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As China Evolves, Are Its Leaders Evolving, Too?

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Thu Mar 31 2016

As China Evolves, Are Its Leaders Evolving, Too?
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China has long been one of the world’s fastest-growing economies. But as China’s economy matures, both top- and bottom-line growth have slowed, reshaping expectations and shifting the importance of different industry sectors.

This is driving three key trends:

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  1. The surge of service industries within China’s economic base, while manufacturing continues a steady decline.  

  2. Recognition that global diversification is necessary for sustainable growth, driving expansion outside of China.  

  3. Rapid emergence of younger leaders with new expectations, dramatically reframing the composition, value sets, and expectations of tomorrow’s workforce.

As part of a recent research study, DDI explored its assessment database of more than 15,000 candidates, hailing from more than 300 organizations and spanning 20 industries, 18 countries, and five leadership levels, from the front line to the C-suite. DDI took a special look at China’s leaders. We considered the collective orientation of midlevel through C-suite Chinese leader candidates to step up to new paradigms in light of personality characteristics aligned to the three trends mentioned above. Here’s what we found.

The new generation of Chinese leaders is markedly different from the old guard. Emerging Chinese midlevel and operational leaders exhibit personality profiles that differ notably from incumbent executives. To some extent this reflects the natural ascension of leaders with facilitating traits, such as learning orientation. However, there are consequential differences.

Midlevel leaders are more analytical and prudent, helping them anticipate and avoid business land mines. Yet, they fall behind on growth enablers such as ambition and strategic orientation and are more vulnerable to conflict avoidance and overconfidence. These patterns may be rooted in cultural legacies of hierarchical authority structures and decision making.

Chinese leaders are much lower than their global peers in interpersonal sensitivity. This presents a challenge, because global expansion heightens the need to listen to diverse perspectives and share feelings to build trust.

What’s more, service sector growth relies on stronger empathy and expressions of appreciation. Given Chinese leaders’ deficiency in interpersonal sensitivity when compared with leaders elsewhere, they may not be able to build essential strong relationships. They may be less likely to seek input and recognize contributions, leaving employees feeling misunderstood or customers undervalued. Left unchecked, these blind spots can limit cross-cultural engagement and partnerships.

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Their leadership style is out of step with younger workers. Chinese leaders are notably high in prudence, contributing to strength in driving execution. On the other hand, they exhibit a tendency toward arrogance and insensitivity. These patterns can produce a more-directive, less-seeking coaching style, which may prove unpalatable to Millennial associates.

They’re a risk to derail. Derailers are those personality traits that can impede a leader’s ability to succeed as she transitions to a higher organizational level. These include traits such as volatility, perfectionism, arrogance, or risk aversion. They become vulnerabilities as leaders transition to the expectations, exposure, and scrutiny associated with increased presence on a global stage. Chinese leaders exhibit significantly greater derailment risk than global peers in the six factors on the graphic shown below.

INSERT IMAGE: DDI\_ChinaStudy\_2016

So what can Chinese organizations do to ensure that their leaders are aligned with the awaiting future? We recommend the following:

  • Flatten out. Given the natural selection of more-prudent next-generation leaders, China-based companies might want to shift to flatter organizational structures. These structures encourage agile, empowered decision approaches that would be best for cross-border entrepreneurial pursuits. Hierarchical decision-making legacies will be hard to displace without systemic structural intervention.

  • Adjust the leadership EQ. Focus on selecting future leaders who are motivated to sharpen their cultural emotional intelligence (EQ) and interpersonal sensitivity. The next generation will need to be able to think globally and act globally regarding collaboration, influence, and talent development.

  • Develop the skills leaders need right now. Shore up evergreen interpersonal fundamentals for both incumbent and emerging leaders, particularly in trust-building essentials such as demonstrating empathy and recognizing and disclosing personal thoughts, feelings, and rationale. These highly developable skills will help optimize relationships both within and across organizational, generational, and functional boundaries.

  • Raise awareness about derailers. Multinational corporations and indigenous organizations should help their leaders identify their personal derailment risks and build self-management techniques. When they become more acutely aware of their own tendencies, leaders can anticipate and avoid personal derailment triggers.

  • Adjust for the younger generation. Create a sense of urgency for new coaching and development paradigms for emerging talent. Chinese organizations can capitalize on talent through flexible approaches to coaching, developing, and motivating young talent, especially Millennials. Training Chinese leaders in less-directive coaching practices, such as leveraging provocative inquiry, also may help.

As China, like the rest of the world, looks to the next horizon, it can’t expect the economic success that has defined the past few decades to continue indefinitely without a change in course. That change in course has to begin with Chinese leaders.

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To download the study, go to www.ddiworld.com/hirezleadership.

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