Harvard Business Review

Building Local Talent in China


Posted on Harvard Business Review: September 26, 2011 3:38 PM

by Avni Patel Thompson and Joseph Thompson

There is a clear and growing divide among global companies operating in China. Should you import expats for key positions to deliver immediate results, or develop local talent, which takes time and delivers unpredictable results?

Sadly, we feel the divide is leaning the wrong way, and it’s easy to see why.

Picture this: your company has a key launch planned in China for the next fiscal year. To successfully get to market you need a leader who can navigate your company’s internal checkpoints. Equally important is the fact that your China results are now reported in every top management meeting. China results matter now. More troubling, it seems that nearly half of your local team in China have quit in the past 18 months. Fortunately you have two to three pressure-tested leaders who have successfully led comparable projects in other regions. It seems you have no choice — time to parachute in those leaders to turn the business around and get the team up to global standards. The expats bring in their own people, and before you know it, your Shanghai team is looking right out of an Applebee’s commercial.

Our humble opinion: take the harder right vs. the easier wrong and build a sustainable talent development system within China, for China. Do it right now. Depending on what you choose, your strategy on talent management in China will be one of the legacies or liabilities of your operational strategy here.

But they don’t know the acronyms!
The three most common responses we hear from Western leaders on why their management teams don’t have more Chinese talent at the top are:

1. “They don’t know our global structure and processes — in a big company like ours, this is key to getting decisions made.”
2. “They possess all the hard skills necessary, but lack some of the softer skills such as identifying change or managing ambiguity.”
3. (This is our favorite) “The attrition rate is high — how do I know my development efforts won’t be wasted if they jump to another company?”

These fears cause Western leaders to miss out on great opportunities that Chinese talent brings to organizations, including:

* An unmatchable understanding of the complexity that is China. From the money you could save by skipping the sub-distributor in Hunan, to the local agency that is twice as reliable for half the cost, to the eCommerce strategy tailor made for key cities — this understanding would take three to five years for an expat to develop.
* They are eager to learn and intellectually curious. Everything is a positive here — you’ve never seen this kind of optimism, which is exactly what you need to deliver that 53% index you are now accountable for. There is also a playfulness and camaraderie in the workplace that makes the 9 p.m. conference calls with the east coast more tolerable.
* A willingness to spread the word for you. People talk (constantly) about which organizations build capability, and which one’s don’t. Word of your organizational equity will travel… fast. If you build a fun and rewarding place to contribute and learn, you’ll have more qualified, wonderful candidates than you can staff (an enviable thought for any company in Shanghai).

Build your organizational equity
If you are serious about building your organizational equity (thereby making your group brag-worthy) and developing China talent for the long term, here are some thought starters:

* Ask your China team what matters — then implement it. We guarantee you’ll be surprised. A personal lunch with top management works well for a new hire in the US, but here in China it will likely be more awkward than rewarding. A customized training session each week demonstrating tangible skills, or an event with “Lucky Draw” for free Apple products & a team karaoke night may be what’s needed to build team morale. You won’t know what works until you ask.
* Title Up.Some companies are stingy with titles. This is a problem in China where the title on your card determines who will talk with you and how they’ll treat you. People hand out business cards like handshakes here and the titles written on them directly correlate to the pride your employees have in their jobs. Push your company to relax some of the rules where appropriate, especially on titles.
* Develop, develop, develop — especially in the soft skills. The young, bright people in China head to the global organizations with the best training. Tap into your global trainers and build action plans for each member of your team. Take it seriously and your team will spread the word that working at your company is getting them ahead. Focus particularly on the soft skills of leadership and change management — your business and your brand will benefit.
* Spend where you can on the little things. A strategy to outspend to win talent will only work until you are outspent yourself (likely three to six months later) and may only gain you the people willing to trade loyalty for a slight salary bump. Instead, why not offer a taxi allowance for employees, or shared use of the company car for new mothers if they need to get home in a hurry? We’re inspired by Sylvia Ann Hewlett’s upcoming book Winning the War for Talent in Emerging Markets and unleashing the potential of the female workforce in Asia.

Daunted by training, developing, and keeping top local talent, many multinationals choose the immediate path of least resistance. But the potential of a remarkably productive local organization awaits. It’s time to invest and build your organizational equity — today.

What are your experiences with developing local talent in emerging markets such as China? What’s worked? What hasn’t?

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