Many multinational companies recently have gone through talent localization at the country level in China. The fact that China and Asian countries continue to be the fastest growing markets has put increasing pressure on multinational companies to develop local talent from China to take regional leadership positions. This article examines what the current regional leadership teams look like in multinational companies, what capability gaps exist for local talent pools, and how to identify high potentials and quickly accelerate this next generation.
Observation from Russell Reynolds Associates of the candidate pools in the China market indicates that while sales, customer services and functional roles are filled more and more by Chinese locals, positions such as general management, strategic planning and marketing still are predominantly filled by Western and regional expatriates. Talent localization at the regional level is a complicated issue and cannot be resolved by a one-size-fits-all approach. In the past, the main driver behind talent localization was cost savings. Nowadays, the salary gaps between expats and locals are diminishing. Understanding the business model is the crucial first step—the variations of business models can well define the differences in talent localization strategies. For example, sales and customer services to the local market should be led by locals; however, it probably makes more sense to use expats if the business is regional or global in nature with key decision makers of customers sitting elsewhere. Therefore, localization is a pragmatic issue based on business needs.
No matter from where people come, one has to demonstrate the right competencies to qualify himself/herself for regional leadership positions. A review of the talent qualified for country-level positions vs. regional-level roles reveals large capability gaps. People who are successful at the country level usually are quite execution-and-result driven with a strong entrepreneurial mindset, whereas the regional leadership roles normally require a consensus-driven profile with more emphasis on interpersonal, influencing skills and organizational savvy. As a result, strong country-level local leaders often struggle with the change in role requirements when put in regional positions. Companies need time to develop talent to close the capability gaps, but the market does not wait. What adds more to this issue is that a lot of local talent do not want to go outside China to gain the experiences they would need to better perform at the regional level because the action is in China.
Facing this dilemma, an immediate solution for many companies is to bring expats into the region to fill the gaps. Companies continue to try to figure out how to identify their future regional strategic leaders early on and accelerate their development as quickly as possible. In terms of some early signs in targeting high potentials, some companies conduct regular talent Revaluations in which employees are reviewed on their performance, as well as learning agility, emotional intelligence, breadth and depth of experience, loyalty, etc. Russell Reynolds Associates defines “potential” as a latent and inherent ability or capacity for growth over time. Based on our analysis of more than 4,000 senior executive assessment profiles in our global database, we divide these characteristics into two categories: the Foundational Attributes that enable people to make the most of their intellectual and emotional intelligence and progress to senior executive or general management roles; and the Accelerator Attributes that enable people to accelerate their trajectory given developmental exposures/experiences.
In terms of best practices in talent development, companies now are more mindful in crafting specifically designed assignments and projects based on talent characteristics and personal situations. Short-term assignments frequently are used for this purpose. Certain companies also try to give leadership candidates international experience earlier in their career when they have less family and professional constraints. Some companies have extended the time period one has to stay in a specific role before moving to the next because they believe people do not have the opportunity to live through the consequences of their decisions and actions within a two-year time frame, and this significantly lowers the strategic learning effectiveness in a particular role. Other organizations have tried to enable a two-way exchange of talent, knowledge and skill sets; i.e., while exporting some high-potential Chinese local talent to various countries, the companies also bring in the exact number of people from outside in order to build a more global organization in the long run. For any of the above development programs to work sustainably, it is important to match the program design with business purposes, and there needs to be specific business and behavioral change goals set and measured for program participants.
Adela Yang oversees the Leadership & Succession practice of Russell Reynolds Associates in Greater China. Based in Shanghai, Adela’s expertise as an industrial/organizational psychologist is focused on leadership and key talent succession, management and development. She advises organizations across industries to identify and develop the next wave of top leadership talent to achieve strategic, sustainable results.
For further information on our Leadership & Succession practice in Greater China, please contact:
Russell Reynolds Associates Shanghai
Room 4504, Jin Mao Tower, 88 Century Avenue
Pudong, Shanghai 200121 China
Russell Reynolds Associates
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