Article (January-2020)

Articles

Leader should listen to team also

Sandiep Grovar

Designation : -   Coach & Managing Partner - HR Consulting Division

Organization : -  possiblers.com, Mumbai

01-Jan-2020

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Leadership Quality of the CMD
"In reality, there are very few villains who view themselves as villains. They just have a certain agenda at a certain time." -Michael Jai White

When the leader is hell bent on pushing his (hidden) agenda, irrespective of divergent views from the core team, then those team members are virtually not with the leader. These members would start to question the motives, words and actions. Soon the leader loses the trust and without trust, the leader loses his ability to influence others.

Some data provided in the current case: The CMD, Mr. Anirudh Suryavanshi, is upbeat about MAIL's performance in a year - the company over-achieved its performance by 13% (that too for a year). Mind you, MAIL has a debt of 20000 Cr and the cost of this adventure was over 70000 crores, that were 60% more than the net worth of the company, as pointed out by Director Finance. Besides, the Director Finance also takes the help of data to point out that not even a single green field steel project has been completed on time.

But all this fails to cut any ice and CMD successfully pushes his agenda. As per the limited data given in the case, where CMD's conduct and leadership style is largely implied and not explicitly depicted in the case, the leadership style of CMD appears to be an Autocratic Leadership.

The CMD made a very risky decision without discussing or debating about the data presented by none other than his Director Finance. Let's imagine the stature of Director Finance. He must be a qualified professional with at least 20 - 25 years of post-qualification experience with proven performance to have reached this level. Having gathered authentic data on the company's financial performance and fate of other such green field projects over the past couple of years, the Director Finance deserved a much better chance to explain his stance and present a "Best Case" and a "Worst Case" scenario, to enable the CMD to take an informed decision. If this was done, I am sure, the CMD would have been better prepared and either not taken this misadventure ahead or would be mindful of the facts and made enough checks and balances to ensure timely implementation of the projects, instead of a unpardonable delay of 5 years- that led to MAIL's current situation having missed the bus for 2008 Olympics miserably.

As against that, he is told curtly "Be optimistic, do not see things from a myopic vision". Whereas the Director Finance had not shared any of his personal views - he had only presented hard data!!!

Under such circumstances, leave aside, this astute professional, anyone can end up feeling that they have either no say or do not have any valuable input. People feel happier and perform better when they feel that they are making contributions to the future of the group. Since he was almost snubbed in front of many others, he and quiet probably many others who were passively watching him would also be feeling the same way.

Researchers have also found that autocratic leadership often results in a lack of creative solutions to problems, which can ultimately hurt the group from performing. Come to think of it, if I know that my (valuable) contributions are going to be snubbed upon, next time I will be looking the other way as ultimately only the ideas generated brilliantly by the CMD are going to be 'most practical', 'strategically right' and eventually implemented, irrespective of the consequences - like in the current case.

Having said that, let's examine if autocratic leadership is always ineffective?

If the situation is of any emergency or where it's a small group having no leadership or in situations that are particularly stressful, such as during military conflicts - group members may prefer an autocratic style. This helps the members to focus on performing their specific tasks without worrying about making complex decisions.

However, in the given case, this was not at all the desired style of leadership.

Business Acumen of CMD

The CMD, from the data provided in the case, appears to be having an average business acumen.

Business acumen demands intense mental activity. When the Director Finance presented the harsh facts to him, he should have done his calculation and understood if the company should be taking such an aggressive risk or no. A debt of 20000 Cr and an additional requirement of 70000 Cr is a herculean order by any standards. Business requirements warranted that this investment, even if someone makes it, taking huge risks - needed to generate revenues at the earliest. A delay of 5 long years that resulted in project cost rising three times was suicidal by most moderate terms.

Another crucial decision seems to be selecting NIXON steel as the service provider, which did not have any experience to handle such mega projects. Their selection appears to be a wrong decision, since there is no data provided on the selection process of this key service provider - we can only concur that the CMD should have ensured that the selection process is impartial.

Given that MAIL performed very well during the preceding three years, the top management lead by CMD should have done a detailed analysis to understand, if the company did something brilliant to earn 5000 crores or were the market conditions primarily responsible for such stupendous performance - given the cyclic nature of the industry. After doing this basic analysis, a joint decision either ways could have been a life saver for MAIL.

Ways to come out of situation

MAIL is in a recarious situation. They are in a financial mess, to say the least. Based on the data available in the case - the company has limited choices:

1) To reduce debts, it should look for such assets that can be encashed. May be there is some extra land that can be sold or redundant P&M (KISCO may have certain P&M that has been replaced by the green field expansion)

2) Another option could be to sell off the acquired KISCO - given that the current market conditions are not very conducive, MAIL cannot expect a great deal but there may be buyers in the market, who may be scouting for a deal during the slump market conditions.

3) The IR scenario is again on the verge of a breakdown as the union has waited for 2 years for a wage revision. So the union needs to be formally informed about the financial condition of the company. They should be made an offer to help the management reduce the additional employees by way of a VRS and then be eligible for a discussion on wage increase.