NEW YORK ( TheStreet) -- China and Korea are emerging from third-world status on the same path as Japan. Japan's rapid growth was founded on low-quality, low-priced products. In the 1980s, as its economy strengthened, Japan developed large trade surpluses and produced substantial increases in GDP per person.The predictable result was yen appreciation and associated product cost increases. However, Japan's product quality improvements neutralized its yen-appreciated cost increases. As a result, many Japanese corporations grew into powerful global giants. In 1989, Japan's equity and real estate bubbles popped. Given its rapid growth, the burst was not surprising. What has been surprising is the unabated weakening of Japan's once great global companies. Over the past five years, these companies have continued their long share price decline.
Why don't people want to work for Japanese companies? There are many complaints: "They don't listen to my opinions," or, "I cannot make it to the senior levels," etc. But at the very bottom of the root cause analysis, there is one reason, one "main thing," from which almost all workforce management problems emerge -- coercive leadership. Coercive leadership sounds bad, does not necessarily imply that the leader is cruel. The coercive style is defined as directive and expecting compliance. Coercive leadership is not exclusively a Japanese style. It is common throughout Asia. Its genesis is in the child-raising methods of East Asian cultures. To succeed in life, children must pass rigorous school examinations. For their first 18 years, they work under two leaders: their teacher and their mother. Both leaders use a coercive style. Both are highly vigilant of mistakes and teach children to stay inside the box. Coercion is the appropriate leadership style to meet the demands of the Asian educational system. The Hay Group conducts leadership assessments with companies throughout the world. Their data concludes that coercive leadership is the dominant leadership style throughout Asia. Asian managers' average coercion score is 68 vs. 39 for North American managers and 45 for European managers. That is a big difference. As the former head of executive leadership capabilities for IBM Asia, I conducted leadership assessments for hundreds of managers. It's true. Whether assessed objectively or subjectively, coercive leadership is clearly the dominant style.
Korea is now following Japan. Korea's home market is 1/3 the size of Japan's which makes the stakes of effective global management even higher. Without an ability to move work outside of Korea, corporate costs will increase as the Korean Won appreciates. Look at LG's top executives . All are Korean, as are all LG country managers. Contrast this with International Business Machines ( IMB) where virtually every country managers is a local. Or, look at Sansung USA's senior leadership team . Again, all Korean. Samsung is what Sony used to be. Can Samsung avoid Sony's demise and strengthen its global competitiveness with an all-Korean leadership team?
And what about China? Name a Chinese global company. Can China continue its growth trend without global businesses? More and more, corporate success depends on an ability to effectively lead a global workforce. If coercion is the root of the problem, what's the solution? Stay tuned for my August column. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.