Next Generation of Best Practices

Dr. John Sullivan
JohnS@sfsu.edu

Many in HR proclaim a desire to be more strategic, yet most doom themselves by not acting any differently than everyone else. A clear indication of this can be seen in the speed by which documented best practices are mimicked and improved. Benchmarking has become a common practice in the profession of recruiting, which most organizations use to identify what must be done to emulate those who do something better. Unfortunately, most stop there with emulation, and that may doom them to mediocrity forever.

The business world once moved at a significantly slower pace, a pace that made benchmarking and emulating best practices prudent activities. However, things no longer move so slowly! By the time firms benchmark a best practice today, the situation that warranted the development or implementation of the best practice might have changed or may no longer be present. Instead of systematizing an effort to consistently follow the leader and mimic the soon-to-be-obsolete practices of others, I recommend adopting a proactive approach, one in which you develop your own “next generation” of best practices. I call these “next practices.”

Next practice development isn’t about making something more efficient; instead, it is about a fundamental transformation of the core business activity.

For example, Apple has long been a participant in the computer industry, in which the core best practices are predominately focused on refinement of manufacturing technologies that enable computers to do more. While Apple could have easily jumped on the performance bandwagon, it instead opted to develop next practices in the areas of product packaging and service.

With the introduction of the iMac, Apple demonstrated that computers don’t have to be beige and gray boxes. With the introduction of the iPod and iMusic service, Apple demonstrated that product companies can develop sustainable long-term relationships with consumers. It abandoned efforts to compete on the nature of performance, long a computer-industry challenge, and reinvented the game with best practices that were unique to its business.

Next Practices Help You Create the Future

Best practices only allow you to do what you are currently doing a little better, while next practices increase your organization’s capability to do things that it could never have done before. By jumping a level up to next practices, you’re taking a giant step in that you are actually creating your future recruiting capabilities, rather than relying on the innovation of others.

Examples of Next Practices …If you are not sure of the distinction between best and next practices, here are some examples in several HR areas:

Practice Area: College Recruiting :

• Average practice: Visit the top schools within your state :

• Best practice: Visit the top 10 schools in the US :

• Next practice: Recruit remotely (without having to visit) from the best schools around the world. :

Practice Area: Next Job Hiring

• Average practice: Hire individuals who have the skills that are currently needed by “this manager.”

• Best practice: Hire individuals who have the skills for both this and the next-level-up job (that the individual will likely be promoted to in the next few years).

• Next practice: Hire individuals who can do both this and the next job but also have the capabilities of reskilling rapidly into skill and competency areas that have yet to be identified.

Practice Area: Global Hiring

• Average practice: Hire the best from India and China, and bring them to America.

• Best practice: Hire the best in India and China and then move operations to India and China.

• Next practice: Find the very best performers in every individual country around the world and let them work remotely in their home countries.

Practice Area: Recruiting Metrics

• Average practice: Cost per hire.

• Best practice: Measure quality of hire through performance appraisal scores.

• Next practice: Calculate the actual dollar impact on business results of each key hire.

Practice Area: Corporate Website

Average practice: Post information on it, like it was a paper bulletin board.

Best practice: Also include “sales” elements like streaming video and individual employee profiles.

• Next practice: Provide the capability to morph or mass-customize the information provided to visitors, so that it provides the right tailored information for this individual candidate, based on the background and interest profile he or she provided.

Practice Area: Recruiting Focus and Prioritization

• Average practice: Recruiters respond to all jobs equally.

• Best practice: Prioritize requisitions based on the potential business impact of that position.

• Next practice: In addition, assign recruiters, recruiting budget, and the appropriate sourcing approach, based on the actual success rates of recent hires in this targeted position.

Practice Area: Candidate Assessment

• Average practice: Conduct behavioral interviews with all candidates.

• Best practice: Add an online test as the first screen.

• Next practice: Replace the test with an online video simulation developed for this job, which both excites and more effectively assesses the candidate’s skills, weaknesses, and capabilities.

The Process for Identifying Next Practices

Predicting which HR practices will become obsolete and what will be needed to supplant them in the future is obviously more difficult than merely calling up a great company and asking it what it’s doing now. However, the impacts are significantly greater on the business, so it’s definitely worth the effort.

The first step is to do some reading in the area of business change so that you can learn how to identify precursors to change points. Unfortunately, there are but a few authors who talk about what in business is known as “inflection points,” where everything in a particular product line or industry changes. Start by reading Only the Paranoid Survive by Andy Grove and the current best-seller, The World is Flat. Then, start reading forecasting articles in publications like BusinessWeek, Fortune, The Economist, Business 2.0, Workforce Management, and the McKinsey Quarterly. Individuals who might help you identify upcoming inflection points include individuals in product development, R&D, and strategic planning.

After you identify these inflection points where business will change dramatically, the next step is to identify which practices in recruiting and HR will no longer support the direction of the company post-change.

It’s important to remember there are almost always precursors or warning signs that alert you to upcoming inflection points. These precursors are alerts that recruiting and HR must prepare for change by beginning to develop the appropriate next practice so that HR is adapting its own next practices at the same time and speed as the rest of the business. For example, if product design implemented changes to dramatically reduce time-to-market so that products were introduced once a quarter rather than once a year, workforce allocation models would obviously need to change. Speed of hiring might need to increase to match the firm’s increased speed of product development.

Other approaches you might consider include reading CEO speeches and articles written by key industry thought leaders who have a track record of forecasting inflection points. Look for individuals who think outside the box and are consistently unhappy with current approaches.

The next stage of the process involves setting aside some time to think about the future. This thinking can be stimulated with if–then and what–if exercises that focus on what might soon become obsolete. Part of the process should also be to develop rules that prohibit looking at solutions that can only help you improve by 5-10%. Next-practice thinking, in essence, demands that you reject all solutions that don’t allow you to improve by a quantum amount of, say, 25%. This quantum improvement rate is the key differentiator between best practices and next practices. If you want to make a quantum jump in business or recruiting, you simply must have to have tools and strategies that allow you to make a 25-50% improvement, all within a relatively short period of time. If you are really bold, just assume that every process must improve by, say, 25% (at the same rate of change in your company’s product line) each and every year.

You can also seek out any developing next practices by networking with only the top firms that have been in the forefront of developing previous next practices. Instead of asking about current best practices, ask them what practices they are considering or developing for the future. Of course, they will be reluctant to share future plans, so you’ll need to have done your own thinking and propose a trade of your next practice for theirs. Incidentally, you can’t do this with 99% of the firms in your industry because most firms have never developed a process to begin thinking about next practices.

The final step, if your budget allows, is to consult with out-of-the-box thought leaders to help validate your thinking. Efforts should be made to network with individuals who have demonstrated their ability to accurately predict inflection points and the related next practices in recruiting and HR. Thought leaders like Kevin Wheeler, Michael McNeal, Michael Homula, Dan Hilbert, and even myself come to mind. Sometimes, these individuals can shock your team into thinking ahead.

Conclusion

If you want to become a leader in developing next practices, the first thing you need is courage. Think of all the sea captains who told Columbus he was nuts about his next practice! It takes tremendous courage to constantly argue that your firm’s best practices could ever become obsolete. Another wise move is to commit yourself to becoming an expert in business change, so that you can begin to identify the precursors to business change. Finally, develop a mindset that assumes that every major practice is holding back your firm and the recruiting function. However, if you are satisfied with a 3% rate of change, don’t bother with next-practice thinking. It’s only for those that want to be first every time and to win big!

Any questions?

Dr. John Sullivan (JohnS@sfsu.edu) is a well-known thought leader in HR. He is a frequent speaker and advisor to Fortune 500 and Silicon Valley firms. Formerly the chief talent officer for Agilent Technologies (the 43,000-employee HP spin-off), he is now a professor of management at San Francisco State University. He was called the “Michael Jordan of Hiring” by Fast Company magazine. More recruiting articles by Dr. Sullivan can be found in the ER Daily archives. Information about his numerous other articles, books and manuals about recruiting and HR can be found at www.drjohnsullivan.com. Dr. Sullivan is also the editor of VP of HR, an e-newsletter providing “out of the box” solutions for senior HR managers. Free subscriptions can be obtained on his website.

Source: ERE Networking

CAREER SUCCESS: PERSONAL BRANDING 101

How to meld your name and what you do best
to build recognition and demand for your work.

Scott Hamilton and Ron Wolf
JPA-ALLIGN; 888.857.9722 • scott@allignteam.com

If a shark stops swimming, it sinks. Constant movement is required for these legendary creatures to reign supreme at the top of the marine food chain.

Careers follow a similar pattern. Without movement, it’s all too easy for a career to sink into oblivion. That’s why smart executives are proactive in managing their careers, keeping a sharp watch for new opportunities that will propel them onward and up.

Developing a personal brand is a key component in keeping careers buoyant. Just as a commercial brand differentiates a product from all similar products in the field and makes it memorable to consumers, a personal brand captures for employers your “motivating difference” – what is it that makes you unique.

Executives who embrace personal branding recognize it as the launch pad that will place them in the path of potential employers. Even if you’re satisfied in your current job, consider a personal brand with an eye toward the future. Ideally, you should always be in the position of having to turn down job offers. If the offers aren’t coming in, it may be a sign your career is stagnating.

Experience Is No Longer Enough

A brand is your promise of what makes you different. If you’ve ever had a burger made your way, nibbled on candy that melts in your mouth and not in your hand, or drank a cup of coffee that was good to the last drop, you’ve experienced the power of branding. A powerful personal brand can shape not only how others see you, but even how you perceive yourself.

Think about the words or images that pop to mind when you think of a Steve Jobs, Bill Gates, Carly Fiorina, or Jack Welch. Each brings an indelible stamp of recognition to the table. Boards, shareholders, and employers of today want more than a strong resume—they’re seeking distinction from those they hire.

Look at the people around you. What do you do better than them? What makes you more capable, a better choice to lead a team or a project? If you don’t know the answer, you can guarantee your boss doesn’t either.

5 Steps to Creating Your Personal Brand

To create a branding strategy requires that you know who you are, your talents and core values, and the uniqueness of your history and experience that will add value. Use the steps below to begin the process of finding and forming your personal brand.

1. Identify “Moments of Purpose”

Moments of purpose are those times in your career or personal life when you know you’re doing exactly what you were meant to do. List up to ten “moments of purpose” when you were at the top of your game. What do the moments have in common? What were you doing, who were you with, and what qualities came forth that made you select these specific events as examples of you at your best? The commonalities will point you toward your dominant strengths to be used in your branding strategy.

2. Practice Courageous Canvassing

Others must see your personal brand as authentic and not something made up just to market yourself. You’ll want to interview decision makers and key contacts within your industry and outside it. Solicit input from former employers and co-workers, peers, family, and managers. Prepare a list of questions. Decide ahead of time what insight you’re seeking to gain through the answers. Do you want an honest evaluation of your leadership skills? Feedback on how others see and respond to you? Ask others to list words that best characterize you. (You may want to give them a list with both positive and negative words already listed.)

3. Determine Your Unique Value

While it’s natural to want to present a laundry list of accomplishments, branding is about being specific. People won’t remember a list—they need you to provide them with the one trait or ability that makes you unique. That’s what they’ll cue in on and that’s what they’ll remember.

To assist in determining your unique value, define your target market and competition. What branding tacts are others taking? How do your branding promises stand up compared to theirs? Ask yourself, what is the one thought you would like others to hold about you? This is your “unique value” and is what you’ll integrate into every aspect of your brand dissemination.

4. Integrate Your Brand Into Your Life

To integrate a personal brand into your life, you first need to know where you’re going. What are your career objectives? Where do you see yourself in five years? Ten? Does your personal brand—again, that unique value you bring to the workforce—track with your career goals? If not, what activities can you engage in to realign your brand or are you sure your stated goals are really what you want (and not just what you think you should want)? Once you’re clear on your brand and purpose, integrate your brand into every aspect of your life. This means keeping your brand in the forefront of your mind in everything from the way you dress, to what you say, to the words and phrases you use in an executive bio, profile piece, resume, press release, speech, etc.

5. Commit to the Process

Branding isn’t a one-time event. As your skills and strengths evolve over time, your brand may change as well. Commit to the process and be willing to update and reevaluate what is and isn’t working for you in your brand and in your career.

Branding Examples

One resource to assist you is Why Johnny Can’t Brand: Rediscovering the Lost Art of the Big Idea (Portfolio Hardcover, 2005). Authors and international branding experts Bill Schley & Carl Nichols, Jr. advise building your brand around a single, mesmerizing “motivating difference” that comes to mind when someone speaks your name. Ask yourself what it is about your work and character that stands out from the crowd. The job title—“Senior VP of Marketing” reveals nothing about the person behind the title. Employers want specifics: what’s unique about you that they should care about?

Let’s look at some examples of how a CFO might use a personal brand to position himself/herself in the market:

EXAMPLE 1:

Bill Smith offers over twenty years experience in managing the finances of Fortune 500 companies, including but not limited to, overseeing accounting, budget, tax, and audit activities with a focus on improving cash flow.

Yawn. Bill may be well-qualified, but is there anything there that makes you want to take Bill out to lunch? The text sounds like something lifted off Resumes-R-Us. Now compare with the version below.

EXAMPLE 2:

Sara Jones is the #1 turnaround expert for small to mid-size companies in financial difficulty, specializing in identifying hidden value in assets.

Sara’s brand statement is short, memorable, specific and—most important—it shows how she adds value. If a mid-size company is struggling and looking to restructure, both Bill and Sara have the qualifications to lead them. But what will draw a company’s attention—ten people touting “twenty years experience,” or “the #1 turnaround expert for small to mid-size companies”?

A BRAND New You

Successful brand dissemination comes from buy-in. You may see yourself as a collaborator or visionary but if those around you see if differently, you’ll have a hard time making the brand stick. Drilling down to the core of your branding strategy will involve time, self-examination, accountability, and a solicitation of others’ opinions. All of which takes a commitment to the branding process and a full acceptance of the need to market a personal brand.

Is creating a personal brand worth your time?

Absolutely. A brand that resonates in the minds of others will do more for your career than any other marketing material ever could. Just as successful executives keep an ear close to the ground, listening for new opportunities to keep their careers on track, so too do employers keep a roving eye out for talent to bring on board.

Sink or swim? For those with a personal brand, it’s clear sailing ahead.

Additional questions to ask yourself as you work toward defining your personal brand:

What does my ideal career look like?

What accomplishments am I most proud of?

When am I at my best (“moments of purpose”)?

What do my moments of purpose have in common?

Is my brand unique?
Can I claim a niche where I am #1 and be perceived as credible?

What does my competition do better than me? How do I compensate?

Do I have any stories that show my brand in action?

What word(s) do I want people to think of when they hear my name?

How can I develop ongoing systems for obtaining feedback on my brand?

How and where can I best disseminate my brand? (Papers, speeches, web sites, etc.)

Am I comfortable promoting my brand? (Your brand should be a natural extension of yourself.)

For more information, contact Scott Hamilton, Senior Partner of JPA-ALLIGN
scott@allignteam.com 888.857.9722

HOW GLOBAL MEGATRENDS ARE SHAPING GLOBAL TALENT DEVELOPMENT STRATEGIES

Philip Berry, President
Philip Berry Associates LLC

About the Author
Philip Berry is involved with global management consulting, executive coaching and training specializing in leadership development, global talent development, global diversity, innovation, team building, and corporate social responsibility and employee relations effectiveness. Mr. Berry has extensive global experience, was previously Vice President, Global Workplace Initiatives for Colgate-Palmolive and also worked for Procter & Gamble, Digital Equipment Corporation and IBM.

The world is changing before our very eyes. Increasingly we see that the dynamics in the global marketplace are not the same now as they were 20 years ago. The rate of change is astronomical and 10 years from now, we will be in a completely different world.

The issue is whether organizations will watch change pass them by or will they get on board and ahead of the changes so they will be profitable in the near future. in a completely different world.

In the global economy, companies need to focus on recognizing and developing talent internationally if they want to succeed in today’s diverse marketplace and meet those challenges. in a completely different world.

So what are some of those megatrends that are impacting organizations?

For one the marketplace grows increasingly diverse each year. Communication and technology are causing connections across the globe to be more frequent and dynamic, As economies grow and income levels increase in many emerging markets, the desire for goods and services will increase. The appetites of consumers in every country for products outside of their country borders will continue to increase. Global immigration patterns are also changing the cultural framework of almost every country. It’s more than a matter of having McDonalds in Russia or Paris or Disney in China. Food, clothes and entertainment will be steadily influenced in every country around the world. Several years ago it was the influx of the West that initiated changes. We will steadily see the influence of the East creep into country habits in the same way. This will bring about a new fusion of thought and behavior in many sectors.

While the global economy seemingly makes the world a smaller and more homogenous place, consumers continue to have very different buying patterns from region to region. In addition, customer needs vary along generational lines as their lifestyles and expectations are very different today than they were in previous

As companies adapt to manufacture and market products and services in very different parts of the world, a major challenge is managing human capital to meet these changing needs. Organizations must have a talent management strategy in place that continually assesses whether employees have the ability to address the particular needs of a diverse customer base.

Companies must have a strategy of having people in place that can produce products and services to meet this new stream of thought and expectation. If companies are not providing goods and services which meet and delight the expectations of the new consumer, then they risk profitability and survival. New solutions must be found to present problems. New goods must be produced to meet new needs that will be prevalent.

You can’t meet these new challenges with yesterday’s thinking, programs, processes and competencies. Innovative thinking is required. Companies must renew their talent development efforts to incorporate the capability to meet these new challenges. To meet these challenges, companies must ensure that employees have new capabilities and competencies which must be increasingly cross-cultural in terms of communication and teamwork.

To accomplish this, companies must foster a corporate ethos that centers on developing the skills of promising individuals so that they, and the corporation, can adapt quickly to changes in the workplace, serve the needs of new consumers, develop new products and position themselves in new and different ways.

For a company to truly succeed in today’s global marketplace, it must develop a new way of looking at and developing its human capital. And if a company is to compete in an increasingly diverse marketplace, it must approach these new challenges with a different set of solutions.

A company with a strong tradition of promoting from within its domestic corporate headquarters might miss out on developing talent in subsidiaries or overseas offices. Instead, companies must look to different individuals within the organization who have different perspectives and different ways of performing.

Defining the CORPORATE BRAND Provides a Context for Global Leadership

Before a global talent management plan can be developed, a company must first define its corporate brand, instill a consistent set of values worldwide, and provide a context for global leadership.

A brand is not simply the product a company manufactures or the company name and logo; instead it is the identity, purpose and direction of an organization. It is the beliefs and behaviors that define what the organization is, and what it is not. A company’s brand is particularly important as it influences all of the corporate strategies, products and services strategies, the corporate culture, and the talent management strategy.

Once a company’s corporate identity and accompanying brand are established, the leadership must define its culture and values. These values will determine the character of the organization and will guide decision-making about the company’s future direction. Organizations that allow their culture and values to develop by happenstance may be destined for failure.

Google, Apple, IBM, Colgate Palmolive, General Electric, Procter & Gamble and Pepsico are all examples of great companies that have established values that position them for global leadership in their industries. These companies are well known for the discipline they provide in generating their leaders and their products.

Corporate leaders must proactively determine what types of values the company will have so that they can purposefully recruit, train, mentor and develop employees whose behavior is in line with the corporate culture and values.

To do this, organizations must answer the following questions:

What are the corporate values?

What behaviors count?

What is the true character of the company?

For example, a corporation may identify corporate social responsibility, trust, global teamwork, integrity and diversity as its core values. The behaviors that reflect these values then would be an integral part of their leadership training programs and a primary determinate of their recruiting processes.

Once an organization’s culture and values are defined in a way that supports its brand, leaders must act to ensure that everyone from senior management to those involved in the day-to-day operations understands and embraces them. This requires that management understand and integrate local values while supplementing them with the required competencies and behaviors so that individuals can be successful within the wider organization.

Creating a Talent Management Strategy

Once a corporation has determined its corporate brand, corporate values and behaviors it wants to promote, it must develop a talent management strategy. A good talent management strategy will recognize the skills an individual possesses at that particular moment and provide opportunities so that those skills may enhance both the company and the individual in the future.

For instance, consider a job candidate who is a woman fluent both in French and Arabic, with a marketing background and a work history as a chemist. Then consider the Middle East both as it is today, and how it may be tomorrow. It is probable that women will have a stronger role in the region in the future, and a company can prepare for that by hiring, coaching and training a strong woman who can lead an organization in the region: someone who, like our theoretical candidate, is multilingual and has the technical capabilities to see the whole business because of her joint marketing and R&D background. This kind of foresight and proactive hiring will ensure that a company maintains a global mindset years, and possibly even decades, into the future.

Identifying Future Leaders

The first step in a talent management plan is to identify the future leaders of the company. Today’s corporate leaders should not just look at the present generation for leaders. Identifying employees that exhibit leadership potential for the next two to three generations is crucial to sustaining the organization and making it successful.

It means that as soon as people come in the door, the company must look for leaders and high-potential people. It requires foresight in hiring for leadership and senior positions, not just the job in question. It means taking the approach of hiring people as leaders because they have the potential to direct and function at a high level.

Future leaders of an organization must possess the following five competencies in order to turn raw talent into global success:

1) functional excellence

2) global perspective

3) consumer focus

4) management skills and

5) communication skills.

These competencies must be evaluated when determining who in a global organization should be groomed for senior positions, including how these five competencies are integrated into their everyday work. Mastering these five competencies demonstrates that a company knows that it can’t just generate leadership with good technical skills and functional know how. They need to focus on those aspects of emotional intelligence as well. They need leaders who can inspire others and communicate across gender, age , ethnic and country distinctions. Future leaders must have a world view that appreciates the dynamics of global competition

Providing Diverse Global Experience

Once an organization identifies its potential leaders at hiring, it needs to give them the experience that will enable them to lead the company as it will be five, ten or twenty years in the future. An effective way of doing this is by moving people through different posts in different countries, putting them through common training experiences and providing coaching for them.

This may include lateral assignments to other parts of the world, so they can learn how others within the organization operate in different marketplaces. Then, the individual can be moved back to the original country with an expanded knowledge of how the company operates. As organizations move people of various backgrounds around the world, it’s crucial to ensure that the organization takes their varying perspectives into account in a way that is going to create a competitive advantage.

For instance, a global organization may start a young manager in an Eastern European posting, then move him to a more senior position in a smaller market in a totally different area, such as Latin America, then move him again to a more responsible position in a larger market in another region, and ultimately to a position in a major potential market, such as China.

The career path will provide fast track experience that gives this new leader a wealth of global knowledge. As an aside, this is particularly important with the millennial generation, because they are keen to get these experiences quickly, and if they cannot get them within the current organization, they will move to companies where they can.

If a company does not have the global reach to move people across every continent, it should still look for a way to make sure that promising individuals are placed in positions or assignments where they can get varied experience, even if it’s simply by working with other teams.

In addition to providing diverse experience, a global talent management strategy must also strive for balanced development. For instance, if an individual has experience working in a small subsidiary in a high-growth market, his or her next assignment should be in a large subsidiary or corporate headquarters in a developed market. Similarly, if an employee only has field experience, he or she should be placed in a short term global assignment.

Why is this expanded development important? It is because the world basically consists of developed countries from the standpoint of their economy and marketplace and of those countries that are emerging and seeking to transition their economies and marketplace to a different level. As companies expand to be more globally competitive, they must also build a cadre of leaders that can operate in multiple markets. This increases the flexibility of a company to address consumer needs anywhere around the world.

Providing Challenging Assignments

An essential element of a talent management strategy is to place employees in assignments that test the individual’s abilities. The company should place them in a stretch assignment, or a sequence of stretch assignments, and assess how they perform, react and learn from these positions. Feedback is a crucial element of any talent management plan and helps organizations determine how employees apply lessons learned, in addition to letting them know that the company both appreciates them and is planning for their future.

Career paths must be established for future leaders, and if the organization doesn’t have career paths in place, it should at least be thinking about them, and at a minimum for the “two-steps,” or where the person will be going next. Top talent should be promoted frequently to accelerate their learning, development and contribution and should be placed on a global career path.

A tool that large organizations can employ to test whether or not an individual can work internationally is to place them on part-time or short-term assignments. This should involve discussions about the assignment with the local human resources staff in the new location, because individual local HR people sometimes do not think globally. The individual’s assignment, however, needs to be viewed in a global context, and in terms of the experiences that this individual needs in order to move forward.

Succession Planning at All Levels

Another important consideration in a talent management strategy is succession planning, not just for the top few or even the top twenty positions, but rather for all levels within the organization and in every subsidiary. This helps to ensure that the company is developing talent on a global basis, rather than just moving Americans to different countries and offices.

For example, an organization may be looking for a financial executive experienced with hyperinflation, and so may plan to move a finance manager from Zimbabwe to Romania. After that experience, the company may round out the individual’s skill sets with postings in other countries, such as Turkey, Brazil or Russia. After five to seven years, this individual would then have the skills and experience to be promoted as a financial executive.

This kind of career planning, including diverse experience and challenging assignments, develops the needed leadership competency in individual employees and ultimately benefits the organization. In this way, an organization can develop talent with a wide range of expertise, span of control and depth of knowledge to be its future leaders.

Companies that devote senior management time and commit to a long-term strategy of developing high-performing talent in their organizations will reap the benefits of growth in the markets they serve from developed countries to emerging economies.

SUCCESSION PLANNING

Using Technology

MARLBOROUGH, Mass. (October 14, 2008) — In response to growing market trends, Workscape, Inc. (www.workscape.com), a provider of outsourced benefits and talent management solutions, is introducing its succession planning functionality. The product is designed to help companies retain top performers by identifying qualified successors as high potentials to move up within their respective organization.

Succession planning has historically been reserved for an organization’s highest levels. By utilizing emerging technology applications that allow better assessment of employee skills, performance, and experiences required for critical positions in the company and other relevant data, succession planning now can be used for a much wider, comprehensive role within the organization. Rather than only deciding who’s primed to move up in the executive suite, smart HR organizations are using these new technology-based tools to ensure that succession planning is taking place for valuable employees throughout the organization, not just at the top level. As a result, organizations are ensuring that a strong, talent-laden bench is ready to move into new roles across the enterprise.

Based on a recent survey, many employers are just starting to take advantage of these technologies across the enterprise. The survey, which included 456 employers, found that companies with formal succession planning strategies in place, most (60 percent or higher) have them for C-level, VP level and Director level, but the number drops quickly for Managers (44 percent) and the general workforce (12 percent). More than half (55 percent) report that they have no succession plan at all.

“It’s interesting to note that more than 60 percent of employers use succession planning for the top levels, but when it comes to managers and the general workforce, the numbers drop,” Tony Marzulli, Workscape’s chief marketing officer, observed. “That shows that employers are not implementing their succession planning initiatives on an enterprise level – most likely because they need robust talent management solutions to fully optimize this critical business function.” Marzulli mentioned that he was most alarmed at the 55 percent of respondents who reported not yet having a formal succession planning strategy. “If you don’t have one, you are exposing your organization to a very steep downside,” he warned. “Utilizing a comprehensive talent management platform can help employers keep top performers at all levels within the organization, while lining up qualified successors to replace them so a company stays competitive.”

Workscape’s solution will enable managers to define talent pools for positions and identify successors for individual employees. Sharing the same proven Web-based SaaS platform, the company’s talent management suite provides intuitive tools for establishing the competencies and experiences required to be effective in a critical job and flexible search tools for finding those employees who meet necessary job criteria and experience levels. Employees are also empowered to better manage their careers through easy-to-use, self-service tools that allow them to create, view and update career path objectives, search for new positions within the company and provide gap analyses to identify professional development needs.

NOW GO FOR ORGANIC GROWTH

With economy stalled, companies must equip managers with skills to lead organic growth

Boston MA, October 14, 2008 – Stymied by global economic turmoil that is severely curtailing performance, companies should focus on five critical actions – readily within managers’ control – to motivate their people and meet shareholders’ expectations for growth, according to a research-based white paper by The Forum Corp. (www.forum.com).

The current economic crisis has made organic growth a top priority for most organizations because it is still the most effective way to increase revenues. By contrast, for example, acquisitions, which can yield one-time boosts, are increasingly difficult to execute given the current credit squeeze.

“Our research shows that, very often, companies can’t execute organic growth strategies or sustain them because their leaders don’t focus well enough — or at all — on the few critical actions that influence organic growth. By contrast, companies that successfully execute organic growth strategies have leaders that typically do a great job of focusing on these areas, and enjoy strong financial performance as a result,” said Ed Boswell, CEO of The Forum Corp.

According to Forum’s research, the five actions that companies can pursue to successfully implement their organic growth strategies are:

1) Develop specific leadership skills that are critical to organic growth. These include the abilities to encourage people to challenge the status quo while simultaneously maintaining focus on key current priorities, such as driving profits and managing costs. To lead organic growth, managers and executives must be able to manage these kinds of dilemma.

2) Create a climate for growth. Changing an organization’s climate can be one of the fastest ways to achieve growth because it has a direct impact on motivation, which in turn affects performance. Leaders can manage and change their organization’s climate by focusing on its six measurable dimensions:
clarity,
commitment,
standards,
responsibility,
recognition
and teamwork.

3) Forge a better bond with customers. Companies that successfully execute organic growth strategies learn how to generate additional revenue from existing customers and attract new ones by meeting customers’ unmet needs. One way they do so is by delivering a customer experience that is not only consistent and predictable but also differentiated and value-adding.

4) Increase sales force effectiveness by developing skilled sales managers who can instill a strategic focus among their sales teams, provide in-the-trenches coaching, and create a motivating, high-performance climate.

5) Foster more innovation. Companies that grow organically must do a good job of anticipating customers’ new or unmet needs, which are particularly fertile territory for future offerings that can fuel growth.

“The ability of organizations to take these actions depends on having effective leaders. The good news is that those leadership skills can be learned. Companies that succeed at growing organically know how to develop people throughout the organization who can lead the way to organic growth,” said Boswell.

Forum’s overview on the topic, entitled Executing an Organic Growth Strategy, is the first in a series of 5 white papers that will look at each of the five factors in detail.

To obtain a copy contact news@globalhrnews.com

MidEast Gulf salaries rise by 11.4%

Inflation, Talent shortages
Forecast: pay rises may ease with influx of Western expats following global downturn

Dubai, UAE, October 12, 2008 –-
Private sector salaries in the Gulf region increased at an average rate of 11.4% over the last year, according to figures released by GulfTalent.com, the Middle East’s leading online recruitment firm. GulfTalent.com is the Middle East’s leading online recruitment portal, with a database of over 800,000 professionals, and serves as the primary source of both local and expatriate talent to over 2,000 employers and recruitment agencies across the region.

GulfTalent.com’s study was based on a survey of 29,000 professionals in the six countries of the Gulf Cooperation Council (GCC), as well as interviews with regional business leaders and human resource managers. The survey was conducted between 15-30 September 2008.

Note the basic salary increases by country, over the twelve-month period to August 2008:

UAE, 13.6%
Qatar, 12.7%
Oman, 12.1%
Bahrain, 10.5%
Kuwait, 10.1%
Saudi Arabia, 9.8%

The UAE and Qatar topped the list of pay rises with increases of 13.6% and 12.7% respectively. This was followed by Oman at 12.1%.

Bahrain came fourth at 10.5%. Kuwait and Saudi Arabia once again came at the bottom, with average rises of 10.1% and 9.8% respectively, though still high by historical standards.

All six markets saw pay increases accelerate relative to last year. The majority of these, however, are still below the forecast rates of inflation for 2008, suggesting diminishing net disposable incomes as pay rises fail to keep up with rising cost of living.

A notable exception is Bahrain, where the average salary increase of 10.5% is marginally higher than the 9.0% inflation rate forecast for the country this year.

Across the region, the frantic pace of growth in the construction and energy sectors escalated demand for engineers, who received the biggest average pay rises. This was followed by finance professionals in second place, largely due to the rapid expansion in the banking sector.

Key Factors
According to GulfTalent.com’s study, pay rises were driven by a continued shortage of talent across most sectors, as well as the spiralling cost of living, particularly in residential rents. Following global trends, food prices have also soared this year, helping bring double-digit inflation to virtually all the Gulf states.

Other contributing factors highlighted in the report include large pay hikes awarded to government employees, as well as rising salaries in India, the Gulf’s main source of expatriate professionals.

The weakness of the US currency until a few months ago is cited as another factor driving up wages for much of the year, with several companies introducing formal exchange rate protection in the compensation packages of their expatriates. The pressure has subsided, however, following the sharp rise in the value of the US dollar.

Kuwait appears to have benefited from its decision to unpeg its currency from the US dollar. With the Kuwaiti dinar rising by 8 percent against other Gulf currencies, Kuwaiti salaries have become more attractive for expatriates relative to its neighbours.

Five-day week
According to the report, the region’s ongoing war for talent is forcing employers to adjust, not only their salaries, but also their working practices.

In a major new trend, 2008 has seen a large number of companies with six-day working weeks, including many in construction and retail sectors, switch to shorter five-day weeks in an effort to improve staff retention. The trend is expected to continue towards further consolidation of the five-day week, bringing the region into line with much of the rest of the world.

Another common trend is the emergence of pay disparities between new and existing employees. Several employers surveyed by GulfTalent.com reported offering higher packages to new hires than those received by existing staff in similar roles, as firms struggle to attract talent in a tight market. The disparities are causing significant tension among employees, sometimes leading to further attrition, requiring yet more recruitment at higher pay, the report said.

2009 Outlook
Most human resource managers surveyed by GulfTalent.com reported aggressive recruitment targets over the next 12 months, and the majority expected 2009 salary increases to be similar to those in 2008.

According to GulfTalent.com, this is consistent with the current fundamentals of the economy – with the oil price still at historically high levels, inflation rampant across the region, and salaries in India so far continuing to experience double-digit growth despite the global slowdown.

The study cautioned that beyond the next few months, the upward pressure on pay rises may start to ease – depending on the strength of the US dollar, the depth and severity of the expected downturn in Western markets, and the extent to which the downturn spreads to developing economies, including India.

Given the current economic gloom prevailing in the US and Europe, the report highlighted the possibility of a flood of Western-based professionals to the region, including those of Arab or Muslim origin, on a scale not seen since the post-9/11 influx.

The employers’ ability to benefit from this trend would vary, however, depending on their sector of activity, their location within the region, and the management’s ability to attract and absorb a Western talent pool, the report said.

Global Top 10 Benefit Challenges

* 48-country Global HRs face common challenges
* Need Global Governance
* Employee Benefits: Changing Concept of Retirement; Cost of health and welfare

Mercer

New York, 12 November 2008

Multinational employers may operate in diverse economies around the world, but they face certain common global human resource challenges – chief among them the changing concept of retirement and the continuing rise in the cost of health care, according to a new Mercer survey of benefit programs in 48 countries.

Mercer’s 2008 Introduction to Benefit Plans Around the World: A Guide for Multinational Employers (available online at www.mercer.com/bpaw) helps global companies assess, compare and provide retirement as well as medical and other group benefits to their employees.

Top five retirement challenges/trends

1. The concept of retirement is changing and many will be forced to postpone full retirement.

Many governments are extending the retirement age, as an aging workforce means that the pool of retirees is growing faster than the number of productive workers who contribute to state or private-sector sponsored retirement programs. This will require employers’ programs for older employees to change significantly. Whereas previous cohorts of retirees in high-income countries viewed retirement as a period of leisure, current generations are increasingly expecting some employment in old age.

“The concept of retirement is changing at an unprecedented pace, driven by a number of related trends,” said Giles Archibald, retirement leader of Mercer’s international benefits specialty group. “Falling birth rates and rising life expectancy mean people will need to keep working and retire later, while the shift to defined contribution plans can make it difficult to save adequately for retirement, particularly in challenging financial times.”

2. Defined contribution (DC) plans are becoming the norm.

Many multinationals have explicitly stated a preference for establishing only DC plans in the future. While several countries still have predominantly employer-sponsored defined benefit (DB) plans (South Korea, Philippines, Japan, Canada, Mexico, Belgium, Israel, Netherlands), it is rare for an employer to set up a new one anywhere in the world. Reductions in Social Security benefits and talent wars are raising employee expectations for improved, portable employer-provided benefits, but employers are not rushing to meet this need.

3. As more responsibility for retirement is shifted to the individual, there is a disturbing lack of employee understanding of how to ensure a secure retirement.

With participation optional and contribution level left up to the employee, many employers are finding that individuals contribute less, start contributing late, invest conservatively and retire too soon. Employers need to ensure employees understand their retirement plans through more effective communication.

4. Retirement benefits may be inadequate for many employees.

Unless supplemented by personal savings, many employees are likely to find their benefit plans cannot deliver sufficient retirement income to ensure a comfortable retirement at the age the employee might expect.

5. Global governance is on the rise to ensure compliance and competitiveness in all markets in which a company operates.

There is a pronounced trend toward more global corporate oversight of benefit programs. “We are seeing more companies conduct global benefits inventories and analyses of where the plans are – or are not – in compliance or competitive,” said Mr. Archibald. “This is true of health-related benefits as well.”

Top five health and welfare challenges/trends

1. Rising employee expectations for state-of-the-art health care conflict with private sector concern about the rising costs.

Health care costs continue to outpace inflation in many countries. Aging populations, health risks, new technologies and pharmaceuticals, consumer demand and continuing system inefficiencies are among the driving forces. Exacerbating the situation, governments are trying to shift costs away from state-sponsored plans to the private sector.

“Health and benefit costs are likely to increase due to higher-than-average stress levels and high utilization of discretionary health services by employees who are being laid off,” said Linda Havlin, global leader for health and benefits research. “Compounding those increases will be efforts by insurers to recoup investment losses and improve their profitability.”

2. Workers differ on the value of individual benefits, depending upon their age and personal circumstances.

Flex benefits and total rewards programs are two ways to address these different preferences. Young employees often prefer lifestyle/life event-based benefits, resulting in the rapid growth of flex programs, particularly in emerging markets. Companies continue to emphasize, however, the value of benefits as part of the overall remuneration or “total rewards” package.

3. Lifestyle diseases are on the rise, straining health care budgets.

Some infectious diseases, eliminated in many developed economies, are still realties in the recruitment pools in emerging markets and are re-emerging in some developed economies (e.g. Italy). Chronic/psychological conditions (e.g., diabetes, stress, obesity) also are on the rise. More companies are implementing programs to keep employees well and productive. They are also reconsidering health plans that exclude chronic diseases and implementing measures to control the underlying disease profiles that drive health benefit utilization and cost.

4. Understanding and managing how changing health risks can affect employer liabilities is essential but often overlooked.

Most multinational employers provide health benefits to their employees, but few understand the health risks or the implications for employees and their productivity. Employers also need to better understand the potential liabilities hidden within these benefit promises and programs.

5. Tracking global health benefit costs and ensuring good governance of programs worldwide is a challenge.

“More employers are establishing global guiding principles for the design, placement and management of their employee health and benefit programs,” said Robyn Cameron, health and benefits leader of Mercer’s international benefits specialty group. “Having such policies in place, and processes to support them, can help ensure appropriate decision making and information flows, and an appropriate balance between local-country and global considerations.”

About Mercer
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com .

How Transformational Leadership Inspires Change

Philip A. Berry, President
Philip Berry Associates LLC

About the Author
Philip Berry is involved with global management consulting, executive coaching and training specializing in leadership development, global talent development, global diversity, innovation, team building, and corporate social responsibility and employee relations effectiveness. Mr. Berry has extensive global experience, was previously Vice President, Global Workplace Initiatives for Colgate-Palmolive and also worked for Procter & Gamble, Digital Equipment Corporation and IBM.

The entire world has been caught up in the events leading up to the 2008 United States Presidential election. The selection of Barack Obama as America’s first African American President, and his highly effective campaign, provides us with a prime example of the power of transformational leadership, and the means by which change occurs.

The notion of transformational leadership is not just pertinent, however, to the worlds of politics and the community. It is highly relevant to the corporate world and organizations as well.

While Obama’s ethnicity is obviously noteworthy and is a large part of what makes this election so significant, there is another critically important component of this moment which people have a tendency to ignore. It has to do with the transformation that has taken place in the minds of voters in the US and the hearts of people around the world.

The change that has occurred is a direct result of the President-elect’s ability to inspire change. He didn’t change the people themselves, which would be impossible.

What he did change was the way they see the world and their place in it.

Business leaders operate under similar circumstances because they also must engage employees and inspire them to feel a part of an organization.

Transformational leadership involves more than charisma and emotion. It involves more than giving good speeches and making people feel good.

In his hallmark definition of the term James MacGregor Burns coined the term transformational leadership as “leaders inducing followers to act for certain goals that represent the values and the motivations – the wants and needs, the aspirations and expectations – of both leaders and followers.” [Italics original]

The leader is not merely wielding power, but appealing to the values of the follower.

In this sense, values mean, “A principle, standard, or quality regarded as worthwhile or desirable,” (Webster’s New Riverside University Dictionary).

Burns insists that for leaders to have the greatest impact on the “led,” they must motivate followers to action by appealing to shared values and by satisfying the higher order needs of the led, such as their aspirations and expectations.

He said, “. . . transforming leadership ultimately becomes moral in that it raises the level of human conduct and ethical aspiration of both leader and the led, and thus it has a transforming effect on both.”

Change doesn’t just happen. It needs an impetus. Einstein in his Theory of Relativity applied the laws of physics to matter and we can apply this theory to universal behavior. As force is applied to an object in the direction of motion, the object gains momentum and gains energy.

President-elect Obama was the force for change; he introduced a new direction that would address the needs as he saw it.

In order for the notion of transformational leadership to be relevant, three elements must be present:

1) A Clearly Articulated Vision

2) Statements that Inspire People to Connect;

and 3) A Detailed Plan to Execute.

1) A Clearly Articulated Vision
The history of the world is replete with examples of charismatic leaders who have led their nations and a cause. The names of Mohandas (“Mahatma”) Gandhi, Napoleon Bonaparte Julius Caesar, Mao Tse-tung, Nelson Mandela, Martin Luther King Jr., Winston Churchill and Franklin Delano Roosevelt evoke tremendous feeling. The Industrial Revolution also evokes thoughts regarding the titans of industry like Thomas Edison, Henry Ford, Alexander Graham Bell and JP Morgan who had an incontrovertible and formative impact on that era.

The vision that was articulated by the individuals in these two categories, the ability to inspire people to connect and the plans that were executed to make the vision a reality is indisputable.

In the present, we may not know the names of all of the transformational leaders who are making change in their sector, but it certainly is happening. Apple, Google, Tata Motors, Carrefour, and Toyota, for example, are having an undeniable global impact on our everyday behavior and interaction. Apple’s iPod, for example, has revolutionized the way we think about listening to music, the way we purchase music, the way we share music, and even the way we define our personal space.

The question for business leaders within organizations such as Apple is how to achieve the multiplier effect of this leadership pattern in order to bring about continuous innovation and improvement?

How do we replicate this leadership pattern at the department and team level in order to generate change in every sector of an organization?

How do we grow transformational leaders so they can rise to the positions of influence to positively impact organizational change?

Transformational leadership must occur throughout the organization, not just at the top, in order to bring about the full synergistic effect.

For example, when a CEO articulates the vision of a company, it is up to the global presidents and department vice presidents to execute the vision. But they must also be able to communicate that vision in a way which translates into local or regional needs. People must buy into the vision and relate it to “what’s in it for me.” To the extent that they do this, the overall vision becomes more compelling. This starts the process of aligning the vision and connecting it to local needs and desires.

A clearly articulated vision must have in it the elements which point to a better way for dealing with the present and the future. It must provide a context to address the most pressing issues in a manner which is innovative and compelling.

Innovative because any change strategy needs to outline what will be different from the status quo. It must be compelling because it must be believable. People must feel that this vision will definitely lead to a better way of doing things.

2) Statements that Inspire People to Connect
The most powerful visions also are those which have a few words that are easily understood and restated. This eases the communication process and enables everyone to embrace the vision as their own.

In the 21st century a brief statement is marketing sin qua non. In others words, it is essential to excellent communications.

As transformational leaders seek to communicate their vision using various venues, they begin to appreciate the marketing challenge of disseminating their message out and ensuring comprehension of their message.

In 1964 Marshall McLuhan coined the phrase “The medium is the message” meaning that the form of a medium embeds itself in the message, creating a symbiotic relationship by which the medium influences how the message is perceived, creating subtle change over time. 21st century transformational leaders ignore the medium at their peril.

In order to give a vision the wings it needs to travel, it must Inspire People to Connect. This is when a vision really begins to come alive. It comes alive because people believe that the vision will take them from where they are to where they want to be.

In organizations it means that employees can begin to align to a better way of doing their work; reaching their customers or constituencies; and providing the goods and services which will make them more effective, productive and profitable.

When people connect on a cognitive and emotional level it begins to move them to action. This action contains the seeds for producing change. Einstein stated that “no problem can be solved with the same type of thinking that created it”. Inspiring people with a different message gives them an alternative way to approach their challenges.

It is this connective element that provides the momentum to a vision and gives it longevity.

It is this connective element that enables people to align with each other in a different way to meet their challenges. By connecting with the vision they are also reenergized to act.

When we talk about motivation this is where it begins. People are motivated to act and engage differently because they can connect to something new, innovative and inspiring.

Obama’s incredibly effective “Yes We Can” slogan is a great example of how a simple statement can encompass a lofty inspirational theme, yet still pertain to day to day action. The slogan was simple, inspirational, easy to remember, and resonated on a number of levels regardless of one’s unique personal circumstances. Furthermore, Barack Obama and his team revolutionized the way they used the internet to connect their vision to people. They provided a continuous stream of messages via mobile phone, internet, the web and countless other technological mediums in a personalized manner practically every day for two years! You always felt that the vision was on top of mind and that they were speaking directly to you. Every message had your name on it. You didn’t feel you were part of a mass communication campaign. The messages were simple, informative and compelled you to action.

Corporate transformational leaders need to embrace these same innovative techniques if they are to connect with the workforce of today.

This type of connection or engagement is crucial to attracting and retaining high potential workers.

When workers are fully engaged, a noted Gallup study of Oct 2006 indicates, they are more motivated and more productive. Specifically engaged employees work with passion and have a profound connection to their organization. They drive innovation and move their organization forward.

Unfortunately, not enough attention is paid to how people connect to a vision. They must go through a process of enrolling with the vision so that they feel it is their own.

In essence, a vision connects when people internalize it and say that it is not just someone else’s vision, it is their own. This feeling of ownership is crucial to success.

By implementing goal alignment processes, organizations can involve every department in the effort. Individual departments need to know tactically what their role is in contributing to the greater good. They must feel that this vision will definitely enhance their way of performing and interacting. When they have this ownership, then they are motivated to act in different ways.

This engagement is directly correlated to employee retention as staff will leave an organization when they can’t get their needs met, and they feel that they don’t identify with the way things are done and with the values or vision of the organization. In short, just having a vision statement will not achieve results.

3) A Detailed Plan to Execute
In order to increase the ownership process, one has to move from “what “and “why” to “how”. Transformation falls short when this is not in place. Invariably many great plans fall apart at the connect points.

A critical connecting point is a detailed plan to execute the vision. This begins to complete the circle. It is no surprise that when you have a wonderfully articulated vision, people will then want to see how it works. For many, this is the litmus test of whether the vision is a good one or bad one!

Consequently, transformational leaders must help people understand that their vision is just the starting point. They must articulate the complete process that individuals must go through to make true change a reality.

During the transition period, it is easy for people to get discouraged because the path to a new future can be difficult to see and follow at times. There must be constant communication and education along the way to keep people focused on the goal.

The vision becomes a compass leading people through the turbulent times.

Conclusion

Indeed change can happen in any organization when there are transformational leaders who clearly articulate the vision; inspire people to connect to the vision and detail the plans in order to achieve the vision.

It is this type of leadership that will bring about true innovation, productivity and employee satisfaction as organizations strive to be relevant on a global basis.

The success of the Obama campaign was not magic. It relied on a disciplined approach articulating the vision, inspiring people to connect to it, along with a plan of execution.

This same pattern can be duplicated in the business world on an organization-wide level. And if done correctly, it can yield awesome results from the entry level to the corporate suites. The challenges in front of us demand no less.

Asia-Pac Recruitment…

No Free Lunch in China

Patrick O. Courtois MBA, Principal Consultant; Blog: http://hrshanghai.blogspot.com
Orion China; Tel: +8621 6326 2790 ext 8018; M +86 1340 2170734; Skype: patcourtois76 • patrick.courtois@orionchina.net.cn

SHANGHAI, CHINA, Dec 3rd – Today I am seeing a recurring misconception about the Chinese labor market from overseas-based clients. What’s the effect?

This misunderstanding impacts overseas-designed, provisional staffing budgets and the perceived quality of China-based recruitment agencies. In short, agencies in general are being perceived as attempting to inflate candidate packages with the effect being higher fees. While some rogue agencies do this, one result is a Chinese talent cost trend catching up with international benchmarks.

China is an emerging Dragon; Shanghai, a crouching tiger…

It is very clear that China is an emerging, developing economy and officially, the International Monetary Fund’s World Economic Outlook Report, dated April ‘08 (1), considers that when the measurement criteria, based on statistical indexes, including: income per capita, GDP, literacy rate, and others, are viewed against the enormity of its population. However, we must go deeper and learn some facts.

Shanghai is the economy’s locomotive, along with Beijing, Guangzhou and Shenzhen. Shanghai has the status of “wealthiest” city in China with a GDP per capita above US $7,000 for 2007, however, it’s important to recognize that Shanghai is still far behind major European capitals (2). To give you a clearer picture, Shanghai’s GDP per capita is below Istanbul, Turkey (3) .

Keeping in mind the size of Shanghai’s population having over 15 million souls, you can understand that GDP per capita does not necessary reflect the reality of local white-collars, which are far from being the majority.

Also interesting, Mercer’s 2008 Worldwide Cost of Living survey (4) provides an insight into the rising costs of living in Beijing and Shanghai; both now in the Top 25. But there is a gap in the cost of living between a modern city like Shanghai and other “emerging” Chinese cities. Despite it all, Shanghai can still be considered a “cheap” city, with low business operations-related costs, minimal salaries requirements, and, reasonable living costs which remain well below costs-of-living of similar sized cities in the US or Europe.

The “Made in China” picture of low wages is still relevant today.

Compared to wages in the EU or US, employing local nationals is indeed an affordable option. Looking at Figure 1 comparison of the median US, UK and Chinese total packages (salary + bonus and benefits) on some common positions, the point is made. At first glance, it quickly illustrates the cost-effectiveness of employing local nationals, considering we are talking about the “median” or average population, of course. It quickly demonstrates that employing the “average” local candidate can still be regarded as a cost-effective solution.

If you pay peanuts, you get monkeys…

No offence to anyone in particular, as this applies to pretty much anywhere around the world… But, If you take a closer look at this “average” labor market, as it is the one providing input for most official statistics, surveys and other reports that one can easily find online and, incidentally, the segment on which a lot of people would base a provisional recruitment budget upon, you get a rather interesting picture.

Simply put by a fellow recruitment specialist, “The average employee in China does not speak English, he does not work in a foreign firm, he does not think outside the box, understand western reporting structures, go to a top university, or have a chance of getting hired into your firm…” (5) .

The average candidate has also the shortest retention potential, following a simple logic of job hopping for ever shinier titles and bigger financial packages, thus leaving a city like Shanghai with a dramatic employee turnover at around 18-months and a managerial workforce with somewhat arguable overall managerial skills. If you are the decision maker of one of these multinationals, which are slowly initiating a shift toward management localization by cutting off expatriates’ budget plans, would you really consider handing over the keys to your financial, commercial or product development operations to an average candidate whom, however nice of a person, would most likely fail to properly relate to, understand or even communicate on basic day to day issues?

No money, no honey…

On the other hand, you have the candidates which are at the center of what is now known as the “Talent War” (6) . These are candidates with bilingual English abilities, 5 to 10 years of solid people and projects management experience, strong overseas exposure, the ability to think in a systemic way, whom are fully acquainted with western reporting systems, can deal with foreign clients with the highest level of service quality, have graduated from top Western universities and can leverage on the added-value of their biculturalism.

These are the candidates companies are fighting over for in Shanghai, Beijing or other tier 1 cities, with packages narrowing closer to those in the US or Europe, and sometimes going well beyond.

Figure 2 sheds some light on a more relevant picture of the Shanghai employment market (for top candidates), with key functions such as Finance, HR or Sales clearly aligning themselves on EU/US levels.

This “headhunter’s” dream can quickly turn into an employer’s nightmare, if the latter does not properly understand the realities applying to the local market: An overall talented, self-motivated, creative, and experienced manager is a scarce resource in China, and a 28 years old sales manager making above RMB 1 million (EUR 100,000) is common.

Assignments, completed by our firm (7) , regularly cover positions for Financial Controllers around the RMB 500,000 (EUR 58,000) figure, HRDs in the vicinity of RMB 700,000 (EUR 80,000) and many others, with financial packages often giving a new meaning to the common image of China as the land of cheap labor.

You need to face the facts, if you want to buy yourself the next superstar everyone else wants, you will most likely have to fork out a substantial amount for it, at least, more than your competitors.

Money can’t buy happiness…

…but you can definitely get yourself a top senior HR or Finance candidate, in China, for the right price. Sure, there are no comparisons possible between a Shanghai or Guangdong based factory worker and his counterpart in Europe, the US or Japan. China has and will continue to retain its image of “world’s factory” for years to come, with affordable labor costs and ever increasing quality standards. Nonetheless, good management, talented leaders and high potential profiles come with a high price tag, just like it would, in “Developed” economies.

Companies that will successfully implement localization strategies, in the upcoming years, and leverage on the amazing opportunities this rapidly growing market yields; are the ones currently understanding that quality, experience and skills come at a certain price, in particular in the Chinese economic capital Shanghai is.

A solid and ethical executive search firm, with deep networks, up-to-date market knowledge, and experienced consultants, is therefore a partner of choice to prevent your next hiring from becoming a time bomb, in your company’s development plan, or a pricey mishap that may not look great during your next board meeting.

Patrick O. Courtois is a Principal Consultant at Orion China, a dedicated executive search boutique, based in the heart of Shanghai, China. (www.orionchina.net). Orion China is part of an international executive search network, Glasford International, which is rated as one of the world’s top 20 executive search groups (www.glasford.com) Patrick has extensive management consulting experience in Asia, as well as European markets. With a current focus in executive talent sourcing in Greater China, Patrick engages with multinational clients in professional services, hi-tech communications and industrial manufacturing. Visit Patrick’s HR blog at http://hrshanghai.blogspot.com.

GUANXI: The Art of Building Relationships in China

Sheida Hodge
Hodge International Advisors

Contrary to the title of the best selling book “The World Is Flat”, the terrain of international business is covered with hills and valleys of miscommunication and lackluster business results. Technology has connected us to almost everywhere in the world, but the efficacy of these connections depends greatly on creating a common perspective.

Many companies fail to achieve the objectives of their international business efforts due to ignoring the impact of cultural differences on the process of working and communicating together. The forward-looking companies that recognize the challenges of global communication, and proactively implement solutions, will certainly come out ahead.

China, for an example, with its mammoth economy flourishing from under the shroud of an ancient culture, remains one of the most promising and problematic places to do business. My first business trip to China was in 1986 while working for GE. During my extensive visit, I came away with a wealth of new experiences, and two new words – Nihau (hello), and more importantly Guanxi.

In literal terms, Guanxi means “the art of building relationships.” But for Americans seeking to do business in China, this translation is somewhat misleading. The idea of forced socialization – complete with lavish dinners, gifts, and maybe even an invitation to the US for more socialization – is often perceived as a waste of valuable time by American businesspeople who want to focus on the task at hand: completing projects and making deals.

However, the reality is that a true understanding of the concept behind Guanxi will shorten the process, and will get businesspeople to the goal of successful business results much faster.

Historically, the Chinese legal system fell short on providing recourse for unfair or dishonest business dealings. If your business counterpart didn’t do as they promised, there wasn’t much that could be done about it. Therefore, smart business dealings evolved by doing business with those you knew personally, or those who came from a reputable referral source. It became very important to business success to nurture a network of trustworthy connections. By appreciating these fundamental concepts, westerners can begin to understand why Chinese are so protective of their reputation and are more cautious in dealing with new business partners.

While the concept of Guanxi derives from ancient Chinese history, its basic values still linger today. The heart of Guanxi is building a relationship of trust and credibility. This is not necessarily accomplished by mere socialization, but by communicating substantive information about you and your company – proving to your Chinese counterparts you are a reputable source with which to do business.

Viewed through this lens, Guanxi seems less like a time wasting practice, and more like good common business sense. The key is to understand and supply the right information up front. After seventeen years teaching the ins and outs of international business, I’ve boiled it down to a simply BEST acronym. These four letters represent the basics that prospective partners will want to know about you and your firm:

Brand – your company credentials

Expertise – your qualifications and level of authority

Sincerity – your demonstrated care and commitment

Track Record – your background and connections

Brand.

Their interest in your brand is simple: like most of us in the western world, the Chinese feel more comfortable dealing with large, well-known firms. Smaller start-up companies mean more risk and less comfort. Whether you represent a blue-chip firm or a start-up, be sure to let them know about your organization’s stability and other reputable clients.

Expertise.

This point speaks to you personally. Because authorities and hierarchies have dominated Asian history and culture, it is important for them to be dealing with the correct level at an organization. You can expedite the process by showing off professional credentials and demonstrating that you have the authority to close a deal.

Sincerity.

In western cultures, we tend to think of people as sincere if they’re honest and they say what they mean. In Asia, where the social structure is based more on the group than the individual, this extends beyond clarity and into the realm of having your partner’s best interests in mind. Show that you aren’t just looking out for yourself and you’ll go a long way towards creating value for both sides. Accepting their social invitations, reciprocating, and paying attention to the human side of the equation will demonstrate this point.

Track Record.

Providing references, especially from those in prestigious positions, speaks to the heart of Guanxi and can make prospective partners much more comfortable than they would have been otherwise. If you have happy clients or friends in high places, don’t be afraid to show them off.

In the end, businesspeople around the world want the same things. With a bit of preparation and understanding, you’ll find you don’t need to spend a lot of time engaging in unproductive activities. You just have to build enough trust so both sides can move forward confidently – and that’s great advice in any language.