surveyed felt that they were well-prepared for the role and that the experience was a positive step in their career. As one executive said, “…a foreign executive who is recognized as being successful in an Asian company should be regarded as having mastered one of the most challenging work cultures in the world.”

Glossary: The Competencies Ambiguity Tolerance: Can effectively cope with change; shift gears comfortably; decide and act without having the total picture; isn't upset when things are up in the air; doesn't have to finish things before moving on; and can comfortably handle risk and uncertainty. Building Effective Teams: Blends people into teams when needed; creates strong morale and spirit in their team; shares wins and successes; fosters open dialogue; lets people finish and be responsible for their work; defines success in terms of the whole team; and creates a feeling of belonging in the team. Energy and Drive: Mental energy and stamina; capacity to sustain analytic thinking; is constantly and consistently one of the top performers; and stead fastly pushes self and others for results. Humility: Willingness to accommodate others’ methods; and ease of dealing with diverse styles. Interpersonal Savvy: Relates well to all kinds of people; builds appropriate rapport; builds constructive and effective relationships; uses diplomacy and tact; and can defuse even high tension situations comfortably. Learning Agility: The ability to learn valuable lessons from experience and apply those learnings to new and first-time situations. Source: Lominger International: A Korn/Ferry International Company

Michael Bekins is Managing Director of Korn/ Ferry International Hong Kong, and Leader of the Firm’s Asia Pacific technology practice. He can be reached at mike.bekins@kornferry.com.

About The Korn/Ferry Institute

The Korn/Ferry Institute was founded to serve as a premier global voice on a range of talent management and leadership issues. The Institute commissions, originates and publishes groundbreaking research utilizing Korn/Ferry’s unparalleled expertise in executive recruitment and talent development combined with its preeminent behavioral research library. The Institute is dedicated to improving the state of global human capital for businesses of all sizes around the world.

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, including: Auckland, Bangalore, Bangkok, Beijing, Brisbane, Guangzhou, Hong Kong, Jakarta, Kuala Lumpur, Melbourne, Mumbai, New Delhi, Seoul, Shanghai, Singapore, Sydney, Tokyo and Wellington. Based in Los Angeles, the Firm delivers an array of solutions that help clients to attract, develop, retain and sustain their talent. Visit www.kornferryasia.com for more information on the Korn/Ferry International family of companies and www.kornferryinstitute.com for thought leadership, intellectual property and research.