Hitting Your Growth Targets in Asia

Western companies need to strike the right balance between corporate strength and local nuance, says columnist Joel Backaler

By Joel Backaler

The position of Asia chief executive officer is one of the most demanding roles a manager at a Western multinational can have. As U.S. and European markets have faltered in the wake of the global economic crisis, corporate expectations for this role have shifted from a long-term growth-oriented approach to a short-term profit strategy. Managing high corporate expectations is only one of the many business challenges these executives face; they also need to allocate resources across distinct Asian markets, recruit and retain top local talent, and negotiate with government regulatory bodies for preferential status.

Above all, Asia CEOs at Western multinationals face severe pressure to maintain historic rates of growth. Among my firm's clients, businesses in emerging markets grew an average of 17.3 percent in 2010, and companies expect to grow by 14.1 percent in 2011. Yet, while companies are growing quickly in Asia and other emerging markets, the nature of these results may be opaque and unpredictable. Volatility in performance is driven not just by the nature of the markets but also by an array of obstacles that can powerfully shape sales teams' performance. Nevertheless, Western multinationals are consistently expanding their sales forces to meet the ambitious targets for emerging markets set by their corporate offices. On average these same clients plan in 2011 to grow their sales teams by 13.1 percent and marketing teams by 6.7 percent.

What are some of the challenges Asia CEOs face in building winning sales teams? Not only are good salespeople hard to find, but once you recruit top talent they can be unpredictable in performance and length of tenure. One Asia-Pacific president for a leading European health-care company noted that roughly one-fifth of his sales force in India and China quits each year because employees take better offers from rivals, leading to further costs associated with recruitment and training of replacements. Other Asia CEOs find themselves overly reliant on top performers, depending on a few star salespeople to drive the majority of their sales. "About half of my sales team hits their targets, but the other half consistently underperforms," an Asia CEO for a U.S.-based fast-moving consumer goods firm lamented. "I have aggressive targets and I cannot rely solely on high performers, but how do I get my underperformers to achieve their targets?"

Western MNCs' sales processes in Asian markets have been largely ineffective. There are often insufficient mechanisms to understand on-the-ground nuances and determine what really drives local salespeople. Corporate strategies developed in the U.S. or Europe are too wide-ranging and suffer from being developed independently of local sales teams themselves. Typically only asked to report on performance against sales targets and on competitive intelligence, local salespeople can be resistant to corporate mandates since the resulting sales mechanisms are not fully relevant or customizable to the local market and the local staff members were not involved in the process of commercial strategy decision-making.

Despite challenges associated with building successful sales organizations in Asia, a number of Western multinationals have developed winning formulas to optimize their sales force. The following are three tips from Western MNCs about how to strike a balance between corporate strengths and local nuances to do just that.