BUS 832 Leadership and Management: Case Analysis of the Sekar Group

This case analysis report examines the Sekar Group, founded by Harry Susilo in Indonesia, and its challenges concerning leadership succession and maintaining organizational values. The report explores Susilo's paternalistic leadership style and its impact on the company's growth, considering whether his leadership approach is suitable for future generations. The analysis delves into how Susilo can ensure his successors uphold his values of moral and ethical leadership, leveraging diverse strengths within the family business while preserving a unified organizational culture. The report also discusses the broader influence of ethics and corporate governance on the organization's growth, and the role of human resource management in cultivating the desired organizational culture. The report concludes with a discussion of how Susilo's leadership has fostered ethical practices and the importance of institutionalizing ethics to ensure the continuation of core values, offering recommendations for the Sekar Group's future leadership and ethical conduct.

Case Analysis Report: Harry Susilo
Executive Summary
The case study talks about Harry Susilo and his group of companies, the Sekar Group that has a
variety of businesses with its headquarters in Indonesia. Harry has been a strong and formidable
leader of the group for a long time, operating on the principles of ethics, morality, corporate
governance and harmony. The third generation of his family is now ready to take up the mantle
of leadership and succeed Harry. The case talks about the challenges associated with choosing a
leader with diverse and different values and maintaining the espoused values of the founder and
the organization culture.
Background of the Case
The present case study is about the Sekar Group, founded by Harry Susilo in 1966 in Indonesia.
The erstwhile ‘Harry Susilo Private Ltd.’ had humble beginnings just like its founder, but with a
clear business vision and dedicated efforts of all employers under his leadership, it became a
very successful and profitable venture, with a global business undertaking and an employee
strength of 20,000 in 2016. Susilo led the company with his core values of ethical
responsibility, morality, harmony, integrity and corporate governance.
The Challenges
The case study on the Sekar Group headed by Harry Susilo is an interesting study on the issues
of moral leadership, ethical decision making in business, and different styles of leadership in a
family business. It poses the issues of inculcating the values of ethical and moral leadership
while passing on the mantle of leadership in the business, ensuring that the core values remain
intact even when future generations succeed the leadership, and how ethics and corporate social
responsibility are crucial in the growth of any organization. In this regard, the case can be said to
pose the following challenges:
1. How has the leadership style of the founder, Harry Susilo affected the growth of the
business? Should the next generation of leadership follow in his style of leadership or
deviate to another one? What are the essential features of his leadership style that may
not work with the third generation of leadership?

2. How can Harry Susilo ensure that his successor espouses the same values as his, of moral
and ethical leadership? How can he leverage their diverse strengths and varying
management styles to maintain a unified organizational culture that values change but
does not deviate from its core?
3. In the larger context, how do ethics and corporate governance affect the organization’s
plan for growth and success? How can leaders ensure that the business is run in a certain
way even after they are not in the picture?
4. Can moral and ethical leadership prove to be detrimental for an organization?
5. How can human resource management aid in developing the organizational culture as
envisioned by the founder?
Harry Susilo’s style of leadership
Harry Susilo has a paternalistic style of leadership which is evident through different examples
of his behavior cited in the case study. This style of leadership is characterized by a strong sense
of discipline and authority with fatherly benevolence (Chen, Eberly, Chiang, Farh, & Cheng,
2014). Susilo is the eldest brother for his siblings who had to take up family responsibility after
his father’s untimely death. The case mentions his love for his family, the need to be nurturing
yet firm with them, his style of looking after the employees like a father, taking care of the needs
of all his siblings and their children, and wanting to be a beacon of morality and values even
when he is considering retirement. All these behaviors provide ample evidence that Susilo is a
paternal leader. Cheng, Boer, Chou, Huang, Yoneyama, Shim, Sun, Lin, Chou, and Tsai, (2014)
report that paternalistic style of leadership is quite prevalent in Chinese organizations. Susilo
assumes the responsibility of being the caretaker of the family and he sees his employees as a
part of his extended family and hence feels responsible for them as well. He considers himself to
be their spiritual and moral leader as well and is obligated to guide them toward a path driven by
values and ethics (Pellegrini, Scandura, & Jayaraman, 2010). He has always headed the
organization and run it with a firm authority while at the same time promoting a culture of
harmony, quality, innovation, integrity and social responsibility at its core. The values of his
organization resonate with his own core values. In the setting up and development stage, the
organization greatly benefited from Susilo’s leadership style since the workers knew who to

follow and followed instructions dictated by the authority figure. Susilo had am ambitious vision
for his organization and he needed the employees to perform their best to achieve that vision. He
values quality in all products of his company and has hence run the organization tightly and
strictly. The third generations view him as ‘a strict leader with principles.’ An authoritative
mindset, with a tendency to not be too flexible, and an expectation of complete loyalty from the
followers is a salient characteristic of paternalistic leadership. Having a strong moral code and
kindness and benevolence are also the key qualities of a paternalistic leader. This style of
leadership is akin to the tenets of the Chinese culture and is thus greatly influenced by Eastern
philosophies rather than Western theories of leadership styles or management.
Paternalistic leaders take interest in the welfare and well-being of their employees. They assume
the authority and role of a father and expect the employees to follow their word (Chan, Huang,
Snape, & Lam, 2013). Susilo provided his employees with generous benefits along with
different amenities at the workplace. The case mentions that the company also looked after their
training, career development, and personal development options. The employees would in turn
feel a strong sense of loyalty and commitment to the organization thus ensuring a sound rate of
retention. The facets of a caregiving and paternal nature of Susilo can also be seen in how he
sponsors higher education for the third generation, encourages his brother to keep trying even
after a business failure, and is interesting in harnessing the ‘power of love.’
As the group is moving into the future, it seems to be at the maturity stage of the organization
life cycle with a set business, assured returns, and a trusted network of customers, suppliers and
employees. In this context, when a change of leadership is on the horizon, maybe the third
generation of leaders may benefit from having a different style of leadership than that of Susilo.
The company culture is used to having a paternalistic style of command, but just as the
leadership is changing, so would the next generation of employees be coming in. A risk in
continuing with paternalistic leadership style is if the incoming leader cannot garner the same
amount of respect and trust as Susilo, the employees may then see him only as an authoritarian
leader rather than a care-giver. In the long term standing of the company, the business
environment of Indonesia has also played a part. The situation, moving forward, with a dynamic
business landscape, availability of modern technology, globalization, and improved
communication, the company may be better off with a leader who has more Western style of

leadership. The third generation being young in age and experience may not be able to inspire
paternal mindset among the employees. Most of the children have studied in Western
universities and would hence be preferential to using their principles to establish a firm footing
for the Sekar Group in the global business landscape.
Sustaining the values and culture of the organization
One of the reasons that the organization has for so long operated on the core values of integrity,
loyalty, harmony, ethics, morality and corporate social responsibility is that these values form the
core of Susilo’s personal values as well (Demirtas & Akdogan, 2015). This congruence in
values is demonstrated in how the people management policies were designed in the
organization. The company’s foray into corporate social responsibility is also a testament to the
fact that the leader was emotionally invested into the idea of social governance. Susilo insists on
standing by the principle of integrity and harmony. In his personal life, he is taking his desire for
ethical congruence forward by establishing the Harry Susilo Institute for Ethics in the Global
Economy. Susilo not just preaches but practices his doctrines of moral and ethical leadership as
well, thus proving to be a very valuable role model to his family and employees. he commands
respect from those who know him and entails admiration in all his relationships. Under his
moral and ethical leadership, the organization can be said to have become synonymous with
ethics, social responsibility, integrity, and innovation as its employee value proposition (Wu,
Kwan, Yim, Chiu, & He, 2015). Keeping that in mind, Susilo’s successor can ensure that the
policies and procedures that are long established do not change in any way. Susilo can leave
behind his legacy by narrating his stories of personal hardships in the pursuit of noble goals. He
has already started that through his biography. He has to be careful in choosing his successor
who values this aspect of Susilo’s leadership and wants to retain the brand of the Group as that
which espouses ethics, integrity and moral responsibility. Organization culture and its espoused
values are passed on through artefacts, symbols and stories to the next generation of members of
the organization (Schein, 1990). Susilo has used family meetings, storytelling, partnering with
educational institutes, donating to social causes, being actively involved in his children’s lives,
and family travel to pass on his learnings and principles to the future generations. He has at the
same time ensured that none of the members of the second or third generation feel any sort of
obligation or pressure to act in accordance with his ways. As the case mentions, his love towards

his children is not blind but directed at making them independent and self sufficient while
serving as their support.
A moral and ethical leadership as stable as that of Susilo while providing immense benefits to the
organization can prove to be intimidating and limiting when it comes to his successor. The third
generation of family members including the spouses of the children bring a lot of diversity in the
forms of their management principles, interests, educational background, family values and
notions for future growth. Susilo is thus rightly challenged in selecting the right leader who
would unify the diversity and keep his values and legacy intact. Susilo needs to hence develop
an approach to institutionalization of ethics in order to develop the foundation for a culture that
promotes the core values and is sustainable in the future (Guerci, Radaelli, Siletti, Cirella, &
Shani, 2015; Shabana, Buchholtz, & Carroll, 2017). He can do so explicitly by establishing
ethical codes of conduct, a mandatory corporate social responsibility approach, training in ethics
and governance for key members of the senior leadership team, and an ethics committee to
handle concerns and issues that may arise in the future. Implicit and covert forms of
institutionalization can be in the form of designing rewards, staffing, and performance appraisal
policies to measure integrity, having ethical leaders, and promoting those who show exceptional
sense of duty and responsibility.
The following points note how Harry has been a strong moral and ethical leader and thus enabled
his organization to achieve its success and glory:
Kindness and harmony: Susilo has maintained the ‘power of love’ with his mother, siblings,
wife, children, children of his siblings, and all the employees in his organization. He encouraged
his brother to keep trying even after a failure, took the financial responsibility of providing
higher education and better life for all his family members at a great personal cost, takes an
interest in the third generation by involving them in his stories, and is also keenly interested in
nurturing young minds and hence started an investment fund for startup ideas
A strong moral code: Susilo has always maintained that integrity and morality are very integral
to his being and he has conducted business in the same way. He has always led by example with
his family as well in being charitable towards various causes and caring about the environment
and society. He sponsored educational institutes and founded his own institute to promote global

business ethics. He wants to leave a legacy of ethical and social responsibility as is evident from
his biography as well.
Humility: The case mentions how Susilo divided his social network into seven different levels
and sought to learn from each of them. He has advocated mutual respect and harmony for
everyone he meets. His personal affiliations can also be seen in how he treats his employees
fairly and professionally. He provides them with a lot of benefits such as incentives for good
performance, recreational and sports facilities, sponsoring higher education, and investing in
their training and development.
Professional ethics: Everyone who knows Susilo vouch for his strong code of professional ethics
and personal moral code. He is a man who is known to conduct his business with scrupulous
honesty, and undertakes such business ventures only that are environmentally and socially
helpful and relevant. His code of ethics is synonymous with the brand image of the Sekar group
and by extension, puts Indonesia in a favorable position on the global front.
Promoting fairness and transparency: Susilo has taken up the responsibility of looking after all
the members of his immediate and extended family. After his retirement, he divided the share
equally among his younger brothers. He has provided equal opportunities to the sons, daughters,
sons-in-law and daughters-in-law of the third generation to be a part of the management team of
the business and contribute to its growth. He believes in making the children independent and
self sufficient by educating them. He understands personal boundaries of love and has strived to
instill a similar work ethic in the third generation family members. Susilo also employs non-
family managers in his organization to keep an unbiased and professional work environment. A
committee comprising members of the second and third generation is involved in decision
making in the organization, thus promoting fairness and equality amongst all the family members
while communicating the message that the business and employees are valued above everything
else.
Impact of ethics and corporate governance on business growth
An Indian philosopher, Kautilya advocated the incorporation of ethics in business in 400 B.C.
Husted, Allen and Kock (2015) report that corporate social responsibility (CSR) in the Western
context concentrate on creating value for the stakeholders while dispensing their obligation

towards the society through welfare. Organizations understand that they cannot be just mere
consumers of resources that the society has to offer without providing something in return. A
large majority of organizations are seeing the value in giving back to the society through
sponsorships and endorsements for relevant clauses, environmental management responsibilities,
standing up for social causes, and taking care of the weaker members of the society. For any
organization, there are a multitude of stakeholders such as the employees, founders, suppliers,
customers, governments, board members, banks, investors, media, activist groups, legal
authorities, and political parties that have an influence on the growth and success of the
organization (Aguinis & Glavas, 2012). The case study of the Sekar group shows how the long-
standing CSR activities of the group have helped establish a favorable global attitude towards not
just Susilo and his family but also Indonesia. In the troubled times of today where individual
moralities and ethics are compromised while humanity is on a path of deterioration, the Sekar
group serves as a beacon of hope that business can survive and prosper even while having an
ethical and moral compass continuously guiding their every action and move.
At the micro level, CSR has been found to have a positive impact on the financial performance
of organizations (Saeidi, Sofian, Saeidi, Saeidi, & Saaeid, 2015). CSR activities promote the
employer brand as well as incite a sense of loyalty amongst the customers. Customer retention
and loyalty would translate into profits and financial gains for the organization’s bottom line.
The benefit on employee relations is seen through better talent acquisition as more people want
to be associated with an organization known for its CSR and ethical governance (Baur &
Schmitz, 2012, De Roeck & Maon, 2018; Galbreath, 2009). There is thus a reduced cost of
hiring, increased rate of retention, improved employee commitment and an overall increase in
job satisfaction and employee engagement (Bear, Rahman, & Post, 2010; Bondy, Moon, &
Matten, 2012). Thus, having corporate governance and social welfare as a part of business
activities is actually good for business.
Ethical leadership has been studied in detail in academic research. The conceptualization of
ethical leadership has a connection to social learning theory (Bandura, 1977, 1986; Walumbwa,
Hartnell, & Misati, 2017). The theory reports that people learn from observing the behavior of
those around them. Following that theory, ethical leaders can inspire their followers and peers to
develop ethical behavior as well. If morality begets morality, then the case can be made for

leaders to pass on their legacy and ensure that the organizational culture sustains the values
demonstrated by their moral and ethical leadership. When desired behaviors are rewarded in the
employees, they would be motivated to act in the way that gets them more rewards (Kish-
Gephart, Harrison, & Treviño, 2010). Similar to CSR, an organization that espouses integrity
and ethics in its brand image garners positive employee relations, customer retention, innovation
and creativity and financial gains (Yindong & Xinxin, 2013). The society would view such an
organization favorably and thus enable optimal resource utilization for its growth and success
(Brown & Mitchell, 2010; Cheng, Chang, Kuo, & Cheung, 2014). It is important to note that
while ethical and moral leadership can reap several benefits for the organization, there is a
challenge to having such leadership as well. It can be assumed that employees would follow
their leaders and emulate their behaviors. In case of moral leaders, it is extremely important that
the leaders portray genuine integrity and morality. If employees see a crack in the armor, they
are likely to lose respect and can lose trust with the organization as well. This would have
adverse effects on their productivity, commitment and engagement levels (Fehr, Yam, & Dang,
2015).
Leadership and human resource management practices thus go hand in hand when it comes to
institutionalizing ethics in the workplace, espousing moral values in the culture and sustaining
corporate social responsibility initiatives developed by the founder or previous leaders
(Eisenbeiss, Van Knippenberg, & Fahrbach, 2015).

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