This article is an extract from GTDT Practice Guide: Diversity and Inclusion 2021. Click here for the full guide.
In an increasingly globalised and multicultural business environment, many corporations have sprawling empires that cover the globe. However, while the reach of multinational companies (MNCs) continue to grow in Asia, there is still a pointed absence of Asian employees in top C-suite roles of MNCs (particularly East Asians, or those of Chinese, Japanese and Korean descent).
The absence of East Asian leaders in C-suites and boardrooms of global MNCs is particularly surprising when taking into account the fact that we are now living in what many are calling the Asian century. At the same time, the number of Asian professionals seeking opportunities in America and Europe continues to increase. For example, an estimated 60 million Chinese-born professionals now live and work overseas, making them the largest migrant group in the world.2
So what is stopping Asian employees from making it to senior management? In this chapter, we consider this phenomenon in greater detail, including the reasons why Asian people appear to be disadvantaged on the climb up the corporate ladder and how they may reverse these disadvantages. We also explore why organisations should seek to reverse this trend, and suggest some steps that organisations may take to support their Asian future leaders.
A world 'going east'?
The rise of Asia’s economic strength is well-documented. GDP in Asia (US$29.3 trillion in 2020)3 is now larger than that of the Americas (US$27 trillion) and Europe (US$21.9 trillion). In fact, the World Economic Forum predicts that Asia’s GDP is set to overtake the GDP of the rest of the world combined by 2030. Asian companies also dominate the global landscape, with 143 of the Fortune Global 500 companies based in China, overtaking the US (with 122), and 53 are based in Japan.4 In the legal industry, the Asia-Pacific market is estimated to be worth US$94.5 billion, and is forecast to grow to US$115 billion by 2025.5 Of this Asia-Pacific market, China accounts for over 57 per cent of the market value in legal services.
In this context, one may expect that MNCs will become increasingly keen to hire Asian employees in management roles to steer their businesses in the same direction. However, many surveys and studies have found that Asians are underrepresented at the management level of global companies. For example, a recent study of C-suite executives at Fortune 500 and Standard & Poor’s 500 companies conducted by executive recruiting firm Crist Kolder found that only around 5.6 per cent of executives surveyed identified as Asian.6 According to a recent paper published by the Association of Asian American Investment Managers (AAAIM),7 Asian Americans and Pacific Islanders are commonly hired for middle management roles but not for senior management and C-suites. Respondents to its survey said opportunities for advancement are 'not equitable' and the majority felt that Asians were not adequately represented in the senior executive levels of their respective organisations.
Indeed, various statistics show that, while a substantial proportion of entry level or junior level employees in various sectors are Asian, this proportion falls significantly when looking at senior leadership positions of the same organisations. Taking the legal industry as an example, while over 11 per cent of associates in US law firms are Asian, only 3 per cent of partners are Asian – this ratio of partners to associates is the lowest when compared to African Americans, Hispanics and Caucasians.8
The issue may be more severe in certain subgroups than others. One recent study conducted by Jackson Lu and others, published by the Sloan School of Management,9 found that the Asian subgroup that appeared to be the most affected was the East Asian group (ie, Chinese, Japanese and Korean), which had a much lower 'CEO per capita' compared with both Caucasians and South Asians (ie, Indian, Pakistani and Bangladeshi). In fact, the study showed that South Asians had a higher 'CEO per million capita' than Caucasians, citing well-known CEOs of South Asian descent at leading global companies, such as Satya Nadella, the CEO of Microsoft.
This study suggests that East Asians are disproportionately underrepresented even within the broader Asian group, and perhaps that data from other studies reported on an aggregated Asian basis may in fact not fully reflect the severity of the problem when looked at from an East Asian’s perspective.
Dissecting the 'bamboo ceiling'
The difficulties faced by Asian employees in advancing to senior management roles is sometimes referred to as the bamboo ceiling, a play on the term glass ceiling commonly used to describe the difficulties faced by women in corporate advancement. Although some commentators find the term bamboo ceiling to be outdated or insensitive, it remains commonly used and, more importantly, the statistics suggest that it really does exist: Asians (particularly East Asians) indeed remain less likely to advance in their careers to senior executive roles.
While the origins of the term bamboo ceiling are unclear, it was made popular by Jane Hyun in 2005 in her book Breaking the Bamboo Ceiling: Career Strategies for Asians. Ms Hyun discussed the complex hurdles faced by Asian Americans in career progression as a result of both cultural stereotypes and racism.
It should be noted that Ms Hyun’s book (as well as many of the surveys and studies cited in this chapter) have an American focus. While the experience of Asian Americans may not be fully reflective of the experiences of Asians elsewhere, the Asian American demographic is a particularly remarkable illustration of the bamboo ceiling when considered in light of the fact that Asian Americans are the most highly educated ethnic group in America, according to official census data.10 However, according to Mr Lu’s research, when surveying the number of CEOs in top Standard & Poor 500 companies compared with the proportion of East Asians, South Asians and Caucasians in the American population, East Asians scored the lowest with only 0.59 CEOs per million. In comparison, Caucasians average 1.92 CEOs per million, whereas South Asians scored the highest at 2.82 CEOs per million.
So if there is a bamboo ceiling, what is it really made of?
It can be easy to pin the problems down to racism, discrimination and bias. However, while these factors do undoubtedly play a role in exacerbating the issues, they are but one piece of the overall picture. Indeed, the surveys conducted by Mr Lu found that South Asians appear to face a greater degree of prejudice than East Asians in America, and yet South Asians still achieve the highest average CEO per capita rate of the three ethnic groups observed, suggesting that discrimination is not the primary factor behind the lack of East Asian presence in senior management roles.
In her book, Stuck: Why Asian Americans Don’t Reach the Top of the Corporate Ladder, Margaret Chin describes a combination of several factors that play into why many Asian Americans fail to achieve career success: the typical Asian American mentality (or ‘playbook’), the lack of ‘cultural capital’ and discrimination. The Asian American playbook, as Ms Chin describes, focuses on individual hard work and self-improvement. This approach often allows young Asian Americans to excel at school and in entry-level positions. However, when it comes to advancing up the ranks of the corporate ladder, the Asian American playbook falters. At a certain point in most career paths, it is no longer sufficient to rely on hard work and self-improvement, but requires gaining the trust of your superiors through networking and other soft skills. Many Asian Americans do not have the cultural capital or the awareness of the necessity to gain this trust. Similar ideas are echoed in the AAAIM paper, with survey respondents stating that some of the key challenges they faced in career progression include the difficulty in building social connections owing to a lack of common interests or shared hobbies.
Survey respondents to AAAIM also cited stereotypes against Asians as another key challenge. These stereotypes are not all bad: some of the positive stereotypes include seeing Asian employees as diligent workers, good with numbers and having good attention to detail. However, at the same time, survey respondents felt that they were seen as not being good leaders or managers, or that they are not 'a people person'.
This stereotypical view that Asian employees lack leadership qualities is often mentioned in the literature on the subject. According to the Center for Creative Leadership (CCL), there are certain aspects of Asian culture that influence the leadership style of Asian executives, which are often incongruent to Western management styles. These cultural nuances include a more collectivist approach to work, dependence on social networks, a focus on harmony by adopting a non-confrontational attitude at work, and a pervasive sense of hierarchy with managers adopting a 'caring-autocrat' attitude. The CCL also argues that most global organisations have a dichotomous view on leadership: they look for global leaders that fit a certain mould, and separately local leaders to fit the local context. This could explain why Asian employees are often appointed at the regional management level, but not at the global management level.
The CCL also highlights that Asian employees who are located in Asia may face even more difficulties than Asian employees who are located in Europe or the US, including the difficulty of developing certain critical skills while working in Asian offices of Europe- or US-headquartered companies, and the lack of internal alignment to build local Asian talent. There may also be cultural differences, language constraints and general biases or lack of trust that make it difficult for an Asian future leader to rise to the top.
The elusive 'X factor' for Asian future leaders
So how can an Asian employee work towards becoming a future leader at the global level? Is there an elusive X factor that is needed? Some of the studies have attempted to identify an answer to these questions.
Mr Lu’s study considers two potential factors that may be the cause of the low leadership attainment of East Asians: motivation and assertiveness. Motivation here includes two separate aspects: work motivation, or the willingness to work hard, and leadership motivation, or the willingness to take on leadership roles. On the other hand, Mr Lu’s definition of assertiveness relates mostly to communication style, and refers to the tendency to 'speak out for one’s interests and concerns when appropriate'. These two factors are chosen to address common stereotypes of East Asian employees: first, that they are passive and obedient but hardworking, and second, that they are non-confrontational and less argumentative.
In each of the studies detailed in Mr Lu’s paper, it was found that assertiveness was the most significant factor leading to the difference in leadership attainment between East Asians and other ethnic groups. On the other hand, both work motivation and leadership motivation (as well as prejudice, as discussed above) did not appear to have a clear impact on leadership attainment.
In its article, What Top-Performing Asian Leaders Do Differently,11 the Boston Consulting Group interviewed 10 Asian executives and highlighted five characteristics that have contributed to their success:
- an enduring, long-term perspective – they take a long-term view and position their companies for success after they have moved on;
- an institutionalised owner mindset – they use financial incentives and other strategies to get managers and employees to think as they do;
- a strong people orientation – demand for talent is high, and many of Asia’s top business leaders make a point of being personally involved in the recruitment and development of employees;
- effective navigation of ecosystems – the ecosystems they need to navigate includes government (whether at the national, regional or local level), NGOs, labour unions and suppliers and distributors, which companies must take into consideration even when it is not in their immediate financial interest to do so; and
- fierce agility and a drive to survive and thrive – agility is especially crucial in Asia, because of the region’s exponential growth rate.
Career mapping of successful Asian-descent global leaders also highlights several common themes based on a CCL research.12 Many were educated outside of their home country, had early leadership opportunities, opted for secondments in a foreign country or did a stint at the headquarters (if the headquarters were outside of Asia), which helped them network, build credibility in the system, and deliver critical engagements. It appears that three critical experiences stand out in preparing Asian leaders for global roles: cross-border rotations, non-obvious career moves and stretch roles. Stretch or ‘crucible’ experiences are particularly valuable in preparing for leadership roles in an unfamiliar or uncertain environment. Crucible experiences could include participating in a global M&A, cross-business transformation projects, developing a new market, dealing with a tough customer or even reporting to a 'demanding' manager.
The case for greater diversity
There is overwhelming evidence that diversity and inclusion are good for business. When our biases (unconscious or conscious) result in organisations looking only at a subset of their talent pool when choosing future leaders, they do themselves a disservice. The importance of tapping into diverse perspectives has never been more important if we are to face into the adaptive challenges now and in the future.
As the authors discuss in BCG’s 2019 report, The business imperative of diversity:13
When a company can deploy a range of perspectives and ideas, it effectively has more ways of hedging the unexpected. Diversity not only mitigates against the risk of system collapse but is also the grist for evolutionary adaptation. It allows for constant variation and experimentation with products, strategies, and business models – essential in maintaining fitness in a changing environment. . . . When that kind of adaptive mechanism is baked into the environment and operations of the organization, diversity can do its best work. And the resulting adaptive, inclusive workplace will allow for easier maintenance of a diverse pool of talent over time, including a pipeline of leaders contributing to the innovative capabilities and resilience of the organization for the long term.
Many MNCs have started to put those ideas into action. Global beverage producer Diageo has made championing diversity one of the key pillars in its recently announced 10-year plan to promote inclusivity and sustainability, known as 'Society 2030: Spirit of Progress'. One of the goals set out in this plan is to increase representation of leaders from ethnically diverse backgrounds to 45 per cent by 2030.
Asian leadership in the future
Organisations may have to make changes to their ingrained culture in order to support their Asian future leaders, and in order to best harness the value brought by greater diversity. In its Developing Future-Fluent Asian Leaders: Myths We Must Debunk report,14 the CCL details three key myths that stand in the way of Asian future leaders, which point to structural barriers that are prevalent in MNC structures.
Myth No. 1
Asian leaders are 'harder to develop' into senior global leadership roles.
Instead, companies may need to recognise that there are often significant organisational reasons hindering the development of Asian future leaders, such as lack of opportunities to gain critical leadership experience.
Myth No. 2
Leadership development efforts should focus on top-level executives.
Instead, companies should ensure that development initiatives take place across multiple levels of the organisation, so that employees within the organisation are not shut out of the opportunities to build essential leadership skills.
Myth No. 3
Organisations can use a 'one size fits all' approach to developing leaders.
Instead, companies should be investing energy into understanding the business context and culture in Asia to tweak leadership development plans for the Asian context.
Adjusting to the Eastern mindset
With Asian companies growing internationally, it is also important to touch upon how Western employees will need to adjust their working or communication styles when working in Asian organisations and with Asian leaders. In his article, Barriers to Entry: Overcoming Challenges and Achieving Breakthroughs in a Chinese Workplace,15 Paul Ross highlighted differences in corporate culture he saw when working in China. For example, relationships between manager and staff may be more hierarchical, and employees may not feel empowered to disagree with their managers in meetings.
In recent history, the onus has been on Asians to understand the Western mindset and to fit in with Western ways of working. With the balance of power shifting east and Asian companies increasingly penetrating Western markets, that is set to change. Westerners will have to become better at understanding Asian ways of doing things.
Organisations that have achieved success in improving leadership diversity demonstrate that change is certainly possible. May Tai, the first Asia Managing Partner of Asian descent at international law firm Herbert Smith Freehills, recalls starting her career in the London headquarters of the firm, where she was one of very few Asian employees at the time. Reflecting on her own career progression and at the increasing promotion and recruitment of partners of Asian descent around the firm’s network in recent years, she notes that 'the firm really believes that diversity is good for our people and our business, and things have really changed due to a conscious effort coming from the top'.
MNCs in a world going east might do well to remember that cultural diversity and inclusion are critical to future success.