Why Asian companies must develop an effective leadership pipeline if they're going to grow in the next decade
One-third of senior leaders are engaged in the workplace.
Gallup recently studied employee engagement at the leadership level in Asian companies that were conducting employee engagement research for the first time. This study included 500 direct reports to CEOs and 1,500 senior leaders. How engaged are Asian leaders in the workplace? The findings are grim.
- One-third (33%) of senior leaders are engaged in the workplace, while 38% of direct reports to CEOs in the region's companies are engaged. These levels are significantly lower than overall averages for these groups in Gallup's global employee engagement database, which shows that 48% of senior leaders are engaged, as are 43% of direct reports to CEOs.
- One in five senior leaders in Asian companies strongly agree that there is someone who encourages their development or that someone at work has talked to them about their progress.
- One in three senior leaders strongly agree that they have opportunities to learn and grow at work.
These findings indicate that engagement is low among what is arguably the most important segment of leadership in any organization and that these leaders feel their talents are underdeveloped and underused. They also show that succession management is relatively weak in Asian companies.
Businesses operating in a hyper-competitive region such as Asia need an effective pipeline of leaders if they are to continue to grow in the next decade. Survey upon survey shows that the scarcity of individuals with the talent to be successful leaders is consistently rated the biggest human capital and business challenge in Asia. And each country in the region has a distinct leadership development challenge based on how its economy is evolving.
- The ongoing boom in the Indonesian market strongly underscores the country's need to develop leaders.
- Extreme turnover in China -- the result of an overheated talent market -- requires a unique strategy to attract and retain the best potential leaders.
- In India, companies with an increasingly younger workforce have seen high turnover and generally low levels of engagement.
These are just a few reasons why Asian companies must build a strong leadership pipeline. A proactive approach to managing talent does much more than merely fill vacant positions. It emphasizes meeting the demands of businesses while fulfilling leaders' career aspirations. The following strategies can help Asian businesses navigate their urgent talent management challenges.
Inject greater objectivity into leadership talent assessments
In 2008, Gallup conducted a landmark study of leadership in Asia that involved interviews with successful leaders in the region's most dynamic cities. Our most startling finding was that most leaders landed in executive leadership positions purely by chance. This kind of "accidental leadership" was prevalent across all six cities included in this study (Singapore, Bangalore, Mumbai, Hong Kong, Beijing, and Shanghai). But identifying and grooming leaders for success should not be left to chance or coincidence. The best strategy to identify and develop future leaders is based on a scientific, systematic approach.
Currently, most Asian companies struggle to consistently pick effective leaders, in large part because they rely on a subjective evaluation of potential or on a nomination process. Many Asian leaders tend to nominate candidates who fit their own self-concept of effective leadership because they wrongly believe that what made them successful will guarantee success for the next generation of leaders.
Even when companies use measures to evaluate or qualify candidates, few of them are actually predictive of true leadership potential. Some of these measures include a person's performance rating for the last few years, competency metrics based on what is required in his or her current role, or feedback from 360-degree surveys. These measures might be appropriate for a person's current role, but they are grossly insufficient at evaluating or predicting whether that person could meet the future demands of a leadership role. Using such measures, leaders may overlook people with real potential for meeting the demands of a future leadership role, forcing them to make crucial succession-planning decisions based on inadequate metrics or unscientific measures of leadership potential. These can be expensive mistakes, and the result is misplaced talent and misaligned executive teams.
Companies that want to make strategic choices about positioning the right talent in mission-critical roles need a rigorous process of predictive assessment and review. A robust succession-management system takes into account the diverse demands of the enterprise and its leaders, then matches the right people with the right roles and responsibilities. This scientific approach is particularly valuable in Asia, where youths are a significant part of the population. Yet companies often value age and experience over leadership talent and the potential for success when filling key positions. Creating more access to leadership roles among junior to mid-level executives will provide a much-needed balance between wisdom and fresh thinking, historical perspective, and raw creativity.
Companies should actively support their next-generation leaders by providing the right kind of support networks.
Make leaders at all levels responsible for identifying and grooming future leaders
In many Asian companies, succession planning is managed by the human resources department. HR's role is crucial in assessing talent and facilitating effective talent reviews. However, for succession planning to be truly effective, leaders and managers at every level must become fully responsible for identifying, selecting, and developing future leaders across all functions. Companies must ensure that executives, functional leaders, and managers are committed to succession planning and leadership development that is focused on results.
Building leadership capacity at all levels requires a strong culture of meritocracy and mentorship. More senior-level leaders must play a crucial role -- as champions, role models, mentors, and coaches -- in building a culture of feedback. They also must be accountable for building and sustaining the pipeline of future leaders. Companies must ensure that current leaders regularly assess their emerging leaders and benchmark them using rigorous talent reviews and objective data. Some of Gallup's clients have instituted metrics that have become the gold standard for succession management in their companies, such as attrition rates, ROI on learning and development and on investments in talent management, and internal hire rates. The company's leaders must be held accountable for these metrics on par with other business and operational standards.
Use the right assembly of leadership development interventions
Many companies in Asia use an ad hoc method of structuring and deploying leadership talent. Few have managed to create an integrated leadership development program backed by a unified vision and a seamless platform of interventions. Successful companies create leadership development programs and solutions that are aligned with meeting specific business goals. These companies move away from a traditional classroom learning format; instead, they focus on providing emerging leaders with breakthrough experiences that build their leadership mettle through well-designed training, coaching, and experiential development initiatives.
Asia has one of the largest proportions of young people in its population, especially in countries such as India and Indonesia. In India, the median age is 27; the median age in Indonesia is 29. Asia's young emerging leaders might be the region's secret weapon. As more baby boomers retire, creating a leadership vacuum, Asian companies must understand what Gen Xers and millennials need to further their development, then put in place a system to identify and groom them for future leadership roles. The fast pace of growth in Asia often forces emerging leaders to take on significant leadership responsibilities early in their careers, and these opportunities can provide them with the kind of breakthrough experiences that can accelerate their development.
Companies should actively support their next-generation leaders by providing the right kind of support networks along with constant feedback and strong mentoring. For a fast-growing bank in Southeast Asia, for example, Gallup defined a set of nine breakthrough experiences that high-potential leaders should be exposed to as part of an accelerated leadership development process. Experiences included these leaders taking on a significant customer-focused project and involvement in a project outside their area of expertise. These experiences are part of a clear career development pathway, individualized for a select group of the company's high-potential leaders.
The best development and training opportunities won't help emerging leaders achieve their potential if they are not paired with a great manager. Asian companies must create a well-defined leadership route for their most important emerging leaders -- based on the right mix of coaching, training, and experiential development and guided by great managers who will position them for accelerated career growth.
As a region, Asia will continue to grow despite its current economic uncertainties. Companies that implement effective succession planning and leadership development programs will be positioned to thrive regardless of economic conditions. These companies will capitalize on the talent potential within their ranks and will effectively position the next generation of leaders to learn from the region's future challenges -- and to maximize its opportunities.