Asia-Pacific looks to home-grown talent

Apr 16 2006 by Brian Amble Print This Article

Companies based in the Asia-Pacific region are increasingly looking to develop home-grown executive talent rather than relying on expatriates brought in from other areas of the world.

Of the 55 Asia-Pacific organisations surveyed for a report by The Conference Board, almost eight out of 10 are seeking to accelerate their talent development programmes.

Meanwhile, despite making cuts in many non-operational budget areas, almost half of these organisations are maintaining or increasing the financial resources they make available for leadership development initiatives.

According to the report, firms in Asia-Pacific believe that home-grown executives can have a greater impact on company performance than expatriates and do not cost the company nearly as much.

"One reason for reducing expatriates and international assignees is based on the premise that in the lifecycle of most businesses, the localisation of leadership has a positive impact on performance," says Andrew N. Bell, Program Director for the Asia-Pacific HR Council and author of the report.

"This positive impact results from a range of factors in which local leadership is more likely to have a deeper understanding and familiarity with the needs and expectations of local consumers and clients, local business infrastructure such as distribution channels and external relations, including with the government and media.

"Also, language may be a critical factor. An inability to work in the local language can be a serious impediment in some aspects of business operations."

Another factor in the reduction of expatriate numbers is the cost of their assignments. Expatriates receiving salary supplements and additional benefits, such as home leave, school tuition and a housing subsidy, can cost the business at least double what a local executive would cost.

But companies looking to develop local talent face a number of challenges.

Firstly, the supply of local leaders is seriously limited, creating severe competition for talent. For example, Shanghai and Bangalore have turnover rates in some sectors that reach greater than 40 per cent per year.

As a result, salary inflation is also significant. Absolute salary levels for some talented executives in Shanghai are equal to or greater than their counterparts in Singapore or London.

Secondly, during initial investments or expansion in a new market, it is essential for many organisations to import leadership competence and technical expertise into Asia-Pacific. The first wave of imported leadership capability normally is followed by a phased reduction, as locals are trained and developed as successors. This process often takes longer than planned.

Other barriers to developing leaders in Asia-Pacific mentioned by companies include the capabilities of HR professionals in some locations; mismatches between location of talent and business opportunities; preservation of established company cultures, networks, and behaviours; low mobility within region for some; and competition for talent leading to high turnover and escalating salaries.