Executive Chairman, Asia Pacific
This Week in Leadership (Nov 29 - Dec 5)
Questions—and answers—about the Omicron variant's impact on organizations. Plus, critical year-end moves to boost your career.
In a shifting economy and corporate world, agility has become a key predictor of success—yet studies show only a fraction of the global workforce is considered highly agile. In this regular column, Michael Distefano, Korn Ferry’s chief marketing officer and chief operating officer, Asia Pacific, explores the concept of agility: who has it, who doesn’t, and what companies can do to mold it.
Chinese Foreign Minister Wang Yi, speaking at the recent UN General Assembly, said the world is at a crossroads and that it is time for nations to choose “between isolation and cooperation.” His own nation, in his view, had made great strides as a champion of globalization and diplomacy among nations. All of which is true—except in one area where his country still remains isolated: the senior leadership ranks of non-Chinese companies.
Certainly, the oddity hasn’t gone unnoticed. Following the naming of Satya Nadella as CEO of Microsoft in 2014 and Sundar Pichai as CEO of Google a year later, a thousand think pieces were spawned about why India has been more successful than China at exporting CEOs. According to one analysis in the Harvard Business Review of CEOs in the Fortune Global 500, as of mid-2013 there were no Chinese CEOs of companies headquartered outside of China. It's not for lack of opportunities either, as CEO turnover has increased in most parts of the world. Among the reasons cited for China’s lack of CEO exports were: more opportunities and higher salaries at home, lack of international experience, a lack of top talent overall, and a rigid business culture that lacks transparency.
But the world changes quickly these days, and the pace of globalization has swung the pendulum in the other direction. Over the last decade, when GDP growth was robust, Chinese organizations were throwing money at senior executives and top talent to keep them from leaving, with the average annual pay for senior executives rising 9 percent to just over 1 million yuan (about $146,000) last year. As GDP growth ratchets down from a peak of 10 percent in 2010 to a forecast of below 6 percent by 2020, the less tenable it will become for organizations to keep paying higher and higher salaries to retain top talent.
The next generation of Chinese leaders also understands that, in an increasingly globalized world, staying tied to the mainland is now considered a potential hindrance to career development. That’s why there has been a fivefold increase in the number of Chinese students studying abroad since 2000, reaching nearly 320,000 students in 2014. It’s no coincidence that the growth of Chinese students studying abroad dovetails with the increasing flow of Chinese investment dollars into businesses in the UK, the US, and elsewhere. Instead of studying or working overseas for a few years and then going back to China, as has been the historical trend, Chinese students and workers realize that globalization is creating more opportunities and the potential for higher pay abroad than back home.
Moreover, millennials in China are just like millennials everywhere else, which is to say their views on the purpose and meaning of work diverges significantly from older generations. Indeed, our own recent study at the Korn Ferry Institute showed that views of senior management were farther out of sync at employers in the Asia Pacific (APAC) than any other region in several key categories. Only a third of APAC employees surveyed were highly engaged in their work, and open communication from senior management is not as common as it is in other parts of the world.
The idea of a CEO who hails from one country leading an organization based in another is still relatively novel—this scenario occurs in only 13% of the Fortune Global 500 companies. But given the strained trade relations between China and the US under the current administration, a CEO who can navigate the diplomatic and cultural divide between the two countries would be a major asset for any multinational conglomerate. So, in my book, the forces are there—from demographic to political—to make it inevitable for a non-Chinese company to name a Chinese CEO … it’s a matter of when not if.