Our workshops on effective communication and collaboration across cultures explore the differences between Asia and the West and how these differences impact companies. In a recent article, we discussed different ways for developing gender neutral leadership. This article explores why most Western MNCs lack Asian leaders and how companies can create more diverse and inclusive leadership.
- The problem – low Asian representation in Asian and Global Leadership teams of Western MNCs
Recent studies show that the percentage of Asians in Executive Leadership Teams (“ELTS”) of the top 200 global companies is low. In U.S. companies, only 8% of ELTS are Asian, this number is even lower at 2% in European organisations. It is interesting to note that the single biggest group of Asian leaders are of Indian origin (see graph below)[i].
Source: CCL Research, 2018
The data clearly indicates that more work needs to be done to promote cultural diversity in global MNCs. Let’s consider the reasons for this lack of diversity:
Why do we have fewer Asians? Possible reasons
As the CCL research[ii] also suggests, we need to look at different levels: Country, organisational and individual.
Country: Development opportunities for talent may vary significantly. This could mean various levels of education, political environment, government policies or cultural norms that don’t support labour mobility as well as the lack of companies present with adequate resources.
Organisational: Lack of resources, structural and policy issues can certainly be important factors, but headquarters’ and the senior leadership’s general lack of global mindset and trust in non-native talent may perhaps play an even bigger role.
Individual: The expectations of a ‘Western MNC culture’ and the perceptions/biases on both sides may put an Asian leader at a comparative disadvantage. Asian people in general also have more family obligations (due to cultural expectations as well as at times larger, extended families) which makes international moves that are often a requirement for senior level positions more challenging.
Why do we have so many expatriates? Possible reasons
Subconscious (and Conscious) Affinity Bias[iii]: Many Western MNCs employ expatriates in hiring positions and the recruiting firms also often pair up these managers with their expatriate employees.
Affinity bias suggests that we employ and promote people who are similar to us in some way, e.g. having a similar background.
Networks: Expats may have more extensive social networks to get to know about job opportunities or simply to get things done.
Company culture: Many companies’ governance structure, mission and value statements reflect the norms of the headquarters’ country culture. Western expats may ‘fit’ this culture better and you also need expatriates to spread and support the organisational culture’s expectations and norms.
- Why does this matter?
Diversity is good for business. McKinsey’s research[iv] indicates that “companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. In addition, overall, companies in the bottom quartile for both gender and ethnic/ cultural diversity were 29% less likely to achieve above-average profitability”. Thus companies do not just benefit from diverse leadership, they are also penalised for the lack of it.
Asia – An area of growth. We cannot and should not underestimate the importance of Asia in terms of economic growth, population and potential workforce size. Companies who do not adapt their strategies to support Asian leaders with their unique knowledge and perspectives are likely to fall behind.
A mix of balanced global and local mindsets is needed. Expatriate assignments, international short-term projects, virtual teams are all providing an opportunity for widening one’s horizon, a more in-depth understanding of the customers, clients, suppliers, etc. in different parts of the world. The development of a global mindset is crucial for individual leaders as well as whole organisations. At the same time companies need localised knowledge to address the markets’ specific needs. It’s safe to assume that an Asian local leader is most likely better equipped to do this than a foreigner.
- Cultural differences
As we consider the clear benefits of having more Asian leaders, it is important to note the cultural nuances and dimensions that differentiate Asians from Westerners and may impact how Westerners view Asian leaders.
In general Asians are usually more indirect with respect to their communication style, have a strong sense of hierarchy, prioritise relationship building over task execution and are more comfortable with silence. This might mean that they do not often speak up in meetings or conversations with more senior colleagues and may be misunderstood by their more direct counterparts.[v] Often, in Western MNCs the definition of leadership is based on the Western model of leadership; a model that may not fit most Asian leaders.
A comprehensive understanding of these differences is therefore essential for creating inclusive leadership teams, company cultures and a space for Asian leaders.
- Next steps
For Companies: How can you develop your Asian leadership pipeline
- Embark on a culture change: Commit to creating more balanced leadership teams, set targets, require succession planning involving local successors, etc.
- Ensure that locals are key stakeholders in recruitment and promotion decisions.
- Design and deliver development programs to advance local talent (workshops, mentoring, coaching, etc.).
- Promote cross cultural competence and awareness for all.
- Raise awareness and manage subconscious biases amongst diverse groups.
For Individuals: How to advance your career
- Know who you are, be that person but also be able and willing to adapt your behaviour and communication styles depending on the situation and the persons you are interacting with.
- Tell people what you want, i.e. if you would like to be on a project, get a promotion, etc. – say it explicitly to your manager or the relevant decision maker.
- Be excellent at what you do, keep learning.
- Develop communication skills across cultures.
- Learn how to engage and influence senior leaders.
- Build your internal and external network with diverse people in it, focus on those who can have an influence on your career.
As we mentioned in our previous article on gender, it is now more crucial than ever to build inclusive organisations that are ready to face the challenges in this new, uncertain and increasingly virtual world. Diversity of thought is key to creating resilient organisations and it is time to actively work towards filling the Asian leadership gap.