49

CEO Succession in asia:

A KEY TO LONG-TERM
GROWTH

55
india: Sustaining
growth through
human capital

82
REFLECTIONS on
REDEFINING BUSINESS LEADERSHIP
leadership
Sunny Verghese, Group MD &
CEO of Olam, shares insights.

Issue 01/2011 www.hcli.org

08 | The Business Case

for Human Capital
Asia's transformative economic growth is
challenging companies and governments
to find urgent solutions to skills shortages,
education bottlenecks and building leader-
ship pipelines.

The Business Case for Human Capital 1

 Issue 01/2011 www.hcli.org

CONTENTS

Introduction Leadership in action

From the Editor-in-Chief 4 Seizing Opportunities in a Fluid World 95
Foreword from the Executive Director 6 My Journey From Success to Significance 99
Facts and Figures on Human Capital in Asia 7
The Business Case for Human Capital 8

Leading in Global Asia

Who is Taking Your Business Across Borders? 16
08 Roundtable on the key issues
of human capital in Asia

Strategy to be the "Global Asia" Talent Hub 24

How the World of Work is Changing 28

Leading in BUSINESS
Adapting Organisations for A Volatile World 34
Corporate Leaders: More Different Than Similar 40
Building the Corporate Mosaic 44
Building Effective CEO Succession in Asia 49

Leading PEOPLE
WHEN WE BUILD BUILDINGS
WE BUILD PEOPLE TOO Driving Sustainable Growth in India Through
Human Capital
A Human Capital of Excellence
55
60
71 Are Chinese managers ready for
global corporate leadership?
Isn’t a good building like a good person?
Cultivating Leaders in Asia: The GE Experience 66
With strength of character,
it could weather hardships.
Growing Chinese Managers for Global Leadership 71

When sensible to what’s around, Leading self

It’s in harmony with its environment.
And like a good building, Becoming a Global Leader: Melding the Best of
a good person is sturdy. Dependable. East and West 77
Someone who looks outside himself, Reflections on Leadership 82
to share your joys and hopes. Cultural Intelligence and Your Bottomline 84
HCLI seeks to help organisations accelerate human
At CapitaLand, we see the two as one.
Because you can’t build one without the other. Research Review capital and leadership development in Asia.

Asian Expats in Asia: Neighbours and Strangers 88

All Rights Reserved. No part of this publication
Does Human Capital Really Matter? 91 may be reproduced or transmitted in any form or
by any means, electronic or mechanical, including
photocopy, recording or any information storage
and retrieval system, without written permission.
 RESEARCH REVIEW

If I don’t have a good job, I cannot be happy. I will

not go out to meet my friends, as I will lose face.

01 | A Chinese respondent’s view on work

Asian Expats in Asia: Work is work. Life is Life. It is ok if my salary is not

high – I can still enjoy life with my family.
Neighbours and Strangers An Indonesian respondent’s view on work

usually by cutting wages. Dissatisfac- extremely long hours. And when they Chinese leaders tend to retreat, frus-
tion with poor performance is often fail to meet their targets, they expect to trated at the supposed poor work ethic
In pioneering research on the distinctly different experiences expressed directly through direct con- be punished. Indeed, the ideal Chinese of the Indonesians. Rarely do they
frontation. They are highly directive leader is the polar opposite of the ideal understand that their own “Chinese”
of leadership in China and Indonesia, Hori Tjitra, Hana when dealing with staff whose opinions Indonesian leader. leadership style has demotivated their
Panggabean and Zheng Jiewei explain that it can be as they rarely consult. Indonesians expect their leaders to staff.
By contrast, our data suggest that be “halus” or soft, rather like a domi- While their Indonesian staff of-
challenging for an Asian to adapt to another Asian country Indonesians view work as but one as- nant yet emotionally distant father. ten admire Chinese working values
as it is for an Asian to operate in another continent. pect of their life and are much less Those who behave like the archetypal as “hardworking”, “disciplined” and
task-focused. They are more likely to “strong” Chinese leader are deemed “entrepreneurial”, recognising that
cultivate a comfortable working atmos- “kasar” or rough and are perceived as such attitudes “get the job done”

T he signing of the China-ASEAN

Free Trade Agreement last year
created the third largest free-trade
ures, there are major differences in
work values and leadership expecta-
tions. More significantly, we found
phere. Rather than viewing failure as an
egregious error, they tend to view it as
a “lesson” to be evaluated. Their toler-
weak, uncivilised and uneducated. In-
donesian workers often characterise the
ideal relationship with their managers
they object to their harsh managerial
style. Indeed, Indonesian staff, un-
like Chinese staff, are more likely to
zone and the world’s biggest pool of that failure to understand such dif- ance of mistakes makes them reluctant as being like ‘kekeluargaan’, or fam- rebel against a manager who fails to
consumers. By removing or harmonis- ferences can result in damaged rela- to apply strong sanctions on others. ily, in which there is unconditional ac- meet cultural expectations.
ing economic barriers such as tariffs, tionships and impaired performance. Mild rebukes in the form of “jokes” are ceptance and trust. Highly controlling
trade and investment is expected to more likely to be used to convey dissat- managerial behaviour is viewed as a sign
grow. Anticipating the benefits, former isfaction. They often seek the opinions of mistrust. The importance of good METHODOLOGY
Philippines President Gloria Macapa- Chinese vs of their staff, although their questions relations with immediate supervisors is
gal-Arroyo hailed it as a “formidable Indonesian tend to embody the answer they are typically emphasised by Indonesians.
regional grouping” to rival the Unit- leadership seeking. Still, their staff perceive that This research
Dr Hora Tjitra is ed States and the European Union. they are appreciated and listened to. project adopts
currently Associate Yet our research in China and In- Based on our research, work is of Chinese leaders the “grounded theory”
Professor at Zhejiang
University in applied
donesia shows that trading with fel- central importance to the Chinese. in Indonesia, approach. “Grounded
psychology low Asians is just as culturally chal- Achieving goals or targets is critical Chinese vs Indonesian Theory” emphasises the generation
Dr Hana Panggabean lenging as trading with the West. to career advancement and financial Indonesian leaders in China of theory from data, and generally
is postgraduate
studies Director at
Based on 57 comprehensive inter- reward. Chinese leaders typically set employees adopts a four-step approach
Atma Jaya Indonesia views with Chinese and Indonesian long-term goals and avoid uncertainty In our study, Chinese managers in involving 1) data collection, 2)
Catholic University business leaders and their co-workers, and risks. They tend to work hard, Chinese employees in our sample ex- Indonesia struggle to motivate their data categorisation, 3) grouping of
Zheng Jiewei is
we found striking differences in lead- sacrificing short-term interests for fu- pect their managers to be authoritarian staff and as a result are typically dissat- categories, and 4) theory creation.
Project Manager and
Consultant at Tjitra & ership and communication styles. ture gains. They seldom celebrate small and to possess deep technical mastery. isfied. When they belatedly realise that Increasingly, data analyses software
Associates, China. While both cultures are extremely successes while routinely investigating Like their managers they are strongly emotional outbursts and controlling like “ATLAS.ti” are used to help code
hierarchical, in which employees are failures, meting out tough sanctions output oriented. As long as they feel behaviour undermine their authority, and group data.
prepared to submit to powerful fig- against those deemed to be at fault, fairly compensated, they willingly work

88 Asian Expats in Asia Asian Expats in Asia 89

 RESEARCH REVIEW

If I don’t have a good job, I cannot be happy. I will

not go out to meet my friends, as I will lose face.

01 | A Chinese respondent’s view on work

Asian Expats in Asia: Work is work. Life is Life. It is ok if my salary is not

high – I can still enjoy life with my family.
Neighbours and Strangers An Indonesian respondent’s view on work

usually by cutting wages. Dissatisfac- extremely long hours. And when they Chinese leaders tend to retreat, frus-
tion with poor performance is often fail to meet their targets, they expect to trated at the supposed poor work ethic
In pioneering research on the distinctly different experiences expressed directly through direct con- be punished. Indeed, the ideal Chinese of the Indonesians. Rarely do they
frontation. They are highly directive leader is the polar opposite of the ideal understand that their own “Chinese”
of leadership in China and Indonesia, Hori Tjitra, Hana when dealing with staff whose opinions Indonesian leader. leadership style has demotivated their
Panggabean and Zheng Jiewei explain that it can be as they rarely consult. Indonesians expect their leaders to staff.
By contrast, our data suggest that be “halus” or soft, rather like a domi- While their Indonesian staff of-
challenging for an Asian to adapt to another Asian country Indonesians view work as but one as- nant yet emotionally distant father. ten admire Chinese working values
as it is for an Asian to operate in another continent. pect of their life and are much less Those who behave like the archetypal as “hardworking”, “disciplined” and
task-focused. They are more likely to “strong” Chinese leader are deemed “entrepreneurial”, recognising that
cultivate a comfortable working atmos- “kasar” or rough and are perceived as such attitudes “get the job done”

T he signing of the China-ASEAN

Free Trade Agreement last year
created the third largest free-trade
ures, there are major differences in
work values and leadership expecta-
tions. More significantly, we found
phere. Rather than viewing failure as an
egregious error, they tend to view it as
a “lesson” to be evaluated. Their toler-
weak, uncivilised and uneducated. In-
donesian workers often characterise the
ideal relationship with their managers
they object to their harsh managerial
style. Indeed, Indonesian staff, un-
like Chinese staff, are more likely to
zone and the world’s biggest pool of that failure to understand such dif- ance of mistakes makes them reluctant as being like ‘kekeluargaan’, or fam- rebel against a manager who fails to
consumers. By removing or harmonis- ferences can result in damaged rela- to apply strong sanctions on others. ily, in which there is unconditional ac- meet cultural expectations.
ing economic barriers such as tariffs, tionships and impaired performance. Mild rebukes in the form of “jokes” are ceptance and trust. Highly controlling
trade and investment is expected to more likely to be used to convey dissat- managerial behaviour is viewed as a sign
grow. Anticipating the benefits, former isfaction. They often seek the opinions of mistrust. The importance of good METHODOLOGY
Philippines President Gloria Macapa- Chinese vs of their staff, although their questions relations with immediate supervisors is
gal-Arroyo hailed it as a “formidable Indonesian tend to embody the answer they are typically emphasised by Indonesians.
regional grouping” to rival the Unit- leadership seeking. Still, their staff perceive that This research
Dr Hora Tjitra is ed States and the European Union. they are appreciated and listened to. project adopts
currently Associate Yet our research in China and In- Based on our research, work is of Chinese leaders the “grounded theory”
Professor at Zhejiang
University in applied
donesia shows that trading with fel- central importance to the Chinese. in Indonesia, approach. “Grounded
psychology low Asians is just as culturally chal- Achieving goals or targets is critical Chinese vs Indonesian Theory” emphasises the generation
Dr Hana Panggabean lenging as trading with the West. to career advancement and financial Indonesian leaders in China of theory from data, and generally
is postgraduate
studies Director at
Based on 57 comprehensive inter- reward. Chinese leaders typically set employees adopts a four-step approach
Atma Jaya Indonesia views with Chinese and Indonesian long-term goals and avoid uncertainty In our study, Chinese managers in involving 1) data collection, 2)
Catholic University business leaders and their co-workers, and risks. They tend to work hard, Chinese employees in our sample ex- Indonesia struggle to motivate their data categorisation, 3) grouping of
Zheng Jiewei is
we found striking differences in lead- sacrificing short-term interests for fu- pect their managers to be authoritarian staff and as a result are typically dissat- categories, and 4) theory creation.
Project Manager and
Consultant at Tjitra & ership and communication styles. ture gains. They seldom celebrate small and to possess deep technical mastery. isfied. When they belatedly realise that Increasingly, data analyses software
Associates, China. While both cultures are extremely successes while routinely investigating Like their managers they are strongly emotional outbursts and controlling like “ATLAS.ti” are used to help code
hierarchical, in which employees are failures, meting out tough sanctions output oriented. As long as they feel behaviour undermine their authority, and group data.
prepared to submit to powerful fig- against those deemed to be at fault, fairly compensated, they willingly work

88 Asian Expats in Asia Asian Expats in Asia 89

 RESEARCH REVIEW

They are more inclined to resign from a job,

even if it means unemployment, if they dislike Bridging Differences
the manager. Even when Chinese companies pay
higher salaries than Indonesian companies, Indo- Do not underestimate the cultural challenges of
nesian workers will prefer remaining with their In- Asians operating in other Asian countries. We
donesian employers. As a result, in a nation where may be neighbors, but we - all too often – are
the employees are renowned for their loyalty, Chi- also strangers to each other.
nese leaders often experience the unusual problem
of high staff turnover.
Our interviews suggest that Indonesian
managers in China tend to be facilitative, typi-
•
Leaders should invest in learning the
language of the country in which they
are working.
cally coaching and mentoring their staff. Chinese 
workers typically appreciate this familial and car-
ing managerial style. However, they are even more
appreciative when Indonesian managers try to un-
• It is important to strike the right bal-
ance between authoritarian and par-
ticipative leadership styles. Indonesian
02 |
Chinese leaders operating in Indonesia
leaders might need to become more
decisive and firm while Chinese lead-
ers might focus on increasing the par-
Does Human Capital
need to understand the principle:
“To move fast, you need to start slow”
ticipative domain.
Really Matter?
derstand Chinese regulation and corporate prac-
tices, particularly regarding remuneration.
•
Both sets of leaders need to under-
stand the different values that each
culture places on the nature of work.
Still, Indonesian managers struggle in China The two quotes below illustrate accu-
to win recognition as leaders. They are often per- rately the different views that Chinese It is an age-old question: how much does human capital – the
ceived as ‘soft’ and ‘indecisive’ by Chinese workers, and Indonesians have regarding work: knowledge and skills embodied in employees in an organisation –
due to their facilitative approach, failing to earn -Chinese participant: “If I don’t have
Chinese workers’ respect and trust. Indonesian a good job, I cannot be happy. I will affect that organisation’s performance? The question is important
cautiousness and reluctance to intervene in busi- not go out to meet my friends, as I will because training and retaining employees can be expensive and
ness details is often perceived by Chinese workers lose face.”
as deficient technical expertise. Chinese workers -Indonesian participant: “Work is results may not be apparent for years. Five experts analysed 66
also demand equal treatment, especially regarding work. Life is life. It is ok if my salary is previous studies to find a definitive answer.
pay, and are quick to express their dissatisfaction, not high – I can still enjoy life with my
especially if they perceive that Indonesian staff are family.”
paid more. Such dissatisfaction can undermine a
manager’s credibility.
To bridge the cultural gap, Indonesian manag-
Chinese leaders operating in Indonesia need to
understand the principle: “to move fast, you need I n a recent paper published in the Journal of
Applied Psychology (January, 2011), the au-
thors found that human capital is linked strongly
competing firms to poach them without in-
curring significant cost, the firms with su-
perior managers should outperform others.
ers learned Mandarin prior to arriving in China. to start slow”. It is critical for Chinese leaders to
However, many fail to master the language suf- first build strong relationships with the Indone- to company performance, especially when meas- Over the last 15 years, researchers have empha-
ficiently for daily working situations. As a result, sian employees as that will set the foundation for ured on the operational level and in cases where sised this human factor in developing a resource-
communication is difficult, instructions are not strong results subsequently. employees cannot move easily from company based theory (RBT) of comparative advantage.
fully understood, messages are not conveyed, etc Indonesian leaders operating in China need to to company. Yet empirical evidence so far has not always
This research project
and processes break down. Targets are attained, understand the principle: “to be kind, you must supported the theory.
is supported by
HCLI. The full but not done in the way Indonesian leaders be tough”. It is essential for Indonesian leaders to Mixed messages This may be because most studies take data
report and research
have expected. For instance, an Indonesian vice be seen as strong and results-focused. This will from one point in time when truly unique
findings are available
at HCLI's website. president working in the chemical industry said help win the respect and good-will of their Chi- According to conventional wisdom, be- and valuable skills tend to develop over time.
he struggled to make his workers comply with nese employees. cause superior managers are often in short Another reason may be that employees
health and safety procedures. supply, and because it can be difficult for with general skills – stockbrokers, for ex-
ample - can job-hop until their costs have

90 Asian Expats in Asia Does Human Capital Really Matter? 91