By Ding Jingping

With leadership, it mainly refers to two basic abilities of leaders: orientation and setting up objectives, and motivating others to achieve the objectives, i.e. strategic decision-making ability and organization and performance ability. As abilities are attached to and incarnated in human beings, leadership is closely connected with human beings, namely, leaders themselves. When it comes to leadership, it is a combination of both the leaders themselves and their qualities. In enterprises, the leadership that we refer to is mainly demonstrated by executives, particularly the middle-level and high-level ones.

Currently, China's leadership resources suffers a huge gap, which is incommensurate with the rapid development of the Chinese economy and hindered the development of many enterprises - the globalization of leading enterprises, the transition of state-owned enterprises, and the localization of foreign-funded enterprises in China are all faced with the bottleneck of leadership scarcity or the predicament of leadership fault - the executives of the older generation have either left their positions or be eliminated by the history, while the talents who have received ten odd years of MBA education still have a long way to go in terms of experience and qualifications before they can become high-level executives of enterprises.

This will surely bring forth hidden dangers for enterprises future development. Furthermore, what deserves attention is the fact that the China's leadership suffers not only quantitative gap but also qualitative one.

What is the status quo of Chinese enterprises' leadership? Let's first take a look at the following facts:

¡ï The satisfaction of employees with leadership is comparatively low.

The survey in 2004 shows that among the ten factors which are the most influential to staff's loyalty, the remuneration and welfare benefits is the No. 1 factor with the least satisfaction of the staff - 35 percent, the leadership of the management team is the factor with the second least satisfaction - 49 percent. Though the result of the survey is around the average of the Asia-Pacific Region, it also clearly shows that the satisfaction of Chinese staff with the leadership of enterprises is comparatively low. Such a low-level appraisal will affect the enterprises' final performance and shareholders' return.

¡ï The pay rise of management team is larger than that of other position-holders.

The pay in Mainland China grows by 7.1 percent on average, ranking the 3rd among the surveyed Asian countries (areas). The pay rise of middle-level management positions in Beijing and Shanghai are respectively 8.0 percent and 8.1 percent, higher than the growth margin of other cities and positions.

¡ï The separation rate of the management team remains high.

The result of the survey shows that the separation rate of the staff members, as a whole, in the four surveyed cities in China is 13.9 percent, the same with that of Thailand, ranking 1st in Asia. And the separation rate of the staff in management team in Beijing and Shanghai are the highest, which are respectively 17.3 percent and 18.8 percent.

The result of the survey shows that while the pay rise of executives in China is at a high level, the separation rate of them is above the average level. In the meantime, staff's satisfaction with them is relatively low. It is a reasonable logic that the executives with high salaries should be less likely to relinquish their positions, and high payment should be positively correlated to staff's satisfaction. But why is the result contradictory to the logic and what are the reasons for the above-mentioned phenomena?

According to our analyses, the above questions should be attributed to the following major reasons:

¡ï Managerial talents with powerful leadership are highly demanded in the market.

The executives of enterprises in China, a relatively scarce resource, are still in short supply in the market. The high separation rate in the management team indicates that the people of this group are highly demanded in the market and that they have relatively plenty of job opportunities. Therefore, they have more choices.

Due to the large market demand for the executives, enterprises have to intensify their efforts to retain these talents, paying continuously more and more costs, and the senior executives face more opportunities than any time in the past, thus being more capable in bargaining with the enterprises. The huge gap of market demand is an abysmal black hole, sucking and scrambling for the limited number of management talents in China.

In certain industries, the demand for leadership talents is even greater. Take the finance industry in Shanghai for example, the managers engaged in finance in Shanghai are around 100 thousand, while the figure for New York is 770 thousand and 350 thousand for Hong Kong. Taken the proportion of over 10 percent citizens in international financial centers engaged in finance, Shanghai lacks over a million financial talents. It can be seen that with China¡¯s finance industry opening up wider to the outside world, there will be a soaring demand for talents.

¡ï The requirements for the abilities of management talents in enterprises are higher and higher.

Different Chinese enterprises' requirements for the core qualities of high-level leadership have many things in common, such as initiatives, execution power, attention to details, influence, abilities to cultivate others, to lead a team, expertise, and skills, etc. These qualities are usually regarded as the indispensable core abilities of the management talents in Chinese enterprises, which were absent in many enterprises in the past.

In addition to the requirements for competent qualities, there emerged the demand of Chinese enterprises for senior inter-disciplinary talents with experience in management in the international market as Chinese enterprises are in world competitions and their face-to-face competitions with multinationals are inevitable in both the domestic and overseas markets. As compared with the criteria used for the selection of executives in the past, Chinese enterprises demand for senior talents who know their businesses, foreign languages, and are familiar with foreign management environments, culture and laws is increasing, while the scarcity of executives who are proficient in international economy and laws, familiar with the domestic and overseas markets, with visions for the world and strategic decision-making ability, has already restricted the stride of state-owned enterprises directly under the Central Government for the outside world.

¡ï The demands are relatively high, while the supply of qualified senior management talents in the market is lagging.

First of all, the aggregate volume is too small to satisfy the demands of various enterprises. In foreign countries, the major source of enterprises' senior executives is professional managers. As the managers market in developed countries has a longer history in evolution and development than that in China, the professional managers in foreign countries are more mature than those in China in terms of quantity and quality. Professional managers in China, as a group, have been in the process of formation in recent years. Over the past twenty years since China opened its door to the outside world, and over the past ten odd years since China introduced MBA education, some talents with corresponding knowledge structures have been groomed in China in such a short period of time, but they, who are mostly in their thirties or forties, are in the middle-level of the enterprises management. Though they are promising high-level executives in the future, there is still a long way to go for them to meet the requirements for high-level executives in terms of experience and qualifications.

Secondly, the demand of enterprises for bachelors of management and MBA graduates these years has decreased as compared with years ago, but it still maintains a steady growth; it is predicted there will be an enrollment of about 13,000 students for MBA across the country in 2005, a decline of 20 percentage points on a year-on-year basis. According to the statistics of Ministry of Personnel, as compared with 2004, a notable change in demands for college graduates in 2005 is that the demand for graduates majoring management (mainly including business management, enterprises management and economic management, etc) increased quite fast, topping for the firsttime among the 10 most-needed majors in the past three years. These people need at least five years before being chastened to be qualified for middle-level management positions since their employment after graduation.

In addition, the qualities of those talents groomed in the planned economy mostly fail to meet today's requirements. Under the criteria for the selection and appointment of talents in enterprises in the past, the executives of state-owned enterprises see themselves more as government functionaries than entrepreneurs. Most of them lack the spirits and skills to fight in the market. In the meantime, the longstanding system of retirement at the age of 60 and feeble remuneration motivation system have brought about short-term actions on the part of the executives of these state-owned enterprises and made them lack sustained impetus for innovations. And a few capable executives had to leave their high-level management positions due to their old age.