Asian leadership softens

A few years ago, when this magazine interviewed Eric Chia, he was the CEO of Perwaja Steel in Malaysia. He is a typical unsmiling and powerful boss.

Xie Yingfu's view differs from those of modern employee management thinkers. He believes that fear is an effective motivating factor: "Fear of failure, fear of rejection, fear of loneliness, these fears make people focus on their own Goals and means to achieve them. To achieve immediate results, shock therapy must be implemented." When the capacity utilization rate of the steel plant dropped to less than 50%, he told the production manager: If the target cannot be achieved, immediately pack up and leave. Only then did the production manager tell the truth: the equipment was outdated and in need of repair - and for the past four years, he didn't say a word.

"Tough leaders dictate what they do," Xie said. "They don't let time and other obstacles dictate their decisions. They rarely compromise because it makes others feel like they've lost control."

At the time, this emphasis on control was a powerful leadership style, especially when trying to save the bankrupt Malaysian steel giant. During his four years as CEO, the steel company's production nearly quadrupled. The strong track record seems to justify this leadership style.

However, the good times didn't last long. Just two years after these initial successes, Asiaweek reported that the company's debt had ballooned to $975 million under Xie Yingfu's tenure. In addition, the early success also masks the fact that the problems in the company's operations have not improved - under Xie Yingfu's strong, powerful leadership, the operational efficiency of employees is still low. It was later reported that Xie Yingfu had signed very suspicious contracts with Chinese companies. In August last year, the court held a trial on charges of defrauding him. Xie Yingfu argued earlier this year that he was innocent.

To a certain extent, Xie Yingfu's predicament represents the gradual loss of power among powerful bosses in Asia. Yes, there are still some powerful leaders still in high positions, but in Asia, power leadership is no longer the norm, it has become the exception.

Even in manufacturing, the last bastion of power leadership, it has come to an end. Tough, efficiency-only leadership once prevailed in manufacturing because of the need for discipline to produce high-quality products; and, frankly, because of the low social status of manufacturing workers.

This logic no longer exists. Forces are accelerating the demise of power leadership styles, such as the total quality management movement, outsourcing, downsizing, process reengineering, flattening of organizational structures, acquisitions and joint ventures, exodus of executives, and increasing span of management by managers wide, as well as rapid technological change and globalization, etc.

The impact of these changes on leadership style has been dramatic. Powerful leadership is out of sync with new trends in manufacturing, while participatory and collaborative leadership is more effective.

In a submission to the Australian Foundation for Sustainable Economic Development, John P. Morgan cites some specific reasons why collaborative and participatory leadership styles are so important:

● No competitive advantage can last without a skilled, motivated and dedicated management team and employee base.

●In order to increase productivity, organizations must strengthen incentives for employees. Employees must be encouraged to develop a work philosophy centered on customer satisfaction. Organizations must empower employees, give them more autonomy, and create more challenging jobs. It is necessary to use the incentive system to mobilize employees, and actively strengthen the incentives for employees from various aspects.

●If employees feel that managers are inconsistent in their words and actions and that they are not being supported enough, they will view any human resource management initiatives by managers to increase engagement with skepticism, disappointment and even lead to a drop in productivity.

While many people aspire to a participatory and collaborative leadership style, it is not a panacea. This leadership style also brings new challenges. To fully understand its benefits, it is worth discussing the new HRM practice, its benefits and what it requires of leaders.

Highly Participatory Work Styles

The most important origin of highly participatory work styles in Asia is undoubtedly the adoption of problem solving groups. These include: employee engagement groups, workplace change groups, and quality control groups, all of which shine because of the quality revolution.

The highly participatory work style requires a strong sense of cooperation, trust and coordination across all functional departments of the manufacturing enterprise. The power leadership style generally makes a fuss through the fear of employees, and does not need these. Involving employees is about trusting them, not forcing them.

However, these highly participatory ways of working are not easy to implement. They have the potential to undermine the confidence of manufacturing workers, thereby rendering them unfit for their original jobs. For example, in order to participate in discussions, workers must be adept at conducting effective meetings, managing conflict, solving problems, and making decisions. "Mastering these skills requires formal training," says consultant Leigh Farnell. "If people are used to being at their command, once they regain their autonomy, they won't know how to make decisions. "

What's more difficult is to adjust the attitude towards the co-workers. They must be more decisive than ever, which is not typical of Asian manufacturing workers.

For these reasons, manufacturers must be prepared for short-term performance declines when adopting these practices.

When is the best time to adopt? A well-functioning business may find it difficult to introduce these practices into the business. Therefore, a time when operations are volatile may also be an optimal time to adopt a high-participation practice. If a manufacturing company's operations are disrupted—perhaps because of the introduction of a new product or process, or a prolonged shutdown, that just happens to be a good opportunity to implement organizational change. That said, the factory is more likely to embrace a highly participatory way of working.

Fisher and Paykel found the perfect time to change when New Zealand lifted tariffs, flooding the domestic market with highly competitive products and a price war. Companies must be more innovative, and in this market situation, assembly-line skills cannot be overemphasized. The company began to move to a highly participatory, team-focused process.

Transformations aimed at highly participatory processes are not always successful. At a major Japanese medical device manufacturer, the transition failed because workers were unable or unwilling to embrace the move. Managers are also responsible for not providing their employees with the necessary training and not going all out to lead change.

Self-Managed Operations Teams

In addition to the highly participatory way of working, there are also Self-Managed Teams (SMT). SMT refers to "a group of employees who are responsible for a complete, independent work associated with a finished product or ongoing process".

In fact, there are fewer bosses giving orders in SMT, not only no position as a powerful leader, but no formal leadership at all. Teams are given responsibility for monitoring and evaluating their own overall processes, and responsibility for problem solving is delegated to members of the group. In some manufacturing companies in Asia, SMT is quite common.

At Texas Instruments' Philippines facility, SMT has existed for over a decade. The factory reduced management levels from seven to three. SMT members make decisions about production and quality issues, schedule their own breaks, and decide who will operate the equipment. They do not impose fixed working hours, but rely entirely on the workers' self-consciousness. "SMT is made up of 10 to 15 people," said a Texas Instruments worker. "The time to complete production tasks is shortened, and people's attitudes towards work are more positive."

Texas Instruments Malaysia factory also uses the same practice. The company's website states: "Participatory management provides SMT with equal responsibility for management decision-making, autonomous decision-making in terms of quality and production compliance. With the implementation of SMT and a total quality management program, productivity has tripled, Output has more than doubled."

Becton Dickinson Pharmaceuticals (Singapore) is the first company Becton Dickinson has established in Southeast Asia. It provides a living example of the steps involved in building an SMT.

According to a report from Development Dimensions International, the facility established SMT just two years after its establishment. Four years after implementing SMT, companies began holding daily and monthly meetings to assess team performance and conduct peer hiring. In the fifth year, the SMT is responsible for matters such as safety, overtime, vacation planning, housekeeping and preventive maintenance, as well as monitoring of output, waste and quality. As SMT operations matured, members began to nominate leaders. By the sixth year, a team evaluation and reward program was launched. Team assessments account for 60% of an employee’s overall performance rating. Finally, in the seventh year of the business, SMT started hiring peers from the team.

When 3Com Technologies started operations in Singapore, special emphasis was placed on the self-management of production lines. The company trains employees in key skills necessary to manage teams autonomously. This is an important part of SMT - members need a lot of training, especially so-called "soft skills" such as interpersonal skills, team building, giving feedback and overall communication skills.

Another secret of SMT that has received less attention: employees are empowered, but their scope of authority should be clearly defined. In other words, leaders of manufacturing companies have to decide very carefully: to what extent SMT enjoys the power of self-management, and to what extent it is controlled by superiors. Therefore, although SMT schedules its own workload, evaluates each other's work performance, and hires members of the team, it must be subject to the control of financial planning and overall production planning. Balancing and grasping the relationship between self-management and superior management is the key to the successful operation of SMT.

Sharing financial information

Some leading companies have realized that if SMT is to be fully effective, it must be given budgetary control. "You can't really delegate unless you hand over control of the budget," says one manufacturing consultant.

If you're not ready to cede budget power, see how leading companies are keeping workers informed about their businesses' financial health. This requires the training of employees, so that they have a higher ability to understand the operation of the enterprise. They must be able to answer basic questions such as: What makes a business work? How does our own business work? How can I contribute to the business reaching its profit goals?

In addition to sharing information on company strategy, performance and operational measures with employees, sharing financial information also enables employees to understand that the organization trusts you and that you can contribute to the performance of the business. If employees don't understand basic operating principles, it's hard to imagine that they will have a positive impact on company performance.

If you surrender control of your budget or tell your employees your business information, you must establish a "pay for performance" compensation system. Employees contribute to business performance and deserve to benefit from improved business performance. If you don't, you're actually only paying employees for their attendance, not their merits. This will inevitably lead to their disappointment, and even cause them to be reluctant to make progress and just get by.

In Asia, the sharing of financial information is not as widespread as self-managed teams. But companies that trust their employees and communicate financial numbers have paid off well. At Ford's Philippine plant, for example, workers can decide whether to install air conditioners in the company's dining rooms. As a matter of common sense, workers would undoubtedly vote for it. After all, they want a more comfortable environment for lunch. However, after estimating the amount of money needed, Ford employees decided that the money should be spent elsewhere - because it would be more beneficial to the business.

Participatory leadership styles have begun to pay off best when employees start worrying about the boss's concerns and the company's concerns -- like the workers at Ford.

Author Jet Magsaysay is a consultant to this magazine; translated by Liu Songjie.