The problem facing Ciputra group seems to be in succession planning. Specifically, there is a risk that should the current CEO – Mr. Ciputra, retire, the group’s leadership will be in disarray especially since all the four children have an equal shareholding in the company. Additionally, they all seem to have different opinions on how best to manage the firm. Going forward, therefore, and depending on whether the group’s founder and majority shareholder offers leadership, there is a risk that the family business will not be as united as it is currently. A different problem, which is a direct result of the current leadership strategy, is that the group is facing shortages in technical skills needed to manage some of its activities outside Indonesia. The three-skill leadership approach indicates that one needs technical, human, and conceptual skills to be an effective leader (Northouse, 2012).
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While it appears that Ciputra has all three skills, the people he has charged with the mandate to oversee the Group’s operations abroad (e.g. one of his sons-in-law), do not possess technical skills needed to provide a wholesome kind of leadership.
Several leadership theories are applicable at Ciputra group. The first such theory is the skill-based model. This model has five components indicated by Northouse (2012) as “competencies, individual attributes, leadership outcomes, career experiences and environmental influences” (p. 48). Arguably, the founder of the Ciputra group is a competent leader having guided the group during its start-up years. He also led the company during the Asian economic crisis, and during the recovery period thereafter. He has personal attributes that include determination, self-confidence, integrity and conscientiousness.
The leadership outcome during his days as the group leader include the fact that the group registered growth during the good times, withered the bad times, and adopted a recovery position. Notably, Ciputra learnt a few lessons during the crisis and is now more cautious about the risks the company takes. Perhaps a more important issue, especially in relation to the problems identified above, is that the group has no succession plans and therefore stands the risk of a leadership vacuum or conflict in future. Based on the foregoing, Ciputra’s competencies, especially in view of his abilities to forge a succession plan, can be faulted. Within the skill-based model, competencies include the knowledge, social judgement and problem-solving skills that a leader has.
The ‘style approach’ is also applicable in the case study. The authority-compliance (9, 1) style of leadership appears similar to Ciptura’s leadership style. According to Northouse (2012), “the 9,1 style of leadership places heavy emphasis on task and job requirements, and less emphasis on people, except to the extent that people are tools for getting the job done” (p. 79). The foregoing may explain why, despite being an arguably successful leader, Ciputra does not have a succession plan yet.
Probably, he expects his children to get organised and determine the kind of leadership they will forge once he retires. Alternatively, it could be that he is a paternalistic leader, who uses the 9, 1 style or the 1, 9 style when circumstances call for either of the two styles. Such kind of leaders can be dictatorial when the occasion calls for a tough kind of leadership and, can be accommodating to their followers when the occasion calls for such type of leadership.
Northouse (2012) indicates that such kind of a leader perceives an organisation as ‘family’. The fact that there are minimal non-family members in Ciputra Group’s board of management is testament to the probability that Ciputra does indeed perceive the business as a family heritage. If the foregoing is true, it can be expected that Ciputra, who has so far been an authoritative leader, can switch his leadership style near retirement to a 1, 9 approach. The 1, 9 approach is indicated as being ideal for building relationships in the work environment, something that will evidently be needed in the group once Ciputra retires.
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Evaluation of alternatives
Instead of the current approach where Ciputra has adopted an authority-compliance approach to leadership, he can opt for a middle-of-the-road management style or the team management style which are respectively depicted by the 5, 5 and 9, 9 number combinations on the management grid. This recommendation is based on the assumption that leadership styles can be changed whenever a person feels the need to do so. According to Northouse (2012), the middle-of-the-road leadership style leaves room for compromises that make it possible for the leader to balance between work requirements, and people’s needs and interests.
The advantage of such an approach is that Ciputra would balance the need to have a successful business, and the need to sustain such success going forward. The latter would inspire him to dedicate more effort in coaching and mentoring leaders (from his family or elsewhere). The disadvantage of such an approach is that Ciputra may have to compromise on what he believes are good business strategies in order to accommodate varying opinions from the people working under him.
A team management style would also be another alternative, which, according to Northouse (2012) “places a strong emphasis on both tasks and interpersonal relationships” (p. 81). If Ciputra was to adopt such a style of leadership, he would have to put more emphasis on interpersonal relationships. The advantage of such a leadership style is that it would enable him to focus on job performance, but would also require him to quit neglecting the personal relationships in the group.
Consequently, it is likely that he will identify the areas of deficiency in his would-be successors, and thus, put plans in place for his succession in good time. Specifically, it is important for him to ensure that people in the group remain united even upon his retirement. A possible disadvantage in this approach is that the requirement to emphasise both interpersonal relationships and tasks, may be too overwhelming for the leader who is accustomed to putting his emphasis on task performance alone.
To ensure that the leaders at the branch levels have technical, human and conceptual skills as is the requirement for a skill-based leadership approach, Ciputra can be more accommodating by allowing people outside the family to take up leadership positions in the group. The foregoing would be advantageous in that it would bring a diversity of talent into the company, but would be disadvantageous from a family perspective since it may lead to family members losing grip on the business.
As Kotter (1998, cited by Rowe & Guerrero, 2013) indicates, an effective leader creates “the systems and organizations that managers need, and, eventually, elevate them to a whole new level” (p. 1). The foregoing includes forecasting future needs, identifying and empowering future leaders. Considering the current and possible future leadership problems at the Ciputra group, there is a need to adopt a different style of leadership. So far, it appears that Ciputra is a result-oriented leader, who does not put much emphasis on relationships in the workplace. The foregoing could mean that he does not take notice of the simmering leadership crisis that would emerge if he abruptly seized his role as the group’s leader.
To remedy such a situation, Ciputra should consider changing his leadership style to either a middle-of-the-road management style or a team management style. Any of the two leadership styles would enable him to focus more on building relationships in the group. It is through such focus that he will identify leadership areas that can benefit from his guidance. Working closely with his family members would also make him more aware of their strengths and weaknesses, thus making him better informed about whom to appoint as the overall leader in the group. Alternatively, and assuming that Ciputra does not consider any of his family members as having the necessary leadership qualities, he can opt to recruit a qualified leader from external sources.
An externally sourced leader may bring in fresh talent to the group, but Ciputra would need to put strategies in place in order to ensure the family’s shares in the group are upheld. Going forward, therefore, Ciputra needs to offer leadership and guidance on how to avoid a leadership crisis, and should also ensure that leaders in the lower echelons of power (e.g. branch leaders) have the technical, human and conceptual skills required for effective leadership to be realised.
Northouse, P.G. (2012). Leadership theory and practice (6th ed.). Thousand Oaks, CA: Sage Publications. Web.
Rowe, G.W., & Guerrero, L. (2013). Cases in leadership (3rd ed.). Thousand Oaks, CA: Sage Publications. Web.