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Hewitt Quarterly
Asia Pacific
is made possible through the combined skills and experience
of Hewitt consultants from across the Asia-Pacific region.
For further information please
contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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| "We believe that our culture drives our business results. The elements of our culture include respect, teamwork and work life balance." |
| "Good leaders are not stuck in their ivory towers. They are out in front, displaying their ability to handle dilemmas and make the trade-offs necessary when operating in a complex, rapidly changing global marketplace." |
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Being a business leader in Asia is no easy task. They need to manage complex and often competing pressures, including continuing improvements in regional standards of living. While this is a welcome development, it is putting an upward pressure on labor costs just at the time margins for many goods and services are under stress from increased commodity prices. Additionally, in some sectors, talented workers have leverage over employers or potential employers and are not shy about using their power. Technology is also changing quickly and leaders' decisions on early adoption of new applications can have major impacts - either positive or negative - for their organizations.
So who are the people making these calls affecting millions of people and shaping the futures of many thousands of Asia's businesses? What engages them and drives their strategies? What do they do to motivate their workers to stay with their organizations in this sellers' market and encourage them to drive the business's success?
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Hewitt's Best Employers in Asia 2007 study shows that they are typically male, aged between 44 and 54, have been with their organization between 14 and 19 years and have held their current role for between two and five years. Contrary to the popular image of entrepreneurs as self-made men who left school early, 60 percent of Asia's leaders have a university degree and 57 percent have a post graduate degree.
Leaders justify their positions and their salaries by delivering value to stakeholders, so it's also no surprise that they list positioning their organization for growth as their first objective.
More than half (55 percent) indicate they are operating in a fast growth market with a third (35 percent) indicating their market segment is growing steadily.
In this high-octane environment, companies are realizing that now, more than ever before, their competitive advantage lies in successfully channeling the energies of a highly engaged workforce. Yet the short supply of qualified managers has emerged as a major stumbling block for many organizations. The demand for talent outstrips supply to such an extent in Asia that Hewitt's recent Best Employers in Asia 2007 study found up to 63 percent of The Best and 77 percent of The Rest indicated they are experiencing a talent shortage. Often the result is rising wages, record levels of employee turnover, and a potential impact on profitability for investors.
The rewards for leaders who deliver increased value in this challenging environment are potentially high, but the risk is that organizations' and investors' tolerance for underperformance can be correspondingly low, creating even more pressure for leaders.
Even Turnover at the Top Doesn't Affect
The Best
The Best Employers in Asia 2007 study showed that 70 percent of The Best and 59 percent of The Rest had undergone leadership changes in the previous 12 months. This may be partly a function of the increased employment opportunities for leaders with good track records at a time of economic growth. The Best are more likely to lose good leaders to other organizations than The Rest precisely because they have already proved their effectiveness, but they are also more likely to replace good leaders with other good leaders from within the organization because they have the strategies and the processes in place to repopulate their talent pipeline. The fact that 50 percent of The Best compared to only 39 percent of The Rest reported changes in their organizational culture during the same period suggests most incoming leaders at The Best have a very clear vision about the direction they want the enterprise to take.
The three factors cited most often by effective leaders as critical to success are: organizational culture, quality of leadership, and attraction of talent. For the best performing companies, these come ahead of marketing, technology, sales capability and even access to capital.
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As one leader puts it, "We believe that our culture drives our business results. The elements of our culture include respect, teamwork and work life balance."
Less successful companies tend not to stress attraction of talent so much and rely more on the generalized notion of quality of leadership.
Indeed, clarity of direction and focus seems to be a distingu-ishing feature of the best leaders. In Hewitt's Best Employers in Asia 2007 study, The Best consistently identified emplo-yee engagement as their priority not only for the coming year, but also for the next three years. There was also a consensus among the best performers that customer brand, company values, and succession planning were the next most important issues. |
The Rest also claimed employee engagement was their key goal, but in reality appeared to be less focused on it and allowed competing goals to intrude on the clarity of their vision.
Ajay Soni, Senior Consultant of Hewitt Leadership Consulting in Asia, says, "There now seems to be widespread consensus among the best Asian CEOs that their competitive advantage lies with capturing the hearts and minds of their employees. This is a critical lever in Asian companies' ongoing competition for talent."
As Asian CEOs pursue their growth agenda, the best performers clearly distinguish themselves by focusing on long-term people issues rather than exclusively on short-term financial measures. Specifically, they focus on customer retention, and ensuring the organization's people behave in ways that are aligned with and support the aims, values and culture of the business.
This customer-centric approach is evident amongst CEOs at The Best where 60 percent indicated they created value for their customers by going out of the way to provide tailored solutions and by being responsive to their needs.
As one says, "The goodwill of the people is the only enduring thing in business; all the rest is simply shadows."
"Asia's best leaders have the ability to combine their macro, strategic, vision for business with an interest in small details. This doesn't mean they are control freaks. They are able to use their talent for clear vision to focus on those details that will also be critical for success," says Soni.
An example, he explains, is the fine tuning of talent and leadership issues. Good leaders genuinely demonstrate through their words and actions that they value their people in terms of who they are as individuals and in terms of what contribution their talents and personality can make to the enterprise. |
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Hewitt's study showed Best Employers are more actively involved in regularly reviewing leadership quality, depth, and succession planning processes (more than twice per year in 66 percent of cases, compared to 43 percent for The Rest). Further, the board is more actively involved in meeting current and future leaders to understand their personal goals and development. At 69 percent of The Best this happens at least twice per year, but only 47 percent of The Rest achieve this frequency.
CEOs and senior leadership at The Best are considerably more involved in resourcing and succession decisions, matching the supply of talent with positions as they become available. In Best Employers, this is a dynamic process, with the CEO regularly attending to this task with the leadership team (70 percent of The Best do this compared with 46 percent of The Rest).
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In Best Employers, the CEO is more likely to have a role in selection of senior leaders (80 percent) for the business compared with The Rest (30 percent). They meet with High-Potentials more regularly (30 percent do so weekly while only 15 percent of The Rest achieve such a frequency).
Employees' Perspectives of Their Leaders Employees perceive that leaders at The Best make better decisions. They also report leaders at The Best are more in touch with their organization, and form effective relationships at all levels (83 percent versus 50 percent at The Rest). This enables them to stay informed and ready to make decisions based on accurate information.
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Ewan Clark, another Senior Consultant of Hewitt Leadership Consulting in Asia, elaborates,
"Good leaders are not stuck in their ivory towers. They are out in front, displaying their ability to handle dilemmas and make the trade-offs necessary when operating in a complex, rapidly changing global marketplace."
Leaders at The Best are effective agents for change. They are considered by their employees to be more passionate about continuous improvement (86 percent) than leaders at The Rest (59 percent). They personally devote their energies to removing organizational barriers in order to create effective cross-department teams (81 percent versus only 46 percent at The Rest). The Best's leaders create a sense of excitement in the organization about their vision and win support for these changes (87 percent achieve this compared with only 53 percent at The Rest).
Clark says, "Leaders at The Best value their employees. The typical Best Employer company positions themselves as a caring organization and fulfills this brand promise by setting a personal example in the way they behave. Leaders at The Best are trusted by most of their employees when they tell them they are the enterprise's most important asset." (The study finds 84 percent of employees at The Best believe this compared to only 50 percent at The Rest)
"Leaders at The Best recognize that trust matters. Leaders at The Best do not make decisions for short-term gain at the expense of their employees, and crucially they appropriately balance employee interests with those of other stakeholders and leave everyone feeling happy," concludes Clark.
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