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Finding the right team to meet the challenges of business in China is vital to success

The race is on in China. As World Trade Organisation guidelines are implemented in stages, companies are rushing to  capture market share before hoards of competitors move in.

One major hurdle faces them, however. Where are the managers to drive the expansion? It is all very well building new plants and factories, but who will run them?

'It's a challenge facing a lot of businesses in China today,' says Anthony Mak,  general manager for  the mainland and Hong Kong at DDI Asia-Pacific International. 'They know they have to expand, but can't do it because they  don't have enough capable people to support the expansion.'

This can be dangerous, he  says, not least since 'if someone can't buy from you, they will buy from someone else - a competitor'.

Expansion and acquisition, he says, are 'the biggest challenges on the mainland these days, and if a company is not fast enough it will lose out'.

Of course, there is always the option of headhunting managers for new operations. But, from research, Mr Mak notes a high failure rate. About half of  the chief executives and managers fail to last more than 18 months - so the revolving door process begins again.

'People from outside often have a problem understanding a company's culture,' he  says. 'Often it is much better to develop talent from within. Managers who are groomed do not face the same problems.'

The solution, he says, is to implement effective succession management - which is DDI's speciality.

'Sometimes you need to bring in someone new to stimulate a company, but there is always a risk,' he says.

It is therefore critical to think ahead and plan succession early. 'It's too late if you are investing this year and expect to have 20 managers next year.'

What DDI advises companies to do is not to single out just one possible successor, who may in any event move on but to identify a group of potential managers early - and channel them into 'acceleration pools'.

In other words, groom a crew for the top by exposing them to various aspects of the operation and fast-tracking their corporate development, 'so when you need 20 or 30 managers in three or four years, they are ready'.

It is not a case of preparing a successor for a position, he stresses, but of grooming a talented corps for a higher level of management.

Selecting a talent corps for senior management is another matter.

'The choice of successors is often instinctive and possibly too subjective,'  Mr Mak says. 'The nomination of the 'old boy' is seldom challenged.'

Research also indicates it often does not work. Even the maths do not add up. On average, corporations devote 250,000 executive hours a year planning for perhaps three potential successors. But by definition only one will get the job, which is just a 33 per cent success rate, and the two rival candidates will more likely than not depart - costing the company two valuable executives.

Instead, DDI recommends casting a wider net with a less risky group succession process.

It has identified 10 specific 'leadership potential factors' to consider from a more objective viewpoint.

Under four categories, leadership promise can be identified not only by a 'propensity to lead' but is identified in those who 'bring out the best' in colleagues. Another key is receptivity to ideas and learning agility - including the ability to learn from mistakes. Balancing values and results, the right 'culture fit' is important, along with a passion for the company's success. Finally, in fast-changing economic times, is the need for adaptability and conceptualising.

Not surprisingly, there are also pitfalls to avoid in the process which requires constant monitoring and diagnosis.

'Some necessary attributes for middle-managers are barriers to the top,' Mr Mak says, citing attention to detail as a key attribute of the former, but not necessarily the latter. Many  chief executives  will doubtless agree they are ill-equipped to handle micro-management aspects of their operations.

In the fast-track development process, it is also important to remember that one size does not fit all. Not everyone benefits from an executive MBA course. Some may be better developed by a challenging assignment, learning from short-term experience, or even professional coaching.

'People talk about corporate development but they do not make it work,' Mr Mak says. 'Senior management are too busy worrying about what they did yesterday and do today, never mind tomorrow.'

This  is another reason why the internal succession process should begin sooner rather than later. Individuals should not only be made aware of what is intended for them but should understand what they need to learn - and what they need to work on.

'It's about building abilities,' Mr Mak says. 'If a company cannot develop capable managers to support expansion, which is critical in China today, it will lose out.'



Shortfall of managers  a threat to expansion