It's lunchtime on a Tuesday at Wang Steak House on Taipei's Zhongshan North Road, and the restaurant is nearly full.

Wang Steak chairman Steve Day strolls into the restaurant dressed in blue jeans and a polo shirt. With the economy taking an abrupt turn for the worse and retailers full of anxiety, how can Day appear so relaxed? 

"As long as a company has talent, it has a future," the usually jocular Day says with a serious tone. Regardless of the state of the economy, he never loses sight of the need to cultivate talent.

A day earlier, Day had just finished a second-generation elite training course held on a monthly basis for regional managers. He also never misses "central standing committee" meetings, held every Friday, to cultivate top-level executives. At the gatherings, guest speakers address the group and then Day discusses the message's significance for Wang Steak. President Ma Ying-jeou, Taiwan Semiconductor Manufacturing Co. (TSMC) chairman Morris Chang, Uni-President Enterprises Corp. president Lo Chih-hsien, and even the warden of Taipei Prison in Guishan Rural Township have all been guest speakers at the meetings.

Once a year, Day even hosts a two-day training session for new managers from both Taiwan and China who have been in their positions at Wang Steak for a year. These many efforts to strengthen the company's employees have left it with a deep talent pool.

Anxiety over Lack of Elite Talent

In the 2008-2009 leadership survey conducted by U.S.-based human resources consultant Development Dimensions International, more than 75 percent of top executives felt upgrading and preparing elite talent was their company's top priority, ahead of corporate growth, controlling costs, increasing productivity and other management challenges. 

The shortage of promising talent is an urgent concern faced by enterprises around the globe. "And the area where the problem is most serious is the Asia-Pacific region," says May Wei, general manager of human resource consultant Watson Wyatt Taiwan.

The problem has been compounded as Asian businesses have grown and expanded at a rapid pace in recent years.

"Originally, they were managing a one-market organization," Wei says as she sketches a pyramid to illustrate her point.

"Then suddenly they have to grow into a pyramid. How do they fill the gap at the top of the pyramid? When enterprises say they are short of people, the people they are talking about are the top generals who can lead the troops," says Wei as she draws a huge question mark of concern in the top corner of the pyramid.

Why Taiwanese Enterprises Lack Leadership Talent

"Taiwanese enterprises do not have a model for grooming successors," observes Ji-ren Lee, professor of strategy and management in National Taiwan University's Department of International Business, in explaining why he thinks Taiwan has plenty of soldiers but no commanders.

Taiwan's enterprises are relatively young, but even many older enterprises with 30- or 40-year histories still have the first-generation founders running their operations. Of the enterprises that do stress talent cultivation, the vast majority engages in basic training.

"But educational training does not equate to passing on leadership skills," Lee says, observing that no matter how many training courses are arranged by human resources departments, it is still hard to elevate supervisors to the level of top executives.

The trend has been changing recently, with the leaders of top enterprises jumping to the front lines. CEOs have turned themselves into teachers, personally grooming leadership talent.

Top CEOs Become Teachers

TSMC chairman Morris Chang plans to lead training sessions this year to groom future leaders, selecting individuals around 40 years old with outstanding potential to attend a weekly two-hour class that also includes reading assignments and homework. Chang hopes that the extensive readings and discussions will broaden the students' vision and arouse their own interest in learning. 

BenQ Corporation chairman K.Y. Lee has built a leadership academy on a hilltop in Beipu, about an hour south of Taipei, where he instructs managers at the vice president level and higher. Lee even personally selected every tree planted outside the academy's building.

Aside from his recent wedding, the biggest news made by Hon Hai Group chairman Terry Gou this year is when he told a shareholders' meeting in early June that he would be handing over the company to managers in their 40s and wanted to establish a "Hon Hai University" to cultivate talent. He was even planning to travel to the U.S. and Japan and pick up nuggets of wisdom from General Electric, Motorola, Toyota and other companies with world-class corporate training centers.

An increasing number of enterprises realize that hiring decisions can no longer be held hostage to sheer luck and that their future firepower depends on how they cultivate people today. Here are some of the crucial points Taiwan's top companies are focusing on in nurturing their future leaders.

Key No. 1:

Having company leaders share their time and leadership experience and get involved in defining corporate culture.

The model most often cited for cultivating leadership talent is General Electric's John F. Welch Leadership Center in Crotonville, New York. In fact, what is hardest to duplicate is getting top-level managers to invest of themselves in training others, including participating in evaluating, teaching, mentoring and sharing GE's culture and work experience.

"People will take the training seriously only if the company's top leaders get personally involved," asserts Wyatt Watson's Wei. This is a critical element of training top executive talent, especially since the top leaders possess the richest experience and have the best command of core corporate values and culture.

Key No. 2:

Cultivating a team by having them learn together, rather than nurturing individuals.

In the intensely competitive home furnishings market, retailer Hola Home Furnishings Co. felt sandwiched between upscale department stores offering international brands and bargain vendors expanding their product lines. General Manager Linda Tsai knew Hola needed to reinvent itself and decided to start by investing heavily in training managers.

Tsai shattered the standard practice of having each department train on its own. Instead, she gathered the managers of all departments together to join in classes on aesthetics and popular trends and meet for study groups.

"The most important thing for everybody was to discuss things together and build points of consensus. To implement change, you can't just suggest methods; you have to make everybody believe in them," Tsai says.

Tsai even took top executives, including her purchasing manager and lead designer, to Japan, South Korea and the United States to attend exhibitions and see how others in the industry operated. "Vision is seeing," says Tsai, explaining that she had to have top executives see the future they wanted in order to lead them through future change.

Key No. 3:

Possessing a strategy for assigning tasks.

The flat panel industry has experienced explosive growth over the past 10 years. The king of flat panels in southern Taiwan, Chi Mei Optoelectronics Corp., has on display in its first floor exhibition area a chart listing the company's affiliates and subsidiaries. Much like a game of chess, the more you look at it the more complex it becomes, as Chi Mei constantly adds to the chart by buying stakes in component manufacturers. These businesses represent future challenges for the company's future leaders, but for now serve as their classrooms.

Aside from regular job rotations, Chi Mei sends high-level executives, such as vice presidents or plant general managers, who have performed well or demonstrate potential to sit on the boards of these subsidiaries, immediately broadening their managerial vision.

"In board meetings, they learn how to be a chief executive," says Chi Mei Optoelectronics executive vice president Dr. Biing-Seng Wu. If they want to give a company general advice, he adds, they will naturally learn how to think strategically, decide on a strategic course, and understand the market.

"In particular, they need to learn how to read financial statements," and once they learn how to identify key points, they'll be able to spot problems, Wu says.

Key No. 4:

Giving back to the company, making mentoring part of the corporate culture.

"Cultivating leadership talent is a process," says Jeffrey Wong, managing partner at McKinsey & Company's Taipei office, explaining that the key to cultivating potential talent into a new generation of leaders is not through classroom instruction. "Only through practice can they develop skills," Wong argues, and the process requires mentors to point out their mistakes and help them improve.

Shin Kong Commercial Bank president Lee Tseng-chang, describing his latest project, pulls a management training agenda out of his desk drawer that is filled with his notes from the reports of each manager. He takes every opportunity he gets to communicate with high-potential supervisors and tells them what they've done well, what they need to adjust, where there is a gap, and which department has resources that can help them.

Shin Kong Commercial Bank, which was formed out of a merger with United Credit Commercial Bank, had plenty of room to improve. Lee believes that guiding others and self-improvement are habits that every manager must develop, beginning with himself.

Key No. 5:

Beginning early to cultivate people with potential.

Three years ago, Uni-President Enterprises launched its first marketing "management associate" program, selecting nine new employees fresh out of graduate school and immersing them immediately in an intensive four and a half month training program. The newcomers rotated around departments, attending meetings alongside their supervisors, and even followed around deliverymen to stores in every corner of the island. They also were sent to Uni-President branches in China, Vietnam and Thailand to learn.

"In a very short time, you can understand an enterprise's structure and organizational culture," says Tsai Yi-hsuan, who was one of those first trainees and is now the tea and beverages brand manager. Right from the beginning, she says, she was able to learn how to consider a problem from different perspectives rather than thinking about just one position and learning one job. She also found that knowing the company's department heads made it much easier to communicate.

Three years later, Uni-President's management associate program has begun to attract talent that it was unable to lure in the past, a sign of its growing impact.

Key No. 6:

Using training to create widespread ambition to rise in the organization.

Programs to cultivate specific individuals with potential are often sensitive subjects companies are reluctant to raise, fearing that those not selected will feel the door to their advancement within the organization has been shut.

"The purpose of the high-potential development plan is to inspire the whole company, not just develop a few," says Steven Billiet, chief executive officer of ING Funds Taiwan. "Everybody believes that as long as they perform well, one day they'll have the opportunity to be developed, instead of always seeing only a small group of people taken care of."

This key requires that selection criteria and the selection process are transparent.

Translated from the Chinese by Luke Sabatier

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Chinese Version: 全球企業打造接班猛將