Leadership Development as an Investment

Leadership Development as an Investment

Paul Murphy

I have written in the past on the value of investing the best education for your children. 

Now I have the opportunity to discuss the importance of adult education as a critical investment for your continued personal development and wealth creation, and in particular leadership development. This can come in many forms, from business schools at home and overseas to leadership development specialists with a presence in the Greater China Region.

The economic dynamics of China's relationship with the rest of the World have changed considerably over the last five years and will continue to do so in the near future. The traditional model of multi-national corporations in China being managed by C-Suite executives from 'The West' is increasingly a thing of the past.

Chinese SOE's are continuing to grow and expand into new markets overseas. Even privately owned Chinese organizations are now looking abroad for growth as they may now have maximized returns in the domestic market.


Tie this all in with an increasing number of educated, skilled junior and middle managers from abroad looking to come to China to seek new employment opportunities and you see an interesting dynamic. We are now changing to a World in which Chinese leadership of non-Chinese teams is increasingly the norm.

So what does this mean for you as entrepreneurs, senior executives of major corporations, or investors? It means that to continue to see your organizations and investments grow in the future one of the key components will be your ability to lead non-Chinese teams.

In theory, this may sound easy. Most of you have massive experience successfully driving dynamic operations in a very fluid business environment. You have proven skill sets, a wealth of experience, and most likely strong EQ and IQ. This all stands you in good stead but by no means guarantees success. The reason is that all of these are what we call 'transferable skills' as opposed to 'demonstrated skills' in relation to the specific task of managing foreign staff.

So what do I mean when I say you may not have demonstrated skills for the task? When we look at many Chinese executives leadership experiences they generally lie in managing Chinese teams in China. What I am discussing here is leading foreign management teams overseas or even a multi-cultural management team here in China.

Here you may argue that you can just place Chinese middle management in your overseas divisions or stay with a Chinese executive team within your organizations. This is certainly an option but one with inherent risks. When we look at experiences in various markets over the last 30 years we see that this approach generally creates initial success but with significant underlying problems that can be hugely damaging in the long run.

In the 1980's the Japanese growth model overseas was underpinned by a need to have Japanese division managers heading up all the business units they created overseas. This ensured that these divisions aligned with headquarters back in Japan and that communication was fairly easy from a linguistic or cultural perspective.

However, it didn't factor in the level below that Japanese general manager, which was primarily staffed by local department managers. Growth in Japanese companies was driven by innovative designs and production practices, but not in leadership.

Similarly, in the 1990's and early 2000's in China we saw Western companies expatriating senior executives to their new China operations. This created some initial successes but once more failed to identify the fundamental need for senior executives who have a strong understanding of local market dynamics as well as the ability to lead a mainly local management team. There are countless stories of failed US or European business initiatives in China.

So where does this leave you as a Chinese senior executive who wants to see strong growth from your increasingly large number of overseas business units and investments? In my opinion you have two options: 1) You start to hire and develop foreign management in China who you then send to manage your overseas business units after a few years, or 2) You invest in the leadership skills of your Chinese management team so that they have a strong understanding of leading foreign employees and the organization behavior of entities from different cultures.

Obviously, I am talking in generalities here but the fundamentals are sound. Many successful China-based executives for Western MNCs are now of Chinese nationality or ethnicity who have spent some time in North America or Europe for study and several years employment. This model is proven increasingly popular in China due to its successful balancing of the needs of the organization in China. This model matches Option 1 above but simply flips it around.

The development of leadership skills in your current team to enable them to successfully build an overseas operation is more of a challenge. First and foremost you should understand some of the core elements of a leader that you need to fit the role of the overseas operation. This can be done through psychometric testing, language appraisals, and small-scale projects to see individuals' ability with cross-cultural teams. Once you have done that you should have a group of individuals, including potentially yourself, who are set for a program of leadership development targeted to suit the specific needs identified.

At this point it is important to stress the difference between strategic leadership & operational leadership. Strategic leadership consists of your vision, corporate culture, and strategic imperatives. Operational leadership consists of your leader behaviors, sense of fairness & justice, and policies. Whilst strategic leadership generally will not change within an organization, operational leadership can often vary considerably by leader.

So, we can now focus on the need to develop operational leadership capabilities in our Chinese management team before they head overseas. In my experience, the key to developing a flexibility in leadership styles that will allow you to meet the varying demands of a multi-cultural workforce is something commonly known as 'situational leadership'.

The fundamentals of situational leadership are that as leaders we should change our style of communication (directive & supportive) to match the development level of individuals on a specific task. Development levels are based on a combination of competence and commitment. People will generally always develop competence over time but commitment levels will vary as they meet various challenges. By understand the mix of competence and commitment we can vary our leadership style to help them to continue to perform.

We then must also establish trust with our staff. Without trust, people will not respond to your leadership. When a leader is from another, culturally very different, country, this trust will be even harder to develop. Trust comes through consistency and honesty. The sense of fairness and justice I mentioned earlier.

The final key part of situational leadership is to adapt your style to meet the need of the individual. Traditionally, East Asian management styles tend to be quite directive or top-down. This is fine when your team is at a relatively low level of development but as they grow you must also change your style until they are full empowered and engaged.

Of course, this is just one of many leadership solutions, but it is one that is particularly relevant when you think about the dynamics of a relatively new, cross-cultural team for a Chinese organization that is operating in a new business environment. When you look at these issues the ability to have a flexible leadership style becomes incredibly important for your own and your organizations' success.

So, in summary, investing in adult education for leadership development is extremely important in our new global paradigm. There are some fantastic education institutes across Asia, Europe and North America as well as specialist leadership providers much closer to home.

Ultimately, whether you are the owner of your own company or a senior executive of a Chinese multinational, understanding the dynamics of leading across global geographies and cultures will be a smart investment that will benefit your bottom line.

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