The days of hardship allowance are passé. For a growing number of MNCs, the most effective way to develop global talent is long-term assignments in countries such as India.
Not so long ago, top-level expat executives in India used to command a hefty hardship allowance — the compensation companies pay for the difference in their executives’ quality of life from their home countries. Transfer to India was considered by many as punishment posting — the way an Indian employee working in a company’s Delhi office would react if he was transferred to Dibrugarh.
Not any longer. An assignment in India and other fast-growing Asian countries is now considered by many global executives as an indispensable factor to fast-track their career. This is particularly so for a growing number of multinationals, over half of whose revenue now comes from developing countries like India. Examples: Unilever and GE India. Also, almost 30 per cent of companies in the 2009 Fortune Global 500 list are now from the Asia-Pacific region.
It’s not a mere coincidence, therefore, that two Hindustan Unilever alumni – Vindi Banga and Harish Manwani — are now on the eight-member Unilever executive team. And GE has taken its legendary Crotonville training facility, a place where thousands of employees have honed their management skills, to hot spots around the world like Bangalore and Shanghai.
Or, take Ravi Uppal, L&T Power MD. Uppal, who was earlier the head of global markets at engineering major ABB, considers his long India stint as something that prepared him for the global platform. When he was the MD of Volvo, Uppal built the luxury commercial vehicle maker’s operations in India from scratch. When he met the Volvo worldwide chairman for manufacturing Volvo buses exclusively for India, the gentleman agreed reluctantly with a warning: If the experiment failed, he would have to resign.
Uppal didn’t need to resign as Volvo became almost a generic name for Indian luxury buses in the country. The unique experience, Uppal says, was invaluable and prepared him for the long road ahead in his career. A leader, in whichever part of the world he is, must also learn to empathise with the customer, Uppal says, giving examples of his experience with truck drivers in India.
More From This Section
What was gratifying for Uppal was the role he played in touching the lives and raising the self-esteem of a forgotten section of society, the truck drivers. Procurement managers first questioned why air-conditioned cabins for trucks were required, but when it was pointed out that looking after drivers well greatly increased productivity, they sat up and took notice. Volvo’s technology and products also greatly hiked productivity in areas like mining and construction.
The India experience comes in handy in other ways, too. The top team members for Essar’s telecom operations in Africa, for example, are all from India. Reason: Africa’s telecom space is now exactly where India’s was five years back. “So the sweat and dust these people had faced in India would be immensely valuable to enhance our rapidly increasing African operations,” says Rajiv Sawhney, CEO of Essar’s telecom business.
These examples are enough to figure out why recent global surveys have found that over a third of global companies now think that longer-term (three years and more) international assignments in countries such as India or serving on international cross-functional teams set up for projects focused on Asian countries is the most effective way to accelerate global talent.
Companies like Sony do it with great effect. As a company that does business in a variety of countries and regions around the world, Sony has recognised the importance of grooming talented employees with leadership potential, as well as an international outlook and appreciation for diverse cultures and working environments. In fiscal year 2008, Sony appointed 13 global talent directors from among its regional human-resources managers.
Global talent directors are charged with identifying promising individuals in all businesses and regions and developing them into future business leaders. To this end, the company launched a job rotation project, under which individuals moved through a schedule of job assignments designed to give them exposure to a variety of businesses and regions.
SpencerStuart, a global consulting leader on leadership issues, says Asia has emerged as an important training ground for global leaders of the future because of the tremendous opportunity the region presents, as well as its complexity and vast diversity. Not only do multinationals require world-class talent in the region, the growing global interconnectedness means that it is more important for global business leaders and even regional leaders in other markets to understand how to do business in Asia.
In its special issue on Asia-Pacific, SpencerStuart says with global business becoming even more complex and challenging, it’s clear that the leadership characteristics cultivated by the most effective executives in Asia Pacific are becoming increasingly essential for all global leaders — wherever they are based.
The first benefit of an exposure to the region is the realisation that Asia is most emphatically not a single market. For example, Japan has a population that is aging rapidly, while the vast majority of the population in India and Vietnam are very young. Local tastes are vastly different, as are levels of spending power.
The second is that a stint in the region helps develop a long-term strategic perspective. In markets such as India and China, it can take many years to establish a sustainable and profitable business, and fully tapping these immense and rapidly growing markets could take much longer. Scott Bayman, the former head of GE India, called his long India stint as a learning experience in patience and persistence.
This is particularly important as the biggest challenge Asian business leaders face is the tyranny of distance — geographically so far removed from the headquarters means that market trends and dependencies are either not understood or, alternately, the assumption is made that something designed for the US market will fit naturally into the needs of the Asian markets, the consulting leader says.
Experience in Asia will also be particularly valuable for the future as the region becomes an even more important source of revenue growth for companies.
Leading executives say that in years past, Western mutinationals mainly viewed Asia as a manufacturing centre or just as a rapidly growing consumer market. But countries such as India and China are also the biggest learning ground for innovativeness — something all global leaders must have.
Agilent Technologies, a leading manufacturer of scientific instruments and test equipment, for example, once served Asia with products developed in the US. Today, 60-70 per cent of the company’s sales occur outside the US.
Or, take Nokia, for example. Meeting the needs of customers in India has meant innovating phones with significantly different features than in the West. The company says ambient noise is much higher in India, requiring louder phones. The speaker has to be better, because using phones to play music is more of a social norm. And the phone must be rugged to endure more wear and tear, and have a stronger backlight to counter the bright tropical sun.
And unlike in the past when these products were manufactured mainly for local markets, a growing number of MNCs are now exporting innovations — making work experience in these countries that much more important for future global leaders.