FOLLOW THE LEADER

Asian companies find that the best classrooms for managers are in their own premises

Haragopal Mangibudi is the kind of employee who has an unflinching motivation to work his way high up the corporate ladder. A trained engineer, Mangibudi wanted to go beyond software development as a way to speed up his climb to senior management at Infosys Technologies, the Indian outsourcing giant. So in 1998 he attended the Indian Institute of Management in Bangalore to learn about commercial aspects of the business and work on his weaknesses. "Working as a software engineer, I was very insulated from the customer environment," he admits.

No doubt the business school credential was an advantage that earned him his current position in Infosys as associate vice president for professional services and client delivery. After all, the famed IIM system, more selective than Harvard or Stanford, has produced distinguished chief executives in India and abroad, including Indira Nooyi, former CFO and now President of PepsiCo, the New York-based food and beverage giant and restaurant chain operator. But ask the 40-year-old Mangibudi where he experienced his best classroom education, and he waves in the direction of the expansive, manicured lawns of the Infosys Leadership Institute.

That's right, we're talking about instructor-led, classroom training right in the premises of the corporate headquarters or a plush purpose-built facility nearby.

These days, Asian companies are seeing the benefits of in-house executive education, investing in concrete buildings and sacrificing management time to develop divisional heads and C-level successors. Asian companies already spend 3.8 percent of payroll on training - the highest in the world, according to the American Society for Training and Development (ASTD). And while no detailed figures exist, the amount of money Asians spend for in-house training could only be substantial.

This is more than likely to become a trend. The ASTD study, based on responses from 550 organizations from 42 countries in Asia Pacific, Europe and the Middle East, and North and Latin America, found that only 26.2 percent of training expenditures went to external providers. While outsourced learning isn't likely to go away, corporate in-house education - as opposed to sending employees to full- or part-time MBA or executive MBA programs - is on the rise. In the US alone, the ASTD projected that employer-provided training grew 37 percent from 2000 to 2001, while that for outsourced training actually declined.

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SPREAD THE WORD

Take Infosys as living proof

As G.K. Jayaram, former chairman of the company who now heads the Infosys Leadership Institute, puts it: "Training is necessary if we want to have an inventory of future leaders." And in-house training with a price ticket of about 5 percent of revenue is cheaper he reckons because of economies of scale. With an initial investment of US$7.3 million in 2001, the education, research, and management development center based in Mysore, India has grown big enough to employ 70 full-time teachers to educate 14,000 Infoscions - as the company calls its employees - of various levels. Each employee is required to undergo seven days of technical training and two days of managerial training a year. In addition, they take courses in personal effectiveness and international communication skills.

"Our company has been expanding so fast and our industry has changed so much in the past several years that if we don't train our people properly and adequately, our survival would be in danger," says Jayaram. So seriously does he take in-house training that the Infosys godfather demands incumbent senior managers lead a series of workshops and seminars as well, called Leaders Teach. And why not? If business schools such as Harvard or Wharton brandish their brain power on the basis of case studies and research, Infosys executives can very well teach their employees the skills they have learned from actual challenges the company has faced.

So the top executives of Infosys - from the chairman of the board and the board of directors, to the CEO, CFO, chief operating officer and chief information officer - are all required to teach eight to ten days a year at the Institute, a three-hour drive from headquarters. The workshops try to develop leadership skills, strategic planning, change management and an awareness of the issues and challenges facing the firm. It is the kind of hands-on, first-hand learning that business schools can't supply. "The present leaders of the company have all the knowledge and experience in the industry," says Jayaram. "They know how the company is run, so they are in the best position to coach the future leaders."

And what has Infosys gained from two years of running the in-house training center? Narayana Murthy, the current Infosys chairman and "chief mentor", views the learning institute as a convenient but efficient way of decentralizing management. "We are creating a large corporation with the soul of a small company, and we achieved this by decentralizing decision making and involvement," he says. "For a growing corporation like us, it is essential to create leaders."
Mangibudi hopes he is one of them, having attended the Institute on top of the IIM. "What I've found is, company leaders have more hands-on and practical knowledge, while the academics know more about concepts and theories." And as Mangibudi very well knows, no amount of business school case studying could prepare him for executing his day-to-day duties. "The [Infosys] Institute taught me how to talk to bankers and CEOs, how to make a sales pitch, and how to network and build client relationships."

Certainly, learning these skills helped Mangibudi contribute to the spectacular growth of Infosys' financial services software division, where he works. In 2001, revenues from this segment of the company surged to US$140 million, from US$61 million in 2000.

Legendary Learning

Mary Ma, CFO of Legend Holdings, the US$2.7 billion a year Chinese computer maker and distributor, is herself counting on the Legend Management School to improve the skills of her finance staff. "I felt there were difficulties when I talked to them about returns, and they couldn't understand me," says Ma. "With the management school, I can make proposals to the vice president for human resources and co-ordinate with him on, say, six courses with different finance subjects this year."

The management school is no small HR project; it is a separate building in a suburb of Beijing. While Ma benefits by sending her staff to the school, it is by no means focused entirely on finance. In fact, the school is an indoctrination center - of the capitalist kind - for the state-controlled company. "The Legend Management School is where we first communicate with our employees about our corporate culture," says Ma. "And this culture is based on one guiding principle: results speak."

Ma says she can't stress enough the importance of the role of the school in easing the working mentality of its employees away from the patriarchal system that operates in most Chinese state-controlled firms. "I can tell you my personal experience," she says. "Before I joined Legend, I worked in the Chinese Academy of Sciences. During my 10 years there, I saw that the [employee] credit and grading system was totally different - you just say how many overtime hours you've worked. Even if you'd delivered better results, if you didn't have very good personal relationships, and you didn't know how to please your boss, you wouldn't be rewarded."

As Legend competes with the likes of IBM and Hewlett Packard in China - and hopefully the world - this mentality has to go, and the management school is the first step towards enhancing employees' knowledge about international best practices in finance and accountability. In 2001, says Ma, the management school invited consultants from McKinsey and human resources executives from a Swiss company to train "very senior management" about performance measurements. The result was almost immediate. In 2002, Legend overhauled its compensation system, linking the bonus to profitability.

Naturally, the school is not just for senior managers. "Every new member of staff coming to Legend has to go to that school for at least three weeks, though not on a full-time basis." Ma's finance staff undergo training in professional skills such as accounting, financial control, and investment valuation. "They have to pass these different courses, including the course on corporate culture," she says.

Ideally, training junior employees should be in the hands of senior managers, including Ma, but the reality is that they could not afford to be away from their tasks for a stretch of one week. "We have a special training department," says Ma. "Previously, the courses were taught by internal senior management but now we have more and more external consultants coming to Legend to give special courses, for instance, accounting firms giving courses on finance for non-financial managers."

Haier Education

In-house education at Haier Group, a mainland white goods manufacturer in the eastern port city of Qingdao, couldn't be more practical. While the school provides lessons on the usual management and financial skills that Legend and Infosys try to develop, its core course is logistics. This is hardly surprising, since Haier is already a US$5 billion-a-year company with big ambitions - it wants to beat Samsung, Whirlpool, General Electric and Electrolux in its sector, not just in China, but also in the US.

At the last count, Haier had 18 design institutes, 10 industrial complexes (in China, the US and Pakistan), 58,800 sales agents and 11,976 after-sales service centers worldwide. As in all good logistics planning, the highlight of employee education at Haier is operational transparency.
"Everything is absolutely transparent to employees," says Marshall Meyer, a Wharton management professor who has sat in on a school class given by Haier Group's executive vice chairman and president, Yang Mian Mian. "Everyone has to understand the whole chain, from product development to production and distribution. That's what's drilled into them at Haier."

It's easy to understand why. Haier says logistics management has enabled the company to keep the cost of products down at 7.9 percent of sales in 2001, compared to the national average of 30 percent. It also prides itself in nearing its goal of zero stock in the warehouse through just-in-time purchase, delivery and distribution. No wonder, then, that the school is located right next to Haier's Information Industrial Park, the group's logistics management center.

Like Legend, the lesson of accountability is not lost on Haier, which is also a state-controlled firm. "Everyone has a picture of the entire organization and how all its parts are related," says Meyer, who wrote about Haier in a Wharton journal. "If you ask a worker where an order comes from, he can tell you who the customer is," he says. "If the distribution folks don't collect the money, no one else gets paid." Also, the school doesn't just cater to Chinese executives. In 2001, the university granted certificates to nine of its US employees. The corporate website calls it "the cradle of future international talents."

Non-stop Training

In Australia, internal training is a road well-travelled by the A$20 billion-a-year (US$12 billion) telecoms provider Telstra, which coaches its 40,000 plus workforce in 20 training centers across the continent. Dealing in telephone, mobile, the internet, wireless communications, multi-media and all types of high-tech device, Telstra has its hands full teaching its employees' technical and client service skills.

"How often do we train our people? All the time," says Alan Bedford, general manager, leadership performance and development at the telecom giant. "Our people are always rushing off to classes and courses. That's how busy we are." The company has 70 full-time teachers coaching its technical staff in areas such as broadband installation and product application. Aside from the classroom, Telstra staff learn online, via new job assignments and community services.

To train its managers, Telstra focuses on strategy, financials, innovation, process management and change management. In what is fast becoming a global approach to training practised by many multinationals worldwide, Telstra enlists its top lieutenants - group managing directors from its four business units - consumer relations and marketing, governance and business, infrastructure, regulatory and corporate relations - as tutors. Several times a year, the managing directors coach high flyers on specific company issues in workshops and seminars.

While other Australian companies groom their future leaders by sending them to executive MBA programs, management workshops and leadership seminars, Telstra, a former state-owned monopoly telecom provider, prepares them for the job by giving them practical experience: job assignments, project management, internal and external mentors and community-based assignments, as well as classes and courses. Its "high potential" employees get the benefit of studying in Europe to see how other corporations are run; they serve on non-profit organizations as CEOs, CFOs and COOs; and they have mentors who are chairmen of the board or managing directors at another multinational company.

"We feel that an all-round learning experience will better prepare them for the senior management roles," explains Bedford. Telstra's internal learning and development (L&D) program has recently undergone a revamp. Seven months ago, the company did a study and found its L&D expenses far exceeded that of other large Australian organizations and that it was the only company that had separate L&D and human resources structures. So it integrated its L&D into human resources in a bid to cut costs and align its activities more closely with the company's business objectives. The result: the L&D staff is leaner and the objectives clearer.

Under the new structure, all the technical and customer delivery training - a large part of Telstra's L&D activities due to the nature of its business - falls under the group's business units. So the business unit leaders are now responsible for updating their staff technical and client service skills in areas such as product knowledge and applications, sales calls and call center abilities. "This way, the business units know the kind of learning their people need in order to meet their business targets," Bedford says.

The remainder of the L&D activities - the general management and leadership training - is left to human resources, says Bedford, because it has a better understanding of the company's corporate perspective and overall business objectives. He adds that Telstra tries to keep the technical coaching in-house and uses external suppliers for general management training where it doesn't have the expertise. In Sydney, for example, it has a contract with the University of Sydney and the University of New South Wales for training, and in Melbourne, with Mt Eliza Business School.

In the future, Bedford is looking at e-learning to spread the benefits of internal education. "Our system, e-Learn, is the single company-wide learning management system that supports our overall L&D activities with both consistency and economy," Bedford explains. All Telstra employees are made aware of the intranet sites where they can study training modules any time, anywhere.

Is e-learning - or mobile training - the next frontier for executive education? Data from the American Society of Training and Development suggest that e-learning is still an experiment in the US, and probably on a global scale too. But its goal, however, is the same. Says Graham Hubbard, Mt Eliza's professor of strategic management: "Companies want to have control over their training process and get knowledge out of their top people." In other words, companies are finding that the best way their employees are educated is through their own leaders' hands.

By Lotte Chow, a contributing editor for CFO Asia based in Australia.

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OUTSIDE HELP

Telstra's Alan Bedford and Infosys' G.K. Jayaram are the first to admit that however well run an in-house training program is, companies still need external input. Telstra from time to time uses business schools for management and leadership training and outside specialists for coaching in highly technical areas such as interactive media and 3G. But having external sources doesn't mean giving up control.

"We influence content, which is the core area of training," Bedford says. "We identify what we want to achieve and work with the providers to get the course content that we want, and leave delivery to the schools."

Jayaram says while Infosys can meet 90 percent of its internal training needs, the remaining 10 percent has to come from outside. Every year, the company sends both its faculty and "high potential" employees to workshops and conferences in India and abroad. "Sending our people to a prestigious program say at Stanford really boosts their spirits," Jayaram says. "It gives them exposure outside the company, and an opportunity to meet other top managers and network." Infosys also has invited corporate magnates such as Microsoft founder Bill Gates to give talks at the Institute in its own Distinguished Speakers Series.

Training experts say companies in Asia are putting more emphasis on employee training and development, partly to keep up with the pace of change occurring in the region and partly to catch up in an area that they've ignored. People development used to be an essentially western preoccupation. Now, however, companies across Asia have increased their spending in people development from 2 percent to 3 percent of total revenue a few years ago to 5 percent to 6 percent, according to independent studies.

"People are accelerating on their jobs so quickly and so young that organizations know they have to develop the skills of their staff so that they can perform well," says Larry Wynant, associate dean, Asia, at the Richard Ivey School of Business in Hong Kong.

And because of the global nature of business, today's leadership programs look at global, rather than western, best practices. "They focus on a cross-cultural or a cultural diversity approach," Wynant says. Business schools for example, look at case studies not only in the US or Europe but increasingly in Asia, the fastest-growing economy in the world.

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