Achieving best practice in managing local talent has been an ongoing challenge for non-Asian corporations in Asia, but as long as expats were in leadership roles it was not a priority. This has now changed, fuelled by the region's growth. Bruno Cuchet, a director at Hong Kong-headquartered strategy and management consulting company Anthora, discusses what foreign companies in the region need to do to achieve success. And what other businesses expanding into other developing regions can learn from the Asian experience.
It's a delicate and complicated subject. Paramount to company performance in developing markets is staff performance. Integral to staff performance is ensuring all employees are positive stakeholders. Achieving such full engagement demands cultural understanding from planning, strategy and operational perspectives.
"But I have worked with and for many different types of corporations. All will claim that people are their most important asset and what then...?" asks Bruno, who has lived and worked in Asia for the past 15 years.
"My observations have been that cultural preparation and planning work are generally 'light' relative to the magnitude of the investments. Not taking cultural differences into account is the difference between trying to execute a plan and driving the business forward.
"In my opinion too many companies moving into Asia - and probably other developing territories - undervalue the people skills and capability local management and staff can contribute to leverage their investment. Indeed the level of engagement of people is a key competitive edge in fast developing markets."
Corporate values and business drivers will generally depend on how long the company has operated in the region, whether it has proactively strategically addressed cultural nuances as critical success factors for employee engagement and the sustainable success of the business, as whether the business is 'culturally' European, American, Australasian or Asian.
Some corporations act in a less convergent manner and demand low engagement from local management. And for centralized corporations, a tailor-made approach is a challenge because it conflicts with the top-down policies and systems that ultimately impact the way business is managed. Such systems can develop risk control or risk adverse culture, which results in low engagement and low morale of local employees.
From an employee perspective, many of the Asian markets are highly influenced by Chinese business culture and associated ways of working.
"This is highly entrepreneurial; the very best Chinese talents set up their own companies," says Bruno. "This is a very important opportunity being missed by the big corporations. If you hire someone who is the crème of the crème, he or she has chosen to be an employee for now, but inside that person is an entrepreneur waiting. Will your company benefit from that? Or will this top talent stay for as long as it suits them before they go and start their own company?
"Corporations have a challenge to develop a corporate environment where Asian managers can feel a sense of entrepreneurship and feel rewarded and respected for achievements.
"Recognition is absolutely crucial; it's not merely money it is recognition as a matter of face. The business culture is progressive but in a paternalistic way and the latter is generally appraised negatively... wrongly. The boss is the boss and he or she will be seen and respected as such. It is important for the boss as well as the reporting lines.
"But it is not just about medals, it's also about money. In Asia as people are more entrepreneurial companies need to implement well thought out incentive plans. The plans will contribute to the building of individual and collective objectives. Because cultural values are different the assessment of performance is a delicate process with Asian employees."
Bruno says that in Asia, solutions should be locally driven to protect entrepreneurship, creativity and out of the box thinking, and to gain ownership from the local team.
"Not surprisingly, decentralized organizations are better at nurturing the entrepreneurial spirit. But the picture is not all bright - most of the time I have observed that entrepreneurship was gained at the expense of management control.
"The lack of planning and management resources, either globally or regionally, has left many organizations or systems growing out of control. This occurs in all size of companies, including blue chips. Hence the right balance between 'entrepreneurship' and 'good corporate management' is rarely met in Asia."
Companies which manage to successfully protect entrepreneurial values within a well-calibrated management control system, including the right checks and balance, are the ones that have been developing the most steadily in the region.
"Growth in Asia is being driven less and less by expats and more and more by local people, primarily because the pool of local talents has grown significantly, getting access to better education and training opportunities and management experience over the years. The rise of local management may imply a string of changes to take into consideration better, such as local environment and specifications, and developing bespoke management models, policies or systems. The engagement of the local management in these scenarios is critical.
"I strongly recommend that these bespoke or even ad hoc solutions be defined in the early stage of projects, such as a company set-up, an organization reshuffle, hiring of new managers or key staff. I have seen Asian-based organizations postpone easy changes when business units were still small and then later face deadlocks to carrying out change a few years later."
These solutions must be truly engaging and deliver a fair level of recognition and rewards for the individuals who feel like driving 'their' business.
"Last but not least, to be effective, the solutions must be easy to track and communicate, and clearly linked to the business performance of the whole company."
Employee Engagement - Learning and good practices for and from Asia
- Medals and money - fair compensation as well as recognition is critical to obtaining full stakeholder engagement and leveraging the very best from local employees;
- Design a compensation system based on value creation, achievements and profitability with increasing individual rewards and incentives;
- Ensure consistency between what is said and what is done. Track and control;
- Engage all Management levels;
- Celebrate collective achievement through shared targets and shared incentives/rewards;
- Give the upper hand to true experience and knowledge - not academic practice. do not be afraid to seek tailor-made solutions;
- Retention of knowledge is an issue in Asia due to staff turnover. Implement mechanisms to control the risk and retain employees;
- Leverage best practices. Combat the re-invent syndrome;
- Be ready to manage not just the plan, but the unknowns, taking culture into account.
For more information or to contact Bruno Cuchet, please e-mail firstname.lastname@example.org