Groomed to lead

  • Business
  • Saturday, 10 Oct 2009

Some corporations groom leaders who have made a strong impact on the Malaysian corporate scene.

REMEMBER Tan Sri Amin Shah Omar Shah’s audacious hunt for dozens of chief executive officers (CEOs) in the latter half of the 1990s? Those were heady days for the tycoon. With aggressive expansion plans in mind, his flagship vehicle Business Focus Sdn Bhd advertised for 50 CEOs.

He probably never found that many suitable candidates, and most of those whom he did hire would have soon been out of a job in the wake of the Asian financial crisis anyway. The fact is, it is unrealistic to believe that you can pick an entire gang of business leaders in one go. After all, CEOs do not grow on trees.

But if they did, the orchard would be dominated by a handful of productive species. Globally, these are the likes of General Electric (GE), Procter & Gamble, IBM, McKinsey & Co and Intel Corp, which are widely seen as fertile management training ground. Many of their executives end up helming other large companies.

This phenomenon occurs in Malaysia as well. Go through the resumes of prominent corporate personalities and you will see that a number of them have worked at international players such as Shell, IBM, PricewaterhouseCoopers, KPMG and Accenture.

For example, the Shell alumni include Securities Commission chairman Tan Sri Zarinah Anwar, Malayan Banking Bhd chairman Tan Sri Megat Zaharuddin Megat Mohd Nor, former MAS CEO (and currently Minister in the Prime Minister’s Department) Datuk Seri Idris Jala and Malaysian Alliance of Corporate Directors president Jaffar Indot.

Others who have worked at Shell include Kencana Petroleum Bhd CEO Datuk Mokhzani Mahathir, Lembaga Tabung Haji CEO Datuk Ismee Ismail, The New Straits Times Press (M) Bhd CEO Datuk Anthony Bujang and MISC Bhd CEO Amir Hamzah Azizan.

Some of the older and larger homegrown companies have produced their share of management and entrepreneurial talent.

Among those who have served at Malayan Banking Bhd (Maybank) are Tan Sri Azman Hashim of the AmBank group, Tan Sri Teh Hong Piow of Public Bank Bhd, Tan Sri Khoo Kay Peng of the MUI group and Datuk Seri Ismail Shahudin, who previously headed MMC Corp Bhd and Bank Muamalat Malaysia Bhd.

Many ex-Petronas executives have gone on to set up and run other oil and gas companies. Dialog Bhd co-founder Ngau Boon Keat was with the national oil company in the 1970s. Several directors of Alam Maritim Resources Bhd have gone through the Petronas mill.

A concentration of CEOs

Surprisingly, a trinity of organisations that are no longer around have played a significant part in the careers of many current heads of government-linked companies (GLCs).

What do these men have in common: Maybank CEO Datuk Seri Abdul Wahid Omar, Tenaga Nasional Bhd CEO Datuk Seri Che Khalib Mohd Noh, Felda Holdings Bhd group managing director Datuk Mohd Bakke Salleh, Ismee of Lembaga Tabung Haji, Bank Islam Malaysia Bhd MD Datuk Zukri Samat and Danajamin Nasional Bhd chairman Datuk Seri Abdul Hamidy Abdul Hafiz?

You can also add to this group Ekuiti Nasional Bhd CEO Abdul Rahman Ahmad, Media Prima Bhd group MD Datuk Amrin Awaluddin and Malaysian Resources Corp Bhd group MD Shahril Ridza Ridzuan.

They have all worked at one or two of these three companies – Bumiputra Merchant Bankers Bhd, the Amanah Capital group and Pengurusan Danaharta Nasional Bhd.

These companies are linked in that a number of key executives of Bumiputra Merchant Bankers had moved to Amanah Capital, which in turn provided a number of core employees when Danaharta was set up in 1998.

Symphony House Bhd group chief executive Datuk Azman Yahya, who had been with all three organisations and was Danaharta’s first MD, says Datuk Azlan Hashim was primarily responsible for building this cadre of top-echelon management.

Azlan is the former chairman of the Kuala Lumpur Stock Exchange and Proton Holdings Bhd. As CEO of Bumiputra Merchant Bankers and then group MD of Amanah Capital Malaysia Bhd in the 1990s, he was Azman’s boss.

Says Azman, “Bumiputra Merchant Bankers was my first experience working with a group of highly motivated and aggressive young professionals.” These included Maybank’s Abdul Wahid and Tenaga Nasional’s Che Khalib.

Also among Azman’s contemporaries at the investment bank was Datuk Iskandar Mizal Mahmood, who is now CEO of Malaysian Biotechnology Corp Sdn Bhd (Biotechcorp).

Recalls Iskandar, “We had a lot of fun together, but there was also a culture of excellence in which we competed with each other to see who could come up with the best credit paper or the best deal for the client. This was embedded in the company’s DNA.”

He says he and his colleagues also acquired values such teamwork, integrity, accountability and diligence that continue to be important to them as they move on to other things.

“Although the time that I spent there was short – close to two years – it was an essential building block in my career, providing me the necessary experience and tools for the next stages,” he adds.

Banking on financial strength

It is no accident that many of these former executives of Bumiputra Merchant Bankers, Amanah Capital and Danaharta have some form of financial training and experience.

Says Azman, “If you look at the initial stage of the GLC revamp, there’s a lot of financial aspects to be looked at. You don’t have to be an accountant, but you must be financially savvy enough to understand the issues and to figure out what needs to be fixed.

If you don’t understand what drives your profit, you’re not going to be able to run the organisation.”

An Amanah Capital alumnus, Amrin of Media Prima says, “Anywhere you go, you need to know about financing and financial operations. As Datuk Seri Idris Jala puts it, you have to anchor everything on the P&L.”

Azman believes that their merchant banking experience was also a big factor in putting these men on the CEO track. He points out that investment banking generally produces a lot of high-calibre professionals.

“It’s the nature of the industry that makes sure only those who are capable and aggressive enough to run things and intelligent enough to carry them through, are able to survive and move up in the organisation.

“Perhaps management style has some impact on it, but typically, those who join investment banking are those who have already proven, either in studies or a previous career, that they are able to work in such a fast-paced environment,” he adds.

Amrin says Amanah Capital’s status as one of the largest local merchant banks meant that it got a steady flow of jobs. The more mandates the company received, the more chances for the executives to improve their abilities.

“The work of merchant banks provide exposure, experience and networking opportunities. In dealing with corporate clients, we got to see how they think and do things. We also learn from dealing with clients, working with colleagues and handling associates such as lawyers and advisers,” he adds.

In addition, the high-level interaction with clients – investment banking work typically requires executives to make presentations to CEOs and directors of clients – instils confidence, sharpens the articulation of ideas and gets the executives noticed.

In other words, a potential corporate employer is more likely to recognise the abilities of a merchant banking executive.

In the case of Danaharta, there is also the fact that the asset management company had a finite life. Once it has served its purpose, it will cease operations. There was no such thing as deepening a career in tandem with the organisation’s growth. As such, employees had to plan for their exit from Danaharta.

Says Azman, “You do have to move on and go somewhere else. Whereas with other investment banks, the people grow with the organisations.”

Unlike the situation in companies like GE and McKinsey, where there are conscious and structured efforts to nurture leadership material, the production of CEOs by Bumiputra Merchant Bankers, Amanah Capital and Danaharta is mostly the result of special circumstances and industry-specific factors.

This does not augur well for the Malaysian corporate sector because it suggests that most local companies do not realise the importance of identifying, developing and promoting their leaders from within.

The need for leadership development

In introducing its Top Companies for Leaders study, human resources consulting firm Hewitt Associates says, “Simply put, companies that excel at leader building gain an edge over the competition because they enjoy a surplus of leadership talent in their pipeline and a strong leadership brand, even in the most demanding talent markets.”

Leaderonomics Sdn Bhd CEO Roshan Thiran, an ex-GE executive, argues that reliance on recruiting top managers from outside is a bad idea.

“If we don’t have leadership development, we’re not producing leaders. It means you have to go out to get people. You should measure the cost of hiring externally at the senior level. Measure not just the hiring cost, but also the pain of the organisation when somebody comes from outside,” he says.

“When you bring a CEO from outside, firstly, there’s the pain of him fitting in, and secondly, the pain of him trying to transform the organisation. The new guy won’t just tweak. Generally, he slashes and burns.”

Roshan says the GE way is to build people who are better than those at most other corporations and to invest heavily in them, so that other companies would be more than willing to grab them. And the leadership development is designed as a flow, which means the company does not expect to retain all its executives.

“And when they go, it’s okay because we have another guy, who’s just as good and who can step in to fill the vacancy. And you know what, he’s new to the job and he’s going to come in with fresh ideas,” he adds.

“Also, when you lose a person, you’re actually gaining a friend in another company. It’s interesting how GE leverages on this alumni, this network of CEOs who are ex-GE. If you do leadership development, a lot of the governance stuff becomes easier because you have top-notch guys running the business.”

Essential ingredients

Thiran says the building of a CEO involves four major skill sets.

“The first thing is what most companies call developing the personal self of the person. I define it as personal mastery – how the executives walk, how they talk, how they dress, how they groom themselves and how they communicate. These are all your personal skills. And these determine how effective you are as a person.”

In addition, there is business mastery, in which the executives gain exposure and experience in multi-industries and multi-functions. This way, they can link things together, see the many facets of different things and come up with strategy.

The third component, says Thiran, is credibility, and that comes from having expertise in specific areas instead of being generalists.

He adds: “The final piece is the whole thing about leadership, which is developed through experience. No matter what people say, you cannot teach leadership in a classroom. It’s something accumulated over time through experiences.”

The key is for the company to give the executives roles that enable them to pick up these skills.

According to Thiran, to produce a proportionately high number of CEOs, a company ought to have multiple industry exposure. It should also have some form of diverse job offerings, so that its people get to move around.

“And it should also have some form of institutional learning – maybe talent management is a better word - whereby it can manage the careers of its top talents.”

Thiran laments that it is hard for corporate Malaysia to embrace leadership development because the bosses do not take ownership of the initiative and deem it instead as a HR matter.

“Talent needs to be owned by the business leader,” Thiran insists.

“That requires a cultural change. Otherwise, we will become less competitive over time, and every 10 years or so, we will be griping about the lack of CEO talent. If you want to compete regionally, you’ve got to have the best talent and you’ve got to have the ability to keep them.”

Related Stories: Talent rollout from Danaharta The GE effect Hot shots in grooming leaders Short cut to the top Syed Faisal: A number tells a thousand stories

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