U.S. and European multinational corporations are raising their bets on booming emerging markets. The trick is finding the right executives to play their hands.
In rapidly growing countries such as Brazil, China and India, tapping expatriates is becoming obsolete. Instead, global businesses are looking for leaders who have the ability to move easily between different cultures and have deep local roots as well as international operational experience.
Finding such executives 'is very challenging,' said Peter Felix, president of the Association of Executive Search Consultants. 'The talent pool is very small.'
China, India and Latin America will see the greatest shortage of executive talent this year, according to a December poll of 210 AESC members. It marked the third straight year that China and India landed on top of that list, though the first time that Latin America has ranked No. 3.
New hires with coveted backgrounds can command rich pay deals in hot emerging markets, recruiters say. For instance, a Brazilian executive joining a multinational there earns at least 15% more than his or her counterpart managing greater revenue in a developed market, according to recruiters.
Competition for talent can be fierce, which promotes a lot of poaching. Earlier this year, social-networking giant Facebook Inc. hired Alexandre Hohagen as vice president of sales for Latin America, based in São Paolo. He created Google Inc.'s operations in the region and managed them for almost six years, Facebook said in a Feb. 14 announcement. Facebook and Google declined to comment.
In this tough environment, recruiters Fatima Zorzato in Brazil, Steve Mullinjer in China and Anjali Bansal in India often succeed in snaring star executives for global companies. Each works for a major U.S. search firm and won votes from at least three rival firms for being one of the top recruiters in their country.
Here's a look at some of their recent big executive catches in China:
China represents 'the single most strategic investment market in the world for multinationals,' said Mr. Mullinjer, managing partner of China and North Asia for Heidrick & Struggles International Inc. in Shanghai.
The veteran Australian recruiter, who speaks fluent Mandarin, has worked in China for 20 years. He said prospects tapped for key China posts need to know how to work with a company's highest executives as well as people across the across the region.
Daniel Zhang typifies this shift. Assisted by Mr. Mullinjer, Owens Corning in 2009 named Mr. Zhang managing director of its Asia-Pacific building materials group, a huge portion of its business. Mr. Zhang had held management posts inside and outside of China for other global manufacturers like Leggett & Platt Inc. and Lear Corp.
A company spokesman said Owens Corning preferred a mainland Chinese executive for the role, previously occupied by American expatriates, because it wanted greater continuity of leadership.
Mr. Zhang 'has had a very positive influence on the organization,' partly by restructuring his management team, Mr. Mullinjer said. The spokesman declined further comment.
Last year, Mr. Mullinjer recruited 17 executives to work in China for multinational businesses, some of which operate with a Chinese partner or through a joint venture.
The ideal China pick can prove elusive. H-P has looked for a marketing chief for its $4 billion consumer-electronics operation there since last summer, said Train Luo, a former Korn/Ferry International recruiter. He handled the assignment until the Shanghai recruiter switched to CTPartners, a Korn/Ferry rival, in late February.
H-P declined to comment.
The competition has pushed up compensation. High-tech multinationals today pay midlevel China executives at least $300,000 a year, twice what they paid six years ago, Mr. Luo said.
Monday, April 11, 2011
Sunday, April 10, 2011
Meet 'Future You.' Like What You See?
Tessa Price, a 22-year-old college senior, is gazing into a mirror in a virtual-reality laboratory at Stanford University. Looking back at her is Tessa Price—at the age of 68.
Staring into a mirror today and seeing yourself as you will look in the year 2057 is unnerving. But that may be gucci shoes just what it takes to shock Americans into saving more. At Stanford and other universities, computer scientists, economists, neuroscientists and psychologists are teaming up to find innovative ways of turning impulsive spenders into patient savers.
The stakes are high. Employers, having cut back on fixed pensions for years, have pushed workers into 401(k)s and other voluntary retirement plans that offer variable rates of return. Policy makers have tinkered with tax and other incentives to encourage savings. Mutual-fund and insurance companies, sniffing trillions of dollars on which they could earn management fees, have pushed relentlessly to get people to save more.
And yet, according to the Center for Retirement Research at Boston College, 51% of American households are at risk of being unable to maintain their standard of living in retirement, up from 43% in 2004. The center estimates that savings shortfall at $4.2 trillion, or roughly $120,000 per household at risk. In sum, despite decades of badgering, Americans are farther behind than ever in their struggle to save.
Behavioral science offers at least a partial answer: To make long-term financial goals more achievable, you must make yourself feel as if the future is now.
Good Intentions
One key obstacle is the stubborn gap between beliefs and actions. A 2008 study showed that one in five older people who said they were contributing to a 401(k) or other retirement plan weren't putting any money in; the typical employee overestimated how much he was contributing by 79% (reporting $2,328 a year, versus the actual amount of $1,300).
Other research found that 35% of workers who said they weren't saving enough in their 401(k) intended to raise their contribution rate over the next few months—but that only one in eight of them did so.
Why is it so difficult for people to set aside money for the long-term future? Low earnings and high temptations are obvious reasons. But perhaps the most basic cause is a fundamental human frailty: We view our future selves as strangers.
Estimating with any precision what you will want 30 or 40 years from now is almost impossible. You don't know your future desires, because you don't know your future self. What will you want or need when you are 65 or 70 or 80 or older? Who knows?
Viewed this way, it isn't surprising that the young typically don't want to save for their retirement, since that stage of life feels as if it will be lived by someone else. And when you save money today on behalf of your remote future self, you deprive your immediate present self of cash you could use right now.
Of course, if you spend tomorrow's savings today, you won't have cash when you need it in the future—but that day of reckoning is decades off. That is true for those of all ages, but the lost opportunity is greatest for young people, because money set aside at an early age has more years to grow.
Yet it is highly unusual for people to think more vividly about their future selves than about their present selves, say psychologists.
Warren Buffett is one rare—and extreme—example. When he was a young man, according to Alice Schroeder's biography 'The Snowball,' Mr. Buffett often asked, 'Do I really want to spend $300,000 for this haircut?' He was thinking about the vast amount of money he wouldn't have decades in the future because of the small outlay he might make in the present.
The project underway at Stanford seeks to close this gap between the present self and the future self, without turning young people into misers. By enabling the young to see themselves as they will be when they are old, virtual-reality technology can transform their urge to spend for today into a willingness to save for tomorrow.
William Sharpe, the Nobel Prize-winning economist who co-founded Financial Engines Inc., a firm that provides investment advice to retirement savers, says, 'The idea of getting people to feel sorry that 'Poor old me, at age 70, is going to need help if I don't save more now'—I regard this not as persuasion, but as additional information.' After he heard about the technique, Prof. Sharpe asked to monitor the research and became a co-author of a forthcoming study on its effectiveness. 'It's very promising work,' he says.
The Proteus Effect
These researchers are tapping into what is called the Proteus effect, behavioral alterations in the real world that are triggered by changes in how our bodies appear to us in a virtual world.
It can be a powerful tool. Experiments have shown that if you are sent into a virtual-reality environment with a particularly good-looking 'avatar,' or digital self-image, you are likely to become more sociable. Seeing your avatar exercising in a virtual world can spur you to add an hour a day to your exercise routine in the real world; people whose avatars do the dirty work of sawing down a virtual tree use less real paper later in the day. Given a taller avatar, you will act more confident and negotiate more selfishly.
How does the Proteus effect make people more willing to save? 'Imagine that you just got a horrible haircut or bought a great new suit,' says Jeremy Bailenson, a virtual-reality researcher who runs the Stanford lab. 'You already know that your physical appearance affects your attitudes, your emotions and your behavior even if you're not consciously thinking about it. The same thing happens in virtual reality, when you become this person with a different body or face. Those features of your avatar affect your mind.'
The scientists developed an avatar of the future Ms. Price by using special software to 'age-morph' a recent photograph until the young woman's eyes became heavily lined, her smile faded and her blond hair went steel gray. Less than four years out of high school, Ms. Price has suddenly become a grandmother.
Ms. Price sees her avatar in a mirror displayed inside a virtual-reality headset. Eight cameras tucked away just below the ceiling of the laboratory capture Ms. Price's precise position in the room, so the older avatar she sees in virtual space replicates the movements the young woman makes in real space.
As today's Ms. Price moves, the Ms. Price of tomorrow mimics her movements with uncanny precision. 'She seems a bit more worn, less fair-skinned,' Ms. Price says as she gazes face to face at her future self. Ms. Price leans forward, then back, and her older mirror image moves with her. 'She seems somewhat reserved, not that engaged. I feel like, I feel like there's some sort of resemblance, still … I don't know that she necessarily looks exactly like me, but I see how she could be me.'
After about three minutes, Ms. Price doffs the virtual-reality goggles. She sits down at a computer terminal and answers a set of questions about time and money.
If Ms. Price is typical, she could emerge from this experience willing to save more. 'People who see their future selves end up being more patient,' says Hal Ersner-Hershfield, a psychologist at the Kellogg School of Management at Northwestern University, who led the project.
In one experiment, young people who saw their elderly avatars reported they would save twice as much as those who didn't. In another, students averaging 21 years of age viewed avatars of themselves that smiled when they saved more and frowned when they saved less. Those whose avatars were morphed to retirement age said they would save 30% more than those whose avatars weren't aged.
The potential real-world applications of the Stanford research are promising. 'An employee's ID photo could be age-morphed and placed on the benefits section of the company's website,' says Dan Goldstein of London Business School, another psychologist who worked on the project.
'From there,' he says, 'we're just a few clicks and a few minutes away from someone making a lasting decision that can be worth thousands [of dollars].' No employee's photo would be altered without permission, to minimize any concerns that people were being manipulated into saving.
Cathy Smith, co-director of the Allianz Global Investors Center for Behavioral Finance, says Allianz—one of the world's largest asset managers—hopes later this year to devise a simpler version of the Stanford technology. The firm would make it available free of charge to financial advisers 'so they can incorporate it into their practice to encourage clients to save,' Ms. Smith says.
You might, for example, give your financial adviser a photo of yourself. Later, while reviewing your saving plan, he might show you an age-morphed avatar and ask you how your future self would feel if you end up short on money in retirement.
Age-morphing isn't the only technique that can enable savers to feel as if the future is now. Several other experimental ideas from academic laboratories show promise in the real world.
• Automatic escalation. About 40% of retirement plans, according to the Profit Sharing/401k Council of America, sign up employees automatically, meaning no action must be taken to begin saving for retirement. Many workers contribute only at the low initial rate their employer signs them up for, usually 3%. but 'auto-escalation' programs, which enable employees to raise their contributions by a specific percentage, say by 1% annually, can address that problem. Only about 9% of workers who are eligible for such programs choose to participate, however, according to Fidelity Investments. If your plan offers such a feature, sign up.
• Set a retirement date today. 'Referring to a specific age helps you transport yourself into the future and think of the needs you will have then,' says Shane Frederick, a marketing professor at Yale School of Management. He found in one study that people were willing to wait nearly 40% longer for a larger reward when they were prompted to think of getting the money at an exact future age.
To encourage yourself to save more patiently, you could christen an account with the date on which you expect to retire, say 'The March 26, 2036, Fund,' or simply 'For When I'm 60.'
• Web tools. Derek Koehler, a psychologist at the University of Waterloo in Ontario, has found that visiting a website to fill out biweekly progress reports can enable people to boost their savings. Those who monitored their progress—by seeing how much they wanted to save and their deadline to achieve it, and then reporting how much they had set aside so far and whether they still were on track—were almost 20% more likely to hit their savings target than those who didn't fill out the reports.
People consistently deny the need for such prompting, says Prof. Koehler, but there isn't any denying that the prompting is effective. There isn't a reason why you couldn't use a smart phone or calendar software to set up do-it-yourself prompts.
• Getting specific. Research sponsored by ING Financial and conducted by behavioral scholars Shlomo Benartzi of UCLA, Sheena Iyengar of Columbia University and Alessandro Previtero of the University of Western Ontario shows that when people spend three to five minutes imagining and writing down how they would feel in a comfortable and worry-free retirement, they become roughly 25 percentage points more likely to increase their savings on the spot. (Elaborating on the negative consequences of undersaving also works, but not quite as well.)
The Shadow of the Avatar
Back in the lab at Stanford, after she steps back into the real world from virtual reality, Tessa Price is still slightly unsettled by coming face to face with her future self.
Describing how she answered the experiment's survey questions about spending and saving, Ms. Price says, 'When the amounts were small, I was choosing to have most of the money right now, tonight. But as the amounts got larger, I found myself hesitating. I don't know if that's because of the avatar, but I found myself pausing to consider it more.'
She adds, 'I don't think of myself as 65 that often.' Perhaps, from now on, she will.
Staring into a mirror today and seeing yourself as you will look in the year 2057 is unnerving. But that may be gucci shoes just what it takes to shock Americans into saving more. At Stanford and other universities, computer scientists, economists, neuroscientists and psychologists are teaming up to find innovative ways of turning impulsive spenders into patient savers.
The stakes are high. Employers, having cut back on fixed pensions for years, have pushed workers into 401(k)s and other voluntary retirement plans that offer variable rates of return. Policy makers have tinkered with tax and other incentives to encourage savings. Mutual-fund and insurance companies, sniffing trillions of dollars on which they could earn management fees, have pushed relentlessly to get people to save more.
And yet, according to the Center for Retirement Research at Boston College, 51% of American households are at risk of being unable to maintain their standard of living in retirement, up from 43% in 2004. The center estimates that savings shortfall at $4.2 trillion, or roughly $120,000 per household at risk. In sum, despite decades of badgering, Americans are farther behind than ever in their struggle to save.
Behavioral science offers at least a partial answer: To make long-term financial goals more achievable, you must make yourself feel as if the future is now.
Good Intentions
One key obstacle is the stubborn gap between beliefs and actions. A 2008 study showed that one in five older people who said they were contributing to a 401(k) or other retirement plan weren't putting any money in; the typical employee overestimated how much he was contributing by 79% (reporting $2,328 a year, versus the actual amount of $1,300).
Other research found that 35% of workers who said they weren't saving enough in their 401(k) intended to raise their contribution rate over the next few months—but that only one in eight of them did so.
Why is it so difficult for people to set aside money for the long-term future? Low earnings and high temptations are obvious reasons. But perhaps the most basic cause is a fundamental human frailty: We view our future selves as strangers.
Estimating with any precision what you will want 30 or 40 years from now is almost impossible. You don't know your future desires, because you don't know your future self. What will you want or need when you are 65 or 70 or 80 or older? Who knows?
Viewed this way, it isn't surprising that the young typically don't want to save for their retirement, since that stage of life feels as if it will be lived by someone else. And when you save money today on behalf of your remote future self, you deprive your immediate present self of cash you could use right now.
Of course, if you spend tomorrow's savings today, you won't have cash when you need it in the future—but that day of reckoning is decades off. That is true for those of all ages, but the lost opportunity is greatest for young people, because money set aside at an early age has more years to grow.
Yet it is highly unusual for people to think more vividly about their future selves than about their present selves, say psychologists.
Warren Buffett is one rare—and extreme—example. When he was a young man, according to Alice Schroeder's biography 'The Snowball,' Mr. Buffett often asked, 'Do I really want to spend $300,000 for this haircut?' He was thinking about the vast amount of money he wouldn't have decades in the future because of the small outlay he might make in the present.
The project underway at Stanford seeks to close this gap between the present self and the future self, without turning young people into misers. By enabling the young to see themselves as they will be when they are old, virtual-reality technology can transform their urge to spend for today into a willingness to save for tomorrow.
William Sharpe, the Nobel Prize-winning economist who co-founded Financial Engines Inc., a firm that provides investment advice to retirement savers, says, 'The idea of getting people to feel sorry that 'Poor old me, at age 70, is going to need help if I don't save more now'—I regard this not as persuasion, but as additional information.' After he heard about the technique, Prof. Sharpe asked to monitor the research and became a co-author of a forthcoming study on its effectiveness. 'It's very promising work,' he says.
The Proteus Effect
These researchers are tapping into what is called the Proteus effect, behavioral alterations in the real world that are triggered by changes in how our bodies appear to us in a virtual world.
It can be a powerful tool. Experiments have shown that if you are sent into a virtual-reality environment with a particularly good-looking 'avatar,' or digital self-image, you are likely to become more sociable. Seeing your avatar exercising in a virtual world can spur you to add an hour a day to your exercise routine in the real world; people whose avatars do the dirty work of sawing down a virtual tree use less real paper later in the day. Given a taller avatar, you will act more confident and negotiate more selfishly.
How does the Proteus effect make people more willing to save? 'Imagine that you just got a horrible haircut or bought a great new suit,' says Jeremy Bailenson, a virtual-reality researcher who runs the Stanford lab. 'You already know that your physical appearance affects your attitudes, your emotions and your behavior even if you're not consciously thinking about it. The same thing happens in virtual reality, when you become this person with a different body or face. Those features of your avatar affect your mind.'
The scientists developed an avatar of the future Ms. Price by using special software to 'age-morph' a recent photograph until the young woman's eyes became heavily lined, her smile faded and her blond hair went steel gray. Less than four years out of high school, Ms. Price has suddenly become a grandmother.
Ms. Price sees her avatar in a mirror displayed inside a virtual-reality headset. Eight cameras tucked away just below the ceiling of the laboratory capture Ms. Price's precise position in the room, so the older avatar she sees in virtual space replicates the movements the young woman makes in real space.
As today's Ms. Price moves, the Ms. Price of tomorrow mimics her movements with uncanny precision. 'She seems a bit more worn, less fair-skinned,' Ms. Price says as she gazes face to face at her future self. Ms. Price leans forward, then back, and her older mirror image moves with her. 'She seems somewhat reserved, not that engaged. I feel like, I feel like there's some sort of resemblance, still … I don't know that she necessarily looks exactly like me, but I see how she could be me.'
After about three minutes, Ms. Price doffs the virtual-reality goggles. She sits down at a computer terminal and answers a set of questions about time and money.
If Ms. Price is typical, she could emerge from this experience willing to save more. 'People who see their future selves end up being more patient,' says Hal Ersner-Hershfield, a psychologist at the Kellogg School of Management at Northwestern University, who led the project.
In one experiment, young people who saw their elderly avatars reported they would save twice as much as those who didn't. In another, students averaging 21 years of age viewed avatars of themselves that smiled when they saved more and frowned when they saved less. Those whose avatars were morphed to retirement age said they would save 30% more than those whose avatars weren't aged.
The potential real-world applications of the Stanford research are promising. 'An employee's ID photo could be age-morphed and placed on the benefits section of the company's website,' says Dan Goldstein of London Business School, another psychologist who worked on the project.
'From there,' he says, 'we're just a few clicks and a few minutes away from someone making a lasting decision that can be worth thousands [of dollars].' No employee's photo would be altered without permission, to minimize any concerns that people were being manipulated into saving.
Cathy Smith, co-director of the Allianz Global Investors Center for Behavioral Finance, says Allianz—one of the world's largest asset managers—hopes later this year to devise a simpler version of the Stanford technology. The firm would make it available free of charge to financial advisers 'so they can incorporate it into their practice to encourage clients to save,' Ms. Smith says.
You might, for example, give your financial adviser a photo of yourself. Later, while reviewing your saving plan, he might show you an age-morphed avatar and ask you how your future self would feel if you end up short on money in retirement.
Age-morphing isn't the only technique that can enable savers to feel as if the future is now. Several other experimental ideas from academic laboratories show promise in the real world.
• Automatic escalation. About 40% of retirement plans, according to the Profit Sharing/401k Council of America, sign up employees automatically, meaning no action must be taken to begin saving for retirement. Many workers contribute only at the low initial rate their employer signs them up for, usually 3%. but 'auto-escalation' programs, which enable employees to raise their contributions by a specific percentage, say by 1% annually, can address that problem. Only about 9% of workers who are eligible for such programs choose to participate, however, according to Fidelity Investments. If your plan offers such a feature, sign up.
• Set a retirement date today. 'Referring to a specific age helps you transport yourself into the future and think of the needs you will have then,' says Shane Frederick, a marketing professor at Yale School of Management. He found in one study that people were willing to wait nearly 40% longer for a larger reward when they were prompted to think of getting the money at an exact future age.
To encourage yourself to save more patiently, you could christen an account with the date on which you expect to retire, say 'The March 26, 2036, Fund,' or simply 'For When I'm 60.'
• Web tools. Derek Koehler, a psychologist at the University of Waterloo in Ontario, has found that visiting a website to fill out biweekly progress reports can enable people to boost their savings. Those who monitored their progress—by seeing how much they wanted to save and their deadline to achieve it, and then reporting how much they had set aside so far and whether they still were on track—were almost 20% more likely to hit their savings target than those who didn't fill out the reports.
People consistently deny the need for such prompting, says Prof. Koehler, but there isn't any denying that the prompting is effective. There isn't a reason why you couldn't use a smart phone or calendar software to set up do-it-yourself prompts.
• Getting specific. Research sponsored by ING Financial and conducted by behavioral scholars Shlomo Benartzi of UCLA, Sheena Iyengar of Columbia University and Alessandro Previtero of the University of Western Ontario shows that when people spend three to five minutes imagining and writing down how they would feel in a comfortable and worry-free retirement, they become roughly 25 percentage points more likely to increase their savings on the spot. (Elaborating on the negative consequences of undersaving also works, but not quite as well.)
The Shadow of the Avatar
Back in the lab at Stanford, after she steps back into the real world from virtual reality, Tessa Price is still slightly unsettled by coming face to face with her future self.
Describing how she answered the experiment's survey questions about spending and saving, Ms. Price says, 'When the amounts were small, I was choosing to have most of the money right now, tonight. But as the amounts got larger, I found myself hesitating. I don't know if that's because of the avatar, but I found myself pausing to consider it more.'
She adds, 'I don't think of myself as 65 that often.' Perhaps, from now on, she will.
Wednesday, April 6, 2011
Follow the trend of the international big-name Japanese lead the design tsunami charity do
Relief efforts have been in overdrive since the earthquake and subsequent tsunami hit the north-east coast of Japan two weeks ago. And in that short time, countless fashion labels have put their talents to good use, designing products and launching charity initiatives in aid of the cause. From T-shirts to tote bags, a range of affordable and stylish items have been created to help benefit the victims of the Japanese disaster. Call for action: This t-shirt by Opening Ceremony ($30) is an example of how fashion designers are clubbing together to help raise funds for the Japanese tsunami relief, 100 percent of this piece goes to the Red Cross.
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