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


WHEN WE BUILD BUILDINGS
WE BUILD PEOPLE TOO
Isn’t a good building like a good person?
With strength of character,
it could weather hardships.
When sensible to what’s around,
It’s in harmony with its environment.
And like a good building,
a good person is sturdy. Dependable.
Someone who looks outside himself,
to share your joys and hopes.
At CapitaLand, we see the two as one.
Because you can’t build one without the other.
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
Driving Sustainable Growth in India Through
Human Capital
A Human Capital of Excellence
55
60
71 Are Chinese managers ready for
global corporate leadership?
Cultivating Leaders in Asia: The GE Experience 66
Growing Chinese Managers for Global Leadership 71
Leading self
Becoming a Global Leader: Melding the Best of
East and West 77
Reflections on Leadership 82
Cultural Intelligence and Your Bottomline 84
HCLI seeks to help organisations accelerate human
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-
tion with poor performance is often
In pioneering research on the distinctly different experiences expressed directly through direct con-
frontation. They are highly directive
of leadership in China and Indonesia, Hori Tjitra, Hana when dealing with staff whose opinions
Panggabean and Zheng Jiewei explain that it can be as they rarely consult.
By contrast, our data suggest that
challenging for an Asian to adapt to another Asian country Indonesians view work as but one as-
as it is for an Asian to operate in another continent. pect of their life and are much less
task-focused. They are more likely to
cultivate a comfortable working atmos-
extremely long hours. And when they
fail to meet their targets, they expect to
be punished. Indeed, the ideal Chinese
leader is the polar opposite of the ideal
Indonesian leader.
Indonesians expect their leaders to
be “halus” or soft, rather like a domi-
nant yet emotionally distant father.
Those who behave like the archetypal
“strong” Chinese leader are deemed
“kasar” or rough and are perceived as
Chinese leaders tend to retreat, frus-
trated at the supposed poor work ethic
of the Indonesians. Rarely do they
understand that their own “Chinese”
leadership style has demotivated their
staff.
While their Indonesian staff of-
ten admire Chinese working values
as “hardworking”, “disciplined” and
“entrepreneurial”, recognising that
such attitudes “get the job done”

T he signing of the China-ASEAN

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

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

T he signing of the China-ASEAN

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

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
the manager. Even when Chinese companies pay
higher salaries than Indonesian companies, Indo-
nesian workers will prefer remaining with their In-
donesian employers. As a result, in a nation where
the employees are renowned for their loyalty, Chi-
nese leaders often experience the unusual problem
of high staff turnover.
Our interviews suggest that Indonesian
managers in China tend to be facilitative, typi-
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-
Chinese leaders operating in Indonesia
need to understand the principle:
“To move fast, you need to start slow”
derstand Chinese regulation and corporate prac-
tices, particularly regarding remuneration.
Still, Indonesian managers struggle in China
to win recognition as leaders. They are often per-
ceived as ‘soft’ and ‘indecisive’ by Chinese workers,
due to their facilitative approach, failing to earn
Chinese workers’ respect and trust. Indonesian
cautiousness and reluctance to intervene in busi-
ness details is often perceived by Chinese workers
as deficient technical expertise. Chinese workers
also demand equal treatment, especially regarding
pay, and are quick to express their dissatisfaction,
especially if they perceive that Indonesian staff are
paid more. Such dissatisfaction can undermine a
manager’s credibility.
To bridge the cultural gap, Indonesian manag-
ers learned Mandarin prior to arriving in China.
However, many fail to master the language suf-
ficiently for daily working situations. As a result,
communication is difficult, instructions are not
fully understood, messages are not conveyed, etc
This research project
and processes break down. Targets are attained,
is supported by
HCLI. The full but not done in the way Indonesian leaders
report and research
have expected. For instance, an Indonesian vice
findings are available
at HCLI's website. president working in the chemical industry said
he struggled to make his workers comply with
health and safety procedures.
90 Asian Expats in Asia
Bridging Differences
Do not underestimate the cultural challenges of
Asians operating in other Asian countries. We
may be neighbors, but we - all too often – are
also strangers to each other.
•
Leaders should invest in learning the
language of the country in which they
are working.

• It is important to strike the right bal-
ance between authoritarian and par-
ticipative leadership styles. Indonesian
02 |
leaders might need to become more
decisive and firm while Chinese lead-
ers might focus on increasing the par-
Does Human Capital
ticipative domain.
Really Matter?
•
Both sets of leaders need to under-
stand the different values that each
culture places on the nature of work.
The two quotes below illustrate accu-
rately the different views that Chinese It is an age-old question: how much does human capital – the
and Indonesians have regarding work: knowledge and skills embodied in employees in an organisation –
-Chinese participant: “If I don’t have
a good job, I cannot be happy. I will affect that organisation’s performance? The question is important
not go out to meet my friends, as I will because training and retaining employees can be expensive and
lose face.”
-Indonesian participant: “Work is results may not be apparent for years. Five experts analysed 66
work. Life is life. It is ok if my salary is previous studies to find a definitive answer.
not high – I can still enjoy life with my
family.”
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.
to start slow”. It is critical for Chinese leaders to
first build strong relationships with the Indone- to company performance, especially when meas- Over the last 15 years, researchers have empha-
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-
strong results subsequently. employees cannot move easily from company based theory (RBT) of comparative advantage.
Indonesian leaders operating in China need to to company. Yet empirical evidence so far has not always
understand the principle: “to be kind, you must supported the theory.
be tough”. It is essential for Indonesian leaders to Mixed messages This may be because most studies take data
be seen as strong and results-focused. This will from one point in time when truly unique
help win the respect and good-will of their Chi- According to conventional wisdom, be- and valuable skills tend to develop over time.
nese employees. cause superior managers are often in short Another reason may be that employees
supply, and because it can be difficult for with general skills – stockbrokers, for ex-
ample - can job-hop until their costs have
Does Human Capital Really Matter? 91