Frank Gallo is a veteran of human resource issues and China. He is a senior consultant in Beijing with Hewitt Asia Leadership Center and was president of Watson Wyatt Worldwide Inc.'s China operations.
Gallo is also a professor at Beijing Capital University of Economics and Trade and chairs the HR Forum of the American Chamber of Commerce in China.
Plastics News caught up with him recently in his Beijing office to talk about leadership development in China. An edited transcript follows.
Q: China is known for $100-a-month factory labor, but it's also a place with challenges of finding good managers and corporate leaders. You have said the talent gap is greatest in leadership, more so than engineering or finance. Why is it hard to find good corporate leaders and what skills are lacking?
Gallo: There is plenty of technical know-how in China. There are plenty of people who have risen through the ranks in China in the last 10 or 15 years who have experience and are quite good. I think what is lacking in China is, in those 10 or 15 years, there may not have been much in the way of leadership roles.
Once you get into the multinational arena and want to work for someone who understands what it might mean to export materials to another country, and deal across organizational boundaries, not just the local Chinese boundaries - those are the skills that are lacking.
Q: How are successful companies overcoming that gap?
Gallo: Companies are doing it by assessing who has the ability to be a leader in the company. You might bring them into a management development program - managing people, making decisions, time management - very basic management stuff.
Beyond that you start getting into what I would consider true leadership development, where you take people who have the basics in management and have been leading for a while, and you start giving them more specific management opportunities, what I call action learning where we give you a project to work on. Then you get to the highest level, the strategic approach.
Q: How do cultural differences play into this? China has a reputation of being a place that respects seniority and hierarchy.
Gallo: The first thing the leader needs to do is be self-aware. When I first came to China I thought I was very self-aware. I really thought I was not at all ethnocentric; I thought I understood enough about China and what a leader should be and do. I really thought that I was going to hit the ground running.
But you know, I found that things that I had believed for years - for example, that employees should be empowered, that pay for performance was a good thing, that a contract was a binding document, those basic things that a Westerner comes here with - I found in China that I had to modify that.
Q: How did you have to modify that?
Gallo: For example, empowerment. I truly believe in empowering employees, but I also understand how Chinese employees look to their leader to tell them what to do, and that it can be seen as a weakness [if I don't].
Empowerment is important, but you do it in steps. You acknowledge that the Chinese employee is really looking for more direction at first than, perhaps, a Western employee.
I think the first step is to talk to employees about empowerment and say, ``I'd like to empower you, but for the first few months, I'm going to try to be like a Chinese manager and give you directions you're comfortable with.'' I found that my employees were uncomfortable with the gray directions that I gave them.
Q: Is there a chance that a more dictatorial Western leader, who might use tactics frowned upon in the West, might actually work here?
Gallo: Well, yes and no. While employees may appreciate the clear direction, they don't appreciate the sense that this dictator is not getting consensus from others, as a Chinese manager. This is a very subtle difference between Westerners and Chinese. The dictatorial-type person, who is very self-focused and interested in getting things done because they know how to do it, that's not a Chinese manager, either.
I think in my case it's taken me these five or six years to really feel it, to really get it. You need to be here and see it and get the feedback and see how people treat you.
Q: How does the leadership gap affect manufacturing companies, with leaving sales on the table, or inefficiencies?
Gallo: It's not about inefficiencies; the technical know-how is there. A lot of companies will tell you they leave money on the table because they don't have the talent to go out and get it. You go back to the planned economy vs. the market economy. Managers didn't have to do that. That takes a different kind of thinking. That's what companies complain about.
Q: So should people only hire managers who are under 40?
Gallo: Yes, because there aren't any [older candidates].
The whole Cultural Revolution, people my age were working in the fields while I was in college drinking in bars and having a ball, and I have all this experience. There are very few Chinese people who have that. Most of them lost 10-15 years working in the fields and then when they came out they did something else. You have a shortfall of leaders in China who are 45-55 years old, where a lot of the senior managers in America are.