Leadership Thats Made in China

It seems only logical for Agilent Technologies to apply rigorous metrics to a leader’s capabilities. The Santa Clara, California-based company is, after all, in the business of measurement.

Nowhere is the assessment of leaders more crucial than in China, which accounts for a growing portion of Agilent’s Asia Pacific market. China is poised to surpass the U.S. as Agilent’s chief growth engine during the next decade, says country HR manager Gordon Xing, who is based in Beijing.

There is a caveat, however.

“Without a strong leadership team, we will not be able to outpace market growth. That [realization] is the driving force for us to develop local leaders at a faster pace than ever before,” he says.

Agilent specializes in hardware and software tools that help organizations collect, analyze, interpret and integrate data into a useful system. The equipment is used across a spectrum of industries, including aerospace, electronics, defense, food safety, health care, nanotechnology and telecommunications.

The company operates in 110 countries in Asia, Europe and North America and employs 19,400 people around the world, including 8,500 workers in Asian Pacific Rim countries. Its Chinese workforce is at 1,500 people and counting. In one notable example of its Chinese presence, Agilent is providing a variety of products and services at the 2008 Summer Olympics in Beijing, including drug-testing equipment for athletes.

Like many other large companies, Agilent is looking to China’s booming economy to neutralize the effects of sluggishness in the U.S. Agilent recorded net revenue of $5.4 million in 2007, a 9 percent increase from 2006, according to its annual report in January. Roughly two-thirds of Agilent’s net revenue originates outside the U.S.

To guide its growing cohort of young Chinese professionals, Agilent needs managers who think globally and act locally, Xing says. In particular, they must be able to work across cultures, coach and motivate, identify top performers and recruit for critical positions—all while monitoring changing business conditions in local and global markets.

China-specific leadership training is geared toward improving three critical skills: strategic thinking, financial and business acumen, and “increasing their influential power” through coaching and communications, Xing says.

China’s challenge
Companies with aspirations in China are presented with a mixture of business opportunities and management challenges. On the one hand, growth seems assured. Some economists predict that China will knock the U.S. off its perch as the world’s leading economy during the next half-century.

A study released in June by researchers at Georgia Tech University in Atlanta found that China’s aggressive push to foster scientists and engineers puts it in position to leapfrog the U.S. as the world’s dominant innovator of products and services. Multinational companies, tempted by China’s still relatively cheap labor and an ascending middle class, are staking out territory there.

Despite foreign investment and a population of 1.3 billion people, China faces an acute shortage of managerial talent, according to two other reports.

McKinsey Global Institute predicts that companies in China will need 75,000 business leaders during the next decade. By contrast, McKinsey estimates that only 3,000 to 5,000 people possess the leadership skills needed to succeed in an increasingly complex global economy.

Although technical workers are abundant, homegrown leaders are in especially short supply and hard to retain in China, where managerial turnover is 25 percent greater than the global average, according to a 2007 report by Pittsburgh-based Development Dimensions International and the Society for Human Resources Development.

The survey of 215 global HR and business leaders found that the average multinational firm sees 30 percent to 40 percent of senior managers changing jobs in China every year. Lack of career development is cited as the primary reason.

Labor leader
Agilent is trying to go against that grain, and it has at least one advantage. Although it is less than a decade old, Agilent has a history in China, thanks to the fact that it was once part of computer giant Hewlett-Packard. H-P in 1985 became the first U.S. high-tech company to participate in a joint venture with the Chinese government.

Agilent was spun off from H-P in 1999, going public in a celebrated stock sale that netted $2.1 billion in proceeds.

Being an outgrowth of H-P gave Agilent mature products with market acceptance. More important, Agilent’s learning leaders in Asia—including Xing and James Cheng, the learning and development manager for China— started their careers with H-P.

Their move up the ranks underscores one of the values inherited from H-P.

    “When developing leaders, we definitely look from within first,” going outside only for skills that are “pretty unique and specific,” says Christopher Goh, who directs learning and development for Agilent’s Asia Pacific region. Goh also formerly worked at H-P.

Typical of organizations based in the West, Agilent’s on-the-ground leaders in China primarily gained experience in sales, marketing, engineering or other operational functions.

“Therefore, they know how to drive an order or execute a task, but in general, leaders lack an understanding of P&L issues” and often struggle when trying to coach others, Xing says. Those are skill gaps the company seeks to fill.

In addition to general leadership skills for China, individual business units are encouraged to propose customized leadership training that targets high-potential employees. All training is based on the Agilent Leadership Competency, a framework that is “embedded throughout our HR processes and systems, from onboarding to performance management,” Goh says.

It consists of roughly a dozen character traits that are common to successful leaders. To reinforce those values, core training programs are targeted to each level of leadership, from middle managers to general managers who run business units, Goh says.

For example, managers at all levels shoulder three broad responsibilities, regardless of location: assess and align strategies, mentor their people to grow and develop, and drive results in their respective local markets. The last item is heavily dependent on the first two.

The three dimensions of learning give top leaders a clear view of the organization’s skills, knowledge and areas of need, Goh says.

‘Ready now, ready later’
At Agilent, managers are responsible for employee professional development and craft learning agendas that help workers plot career milestones. They also provide performance support along the way, Xing says.

Aside from technical skills and knowledge, the career development reviews examine an individual’s capacity to assume roles of increased responsibility. Agilent’s most immediate need is to ensure that critical positions are filled by the best available candidates, but the succession plans create a pool of “ready now, ready later” workers to fill out the leadership depth chart, Xing says.

People with managerial potential have a chance to fortify skills gaps and mark their progress through periodic 360-degree assessments, Cheng says.

“Based on that, we fine-tune each learning program to address those areas of needs,” he says.

What Agilent does in China is but one demonstration of its almost obsessive attention to cultivating influential new leaders.

Every three months, all 19,400 employees worldwide are asked to participate in “leadership audits” that define the attributes of successful managers. Questions focus on “behaviors known to drive engagement and accountability,” says Teresa Roche, Agilent’s U.S.-based vice president of global learning and leadership development.

The quarterly audits were instituted shortly after William Sullivan took over as CEO in March 2005. Employees apparently welcome the chance to share their views, with 82 percent participating in the most recent survey, Roche says.

It’s more than merely a feel-good tool for employees, though. The results are compared with normative data compiled by groups such as Corporate Leadership Council and Gallup, she says.

This year, line managers began receiving individualized reports to compare their performance against industry norms as well as Agilent’s top 100 leaders. The reports provide a way “to measure progress and hold our leaders accountable for improvement in areas that we’ve deemed important in a given year,” Roche says.