Calypso Consulting

(A version of this article appeared as a chapter in Business Leadership in China, Frank T. Gallo, Ph.D., Singapore: John Wiley and Sons, 2008)
 
Even when one thinks that they know the “right” way to do something, there still might be a better way.  In my experience with “corporate China,” I have heard many cases of companies that claim to have a “solid” leadership program.  Many of these programs however, consist of nothing more than focused training for people either currently filling leadership roles or expected to do so within a few years.  While this kind of intervention may bear fruit, it is not a comprehensive leadership program. 
Actually, very few companies in the world have a comprehensive program.  Many firms have good intentions and combine some of the key elements of developing leaders in their programs.  But rarely have I seen a firm in China that encompasses all of what is needed to build, develop and retain their key leaders.
In fairness to Chinese firms, there are unique features of doing business in China that make it tougher than elsewhere to do this.  While companies around the globe are frustrated by an over emphasis on short-term versus long-term operations, the fanatical desire for quick profits in China makes a long-term investment like leadership development a difficult program to sell.  Furthermore, most current Chinese leaders got to their positions by fighting and scraping their way to the top.  There were rarely any programs to help them get there.  As one Chinese executive recently told me, “we throw the high potentials into the water.  The ones who swim the fastest and the furthest get promoted.”  While this process of elimination may work in the short-term, it assumes an endless flow of new talent.  But as we know, while there are many, many people in China, the percentage qualified to work in our best firms is small.  Leaders cannot afford to lose the good ones to other firms that may be more willing to develop a future leader. 
More importantly, this “sink or swim” mentality also counters the understanding that we can “teach” people to swim better.  And if we do this early enough, we can help many more to swim faster and farther than they would if we did not provide that help.   That is what a leadership program is designed to do.
 
A Comprehensive Leadership Program in China
 
       A comprehensive leadership program in China should consist of four major parts: (1) a program strategy; (2) a method of identifying future leaders; (3) a development program for both potential and current leaders; and (4) a retention program for current leaders.
(1) Leadership Strategy.  Every company needs leaders.  The questions they must answer are: How many leaders do we need and at what levels – entry, intermediate and senior?  Is there a gap in our current internal pipeline and our future needs?  How do we fill the gap? 
Some human resource directors in China have told me that a strategy for leadership development is not necessary.  They declare that, for the foreseeable future, they just need to develop as many leaders as they can because the demand is endless and the supply is limited.  That may be true, but that does not eliminate the need to get answers to the above questions so that your program has a clear direction and measurable goals.  This is your roadmap.  It is not difficult to do, even if most of your answers are best guesses from a collection of current senior executives.  How will you know if you arrived at the right place if you did not know where you were going?
(2) Identifying Future Leaders.  To be sure that you have a way of keeping your China leadership pipeline fresh, you need to have at least two programs and they must be done well.  One is a “succession-planning program” and the other is a “high-potential program.”   These should both be linked to competencies.  It does not matter if your company has a full corporate-wide competency program in place.  What is necessary though, is that you have identified what the three to five key leadership competencies are in your firm in China and that you carefully select for these as you are planning succession or deciding who should be in a high-potential program.  Good business results may get a person noticed, but the presence of the right competencies will almost always guarantee leadership success in your firm.
A basic succession-planning program in China should at least identify the top positions reporting to the CEO and have potential replacements identified for each of those.  (The international best practice is to go two to three levels down from the CEO and have at least two candidates for each of those positions.  But I believe this type of program is currently unreachable in China because of the existing scarcity of leadership talent.)
As for a high-potential program in China, there is much to consider.  At least, it should do the following.  It should exude enthusiasm.  It should use valid selection techniques and have a very transparent selection process.  It should include different opportunities for people selected than for the general population and should also offer different rewards based on their new accountabilities.  Finally, it should not be kept secret.  Everyone should know such a program exists and what it would take to be selected.  I am not suggesting that all of the program’s members should be publicly listed, but the method of selection and the path for another employee to get admitted to the program should be.
With these two programs in place, “succession-planning” and “high-potential,” a company can best identify their future China leaders.  Such programs, combined with the supply-demand analysis mentioned above, help a firm to decide whether to stay internal for future leadership promotions or whether it is time to go outside.
(3) Leadership Development.  There are numerous components to a leadership development program.  A company need not have them all, but the more you do, the more likely you will reach people in ways that will help them be better leaders.  Common leadership development programs include: mentoring personal development, coaching, training, developmental assignments, key project teams (action learning), rotational assignments, and global assignments.  Because of the relative inexperience of many human resource professionals in China, and the relative rarity of some of these programs there, many companies in China tend to lag behind other countries in the sophistication of these programs.
Mentoring for personal development means that the company will assign someone, usually an internal resource, to work with the employee to develop themselves inside the firm.  The mentor is like a trusted aunt or uncle.  Discussions are not technical but rather are focused on what steps a future leader could take to be most successful in their career.  Success of these programs requires both the mentor and the mentee to be committed to make it work.  The human resources department can often help here by checking in occasionally with both parties to make sure the relationship is moving as it should.
Leadership coaching usually involves an outsider and is most often reserved for the most senior leaders.  It can be expensive and the company needs to do a cost-benefit analysis in each case.  There are a variety of professionals who call themselves leadership coaches.  Some focus on personal leadership development, some focus on corporate strategy, some focus on change management and some are expert in particular corporate functions.  A company needs to be sure that the coach they select is suited for what they expect from the coaching.
Oftentimes the coach will use a formal assessment instrument to help identify the leadership styles and leadership behaviors that the leader employs.  Some behaviors are very constructive and some are destructive, possibly even derailing to the leader’s career.  The assessment instrument helps the leader to key in on those that are good so that he or she can do more of them and those that are negative so that he or she can try very hard to stop them.  Furthermore, if the instrument applies a 360º approach, the leader can learn whether others view his intended behaviors in the same way as they were intended.  For example, some leaders, in their haste to teach others the “best way” to do something, may be viewed by those others as being perfectionistic and therefore impossible to please.
Developmental assignments are usually short-term and involve doing something that the employee typically would not be asked to do in their normal work activities.  For example, a young engineer may temporarily be assigned to the human resources department to get a feel for the kind of people issues that the company faces every day.  A person in sales or manufacturing may be assigned to the finance department to see the world from a non-line perspective and also to get a better idea of how costs enter into the corporate equation.  Sometimes an employee receives a developmental assignment in addition to their regular duties.  For example, the employee may work in their engineering role for 80% of the time and work in an administrative staff function for the remaining 20%. 
Working on a key project team is also time-limited and allows the employee to do something in conjunction with others from different functions and often from different locales.  This type of work is designed to teach teamwork as well as how to operate across boundaries.
Rotational assignments provide a way to give two or more employees the chance to learn something different without having to leave the firm to do so.  It also helps to build cross-functional teamwork because the rotated employee brings with them the knowledge and network of the prior team.  A software company in Shanghai that is having difficulty with cross-functional teamwork is using rotational assignments to break the bonds formed in very small teams and extend those to broader teams.  They believe that rotating team leaders as well as individual team members is a healthy way to keep people excited and also more focused on the bigger picture than just on their smaller team.
Global assignments are very important for teaching people how things work in a different culture and also for enhancing their networks.  This is particularly important in China since most Chinese employees have never worked abroad.  A typical arrangement for a multinational firm in China is to post the Chinese employee in corporate headquarters for six to twelve months.  This will almost always improve the employee’s ability to better understand the workings of the firm.  It also serves to improve the employee’s network and, perhaps most importantly for China, gives the other employees at headquarters an opportunity to better understand their China operations.
            (4) Leadership Retention.  One executive in China told me that his company leaves “on the table” at least RMB 10,000,000 (more than $1,400,000 USD) every year because they do not have the leadership talent to go and get it.  Having enough good leaders is not just a human resources department challenge.  This is a critical business need and companies cannot afford to lose the leaders they already have.  This is why leadership retention must be a part of your program.  It is not enough to just find them and develop them.  You must have a plan to retain them.  Among the best practices for retaining leaders are the following: opportunities for advancement, recognition from the top and compensation.  Many other books about human resources have stressed the logistical and financial importance of employee retention, so there is no need to repeat it here.  I will mention however, that at the executive level, compensation plays a much bigger part than lower down in the organization.  As most business people already know, compensation is usually not the key element for retention.  However, with top jobs in the firm, the relative importance increases.  Good leaders can demand very high salary packages in the market.  These jobs are so important that a competitor will not hesitate to offer a huge increase to a leader.  As such, if your leader is a good one, then I recommend a pay package closer to the 75th percentile than the 50th.  The same argument should be made for many non-executive jobs in China versus elsewhere in the world.  As noted in an earlier chapter, salary plays a very high social status value as well as fills an economic need.  Furthermore, in some high growth financial areas like Shanghai, the importance of salary is multiplied because of the relatively high cost of living, especially in housing.
 
 
One More Thought about Leadership in China
Another area to consider when developing leaders is the difference in needs among people at different levels of the firm.  The junior leader will typically lead a function or a team.  This person may need many of the basic elements of leadership such as decision-making, talent management, organizational finance, organizational design, etc.  Much of this can be obtained through training, coaching and developmental assignments.  Mid-level leaders need to understand how to manage across organizational boundaries.  The employee needs to learn about cultural differences as well as business differences among departments and in different geographical areas.  This type of development is best obtained through rotational assignments, global assignments and serving on key project teams, especially those that are cross-functional.  Finally, the senior-most leaders need to develop strategically.  This is best developed through external coaching.