Most leaders we speak with in Asia want to increase the number of Asian leaders in their company’s top positions, but are concerned about a lack of Asian leadership talent. At the same time, their Asian competitors from Japan, Korea, India, and China are often fully staffed at senior leader levels with Asians. So, is there a real lack of Asian talent? If so, where is the gap, and why is there a gap?
To understand more, we asked about the leadership composition of over 60 global, regional and country (mostly China, India, and Japan) leadership teams in Asia. We asked about who was on the team today, and about their plans to change team composition in future. This provided insight into leadership “bottlenecks” where companies were not achieving their goals. By looking at the best performing companies, we also gained insight into what is possible for companies to achieve despite their challenges.
In this article, we’ll summarise some key insights about Asian leaders and some recommended actions. In a subsequent article, we’ll share the results on women leaders.
Asian Leadership Ceiling Mainly in Western MNCs
The composition of Western MNC country teams and Asian MNC region or global teams is similar. On average, 80 percent of their team members are Asian (born and raised in Asia). The leadership gap only appears at a region level in Western MNCs where only 40 percent of the team is Asian (see chart).
Why is it that Asian MNCs find talent at a regional and global level to lead their growing businesses and Western MNCs fail to do so? What is behind this ceiling for Asian talent in Western MNCs?
There are many possible reasons for this gap: different expectations for leadership style, more conservative decision making in Western MNCs, increased complexity of managing in the matrix in Western MNCs, and leader preferences for working in companies where their native language is the norm, for example. However, much of this is supposition or rationalisation. From our survey, we do have information that provides some additional insight.
First, only 40 percent of the Western MNCs surveyed intend to add more Asians to their leadership teams in the next 12 months. Despite having almost 60 percent expats on their teams, these teams had no short-term intent to change the mix. This is especially interesting compared to the Asian MNCs. Even though they had had a higher percentage of Asians, 30 percent of these companies planned to increase the number of Asians on their teams in the next 12 months. Although the Western MNCs may have longer term intent to increase Asians, this lack of short term intent may make it difficult for them to significantly change the number of Asians in regional jobs over the next few years.
Second, Western MNC country teams have very long tenure while their regional counterparts have lower tenure (see figure below). Clearly, jobs are becoming available on the region teams at a faster pace than on the country teams. Unfortunately, few individuals from the country teams appear to be moving into these roles. One possible reason is that progression to a region role is significant, so moving from a country role directly to a region team role is not likely. However, participating companies also suggested other reasons. They suggested that their country teams are very strong in leading local country performance. Because of this, they wanted to leave the teams in place to run the local markets. At the same time, some of these country leaders do not have the potential to move to region roles. This dynamic creates high average tenure at a country level, essentially blocking other local leaders with potential from moving into country and then region roles.
Third, not all Western region teams have a low percentage of Asians on their teams. Sixteen percent of the teams in the survey had 75 percent or more Asians on their region teams. These companies included both smaller MNCs as well as MNCs from Global 500 companies. Asian MNCs and some Western MNCs have large numbers of Asians on top teams. Why is this and how are they achieving these results? Companies that have Asians on their top teams are much more likely to state that their talent management and selection practices are the cause for this change. We have incorporated some of their comments into our suggestions below.
Albert Einstein once suggested that insanity was doing the same thing over and over and expecting a different result. What can your company do to stop the insanity and increase Asians on your top teams? Here are a few suggestions:
Just to be clear, we do believe there is a talent gap in Asia. Growth challenges leaders to continually develop, and growth means that many companies compete with each other to hire good talent. Most companies are taking action to address this gap. The real question is simple…are they taking the right actions to get the desired results?