Asia's US Investment Boom Has A Leadership Problem

However you feel about the raid, it highlighted a reliance on sending experts in from the foreign parent company instead of developing talent locally. Four decisions determine whether such projects succeed or fail in America.

First is timing. Many Asian firms appoint the US leader only after the factory has been selected, approvals have been sought and contractors engaged. By then, the major decisions affecting US operations have already been taken by people who won't have to deal with their consequences.

The US leader should be in the room while the incentive package, the labor plan and the supplier list are negotiated, which usually means hiring a year or more ahead of the opening rather than a few months.

Second is whether the leader is appointed from HQ or recruited in the US. An executive from Seoul or Tokyo understands the products, the culture and the decision-makers there. A US manager understands the regulators, the labor market and the politics. It's rare to find both.

The most successful approach I've seen is a US CEO with real power backed by a senior HQ manager who acts as a translator, ally and source of early warnings in both directions. And neither role should be a sinecure.

Third is pay and decision-making power, where cultural differences are a bigger barrier than financial ones. US senior managers generally expect a significant portion of their compensation to be tied to performance and want a clear mandate to make decisions in the US without having to consult HQ.

A salary that's high by Tokyo standards can seem low in the US and a title that appears senior can amount to little if any hire above a certain level requires permission from the parent company. Experienced candidates pick up on that quickly.

Fourth is the reporting line. In many firms, the US subsidiary reports to a regional or global function several levels below the CEO. If that's what HQ considers a strategic investment, it's a misnomer.

The US leader needs a fast, direct link to someone at the parent company who can take a decision in a week, not a quarter. When that line of communication is weak, US managers usually leave earlier and the company begins anew with diminished credibility.