Leadership Term Paper

UNIVERSITY OF NAIROBI

SCHOOL OF BUSINESS

MASTER OF BUSINESS ADMINISTRATION

DSM 504: LEADERSHIP & ORGANIZATIONAL BEHAVIOUR

TERM PAPER:

EFFECTIVE LEADERSHIP IN ORGANIZATIONS

MUMIAS SUGAR COMPANY

GICHUKI NYAWIRA D61/70076/2007

COURSE INSTUCTOR: F. MUINDI

Leadership & Organizational Behaviour Term paper

DSM 504: Leadership & Organizational Behaviour

TABLE OF CONTENTS

ABSTRACT...............................................................................................................................................3

1. INTRODUCTION..................................................................................................................................4

1.1 STRUCTURE OF THE ORGANIZATION............................................................................................4

1.2 THE SCOPE OF THE ORGANIZATION..............................................................................................5

2. THE IMPORTANCE OF LEADERSHIP.....................................................................................................6

2.1. LEADERSHIP AND MANAGEMENT................................................................................................7

2.2 THE IMPORTANCE OF LEADERSHIP IN PRESENT BUSINESS SCENARIO..........................................7

3. THE THEORIES AND CONCEPTS OF SUCCESSFUL LEADERSHIP............................................................9

3.1 STRATEGIC LEADERSHIP..............................................................................................................10

3.2 RESULTS BASED LEADERSHIP......................................................................................................11

4. LEADERSHIP AND ORGANIZATIONAL CULTURE IN MUMIAS SUGAR COMPANY...............................12

4.1 CURRENT SITUATION..................................................................................................................12

4.2 STRENGTHS.................................................................................................................................13

4.3 WEAKNESSES..............................................................................................................................13

5. RECOMMENDATIONS ON ENHANCING LEADERSHIP IN THE ORGANIZATIONAL CULTURE...............15

6. CONCLUSION....................................................................................................................................17

REFERENCES.........................................................................................................................................18

Leadership & Organizational Behaviour Term Paper Page 2 of 18


ABSTRACT

In today’s business world, effective leadership is gaining precedence over effective

management. If effective management principles alone were once considered as the

essentials of organizational and business success, today the success of organizations and

businesses are equally or perhaps more dependent on effective and futuristic leadership.

This paper presents an analysis of the skills and qualities that contribute to the success of

present day leaders and business organizations by studying the concepts and theories of

successful and effective leadership and decision making, the significance of organizational

assessment and enhancing organizational culture in effective and successful leadership.

Before attempting to analyze the concepts and theories of successful leadership, an

understanding of the concept of leadership, its distinction from management, the

importance of effective leadership in present business scenario is imperative.



1. INTRODUCTION

Name: - MUMIAS SUGAR COMPANY LTD

Location: - Mumias

Address: - Private Bag Mumias

Mumias Sugar Company is the largest sugar processor in Kenya with an installed annual

capacity of 520,000 tonnes. Mumias Sugar Company is a leader in the local and regional

sugar processing firms and is listed on the Nairobi Stock Exchange.

The company grows some sugar cane; its own estates provide up to 7% of its annual output.

Its primary source of sugarcane is over 50,000 registered "out growers" with over 400 km²

under cultivation.

The company is undertaking a project in power generation that is expected to add 34MW to

the national grid. The fuel for the power plant will be bagasse, a by-product from the sugar

mill. The power will be sold to the electricity distribute and be used in the company’s

operations, thus saving on energy costs and therefore running costs.

Once its power plant is operational, the company will raise additional revenue from selling

the power alongside cutting on its energy bills. The company is cutting on costs and has

invested in more efficient plant that is expected to minimize per unit production costs and

increase the production capacity

1.1 STRUCTURE OF THE ORGANIZATION

The organization has the following key departments which have got various sub-units:-

Corporate and Communication Affairs

Agriculture

Marketing

Finance and accounting

Audit

Human Resources



Information communications technologies

1.2 THE SCOPE OF THE ORGANIZATION

Mumias Sugar Company serves both national and international markets.

VISION STATEMENT

“To be a world class producer of sugar and energy”

MISSION STATEMENT

“To consistently satisfy consumer needs for sugar and energy through efficient and

innovative practices while meeting the diverse expectations of all our stakeholders”

CORPORATE VALUES

“Our values form the core of everything we do and are the standards we set ourselves for

every aspect of our performance.”

Customer Focus -We shall commit ourselves to providing high quality products to the

satisfaction of our customers who are our most important asset.

Integrity -We shall be ethical, accountable and transparent in our dealings with

stakeholders.

Performance Oriented Staff - We shall attract, develop and retain talented and

performance oriented staff by providing superior employment opportunities that will

fulfil employees’ and the company expectations.

Responsible Corporate Citizen -We shall be responsible corporate citizens by

supporting sustainable projects relating to environment, education, health, culture

and sports.



2. THE IMPORTANCE OF LEADERSHIP

Ever since the development of modern management, business and management experts

have considered leadership as an important attribute to effective management from a

people management perspective.

Leadership essentially involves influencing people to strive willingly for the accomplishment

of group or organizational objectives.

(Chester Barnard 1986) defines leadership as “the quality of the behaviour of individuals

where by they guide people or their activities in organized effort.” This and other earlier

definitions of leadership emphasize the behaviour of leaders in defining leadership.

(Cribbin, 1982) identified leadership as a process and suggests the external and internal

situations that would impact the process of leadership, by defining managerial leadership as

“the process of influence on a group in a particular situation at a given point of time and in a

specific set of circumstances that stimulate people to strive willingly to attain organizational

objectives, giving them the experience of helping to attain the common objective and

satisfaction with the type of leadership provided.” This definition, while emphasizing the

people management function of leaders, also suggests the significance of decision-making in

leadership.

The above definitions identify leadership as a process and focus on the relationship of a

leader with the subordinates. In modern management practice, the nature of leadership is

often discussed in terms of the ‘interaction’ among the people involved in the process both

leaders as well the followers.

Accordingly leadership does not imply the trait or action of a leader, but a “collaborative

endeavour,” by the members of the team.

The current leadership models are exemplified by collaboration, power sharing and

empowerment, which make leadership complex and diverse, mutually shaping and

spontaneously changing and hence highly challenging.



Thus the modern concept of successful leadership rejects the idea that leadership revolves

around the leader’s styles, behaviours and/or charisma and signifies the level of

collaboration, power sharing and empowerment that a leader extends to the group.

Appropriate decision making skills, futuristic approach, envisioning ability etc are other

attributes of a current successful leader.

According to (Caudell, 1994), a successful leader today is highly sensitive to the forces, which

impinge on him; he accurately understands himself, his followers and the impinging

environment.

2.1. LEADERSHIP AND MANAGEMENT

Contemporary literature defines leadership as a process, and it is often mistaken with

management. According to (Kotler 1990), leadership and management are two distinct and

complementary systems of action, both being essential for success in today’s business

environment. The complex business organizations of the twentieth century led to

development of management discipline, so as to primarily address organizational

complexities.

If effective management helps to cope with complexities, effective and successful leadership

helps to cope with change. It is worthwhile to note that organizations with strong leadership

and weak management and those with weak or ineffective leadership and strong

management are equally unsuccessful. Thus both are complementary and the real challenge

is to combine strong leadership and strong management and use each to balance the other.

2.2 THE IMPORTANCE OF LEADERSHIP IN PRESENT BUSINESS SCENARIO

The rules of conducting business have changed since the globalization of world economies.

Though the advancements in information and communication technologies have significantly

improved the productivity and effectiveness of organizational management, many

businesses fail to steer ahead in the present business settings characterized by tough global

competition and increasing diversity in workplaces.



Computer technology has revolutionized the methods of production and distribution shifting

from mass standardization to mass customization and individualization, and calls for highly

innovative management practices. Also workplaces are increasingly diverse as a result of

globalized workforce, and pose a challenge to the leadership, both at the top level and

divisional level. High employee turnover rate, dealing with global clientele/customer and

adapting to fast changing market requirement are further challenges faced by management

today, which calls for people-centered, strategic, result oriented and visionary leadership so

as to be successful.

Thus leadership today involves a great level of right and timely decision-making. During the

pre-globalization years the decision-making or the ‘what to do’ aspect of business was

relatively certain, and leaders focused more on the ‘how to do’ aspect. However, today

businesses are almost daily challenged with both ‘what to do’ and how to do’ aspects,

making good leadership coupled with right decision-making a necessity for business and

organizational success.



3. THE THEORIES AND CONCEPTS OF SUCCESSFUL LEADERSHIP

Effective leadership is explained within the framework of three main theories as discussed below:

1. Trait theory - The theory proposes that a successful leadership depends on certain

personality traits of the leader such as intelligence, initiative and creativity, open mind,

self confidence, vision and foresight, sense of responsibility, human relations skill,

maturity etc. Though this theory has led to the notion that ‘leaders are born, not made,’

it is commonly considered that the traits can be developed by training and practice.

However years of research have failed to identify one personality trait that can be used

to distinguish leaders and non-leaders

2. Situational theory - The situational theory suggests that leadership is a function of the

situation in which the leader operates. The three situational variables include leader’s

position and power, leader-subordinate relationship and task structure. However in

current business scenario, situational variable extends beyond these variables to include

many external factors.

3. Behavioural theory - The behavioural theory suggests that leadership effectiveness is a

function of effective role behaviour; it depends on what the leader does. However, the

effectiveness of a particular behaviour depends on the situation in which it is applied.

Based on the three theories discussed above, many modern management experts and

researchers have developed several models and concepts of successful leadership.

According to (S.Covey), principle-centered leaders work on the basis of natural and

permanent principles or values and build those principles into every aspect of their lives

including business and manifest in their management processes, business dealings, as well as

mission statements.

Principles-centered leadership is practiced from the inside out on four levels:

Personal: relationships with oneself

Interpersonal: interactions and relationships with others

Managerial: the responsibility to get a job done with others

Organizational: the need to organize people – recruit, train and compensate people, build



teams, solve problems, and create aligned structure, strategy and systems

To be effective principle centered leaders Covey identifies 7 habits of which three are habits

of independence enabling private victory, three habits of interdependence enabling public

victory and renewal these are :-

1. Be proactive - Enhance resourcefulness by expanding the circle of influence.

2. Begin with the End in Mind - Visualizing the consequence of actions.

3. Put First Things First - Organizing and executing around priorities.

4. Think Win / Win - Seeking mutual benefit in human interactions.

5. Seek First to Understand, Then to Be Understood - Highlights the most essential

communication skill of listening.

6. Synergize - Synergy signifies that the whole is greater than the sum of its parts. Synergy

is particularly important in leading today’s culturally diverse business organization.

7. Sharpen the Saw - focus on self-renewal: physical renewal by exercise, stress

management; mental renewal by reading, visualizing etc; emotion renewal by enhancing

social relationships; spiritual renewal by mediation etc.

3.1 STRATEGIC LEADERSHIP

The future growth and prospects of a business is dependent on leadership, hence successful

leadership implies strategic decision-making. Strategic leadership offers the vision and

direction by defining the rationale for growth and the environment for the success of the

corporation. It facilitates “outside-the-box” thinking so as to create future growth of the

organization. Strategic leadership is not about micromanaging business strategies, it

provides the broader perspective for businesses to develop appropriate strategies and aid

the creation of value.

The seven functions of strategic leadership are:-

a) Vision: Providing direction for the organization as a whole.

b) Strategic Planning: Instituting right strategy and policy.

c) Administration: Overall management and executive responsibility.



d) Assessing the Organization Fitness: Assessing the organization, organizing or reorganizing to

inculcate appropriate work culture.

e) Confidence, Morale, Energy, and developing a corporate spirit.

f) Leading and Teaching: choosing today’s leaders and developing the leaders of tomorrow.

g) Stakeholders, Associates and Society: relating the organization to other organizations as well as

the society.

3.2 RESULTS BASED LEADERSHIP

Unlike other models, results-based leadership emphasizes results and considers effective

leadership as a non-cumulative product of attributes and results. Hence, in order to be

successful, leaders must strive for excellence in demonstrating attributes and achieving

results. The four areas of result include:-

Employee results - developing human resources.

Organization results - innovation and continued learning.

Customer results - customer satisfaction and delight.

Investor results - ensuring cash flow.

In his study, “Leadership That Gets Results” (Goleman 2000) identifies six leadership styles

adopted by leaders to influence the followers:-

(i) Coercive - Demands immediate compliance.

(ii) Authoritative - Mobilizes people toward a vision.

(iii) Affiliative - Creates harmony and builds emotional bonds.

(iv) Democratic - Forges consensus through participation.

(v) Pacesetting - Sets high standards for performance.

(vi) Coaching - Develops people for the future.

After analyzing the financial results of leaders with different styles of leadership and

Goleman observes that those leaders who adopted four or more styles authoritative,

affiliative, democratic and coaching, have the best climate and business performance, in

short, get the best results.



4. LEADERSHIP AND ORGANIZATIONAL CULTURE IN MUMIAS SUGAR COMPANY

Mumias Sugar Company has undergone a major transformational change in leadership since

it was privatised in 2000 when the government offloaded part of its shares. The board of

directors of the newly privatised company sort to hire a new Chief Executive Officer who

could be able to turn around the company into a profit making organization, stream line its

agricultural, manufacturing and marketing processes and to have on board competent staff

who would be able to actualize the vision and mission of MSC.

4.1 CURRENT SITUATION

Evans Kidero was appointed Chief Executive officer of Mumias Sugar Company in 2002.

When he took up the position MSC has not posted a profit in ten years. There was gross over

expenditure and the organizational structure needed to be reviewed to streamline

operations.

The CEO took control as many activities as possible. Key functions and key business units

received his careful, frequent, personal scrutiny. Stringent controls were placed on operating

expenditures.

Previously approved capital spending was cancelled unless it had been specifically re-

approved in writing by the new CEO. Capital projects under way were reviewed, then

cancelled or postponed if such action was feasible or necessary.

The CEO instituted changes in both the organization's structure and its processes. Structure

is exemplified by the organization chart: who reports to whom? Process deals with

interactions: Who is invited to meetings? What authority is given?

The changes instituted not only made the company’s operations more efficient but the

company has for the past 3 years posted profits in excess of 1 billion Kenya shillings making it

the most profitable sugar company in Kenya.

Evans Kidero is a visionary leader and has in the last 2 years begun to look at ways of

increasing MSC revenues by venturing into power generation and alcohol production all of

which can be generated or manufactured as part of the by products of sugar production.



These ideas seemed far fetched to many but Mr. Kidero managed to bring the board of

directors, the ministry of agriculture and all MSC employees on board to accept the idea as

viable and motivating the employees to participate in the projects and own them.

4.2 STRENGTHS

The following can be noted as the strengths of the visionary leadership at Mumias Sugar

Company.

1. Developing a challenging but achievable business plan that will assure the survival of

the organization.

2. Defining a clear vision, mission statements and core values of the company.

3. Established a productive relationship with important customers, key vendors,

investors, and lenders.

4. Meeting frequently with employees. Keeping them abreast of developments and

trying to learn from them. Communicating constantly and honestly.

5. Establishing clear goals for the company and strong incentives for employees to

perform.

6. Demonstrating strong, optimistic and visionary leadership.

7. Taking charge, having to sometimes make unpopular decisions to get things moving.

8. Trimming the organization and cleaning out the deadwood employees.

9. Developing an exciting marketing program which included re-branding the company

logo and product packaging.

4.3 WEAKNESSES

Human beings are not perfect at everything. Each of us has some weakness, that no matter

whatever you do, remains our weakness and sometimes shows up in the way one does

things. The weaknesses experienced in Mumias Sugar Company can be attributed to both

employees and management’s attitude towards the new change in leadership.

1. Resistance to change from employees who were afraid of what the new changes

meant and what was expected of them.



2. Sometimes shooting from the hip, good leaders can make decisions quickly, often

with incomplete data. Rarely is a leader able to get 100 percent of the information

needed for a decision. Typically it is "60 percent and go" or "80 percent and go."

3. Not necessarily salespeople, good leaders can bring others to their point of view

using logic, reason, emotion and the force of their personalities. Sometimes strong

personalities can be viewed to others as aggressive or arrogant.

4. Failing to address employee motivation issues on a timely basis which sometimes

hindered their performance.

5. Failure to adequately manage organizational politics and roadblocks.



5. RECOMMENDATIONS ON ENHANCING LEADERSHIP IN THE ORGANIZATIONAL CULTURE

It would be an understatement to say that leadership impacts organizational culture. In fact

organizational culture is defined and determined by the leadership style adopted by the

management.

Organizational culture is considered as the values, beliefs, behaviours, principles and

practices held and followed by the organization, and is defined and/or influenced by the

organizational leadership.

In order to be successful in dealing with the increasing diversity in business organizations

today, the leadership of MSC needs to define an organizational culture, which is more

inclusive and effective in managing diversity for organizational benefit.

A strategically oriented, result-based, effective leader analyzes the Strengths, Weaknesses,

Opportunities and Threats to his organization considering the factors, both internal and

external to the organization and fills the gap by facilitating the appropriate climate required

to change and enhance the organizational culture to suit the situational requirement.

In order to understand the leadership qualities and organizational culture from outside the

organization, one needs to look into the organizations’ public language, that is language used

in the policy documents that describe the organization’s vision, values, and mission, and

procedures manual as well as the other brochures and publications of the organization.

By analyzing these and other material available on the MSC intranet and other sources, the

following features emerge:

(i) Values of Integrity - Follow and demand high ethical standards.

(ii) Respect for People - Treat people with respect and dignity, value diversity.

(iii) Customer Focus - Constant focus on customer satisfaction.

(iv) Organizational culture - Open and inclusive.

(v) Innovation - Facilitates innovation by tapping the collective knowledge, wisdom, talent,

and experience of its diverse employees.



(vi) Teamwork - Understands the need and importance and promotes teamwork.

(vii) Performance.

(viii) Leadership - Believes every employee is a leader, empowering and visionary.

(ix) Quality - Value oriented work, products and relationships.

(x) Community - valuing the role of community in the long-term health of the business.

Retaining employees, and fast changing market needs has been the biggest challenges faced

by managements during the turn of the millennium. Had the MSC leadership failed to value

its people, lost its result orientation or lacked the vision to lead the organization to future

growth, the organization would not have emerged as successful as it has.



6. CONCLUSION

The importance of good leadership for business success is little debated today. Management

scholars as well as business experts have developed many models and concepts for

successful leadership, of which Principle based, People-centered, Result oriented and

Strategic Leadership models, when considered together provide the framework of traits and

qualities needed for a leader to be successful in today’s challenging business environment.



REFERENCES

1. Luthans, Fred: Organizational Behaviour, 10th Edition, McGraw- Hill Inc. NY.

2. S. Covey: The Seven Habits of Highly Effective People, Simon & Schuster, (2001)

3. D.Coleman: Leadership That Gets Results, Harvard Business Review, (2000)

4. John P Kotter: What Leaders Really Do, Harvard Business School Press, (1999)

5. J. Cribbin: Leadership strategies for organizational effectiveness, Amacom NY. (1982)

6. Robbins, Stephen P: Organizational Behavior - Concepts, Controversies, Applications.

4th Ed. Prentice Hall, (2004)


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Leadership Term Paper