During a period of economic slowdown in China, human capital challenges continue to be at the very top of the list of pressures facing US companies operating in China, according to the AmCham China 2016 Business Climate Survey. Rising salary and wage expenses are now the top HR challenges across all industries. Most organizations can no longer afford or justify large salary increases to attract and retain staff. In fact, more than four out of five companies expect less than a 10 percent average labor cost increase this year. At the same time, innovation continues to be the key for growth in China, and hiring domestically and training are two of the key actions companies are planning to take to innovate, according to the survey. In this context, it is more important than ever to attract and retain high potential, without relying on large salary increases as the main lever for doing so.
At MDS Beijing, we analyze what differentiates high potential leaders in China in order to have a better understanding of how to attract, retain and leverage their strengths. Called the Leadership Effectiveness Analysis, our research (done in collaboration with Management Research Group) looks at 283 mid-level Chinese leaders and 3,528 mid-level leaders from other countries across 18 industries. We compare Chinese high potential mid-level leaders (mid-level managers and individual contributors, rated as high potential by their boss) to those who were not identified as high potential over a 15-year period. We also compare the high potential Chinese leaders to their international counterparts in Europe, the US and Australia.
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Creating a vision
When it comes to creating a vision, the biggest differentiator for the high potentials is that they measured much, much higher on the leadership practices of “innovative” and “strategic.” They are more comfortable in fast-changing environments and willing to take risks and consider untested approaches. They take a long-range, broad approach to problem solving and decision making through objective analysis, thinking ahead and planning. The also tend to much be lower on “authority,” and therefore are more likely to question and challenge those at more senior levels. In order to better leverage these strengths and keep these managers engaged, companies should provide more opportunities much earlier on for these high potential managers to be heavily involved in strategic planning and brainstorming sessions with their senior leaders, not only within China, but also internationally.
Developing followers
The high potentials also appear much stronger in their ability to develop followers, with the biggest differentiators being their ability to build commitment by convincing others and their higher level of excitement, operating with a good deal of energy, intensity and emotional expression. Along with being energetic, they are also higher on the leadership practice of communication, sharing their message in a clear and consistent way. To better leverage this strength, organizations should be more systematic in preparing them to develop not just the next generation of leaders, but also their peers in some of the leadership practices they are strong in. One of the common threats or de-railers for these high potentials is for them to become overloaded, or spread too thin across organizational demands. Providing opportunities for them to delegate earlier on and also become more comfortable with lower levels of control would also free them up to focus more on people development and at the same time better prepare them for success in more senior roles.
Achieving results
“Management focus” and “production” are the biggest differentiators for the high potentials when it comes to achieving results, another one of their strengths. They seek to influence by being in positions of authority, taking charge and directing the efforts of others. They hold high expectations for themselves and others.
While we see significant differences between Chinese managers and their international counterparts in general, when we look specifically at high potentials, they are extremely similar in their leadership practices. Encouraging Chinese high potentials to recognize and focus on these similarities with their international counterparts could go a long way in fostering higher levels of collaboration.
In fact, cooperation is an area of concern for both Chinese high potential leaders and their international counterparts, who score consistently lower than non-high potentials. As globalization accelerates, higher levels of cooperation is becoming even more essential in global leadership teams as they tackle opportunities and challenges in more complex and ambiguous business environments. Companies should actively remove any organizational obstacles to cooperation. Then high potentials can find more ways to increase levels of cooperation without losing the many other strengths that differentiate them.
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Elisa Mallis will speak on this topic further at AmCham China's Conference Center on March 9.