leadership capabilies(3)

8/7/2019 leadership capabilies(3)

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Developing LeadershipCapabilities of GlobalCorporations: A ComparativeStudy in Eight NationsArthur K. Yeung and Douglas A. Ready

Changing competitive dynamics are influencing the leadership capability requirementsof global corporations. More than 1,200 managers from ten major global corporations ineight countries responded to an international survey on the core capabilities required forcompetitiveness. While the results highlighted six leadership capabilities that are globallyvalued, a comparative analysis of the data shows that culture affects the relative impor-tance given to a leadership capability requirement. The article also investigates the mosteffective methods for developing each of the core leadership capabilities. Implications forHR professionals are suggested as they devise strategies for leadership development. 1995 byJohn Wiley & Sons, Inc.

I N T R O D U C T I O NAn inescapable characteristic of the current global economic arena is

that most global corporations are undergoing revolutionary changes(Fortune, 1993a) elicited by an unprecedented convergence of forces:global competition of an intensity never before seen, exponential tech-nological development, surging customer expectations, and vacillationsin the kinds and numbers of governmental regulations (Fortune, 1993a,1993b, Kotter, 1991). Confronted by this nexus of circumstances, manycorporations are in the midst of radical transformations which will allowthem to respond simultaneously and effectively to meet heightened cus-tomer requirements in quality, service, innovation, speed, and price; toincrease their flexibility in meeting new competitive conditions; and tocreate frameworks that enable the corporations to engage in a continu-ous process of regeneration and renewal (Ready, 1994). To ensure notsimply survival but success as well, many corporations, such as GE,AT&T, British Petroleum, BT, Conrail, and Pepsi-Cola International, aredeveloping (and subsequently relying on) a new breed of strategic lead-ers who have the ability to reinvigorate corporate competitiveness and


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tum ultuo us change in the decades ahead (Bennis & N anus , 1985; Kotter,1991; Tichy & Dev ann a, 1986; Tichy, 1989; Vicere, 1992).The primary focus of this article is to investigate and examine newlead ersh ip capabilities that are identified by ma nag ers in eight na tion s ascrucial for their leadership effectiveness. Leadership capabilities refer tothe knowledge, skills, abilities, and attributes that leaders need to pos-sess and demonstrate in order to perform their roles and jobs compe-tently (Ulrich, Brockbank, & Yeung, 1989). Kotter (1991) arg ue s t ha tleaders play three roles: setting a direction, aligning people, and mo-tivating and inspiring. Nevertheless, th e leadership capabilities that arerequired to perform these roles effectively may vary in different corpora-tions and countries.An examination of managers' perceptions of new leadership capa-

bilities in different countries is significant for three reasons. First, itallows a systematic cross-national comparison of how managers per-ceive new leadership capabilities similarly and differently in differentcountries. The findings bear direct relevance to the leade rship develop -ment strategies of global corporations as they attempt to reconcile thedual imperatives between global consistency and local differentiation(Bartlett & Gh osha l, 1989; Milliman, Von G linow, & Na tha n, 1991; Por-ter, 1986; Rosenzw eig & Singh, 1991). Second, m ana ger s' p erce ption s ofleadership capabilities, as opposed to top management's communica-tions and/or company documents, provide another useful source of in-formation for understanding future leadership capabilities within corpo-rations. While corporations nowad ays have launched so many prog ram sof the month that managers may ignore most of them, managers' per-ceptions of leadership capabilities reflect what they understand, or whatthey personally believe in, as essential leadership dimensions. Third,even though managers' perceptions may represent ideal leadership ca-pabilities rather than actual leadership capabilities, these perceptionsreflect their felt need to develop themselves along those dimensions. As aresult, they should constitute the foundation for their present and futureleadership development and shed light on the future leadership capa-bilities in these nations.

To investigate the future lead ership capabilities required of m ana ger sin global corporations, we conducted an international study titled"Competitive Capabilities Profile" in 1993 to examine the key organiza-tional and leadership capabilities essential for effective global compet-itiveness over the next three years. Over 1,200 executives and managersrepresenting ten global corporations in eight countries participated inthe stud y. Participating com panies we re AT&T, British Airw ays, BrokenHill Proprietary, Daimler-Benz, EDF (Electricity of France), Fiat, Kao,Siemens, Ssang Yong, and Union Carbide. The respondents were di-verse, representing a broad sampling of nationalities and managementlevels. This diversity enabled us to conduct a systematic comparative


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resulting data base , this article examines th ree issues critical to the iden ti-fication and development of leadership capabilities within major globalcorporations: W hat are the key leadership capabilities considered most im portan tby executives of major global corporations? What is the role of national culture in affecting the relative impor-tance of these leadership capabilities? What are the best ways to develop each of these key leadershipcapabilities?

LEADERSHIP CAPABILITIES ASCOMPETITIVE ADVANTAGE

While traditional literature in strategy and organization theory sug-gests that organizational performance is a result of organizational adap-tation to industry or market requirem ents (Hill, 1988; Porter, 1980, 1985),recent research highlights the importance of organizationally "distinc-tive competencies" in creating competitive advantage regardless of exist-ing industrial or market constraints (Hamel & Prahalad, 1994; Lado &W ilson, 1994; Pfeffer, 1994; Ulrich & Lake, 1990). Com panies that areable to leverage their distinctive com petencies (such as peo ple, tec hno lo-gy, and processes) can redefine rules of competition and create newbu sine ss op po rtun ities for future gro w th (Ham el & Prah alad, 1994).Leadership capability, one of the central components of organiza-tionally distinctive competencies, is crucial to business success, as itaffects the organizational interpretation of the environment (Daft &Weick, 1984; Dutton & Jackson, 1987), the articulation of business visionan d strategy (Bennis & N an us , 1985; Ham el & Prah alad , 1989, 1994;Prah alad & Bettis, 1986; Westley & Mintzbe rg, 1989), and the alignm entand mobilization of people toward common ends (Kotter, 1991).Leadership capability is especially important for global corporationsin which organizational structures, processes, and systems are hardlysufficient to cope with the ever-changing and highly complex businessenvironments in different parts of the world (Bartlett & Ghoshal, 1990;Evans, 1992). In addition, the globalization of markets and the spectacu-lar acceleration of information and communications technology driveorganizations to com pete faster, better, and cheaper simultaneously. Asa result, the success and survival of global corporations is predicated onthe capacity of leaders to create and sustain tangible value for theircustomers and to maintain the strategic agility required to respond to

new opportunities at a moment's notice.In spite of its importance, the development of leadership capabilities


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dem and s these organizations are facing: betw een global consistency a ndlocal differentiation (Bartlett & Gh osha l, 1989; Doz , Bartlett, & Prah alad ,1981; Rosenzw eig & Sing h, 1991) and betw een fit and flexibility (Milli-m an . Von Glinow, & N ath an , 1991). As a resu lt, the n ew gen eratio n ofstrategic leaders must skillfully balance the host of concerns that fallwithin th e category of busine ss imperatives on the one h an d an d cultur-al imperatives on the other. Business imperatives emphasize the keyleadership capabilities that corporations must possess in order to re-spond effectively to customer needs and competitive threats. Culturalimperatives refer to the sensitivities that are required in order to com-pete and conduct business effectively within a given cultural context.Researchers and practitioners (Adler, 1986; Hofstede, 1980; Linowes,1993; Tung, 1988) are quick to point out that the historical and culturaltraditions of each country cannot be ignored in the development ofstrategic leaders. The studies of Kluckholn and Strodtbeck (1961) andHofstede (1980) have highlighted the key cultural dimensions whichdifferentiate organizational and leadership practices of various countries(Boyacigiller & Adler, 1991). Thus, even in the face of pervasive globalchallenges and broadly shared market conditions, corporations in differ-ent countries respon d differently based on the cultural progra mm ing oftheir leaders (Hofstede, 1980). Global corporations tend to emphasizekey leadership capabilities that are acceptable, legitimate, and feasiblew ithin their cultural contexts (Schuler, Fulkerson, & Do wling , 1991). Inshort, the contrasting cultural contexts of global corporations conditionthe way in which they formulate their strategic priorities, envision theirfuture, and develop their leadership capabilities.Although the business and cultural imperatives of leadership devel-opment may, at times, appear to be contradictory, the importance ofbalancing both imperatives has been recognized by researchers (Rosen-zweig & Singh, 1991; Schuler, Fulkerson & Do wling , 1991). Ne ve rth e-less, what remains unclear is precisely how global corporations haveman aged to successfully balance the tw o imperatives in develop ing theirstrategic leaders. Findings gathered from the ten global corporationsincluded in our study elucidated the ways in which global corporationsoperating in widely separated parts of the world have developed thecapabilities of their leaders.While the identification of key leadership capabilities is the primaryfocus of this paper, the specifics of how global corporations developtheir strategic leaders are also of interest. Previous research has revealedfour broad categories of developmental methods (Tichy, 1989; Robinson& Wick, 1992). The most common approach is experience-based learning(McCall, Lombardo, & Morrison, 1988); in essence, this metho d assu m esthat experience is the best teacher. In being assigned to project andprocess teams, special task forces, and turnaround situations, leadersexpose themselves to critical events and challenges which, in and of


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cates that about 70 perc ent of all dev elop me nt occurs thro ug h on-the-jobexperiences, whereas formal training provides less than 10 percent of am ana ger 's dev elop me nt (Robinson & Wick, 1992).Performance management is the second most widely used category ofleadership development. Through performance feedback and mentor-ing, leaders can be coached in methods of inculcating key leadershipcapabilities. A primary success factor in performance management ispairing potential leaders with exemplary, seasoned leaders wh o can pro-vide poten tial leaders with effective coaching and feedback that ha s bee ngathered from supervisors, peers, subordinates, or customers.The third category is classroom educationtraining which can occureither in-house or through external educational institutions. Increas-ingly, many companies are turning to in-company management devel-opm ent program s that tailor their approaches to specific corporate nee dsand address ongoing business problems (Ready, 1992). In addition, in-company management development programs are used to leverage cul-tural and strategic change (Tichy, 1989).The fourth category of development is benchmarking, an approachwh ich serves tw o pu rp os es. First, it is often use d as a catalyst for org ani-zational change and improvement. For example, by visiting the best-managed companies in the world and meeting with their managers,leaders can visualize applications to their own companies. In this way,they can begin the process of evolving strategies that they can imple-

ment within their own companies. It serves, in effect, as a springboardto strategic planning and as a way of defeating the Not-Invented-Heresyndrome. Second, benchmarking provides specific standards andme thod s for imp rovem ent. By participating in benchm arking efforts,leaders are exposed to world-class standards and learn how the best-ma nag ed com pan ies have achieved their objectives. A classic case of thisis Xerox's bench ma rking of L. L. Bean's distribution system. By studyingthe warehouse management and distribution strategies of L. L. Bean,Xerox's Logistics and Distribution unit has moved from 3 to 5 percentannual productivity gains before benchmarking to 10 percent annualimp rovem ents after ada pting some of L. L. Bean's distribution me thod s(Tucker, Zivan, & Camp, 1987).

R ESEA R C H METHOD

In order to examine key leadership capabilities and developmentmethods in major global corporations, a questionnaire (in six differentlanguagesEnglish, German, French, Italian, Japanese, and Korean)w as distributed to executives in ten selected corp oration s. The two majorcriteria for selection were the size and global complexity of the corpora-


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ness Week 1000 in 1993) and the selection of a diverse group of organiza-tions at various points along the transformation continuum.Based on the literature on leadership (Bennis & Nanus, 1985; Kotter,1991; Tichy & D evann a, 1986; Vicere, 1992), a list of m ore tha n 50 leader-ship capabilities was originally generated. The pilot version of the ques-tionna ire wa s tested an d com pleted prior to 1993 by 300 m ana ger s f romthe United States (US), United Kingdom (UK), and Japan. In the finalsurvey (see Appendix 1) conducted in 1993, the list of leadership capa-bilities was refined and reduced to 45 items.Through our initial correspondence, ten global corporationsAT&T,British Airw ays, Broken Hill Proprietary, Daimler-Benz, ED F/GDF, Fiat,Kao, Siemens, Ssang Yong, and Union C arbideag reed to participate inthe study. Two hu nd red surveys w ere sent to our liaison in each corpo-ration for distribution. A total of 1,213 executives and managers re-sponded to our study, representing a response rate of 60 percent. Toexamine the impact of cultural context on leadership capabilities, therespondents' national citizenshiprather than the country in whichtheir corporations had its headquarterswas used to measure the cul-tural differences.Figure 1 indicates the nationality compo sition of the res po nd en ts.German respondents were the largest group in the sample, followed byUS, Korean, and French respondents. Japanese and British respondentswere relatively underrepresented in the sample although both groupsstill have mo re than 50 resp on den ts. In addition, the stud y include d 130respondents from miscellaneous nationalities (i.e., Canada, India, andTaiwan, among others). For the sake of simplicity, our analysis wasrestricted to eight major nationalities. As a result, only 1,083 respon-

AustraliaF r K e

GermanyItaly

JspsnKonaaUK .US .

Others

f

fi

i

i10 12 14 16 18


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Executive OfflcereVice President

Director-

Middie M anagerndivlduai Contributor

Other

tw^ IZZZT3t

10 15 20 25 30 35 40 45Percentage

Figure 2. Management levels of respondents.

dents were retained for subsequent analyses in cross-national compara-tive study.Figure 2 show s the man agem ent level of the resp on de nts. The sa mpledeliberately focused on senior managers in order to shed light on thisspecific group's perception of strategic leadership capabilities. About 73percent of the respondents were at least at the level of director or above(vice presidents or executive officers).Am ong the list of 45 leadership capabilities, respo nd ents were askedto select the five leadership capabilities^ they considered to be mostimportant for their own leadership development over the next threeyears. For each leadership capability identified, resp ond ents we re askedto select the most effective method of developing that capability. Sevenlearning methods (see Table III) based on the four broad categories ofdevelop men tal m ethod s (discussed on p . 7) were provid ed for selection.Leadership capabilities that were considered most important and thatwere selected in the five choices were assigned " 1 , " while leadershipcapabilities that were not selected were assigned "0" (i.e., dichotomousvariables). For each leade rship capability, a me an score rangin g from 0 to1 was calculated based on the respondents in each country. The leader-ship capability measure carries two different meanings in the interpreta-tion of this study. First, it is a mea sure of imp ortan ce. Th e score indica testhe extent to which the leadership capability is considered im portan t byres po nd en ts in each country. If mu ltiplied by 100, the score indicates th epercentage of respo nd ents in a country w ho considered a specific leader-ship capability as m ost impo rtant. S econd, it is a measure of con sens us.Given the forced choice method used in the survey (i.e., each respon-dent was allowed to select 5 of 45 capabilities), the measure also indi-


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agreed upon, set of leadership capabilities or a diverse set of leadershipcapabilities about which the consensus level was low.To assess cultural variations of leadership capabilities among the eight

countries, ANOVA was used in the statistical analysis. In addition, theScheffe test of multiple comparison was utilized to pinpoint which coun-tries were significantly different from each other in their valuation ofspecific lead ersh ip capabilities.While national variations in the perceptions of leadership capabilitiesmay be confounded by variables other than culture (e.g., global corpora-tions' strategic priorities, competitive environments and strengths, coreobjectives, and so on), it is natural that national culture should partlyaccount for the variance for two reasons. First, previous research indi-cates the importance of national cultures on leadership practices (Adler,1986; H ofstede , 1980; Tung, 1988). Secon d, our sam ple dre w deliberatelyand systematically up on re spo nde nts from culturally and geographicallydiverse background (i.e., Asia, Australia, Europe, and North America),making cultural variation a significant factor in the study.

DISCUSSION OF RESEARCH FINDINGSSimilarities of Leadership Capabilities in Eight Countries

Table I lists 13 key lead ersh ip capabilities out of a total of 45 leadershipcapabilities listed in the survey. These leadership capabilities have beenidentified as among the top five most important capabilities by respon-de nts of at least one country. The findings in this table offer a num be r ofinsights. First, a high degree of convergence exists around several keyleadership capabilities. Respondents from all countries (except Italy)reached consensus that the ability to articulate a tangible vision, values, andstrategy is the most important leadership capability. This capability wasdeemed the most valued leadership capability by Australian, French,German, and British respondents and the second most valued leader-ship capability by Japanese, Korean, and US respondents. Its wide-spread importance to managers in both the West and the East suggeststhat, am idst the rapid economic transform ation of the 1990s, mo st globalcorporations place great emp hasis on setting a direction or d eveloping aguiding purpose (Kotter, 1991).

Other key leadership capabilities considered important by respon-dents in most countries represented in the study were: being a catalyst forstrategic change, being results-oriented, empowering others to do their best,being a catalyst for cultural change, a n d exhibiting a strong customer orienta-tion.These leadership capabilities, based on analysis of the overall data,represent the leadership capabilities which respondents in the eight


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Table I. The Most Imp ortant Leadership C apabilities Selected byRespondents in Eight Countries.^LeadershipCaDabilitTBe a catalyst/manager ofstrategic chan&eBe a catalyst/manager ofcultural chanseBe fleuble andadaptiveHave a "globalmindset"Articulate ataugible vision,values & stratesvConununicateeffectively on adav-to-day basisManage internaland extemainetworksThinkintegratively aboutthe total businessHave integrity andtrustExhibit a strongcustomerorientationManage qualityimprovementEmpower othersto do their bestGet results -manage strategyto action

Australia(N=101)

.2

.34(3).11

.19

.41(1).18

.09

.19

.13

32(5).1 2

.34(3).37(2)

France(N=158)

.23(5)

.38(2).13

.20

39(1).28(3).26(4).19

.06

.15

.11

.16

.22

Germany(N=215)

3S(2).19

.24

.14

.41(1).31(3).09

.13

.23

.26(5).04 .

31(4).1 8

Italy(N=130)

.10

36(1).30(2).13

.15

.28(4).05

.21

.07

.28(4).16

.2 1

.29(3)

Japan(N=54)31(5).06

.19

.39(4).46(2).09

.09

.41(3).19

.09

.04

.50(1).15

Korea(N=177)

.32(1)

.05

.17

.26(4).27(2).12

.07

.25(5).27(3).19

.14

.12

.09

U.K.(N=64).27

30(4).1 6

.13

.41(1).22

.08

.13

.13

.31(3).28(5).19

.31(2)

U.S.(N=184).32(3).29(5).09

.16

.34(2).22

.04

.16

.15

.3 1(4).05

.2 7

.41(1)

Total(N=1083).28(2).25(4).18

.19

.34(1).23

.10

.19

.16

.24(5).11

.24(5).25(3)

' All leadership capab ilities are significantly different am ong the eight countries at the .001 level.The rank order of the top five leader^ip capabilities in each countiy is placed in parentheses.Core leadership capabilities that are globally shared are in boldface.

convergence between globally valued leadership capabilities and thosewh ich are more n ationally valued illuminates the extent to which leader-ship capabilities are driven by internationally shared business impera-tives or by cultural imperatives. The percentage of overlap betwe en thetop five nationally valued leadership capabilities and the six globallyvalued leadership capabilities was as follows: Australia, 100%; UnitedStates, 100%; Germ any, 80%; Un ited King dom , 80%; France, 60%; Italy,60%; Japan, 60%; Korea, 40%. Korea was the only country that had lessthan 50% overlap between the selected leadership capabilities and theglobally valued capabilities.The degree to which managers from ten global corporations in eightcountries achieved a consensus on these key leadership capabilities w as


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Why is it so? and What does it imply for corporate competitive advan-tage? The m ost logical reason for the hig h d egree of con sen sus is the factthat global corporations are facing similar challenges and opportunitiesin the global ma rket. As a result, thes e lead ersh ip capabilities are unive r-sally, not simply nationally, important as they enable corporations tolead through tumultuous change, to refocus on key strategic priorities,to reinvent management styles and processes, and to deliver value tocustomers. Another possible reason for a high degree of consensusamong multinational respondents is the possibility that managers in-creasingly learn from similar sources of knowledge through interna-tionally renowned consultants, world-class educational/training institu-tions, and best-sellers in management literature. Consequently, theyidentify similar leadership capabilities.If global corporations in different countries are developing similarleadership capabilities, will corporations lose their unique competitiveadvantage? Ou r answ er is no , as leadership capabilities are hardly repli-cable (Lado & Wilson, 1994; Reed & DeFillippi, 1990). To be effective an defficacious, leadership capabilities need to be contextualized with eachcompany's unique organizational cultures, histories, technologies, andsocially complex interactions (Barney, 1991; Reed & DeFillippi, 1990). Toderive com petitive a dv anta ge, it is clearly insufficient for corp oratio ns tosimply benchmark from high profile, successful companies. They mustdefine, develop, and measure leadership capabilities based on their

company-specific needs, challenges, and national cultures.Variations of Leadership Capabilities in Eight Countries

The stu dy also revealed tha t significant n ational variation s exist in theways in which leadership capabilities are viewed. It is interesting tonote that no two countries selected identical priorities for their top fiveleadership capabilities. ANOVA tests also indicated that respondentsshowed significant differences in their consensus of all the leadershipcapabilities listed in Table I. For instance, both Japanese and Koreanrespondents ranked the ability to articulate a tangible vision, values, andstrategy as the second most important leadership capability. However,while 46% of Japanese respo nd ents considered this leaders hip capabilityimportant, only 27% of Korean resp on den ts rank ed it as imp ortan t. Thisdegree of consen sus or shared pe rceptions rega rding a particular leader-ship capability provides another indication of its importance as per-ceived by managers within a country.

To pin po int th e leaders hip capab ilities tha t differed significantlyam ong the eight countries, the Scheffe test of multiple comp arison wa sused in ANOVA. Table II summarizes how each country differs from atleast two countries on a specific leadership capability. For instance, the


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Table II. Leade rship Capabilities of Unique Importance in Each Coun try.Focal Country

(A )

Australia

France

Gcimany

Italy

Japan

Korea

U.K.

U.S.

Leadership capabilities that are morestrongly emphasized in a focal country(A) than the contrasting countries (B)

Be a catalyst of cultural change

Manage internal and external network s

Be a catalyst of cultural change

Have integrity and trust

Be flexible and adaptive Be a catalyst of cultural change

Empower others to do their best Have a "global mindset" Think integratively about the total

business

Have integrity and tnist

Manage quality improvem ent

Get results-m anage strategy to action

Contrast ing Countries(B )

Japan, Korea

Australia, Germany, Italy,Korea, U.K.. U.S.

Germany, Japan, Korea

France , Italy,

. Australia, U.S. Japan, Korea

. France, Italy, Korea, U.K. Germany, Italy, U.K.. Germany, U.K.. U.S.

France, Italy

Gennany, Japan, U.S.

France, Germany, Japan,Korea

ability to be a catalyst of cultural change than Japanese and Korean respon-dents . Therefore, wh ile Table I aims to highlight th e imp ortan ce of lead-ership capabilities that are globally shared. Table II offers insights onleadership capabilities that are emphasized differently within differentcountries. This information is useful for global corporations as they for-mulate leadership development strategies for their leaders operating indifferent nations.French respon den ts emp hasized the ability to manage internal and exter-nal networks more strongly than did respondents in six other countries.

Global corporations should obviously be sensitive to the need for thisleadership capability as they develop leaders for business operations inFrance. Similarly, Japanese respondents emphasized the ability to em-power others to do their best more strongly than did respondents in fourother countries. As a matter of fact, this is the most frequently selectedleadership capability among Japanese respondents. Given the overrid-ing goal of regaining com petitiveness and succeed ing in a global ma rket,US respondents emphasized the ability to get resultsmanage strategy toaction more strongly than did respondents in four other countries. Sim-ilarly, it is the most frequently selected leadership capability among USrespondents .Two explanations may account for leadership capabilities being em-


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importance of certain leadership capabilities within a particular country.That is, these particular leadership capabilities are crucial for leadershipeffectiveness within a particular cultural context. Without these leader-ship capabilities, a leader may be crippled in interactions with a coun-try's customers, employees, suppliers, shareholders, or regulators. Ifthis explanation is true, it implies that leaders who are transferred toanother country should be sensitized to the specific leadership capa-bilities most valued within the new host country. Moreover, these datacould very well suggest that perspectives on the importance of variousleadership dimensions are culturally anchored, meaning that they arelinked to much deeper beliefs, perhaps even rooted in societal and cul-tural mores and values. For example, the authors believe that it is not bymistake that the Japanese managers ranked the ability to empower othersto do their best as the most important dimension for leadership effective-ness, given the clan orientation that exists in Japan and the focus onconsensus and team management, as well as a strong preference forprocess excellence. It is also no t surp rising that the ability to get results-manage strategy to action was ranked as the number one leadership di-men sion for the American resp on den ts, given their orientation to revereheroic models of leadership. As a matter of fact, American CEOs losetheir jobs more readily for not producing short-term results than dochief executives from other cultures (Ready, 1994).

The second explanation could be that these leadership capabilitieshave not historically been important within the country's cultural con-text but that shifting busine ss imperatives are making them mo re impor-tant. If this explanation is correct, it has a completely different implica-tion for global corporations. It suggests that local leaders, althoughprobably not global leaders or even leaders outside of a particular coun-try, should be developed according to the country's unique leadershipcapabilities. Our speculation is that both explanations are, in some part,correct, and corporations should be careful in discerning between thetwo.On the other hand, Japanese and Korean respondents placed lessimp ortanc e o n their ability to be a catalyst of cultural change (in com parisonwith resp ond ents in Australia, France, and Italy). The finding sugge ststhat Japanese and Korean corporations may be relatively satisfied withtheir existing corporate cultures. As a result, cultural change is not animportant requirement for future leadership effectiveness in Japan andKorea.The above summary points to significant national variations in theperception of leadership capabilities in various nations. Clearly, whileglobal corporations achieved a cons ensus on the primacy accorded to thesix core leadership capabilities, significant variations among countriesexisted with regard to the degree of consensus about the importance ofindividual leadership capabilities.


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Developing Strategic Leaders: How Leaders Learn?

Determining which leadership capabilities are most important is onething, wh ile unde rstan ding how to best develop these capabilities is yetanother. We want to learn more about the most effective processes fordeveloping leadership effectiveness. How does one learn to become astrategic leader? Are some learning methods more effective for develop-ing certain leadership capabilities than others?As summarized in Table III, our respondents supported the notionthat experience is the best teacher. Experience-based learning, definedin this stud y as either a job assignm ent or participation in project or taskforces, wa s rank ed e ither first or second as the mos t effective m eth od forlearning each of the top lea dersh ip capab ilities. This finding clearly su p-ports prior research on experience-based development (McCall, Lombar-do, & Morrison, 1988; Robinson & Wick, 1992).Performance feedback was considered useful in developing leader-ship capabilities aimed at getting results, empowering others, and exhibitinga strong customer orientation. In-company management development wasranked as the most effective method in helping leaders articulate a tangi-ble vision, values, and strategy, whereas benchmarking was considereduseful in developing leaders wh o are a catalyst for cultural change. Univer-sity executive education and mentoring were considered relatively lesseffective in developing the core leadership capabilities.The perception of the importance of university executive education indeveloping strategic leaders was not as high as expected. This finding

Table III. Most Effective Learning Methods by Leadership Capabilities.L e a rn i ng Me t hods

Experience-based Learning Job Assignment Projectsn'ask ForcesPe r fo rm a nc e Ma na ge m e nt Feedback MentoringCl a ss room E duc a t i on In-company management

development University Executive

EducationBe nc hm a rk i ng

ArtkuliteVbion

X

XX

CntM\jat-StrategicChanse

XXX

GettingResulb

X

XX

CaUlyst-CulturalCtuDxe

XX

X

EmpowerOlhere

X

XX

ExhibitCustomerOricDUtioD

XX

X

XX rcprcsenis the most crTccuvc method in develofniig a teadcnhip cspabiliiyX represent the second mou cn^ective method in developing a leadoship capability


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suggests that business-as-usual executive programs cannot meet theneeds of a rapidly changing business environment (Fortune, 1993c).Such program s evidently have not pro ven to be sufficiently adap tive tocorporations' pressing needs.In addition, global corporations need to streng then their performancemanagement systems. Providing timely and accurate feedback to man-agers is crucial in helping them to achieve their goals and, at the sametime, to empow er o thers. Clearly, no single me thod is best for d evelop -ing all lead ersh ip capab ilities. Global corp orations ne ed to be versatile increating a variety of learning opportunities for managers and in offeringmultiple learning methods.When the respondents' answers to the question of effective learningmethods were analyzed by managerial level, however, another findingemerged. Mid-level managers indicated that classroom training is themo st effective me thod for dev elopin g lea ders hip capabilities. This beliefmay be due to the fact that classroom training is often viewed as themo st visible manifestation of an organ ization's inv estm en t in a mid-levelmanager's future. Given this perception among mid-level managers,organizations would be wise to use in-company programs to send im-portant messages about the company's future and to build critical net-works necessary for executing strategic initiatives.The respondents in our sample agreed strongly that each individualshould be responsible for his or her own leadership development. Also,while the respondents indicated that business unit presidents played animportant role in the leadership development process, the human re-sources department was not perceived as critical in this area in ouroverall sample. This should signal an opportunity for HR executives toclarify and redefine their role in building an organizations' competitivecapabilities.

IMPLICATIONS FOR HR PRO FESSION ALS

CEOs place enormous emphasis on creating and sustaining value intoday's environment, and for good reasoncustomers demand it. Inthe process, strategic frameworks are being reconfigured, organ izationalsystems revamped, and work processes reengineered. In order to leadand strengthen these reinvented corporations, corporations are devel-opin g a new bre ed of strategic leaders. In that con text, this article offersboth good news and bad news for HR professionals.The good news is: Never before have HR executives had a betteropportunity to influence their organizations' competitiveness. Aboveall, leadership development is viewed as important when it is linkedclearly with business strategy and pressing business needs. Strengthen-ing competitive capabilities means that both individual and organiza-


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tional development needs are taken into account and that developmentpla nn ing is future-focused and targeted at critical gap s in hum an re-source preparedness. In addition to cultivating critical skills and compe-tencies, development must be seen as a vehicle for facilitating produc-tive change.The bad news is: HR was not perceived as important in leadershipdevelopment. Clearly, HR needs to redefine its role in leadership de-velopment beyond the traditional focus on classroom training. Withsuch strong concurrence on the importance of learning on the job, HRprofessionals would be wise to work with line managers to ensurethat as many job assignments as possible serve as learning oppor-tunities for employees. This involves developing a deeper under-standing of the learning challenges provided by particular jobs or jobclusters as well as placing more focus on matching learning oppor-tunities with individuals identified as being able to gain more valuefrom experience-based learning approaches than other methods. Or-ganizations would also benefit from placing a high value on line man-agers who are capable of structuring jobs as learning opportunitiesand providing these managers with the appropriate recognition andrewards for their activities in this area.

Leadership development must be viewed as an ongoing process rath-er than a one-time event, which means that linking management devel-opment education with organizational systems such as performancefeedback, succession planning, and career management activities be-comes critical to the impact of leadership development on organizationalperformance.This stud y also offers a nu mb er of insigh ts for HR professionals seek-ing to identify required leadership capabilities in different nations. Ourstudy indicates that a set of universally valued leadership capabilitieshas em erged in most coun tries. These leadership capabilities enc om passthe capacity to articulate a tangible vision, values, and strategy; to be a catalystfor strategic and cultural chang e; to achieve results; to empower o thers; a n d toexhibit a strong customer orientation. To resp on d to chan ging com pet i t ivedynam ics in a highly interd epe nd ent global economy, these capabilitiesbecome fundam ental to many co rporations. To create a competitive ad -vantage, however, HR professionals need to help their organizationsdevelop these leadership capabilities based on the unique cultures, his-tories, industries, and technologies of their corporations. The cognitiveand behavioral manifestation of these leadership capabilities shouldvary from one corporation to another. For examp le, if one were a hu m anresource development professional at PepsiCo, the art and craft of devel-oping lead ers for the com pany wo uld necessarily take into account Pep-siCo's industry, its corporate culture, as well as the national culturewhere business is being conducted by the firm. It would be a greatmistake to design a generic initiative for the firm's global workforce


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through the lenses of its New York headquarters office and culture(Schuler, Fulkerson, & Dowling, 1991).HR professionals should also be alert to the national variations ofleadership capabilities as perceived by our res po nd ents . Global corpora-tions may prefer to develop leadership capabilities based on a set ofglobally valued leadership capabilities, adjusting for leadership capa-bilities that are unique in different countries.Clearly, the tim ing is ideal for HR professionals to add valu e to corpo-rate competitiveness by preparing a new breed of strategic leaders thatpow ers the compan y forward. By collaborating and orc hestrating withline management, HR professionals should and can help corporationscreate a compelling future.The authors would like to acknowledge the sponsorship of Gemini Consulting inthis research study and the useful comm ents of two anonym ous reviewers. Thegenerous participation of all executives and managers in this study is also grate-fully acknowledged. Without their support, this study could never have beencompleted.Arthur K. Yeung is on the faculty of the University of Michigan 's School ofBusiness Ad ministration. He is also the founding Executive Director of theCalifornia Strategic Hum an Resource Partnership, a consortium consisting ofthe senior HR executives of 30 leading California companies.

His areas of teaching and research interest includ e H R process re-design I reengineering, the transformation of HR functions, changing comp eten-cies ofHR professionals, developing organizational learning capabilities, design-ing high value-added HR practices, and managing cultural change. He is theproject manager of "Human Resource Competencies of the 1990s" which won the1989 Yoder-Heneman Personnel Research Award presented hy the Society ofHuman Resource Management.Dr. Yeung is the author of three books and his articles have appea red innumerous professional journals.

Dou glas A. Read y is Foun der and Executive Director of the International Con -sortium for Executive Development Research, a collaboration of 50 global corpo-rations and 20 leading business schools that conducts applied research and bestpractices on innovative approaches to developing world class organizations andleaders.

Dr. Ready's research interests include leadership and executive development.He has recently completed the International Competitive Capabilities Pro-ject, a worldwide study on the organizational and leadership capabilities criticalto global competitiveness. The findings of the study are reported in C h a m p i o n sof ChangeA Global Report on Leading Business Transformation.Dr. Ready holds an M.P.A. in Managem ent from H arvard University's John

F. Kennedy School of Government and the Ph.D. in International H uman Re-sources from the Cranfield School of Managem ent in the U.K.


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APPEN DIX 1: QU EST ION S O N LEADERSHIP CAPABILITIESTo be an effective lea der over th e next three y ears, I must: (Circle only 5 capabilities)1. be a calalyst/manager of strategic change2. be a catalyst/manager of cultural change

3. beflexibleand adaptive4. plan for changing human iesouice requirements5. manage a crisis6. deal with high ambiguity/uncertainty7. manage natural tensions arising from culmral differences8. live and woric outside my native country9. have a "global mindset"10. manage transnational teams11. conduct negotialions across borders/cultures12. have m ultiple language capabilities13. negotiate with government leadeis14. understand global economic, political, culmral. social issues15. articulate a tangible vision, values, and strategy16. manage strategic alliances17. communicate effectively on a day-to-day basis18. manage the media/press19. have a sense of humor and social skills20 . influence others without authority21 . negotiate for resources22 . manage intemal and external networics23 . think integratively about the total business24 . make tough choices25 . process and distill large amounts of infonnation26. leam how to learn27 . handle personal stress28 . have self confidence/strong sense of self29 . have integrity and trust30. take risks/initiative31 . manage process/project teams32. build customer/supplier alliances33 . exhibit a strong customer orientation34. manage quality improvement35 . develop and coach otheis36 . empower others to d o their best37. be an advocate for entrepreneurship and innovation38 . manage a "fast-cycle" product development organization39. manage a leaner organization40 . embrace new technologies41 . get results - manage strategy to action42 . manage a downsizing43 . demonstrate competence in financial management44 . demonstrate excellence infimctionalmanagement45 . balance woik. family and personal time

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ENDNOTES

1. There is no a priori reason for asking respondents to select five (instead of sixor seven) capabilities. It was simply deemed a convenient number to workwith.


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