The Asian Question

18 Mar 2016

The Asian Question

Failure to help Asian managers rise up the multinational corporate ladder can cost companies money and reputation

Asia has long been a region of focus for multinational corporations (MNCs) seeking growth opportunities. Home to 60 per cent of the world’s population and constituting a third of the global economy, Asia is too big to ignore but presents unique challenges to companies that have a primarily Western outlook.

Unsurprisingly, the same cultural and communication differences that make doing business in Asia challenging for Western companies also play a role in keeping Asian executives out of the upper echelons of management. This is a challenge MNCs will need to tackle head-on in order to maintain their competitiveness in this crucial market.

According to IMA Asia, a group providing advisory services to executives in the region, 80 per cent of the members of its Asia CEO Forum, comprising APAC presidents working for large MNCs, are expatriates. The executives in the forum who are from Asia were all educated abroad and have spent time working overseas, often in Europe or the United States.

Surveys conducted by Odgers Berndtson in 2015 with HR managers at 19 MNCs who base their Asian headquarters in Singapore confirmed this finding. Odgers Berndtson asked the executives on a non-attribution basis about their experiences identifying and promoting high-potential Asian employees. One HR manager at a global technology company believed that Asian employees tend to remain one or two levels below where they should be in terms of their skills and career path.

Given the importance of diversity and local knowledge to success in this region, why is it proving difficult to promote qualified people? According to the recruiting and human resources professionals that Odgers Berndtson surveyed, a few key issues stand out.

Barriers to entry

One reason Asia-born managers find it difficult to reach the next rung on the MNC leadership ladder relates to cultural differences in communication and leadership styles. In Asian cultures that score high on the power distance index [which measures the extent to which the less powerful members of organisations and institutions accept and expect that power is distributed unequally], respecting your elders, deferring to those above you in the corporate hierarchy and consensus building are key. As a result, a highly capable Asian employee may be reluctant to tell his superiors ‘no’.

Western managers, by contrast, value a plain-talking straight shooter and may therefore find an Asian employee’s deferential communication style to be too opaque. As a Singapore-based executive of a multinational pharmaceutical company pointed out, this can lead to Asian talent being viewed as less skilled at managing upwards, managing conflict and giving feedback.

Communication differences can also result in trust issues and MNCs are especially reluctant to promote someone perceived to be non-communicative to roles involving compliance and financial oversight responsibility.

Another stumbling block is the degree to which Asian employees rely on their managers to identify and present them with growth opportunities. A human resources leader at a global chemicals company observed in this regard: “Managers need to push Asian employees to be more proactive in managing their own careers.” A final issue mentioned by most of the Singapore-based executives Odgers Berndtson surveyed is the reluctance of many Asian employees to relocate internationally. A human resources manager at a computer hardware MNC noted: “Candidates must have experience in multiple markets before they can be considered for regional leadership roles.” This can be a limiting factor for otherwise high potential Asian talent. As a global pharmaceutical executive said: “Asian employees tend not to want to move as they may be the family’s sole income earner.” Even unmarried Asian employees may be reluctant to relocate for a long-term assignment if it means leaving their parents behind.

Re-evaluating MNCs’ approach

Expecting all Asian employees to transform themselves into Western versions of themselves cannot be the answer.

Although, without a doubt, being able to move seamlessly between the two worlds is a valuable asset and employees fitting this description will continue to be expensive and highly poachable. Instead, according to some human resources managers in Asia Pacific, MNCs need to address the weaknesses of their current approach to hiring and talent management in the region if increasing diversity and local market knowledge are truly a priority. By and large, the talent development programs of MNCs are designed with the Western executive in mind. Of the 19 MNCs surveyed, only 13 had a formal talent development program in place and only seven had tailored that program to suit the particular needs of Asian employees. Not surprisingly, the same seven were the only companies surveyed that had promoted local Asian talent – meaning Asian employees who had not spent a significant amount of time in the West – to APAC leadership roles.

For one thing, Western-leaning talent development programmes tend to emphasise longer-term overseas rotations as opposed to short-term placements that guarantee the employee’s position will still be there when she returns home. The latter are generally more palatable to Asian talent.

In addition, networking and profile-raising are often key to climbing the ranks at an MNC. These are skills that are learned throughout a Western-style education and corporate environment and may not come naturally to someone from a different cultural background.

Contrasting perceptions

One of the multinational technology company executives Odgers Berndtson spoke to contrasted the perception of what is needed for career advancement in the West and in Asia: “Asian employees project a more competency-based model of success while Western employees tend to proactively educate themselves on company structures and take on responsibilities beyond their functional titles.” Companies that are seeking to increase diversity in their top echelon of managers would be wise to recognise that this diffrence in approach is cultural as opposed to viewing it as a deficiency on the part of Asian employees.

As a human resources leader at a multinational chemicals company observed: “One can not simply apply Western talent development models to Asian employees and expect that to work.” Another executive at a global telecommunications company advised: “Companies should change their [career development] systems to cater to Asian talent. This would internationalise their talent pools, which are quite headquarters-centric.”

It may be inescapable that “relocating gives candidates peripheral vision and learning agility” that is difficult to acquire if an employee never leaves his home market. But companies should consider whether a three-week overseas assignment might achieve the same development goals as a longer placement. Likewise, managers should question whether over-emphasising the ability to network across the organisation could cause them to overlook well-qualified candidates for regional roles. As long as talent development programmes are designed to recognise only people that fit the typical Western profile of a ‘high potential’ employee, valuable talent resources will be missed.

The bottom line is that failure to remove the glass ceiling for Asian talent will cost companies money – either in terms of costly expat placements that fail to yield sustainable results or missed growth opportunities in the region.