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Lin, an executive at the Chinese unit of a luxury carmaker, has a problem. During the last decade, the luxury car market in China has grown by 36% a year — and still has plenty of room to grow. But as Lin’s organization grows, he needs more managers capable of leading his fast-growing staff. Unfortunately, he can barely fill the leadership roles within his organization already. His managers often wear multiple hats while they wait for additional managers to be hired. And when Lin can find qualified candidates for managerial jobs, the new hires tend to have good technical skills but weak people skills, decision-making skills and strategic judgment.
Lin has considered formal leadership training, but few training programs in China suit his needs. Available programs are costly and seem mostly targeted toward senior managers. Even if Lin could afford the training for his middle managers, he could not afford the opportunity cost of letting them take the time off for the training sessions.
Lin’s experience is not unique. China’s economy has grown so fast that demand for business leaders now far exceeds supply, and shortages are expected to continue for the rest of the decade. Despite China’s massive population and expanding higher education, Chinese and foreign companies often struggle to recruit enough middle and senior managers to provide the leadership they need to succeed in China’s fast-growing, highly competitive business environment. The leadership gap confronting executives like Lin is compounded by the fact that many experienced Chinese managers — who might otherwise fill leadership positions in fast-growing sectors — gained much of their experience in traditional industries and in a system where management was based on government regulation that suppressed managerial initiative.
One method Lin has considered to fill this gap is leadership self-development. With a self-development program, managers pick up skills through a mix of formal and informal channels, such as learning from a mentor, taking a class, reading a series of specially selected books and articles or undertaking self-reflection on their performance. Self-development programs are cost-efficient, don’t take managers away from their jobs for extended periods of time and can provide leadership skills tailored to a company’s current environment.
This kind of self-directed study has proven to suit Western companies in which individual responsibility is highly valued and emphasized. But will it work in a country like China, where not so long ago employees mostly did as they were told? To find out, we spent three years conducting surveys, focus groups and interviews with more than 500 Chinese managers. Our study participants were drawn from IT, manufacturing, natural resources, legal service, transportation, finance, consulting, aerospace and retail industries across different cities all over China, and from state-owned, foreign-owned and privately owned domestic companies.
We learned that although many managers in China already study independently, a number of factors are holding them back from doing more. Perhaps the biggest is that most Chinese companies still undervalue management training. Before the economy opened up in the 1980s, the country did not need many managers in the free-market sense: Managers at all levels were expected to execute directives and state plans, not develop their own strategic vision and pursue competitive advantage. Many were chosen on the basis of political or military credentials, and the first post-reform training initiatives focused on upgrading their formal qualifications. Only in the 1990s was leadership development introduced into the national policy discussion as a result of increasing exposure to, and collaboration with, Western countries. However, even now, in a volatile and fast-changing business climate, many companies are reluctant to tie up much time and money in training and development.
Some of our interviewees complained that Chinese companies tend to view market competition in terms of “guerrilla warfare,” rather than as a set of long-term strategies to address challenges, which they believe is the practice in Western companies. In an environment where many companies have experienced double-digit growth for years but on razor-thin margins, the narrow margin for error means executives judge every activity by its contribution to the bottom line. Some companies are also reluctant to invest in training out of fear that managers will use their new skills to seek better-paying jobs elsewhere — a not unreasonable concern in an economy where highly skilled managers seeking new jobs may expect up to a 40% increase in salary over their previous positions. Why fund training that will improve managers’ credentials and encourage them to leave even sooner?
But other factors are driving self-development programs. The biggest is perhaps the anxiety and ambition of Chinese managers themselves. In the old state-planned economy, managers were accustomed to what were called the “iron rice bowl” guarantees of job security plus a steady income and benefits, irrespective of their performance or external market forces. Today, by contrast, managers in Chinese businesses feel constant pressure to work long hours and meet high performance expectations. Although their opportunities have multiplied, they also feel more vulnerable. Many believe that they have become commodities to their employers and see their careers as a series of job opportunities and not, as in the past, a slow but steady climb through the ranks of a single organization. Business executives realize that to stay competitive, they can’t wait for their companies’ help but must assume personal responsibility for their own development. Recruiters have told us that one of the most frequent questions from prospective candidates for any position is: What are the training and development opportunities like?
Most Chinese managers see self-development primarily as a way to raise their bargaining power with their employer and their attractiveness to potential employers. This view shapes the kind of learning they seek. More than 80% of managers we interviewed said they were either engaged in or considering self-development involving technical subjects that they believed would have immediate benefits in their current job or an equivalent job in another organization. For example, Chen, a sales manager in the IT industry, was undertaking further sales training in the use of analytical tools that could be employed to anticipate changes in the sales market, identify niche markets, analyze consumer needs and position products in the market. Chen undertook the marketing research course after a series of his colleagues were summarily dismissed when a planned project failed at the bid stage. Similarly, other managers we interviewed commented that they felt a need to self-develop specialized “hard” technical skills that were directly related to their achievements at work.
A smaller proportion of our sample studied to gain “softer” social leadership skills. Although our interviewees considered social skills important as a means to get the job done and achieve performance targets, and many interviewees pointed to the critical work of ren qi and cai qi — accumulating social capital and attracting capital investment, respectively — a smaller proportion actually studied this side of management. Social leadership competencies, such as conflict management or managing, motivating and developing staff were considered to be of lower priority than technical leadership competencies.
Given the pressure to survive the market competition and the lack of well-established career structures, ethical competencies were rarely mentioned by managers as the focus of their self-directed study. When interviewees were asked specifically how much time they allocated to developing ethical leadership competencies, their answers were often vague. Although there may be public pressure after a business scandal to train more businesspeople in ethics, for many of the managers themselves, ethics meant compliance with organizational rules. And, from the company perspective, ethical competencies are hard to develop, elusive to evaluate and seen as not relevant to short-term interests that are dominated by competitive pressures and demands for growth.
One factor that made this attitude particularly worrying to us is that few managers we interviewed had thought about whether continued growth of their market was sustainable. If the economy falters at some point, investor pressure to deliver continued growth — placed on executives that have not received ethics training — could lead many companies into risky situations. And even under conditions of fast growth, the pressure to capture the growth can lead an executive to take shortcuts on quality and reliability that may damage the long-term value of their company’s reputation.
Winning the Talent War in China
This gap between Chinese companies’ unwillingness to invest in training and young managers’ hunger for an opportunity to learn may create an opening for companies with a strong tradition of employee education. A company with a more progressive attitude toward training could differentiate itself in the tight market for talent in China, even without a significant investment, through active, public support of self-development. By encouraging and guiding the efforts that many managers are already undertaking on their own, companies will be able to help their businesses operate at a higher standard and make themselves more attractive to new recruits.
Specifically, companies should:
1. Cultivate awareness of the importance of self-development options through a variety of channels.
For example, engage in frequent and open conversations about self-development options and share information about the latest research findings, technologies and learning resources associated with self-development. Don’t mandate self-development — the voluntary nature of self-development is an important source of motivation — but do encourage it. Our research found that those managers who had a stronger self-image as a leader and believed they were responsible for their own development were more likely to engage in self-development activities. Among Western managers, this idea is self-evident, but in China, one legacy of the pre-reform economy is that some managers are still only beginning to accept responsibility for their own career development. This group needs to be encouraged.
2. Offer new managers self-development opportunities tailored to their situations.
Ask your human resource specialists to be more attentive to the different characteristics and preferences of individual managers during the selection, recruitment and orientation stages to see if they would be good candidates for particular self-development modules. These assessment practices should also be embedded in performance appraisals and performance conversations. Additionally, the HR team should build a portfolio of self-directed activities and promote knowledge of the wide range of self-directed study options available.
3. Look for a technological edge.
Companies should be creative in utilizing new technologies to build self-direction into their organizational culture. For instance, China is now the largest smartphone market in the world, so researchers at the Centre for Ethical Leadership in Parkville, Australia, are proposing the development of smartphone apps as a new platform for learning and research.
4. Design systems and procedures with an awareness of Chinese ways of thinking, learning and doing.
For example, some of our interviewees referred to mian zi (face) to explain their engagement in reflective, self-directed activities. Self-reflection affords managers a sense of privacy and allows them to maintain a capable public image while avoiding embarrassing public displays of ignorance. A range of face-saving and face-giving strategies should be in place to minimize managers’ fears that participating in training might make them look bad in public and to set performance standards that encourage them to learn. These strategies should be tailored to each different company and might, for instance, include avoiding criticism in the presence of peers and subordinates, allowing the review of one’s mistakes in private, and recognizing successful self-directed efforts in public.
5. Give managers choices.
The nature of self-development enables managers to adapt their course of study in a way that best suits their current and future work needs. Companies should encourage self-direction initiatives in a way that promotes individual accountability and responsibility for learning and development, while facilitating knowledge-sharing and the achievement of important company-wide goals.