As we examine executive development in different parts of the world, each with distinct macroeconomic realities, cultures and historical contexts, we witness variability and commonalities among executive development activities from one geographic region to another.
For the majority of organizations in North America, after several years of closely managing costs and improving efficiencies, there is a renewed focus on top-line revenue growth. For the largest global organizations, many of whom already have operations in the high growth “BRIC” markets (Brazil, Russia, India and China), it means expanding such operations, while midsized organizations likely find themselves in the early years of entering such markets.
While merger-and-acquisition activity remains strong in certain sectors of the economy, there is a desire for many organizations to build the capability to identify and capture new revenue streams from within the existing organization.
Regional Business Challenges
By and large, North American firms are oriented to “maximize shareholder value,” which, of course, has interesting consequences. For example, relative to other parts of the world, it is easy to gain alignment in North American organizations — earnings are the ultimate scorecard for the business, and they are how management and sometimes rank-and-file employees are compensated. Activities that increase earnings are supported, and those that do not are eliminated. The system is somewhat fragile, though. In recent years huge financial incentives seemingly have opened the door to corruption from a few corporate executives, causing the implosion of several large U.S.-based organizations with great negative consequence to themselves, their employees and their overall community.
For executives in North America, the challenges of an increasingly global world are significant. For medium and large organizations, it is increasingly common to have some goods produced overseas, as well as some major business functions outsourced (such as customer support, IT, HR and accounting).
While challenging to look at this region as a whole, European organizations, operating in an environment of slower growth relative to North America, also are focused on top-line growth. They also have to manage, however, the fact that some of their organizations have cost structures that do not allow them to remain competitive in a “flat world” that now competes on a global basis.
In terms of top-line growth, they too are starting to exploit opportunities in Asia, and they also have Eastern Europe as a more geographically feasible opportunity than their North American counterparts. Even for Western European companies that are designing and marketing products for consumers in the same region, migration of Eastern Europeans to the West is changing how such companies think of their domestic consumer base, let alone adjacent markets for growth.
In contrast to a more narrow orientation that North American organizations have toward the shareholder, European firms operate with a more broadly defined stakeholder community in mind. For example, social and environmental issues are discussed more frequently at the highest levels of the organization.
Additionally, there is less of a clear-cut distinction between “business” and “society” in Europe. For instance, labor laws ensure European firms navigate issues affecting front-line employees much more delicately than their counterparts in North America.
However challenging it is to examine Europe as a singular region, Asia is even more so. The economies, cultures, histories and politics vary greatly. If we take a look at those with which the West is doing a great deal of business — China, Japan, South Korea, Singapore and India — however, we witness some of the same business challenges. There are many organizations with tightly held ownership structures (many are family owned), which have implications on the governance and management structure.
In China, many state-owned enterprises are transforming to become more market-oriented. Many Asian companies are starting to invest in original research and development to become innovators, not just low-cost producers.
Tight labor markets also are becoming salient business challenges — in certain communities in India and China, employers are finding out the hard way that “talent has legs,” and the fight to attract and retain good management is becoming a heated battle. Executive development can be a great perk because it can both attract good candidates and keep them as they seek employers who will invest in them.
Required Skills and Competencies
So how do these contextual factors affect what types of skills and competencies are required to operate effectively?
Mary Plunkett, vice president of executive development, British Petroleum Co. Ltd., has executives operating in virtually every part of the globe. At BP, the skills executives are expected to have are consistent across regions: people leadership, personal leadership (including integrity) and the ability to leverage the external environment.
This is likely the case with some of the world’s largest organizations that operate on a global scale and whose executives often rotate through several regions during their career. These organizations often have less of a regional orientation and more of a global one.
Region-based firms might work a bit differently. North American executives increasingly, if not urgently, need to broaden their perspectives to manage the change they are facing — they are increasingly managing a fragmented, younger, virtual and international set of employees, suppliers and customers.
Relative to other parts of the world, North American executives have great technical skills, thanks to a strong business educational system and internal capabilities of corporate training departments to teach hard skills. They need to augment these skills with cultural awareness and interpersonal sensitivity, as well as the ability to remotely manage a diverse employee base.
For Patrick Keating, director of leadership education, Cisco, it is not just IQ and EQ but also “CQ” (cultural intelligence) that reflects an executive’s adaptability and sensitivity to others, which are crucial for Cisco’s management to embody. Without taking their eye off the bottom line, they need to spend more time and energy on the means to achieve their ends, as well as increasingly reflect on what type of management styles will be most effective.
Executives at Europe-based organizations are more accustomed to managing such diversity — for any of them, a two-hour drive means crossing multiple country borders. Their workforce and consumer base always have been highly diverse, and managing this diversity takes specific skills.
Navigating the reform many European countries are going through will continue to require diplomacy with governmental bodies as much as the unions and other entities that have historically required senior management’s attention. While European organizations increasingly are adopting more of a “bottom line” mentality, paradoxically, it will be their ability to leverage their historical capability to manage diversity and be reflective about the management process that will help them and their organizations yield better financial results.
Asia, as it is undergoing the greatest amount of change, will require a huge amount of new skills and capabilities to manage such transformation. Those managers who took comfort in the structure and predictability of state-owned-enterprise resource planning will need to learn of and adopt new models of operation. Perhaps more important than the influx of Western financial capital, the Western models of operation and management will have a huge impact on those organizations and executives who can adopt them.
For Asian executives, human interpersonal skills always have “trumped” technical skills. Over the next 10 years, during this transformation, one might expect to see technical skills play a more important role — Asian firms need to rapidly adopt more of the “performance culture” seen in the West. Asian executives who relied on good relations with the state will need to shift their focus internally and adopt some of the modern management tools and techniques their Western competitors are deploying.
Executive Development to Address Regional Needs
To what extent do regional needs define what type and quantity of executive development is conducted versus the influence of the regional culture? As when one looks into the large global organizations that increasingly have a “global” flavor versus American or European, how do they think of executive development for their top leaders?
“For our top 150 leaders globally, the required skills are similar, but it will be the culture in which they operate that dictates which style of programs will be effective,” said Ad Boon, vice president of human resources, Phillips Electronic, which is based in Eindhoven, The Netherlands.
North American companies have been some of the most experimental as it relates to executive development. For example, although executive coaching has been in existence in some form for many years, it is undergoing a huge explosion in North America. To the extent that the majority of the issues discussed in such sessions revolve around “soft skills” (e.g. communication, interpersonal) and not “hard skills” (e.g. technical, financial), this is a good solution to the needs outlined earlier for North American executives.
Europe shows a similar picture, although it tends not to move as aggressively into new types of developmental activities. It is more difficult in Europe, for example, to get a management team to participate in experiential learning. The interest is more in formal, traditional, business school-type education — executive coaching exists but is not exploding as quickly as it is in the United States.
Given their needs to progress through their transition and gain insight into management practices used elsewhere, this too seems to be a good match. Western business schools have sensed this opportunity to provide Asia with formal business training, and many have partnered with operations in Asia.
Action learning, which is popular all over the world, is becoming popular in South Korea (the top country in terms of educational spending as a percentage of GDP), which has a very successful action learning society. It is not widely deployed in other parts of the region, however.
Looking at another method of development, executive coaching, we see that in places such as Japan, coaching is typically used for remedial purposes — if you have a coach, it reflects a problem with your work performance. As such, it will be difficult culturally to use coaching proactively and have it seen as a positive occurrence for the executive.
Asian countries have a talent shortfall at the managerial level. According to a 2005 study by McKinsey & Co., there is a need for 75,000 leaders who can work effectively in a global environment within 10 to 15 years compared with the 3,000 to 5,000 on hand today. The challenge is compressing the talent development cycle, if that is possible. There are a lot of talented people in the wings with technical skills, but they need management experiences.
China, at least for now, is taking an approach of buying talent from the West, according to Bill Wiggenhorn, former CLO for Motorola and founder of Global EdTech Management, an organization that provides management education in Asia. State-owned organizations are slow to transform themselves to adopt more of a market orientation and to be more accountable, and as this transition goes, business principles such as productivity and efficiency will play a much larger role in how work is conducted, and professional management- and MBA-style training will be in high demand.
What might ultimately determine the development that will be most effective for an executive might have less to do with where individuals are based and more on the type of organization in which they work. Those at the largest global organizations might find in an effort to have consistent experiences across the management ranks, their organization provides uniform developmental experiences on a global scale. Other organizations outside of the largest global companies might stick with approaches common in their region. As with most elements of executive development, where few rules of thumb apply, the best approach will continue to be highly customized.
Scott Saslow is the executive director of The Institute of Executive Development. He can be reached at firstname.lastname@example.org.
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