Rolex Mudalali Case Study: Leadership, Succession, and Challenges

This case study examines Rolex Mudalali's leadership style and its impact on his business, focusing on his paternalistic approach and the subsequent decline after his retirement. Mudalali, a successful businessman with limited formal education, built a thriving biscuit manufacturing plant by prioritizing employee welfare and fostering a strong sense of loyalty through various financial and non-financial incentives. However, his failure to adequately train his employees and children for leadership roles, coupled with the introduction of new management practices by his successors, led to employee dissatisfaction, decreased productivity, and ultimately, financial difficulties. The case highlights the importance of succession planning, employee development, and adapting management strategies to maintain organizational stability and success. Desklib provides solved assignments and resources for students studying leadership and management.

TABLE OF CONTENTS
Page Number
01. Acknowledgement 02
02. Executive Summary 03 - 05
03. Problem Statement 05 - 06
04. Answer for Question (a) 07 - 09
05. Answer for Question (b) 10 - 13
06. Answer for Question (c) 13 - 14
07. Annexure I 14 - 16
08. List of Group Members 17
1

01. ACKNOWLEDGEMENT
In performing our assignment, we had to take the help and guideline of some respected
persons, who deserve our greatest gratitude. The completion of this assignment gives us
much Pleasure. We would like to show our gratitude Mr. C. H. Liyanage, Module I
lecturer, IPM for giving us a good guideline for assignment throughout numerous
consultations. We would also like to expand our deepest gratitude to all those who have
directly and indirectly guided us in writing this assignment.
A special thank of us goes to my colleague or team members who helped out in
completing the assignment, where they all exchanged their own interesting ideas,
thoughts and made this possible to complete our assignment with all accurate
information. We wish to thank our parents for their personal support or attention who
inspired us to go our own way.
At last but not the least we want to thank our friends who treasured us for our hard work
and encouraged us and who made all the things possible for us till the end. We thank all
the people for their help directly and indirectly to complete our assignment.
2

02. EXECUTIVE SUMMARY
The purpose of this report is to recapitulate how Rolex Mudalali was managing his
businesses towards accomplishment of his goals with 2000 employees under his
Paternalistic leadership skills, how his retirement plan was taken place, Pre and post -
retirement strengths and drawbacks which resulted falling down his Empire at the end.
Rolex Mudalali’s School education has confined up to grade 6 only and never has read
management books or doctrines written by management gurus. However, at his age 50 he
is the leading businessman in the hill country owning the largest and one and only state of
art biscuit manufacturing plant in country with over 2000 employees working for him.
His product had a 70% market share in the local market and exported his products to 20
countries. In addition to his main business, he had many other business interests in couple
of trade lanes. He always believed in people and treated his employees are the best assets
he possessed. This could be the main secret behind his success. He maintained many
financial and nonfinancial tools to keep his employees influenced. Inspired motivated and
retained in the organization in accomplishment of goals and objectives. Some of tools he
used for this purpose are as follows.
 Distribution of dry rations pack worth Rs. 1000 to his employees every month
 Payment of employees above the market rate and 3 months’ bonus before Sinhala
and Tamil new year
 Grant of Soft loans for employees who have completed more than 5 years in the
company in order to purchase motor bikes and Gifting of the best employees a plot
of land each year
 Awarding of Scholarships for children of employees who are selected to
universities and distribution of school books and other accessories for most needy
children of employees to help them in education
 Maintaining of open door policy for his employees
 Not recruiting of professional managers to run his business but to trust on his
existing senior most staff deploying them as supervisors
3

 Visiting of production floor every morning with his white attire exchanging a few
words with workers he meets
With above he always maintained Love and affection by his employees towards him and
kept them worked very happily delivering max results
While taking his utmost effort to keep his business growing well, he was dreaming to
hand over his business empire to two children who were send to India for their mastery
education in IT and Fashion Design upon their return and enjoy his retirement. Though
he is a conventional business personality, this would clearly prove his visionary thinking
of the future market requirement and its volatile nature by selecting above courses for his
children. However two main failures highlighted in his story are as follows.
1. Not training and developing of his employees for the next level after his retirement
and this is clearly proven during his post retirement period after handing over the
business to his educated children
2. Appointment of his IT qualified son as Director Operations and Fashion Design
Qualified Daughter as Director Marketing and overnight handing over them almost
100% responsibility of his business without proper training and orientation
program.
During the pre-retirement period of Rolex Mudalali his business went all along well but
after handing over the business to his two Children it started falling down owing to the
following reasons in addition to the above two main reason
 Hiring of various employees at senior and manager level without aligning it to
financial, Human resources and prevailing business strategy.
 Spending Rs 1m for fixing a digital sign board showing the Vision of which no
Mission has been properly focused to accomplish same.
 Mixing of Foreign consultants with people in the production line which was
perfectly fine before
 Employees to attend Series of seminars and devoting their time for endless
meetings in the work floor with various disciplines
 Introduction of incentive scheme based on individual productivity and announcing
of performance appraisal based annual bonus scheme in lieu of existing systems
4

 Confinement of Rolex Mudalali’s appearance in the production line once a week
only would have deprived the paternal shield had by employees before
 Leaving of most of senior and talented employees from the company and joining
with the newly formed Indian company
 Not achieving of production target and facing financial crunches as a result
 Receipt of court orders stating his property will be auction by the bank in the
coming month
03. PROBLEM STATEMENT
Generally, an organization is having two kinds of problems. The first type is the main
problem which is directly affecting the organization as a going concern and the other type
is the minor problems with which an organization can run without affecting its continuity.
However, for the wellbeing of the organization and best performance both the kind of
problems need to be arrested and resolved. In the underlined story, the main problem is
the short coming in the vision of both Rolex Mudalali and his Children
3.1 The Main Problem
Though Rolex Mudalai was doing well in his business over 30 years as a leading
business, he would not be a visionary leader and that is why his empire was fallen down
after his retirement. If he had a clear vision for his business to be successful or the same
glory of business after his retirement, he should have trained and developed his
employees for the post retirement period as well and in the same manner his 2 children
should have been educated about the knowhow of his business before handing over them
the business.
3.2 Minor Problems
 Appointment of his son and daughter as director operations and director of
marketing respectively,
Both these position require experience in the job. Appointment of IT qualified Son as
Director Operations and Fashion Design qualified daughter as Director Marketing
would not be a right choice. They should have been kept under training for some
period before appointing to those positions,
5

 Haphazard recruitment of managers and other staff.
There should be real purpose for those recruitments and also approved in the financial
budget of the company. Otherwise increasing cost without a plan will lead to financial
crises
 Haphazard increasing of overhead for building of AC room and payment of Rs
1m for digital signing board for showing the company vision and also travelling
of overseas by Director marketing along with her marketing manager.
As appeared in the story these are all unplanned expenses which resulted company in
financial crises
 Two teams of Foreign consultant are seen the production line with in a month
time of new directors for training employees who made the company successes in
its business over 30 years
This clearly denotes the training being done and huge expenses incurred on foreign
consultant without properly analyzing the requirement and its returns.
 Conducting of series of Seminars and time wasting endless meeting in the work
floor on various disciplines.
Over last 30 years’ employees were giving benefit to company without these
disciplines and sudden introduction of then can make employees unhappy owing to
egoistic feelings.
 Induction of new incentive scheme based on individual productivity and also
annual bonus on performance appraisal.
People are used to the incentive and bonus systems introduced by Rolex Mudalai and
sudden introduction of those system can make the employees unhappy and desperate
 Confinement of Rolex Mudalali visiting once a week in the production line
Employees had a chance to share their grievances with Rolex Mudalai every day and
now they are getting same opportunity only once a week. This situation would have let to
disappoint old employees and leave organization
 Increased employee turnover and Joining of most talented old employees with
the new competitor who opened a plant in the vicinity of the factory
6

Poor HR practices of the company would have let employees to leave the company
and join the company.
 Rejection of shipment due to quality issues and factory is running below the
capacity
Arising of quality issues due to loss of experienced and talented employees and
occurring of production shortages due to increased employee turnover.
 Receiving of a Court Order for auctioning of property of Rolex Mudalai.
Haphazard spending of money, quality issues and lowered production affected
financial crises resulting litigation issues.
04. Answer for Question (a)
“A Leadership is a process where a person exerts influence over others, inspires and
motivates and directs their activities in order to achieve desired goals ” Accordingly ,
Rolex Mudalali is a great leader to his employees and a leading businessman in the
hill country, who owned a largest biscuit manufacturing plant and had a 70% of market
share and generating of exports income on his products to 20 countries. He is not an
educated businessman in doctrines written by management gurus and even he had never
stepped into school after grade 6 or read management books but believed in people
worked under him and taken care of wellbeing of them including their families. That
would be the main secrecy behind the success in his entrepreneur style and this statement
is clearly evidenced from the following leadership tools he used as a businessman to
achieve his organizational goals.
 Treating his employees as the best assets he possessed
 Treating welfare of his employees and their families prime Important
 Distribution of dry rations pack worth Rs 1000 to his employees every month
 Payment of employees above the market rate
 Payment of 3 months’ bonus before Sinhala and Tamil new year
 Grant of Soft loans for employees who have completed more than 5 years in the
company in order to purchase motor bikes
 Gifting of the best employees a plot of land each year
 Award of Scholarships for children of employees who are selected to universities
7

 Distribution of school books and other accessories for most needy children of
employees to help them in education
 Maintaining of open door policy for his employees
 Not recruiting of professional managers to run his business but to trust on his
existing senior staff
 Visiting of production floor every morning with his white attire exchanging a few
words with workers he meets
 Deploying of senior most employees as supervisors
 Keeping Resignation rate almost to zero
 Maintaining Love and affection by his employees towards him and keeping them
worked very happily Delivering max results
 Getting his business grown rapidly along with his popularity
His ultimate goal is to handover developed business to his two children and enjoy his
retirement. Therefore, his vision is not clear in the story, which would attribute him to a
visionary leader. Similarly, he used most of financial benefits to keep his employees
happy, attracted towards him and controlled and not had a charismatic quality or
personality that would attribute him to a Charismatic leader. Therefore his paternity
attitude towards his employees would be attributing him a Paternalistic leadership style
and it is apparent throughout his story
The underline leadership style with Rolex Mudalali has benefited to the company for
many years. He was treating Employees as assets and the reason behind it would be that
normally assets generate revenue. He did not only treat welfare of employees but also
their families. That is clearly explained in distribution of dry rations packs and books for
needy children of employees. In this task he would be trying to attract spouses as well
and to get them encouraged to push their partners every day in works. He has done this
task very wisely and meaningfully not giving Rs 1000 in cash to employees anticipating
they would misuse it. He also would have expected Children of employees to join his
company after their education and that must be the hidden agenda of granting them
scholarships for university education. Payment of higher salaries than market rate ,3
months bonus and a plot of land for best employees would be his sort term devised
8

strategies to keep employees retained in his organization while giving motorbike loans to
employees who has completed 5 years to keep them retained in the long run. Among his
other tactics. Open door policy, Trusting of existing senior staff and elevating them to
supervisor level, visiting every morning to production flow with a white attire and talking
to employees would have kept the employee turnover ratio almost at zero. Beside his
visit airport by himself with his wife is showing he time management among his busy
schedules. All in all he has not given any of those benefits to his employees just sake of
giving them or just to show his compassion but to expect many in return from them
Though Rolex Mudalali was succeeded in his business with his self- learned management
skills, the main drawback in his process is that he has not planned properly the future of
his business after his retirement. Followings are the salient point he has not focused
before his retirement.
 His children are new to his business and they would need a time to understand the
SWOT of his business. Therefore, handing over of business should have been done
gradually and systematically
 We always change or radically change an existing system when it is not giving
expected results. Therefore, If Children engaged in his business for some time
under his leadership or stewardship, his two Children would have understood the
value of existing human resource, systems, processes and leadership style of their
father and success he achieved using existing resources.
 He always believed people but not put them in required training and development
and that could be the main reason for old employees could not succeed in new
management style and let them ultimately to resign and join a competitor of his
business.
 Rolex Mudalali should have taken step to train and develop his employees for the
period after his retirement as well and had it been done, his employees would not
have resigned and joined newly formed company. In order to do above task he
could ideally have recruited a Good HR manager or out sourced a consultant
 Before retirement he used to visit factory daily and after retirement it was once a
week only. This new development would have affected on his old employees very
9

adversely and therefore he should have change his routines very slowly and
gradually without affecting old employees’ sentiment
05. Answer for Question (b)
Rolex Mudalali,is a visionary person and foresighted with the knowledge to achieve his
targets. He sent his children abroad to get the knowledge in IT and Fashion designing. He
had a good vision among the industries as India can be classified as a country which is
mostly wealthy with knowledge among the education and Fashion designing. He would
have had an idea that IT and Fashion designing sectors would be taking a major role in
future market. Therefore we can reiterate that he had a great vision to develop his
industries in the future market as well. Also he would have had a thought that his children
would have the opportunity to meet people and build up good rapport which is prime
important tool to get his business going
Mudalali’s twin children were appointed as operational director and marketing director
after their arrival to Sri Lanka. They were very young and less experienced about
business sector. And also they have masters degrees in IT and Fashion designing which
not related to management or marketing. They were appointed as Directors without
explaining them about the nature of the business, employees the trend. So, due to their
modern ideas and less experiences there were lot of shortcomings of new approach taken
by directors and their team. Such as,
 Recruiting of people without proper HR planning and selection.
After appointment of new directors, they hired two people as personal assistants without
analyzing their qualifications. And then they hired six of their class mates as managers of
each function such as Production, HR, Quality, Supply Chain, and Marketing & Finance
those who are not qualified or having experiences in relevant sectors. Proper management
is essential function for an organization, but in this case directors hired people as their
acquaintanceship without considering their knowledge and experience in management.
Especially HR manager and other top managers are expected to be very talented. A good
HRM should be a good leader and should be rich with good communicating skills. The
business was practiced a good HR earlier so it should be polished and implemented with
10

new value added process rather than trying to implement new HR practices haphazardly.
Sudden changes discouraged the workers and it caused to reduce the productivity of
them. Failure of a HR manager will reflect severe problems which can lead to the end of
the organization. And also failure of the marketing and production manager will decrease
their quality of product and market share. Company turnover increased all the time high
of 25% after appointment of new directors but many rejection of shipments by overseas
buyers due to quality issues. So, the selection of unqualified people for top management
positions is an unwise decision take by newly appointed directors.
 Study of prevailed culture of the organization is vital by the new board of
directors and accordingly should educate the new employers
The organizational culture was well developed when it was handed over to new directors.
There were good values in that culture which was prevailed over 30 years in the company
and even a leader should go through the organization first and should have a proper
knowledge about the culture .However in this case his children were well educated but
they couldn’t identify and analyze about the culture they applied only a theoretical part
which they have learned. This would be an ineffective system
 Ineffective Industrial Relation, improper communication and
counseling procedure.
During Pre- retirement period of Rolex Mudalali, he used to walk in the production floor
every morning and talked to the employees so that workers had a chance to talk to him
directly and to share their grievances but now new management implement new
theoretical practices which would not be quite comfortable for old employees. .These
instant changes would have made workers stressful and created an unhealthy working
environment. Rolex Mudalali had practiced open door policy and this created a
comfortable working environment for employees. It also increased the job satisfaction of
the workers which the new management fail to understand.
 No suitable targets and goals were created and didn’t concern about
the actual vision
11

When the 02 teams of consultants were mixing with people in the production line,
employees had to attend series of seminars for weeks and the most of their time devoted
for endless meetings in the work floor on various disciplines Therefor the workers could
not concentrate on their jobs and their valuable time appeared to be wasted. As a result
they were not able to concentrate on their job ,did not produce sufficient products and the
quality of the product was also not satisfactory to the customer which resulted employee
dissatisfaction, decreases in market share, rejection of overseas shipments and ending up
with financial crisis. They created an attractive vision in words but they did not properly
plan the way how to achieve their vision and maintain a sustainable business growth.
 Worked on personal feelings
New management always takes decisions favorable to the organization not for the
workers. Before changing the organization structure they fail to discuss it with their most
senior employees who were with the company for decades. While ignoring old
employees they implemented new practices and policies as per their whims and wishes.
This might have carried out a negative impact on employees and the image of the
organization.
 Ignorant about the skilled experienced work force and their
retention.
Most of the senior employees left the organization even without a proper employment.
They could not cope up with the sudden management decisions and changes which were
implemented from the day one of the appointment of new directors. Cut downs of
welfare measures and changes in bonus & incentive schemes had a severe impact on
employee’s personal life. The repercussion all those arbitrary changes made tender
resignation and to leave the organization.
 Failure to utilize the scare resources effectively and align with the
financial budget
12

Without the guidance from the senior employees or consulting Mudalali they
implemented things as per their whims and wishes. Followings expenses would have
been incurred haphazardly,
1 Air conditioned rooms for 2 Directors .This should have been done after
analyzing the existing liquidity situation/Cash Flow
2 Heavy cost on consultancy fee in order to make the vision and the cooperate plan.
3 Heavy cost on digital and printed vision.
4 Cost burden on hiring training consultants.
5 Cost involved in recruitment and selection process
In HRM we consider human resources are the vital factor of the organization’s success
and these resources should be effectively utilized, trained developed and retained in order
to achieve its vision but new directors fail to utilize the human resource which the way
that could produce more advantages to the organization rather than wasting their
production times for attending useless training and seminars ultimately it was effected
production qualitatively and quantitatively as well.
06. Answer for Question (c)
Company was running over 30 years without a proper vision but achieving its desired
goals as a leading business outfit with a 70% market share. Therefore, being the HR
manager of the company it would be advisable to study the history and the secret behind
the success of Rolex Mudalali in his business in order to re-engineer the process. The
main reason behind success is the paternalistic leadership style of the Rolex Mudalali and
therefore it is a vital point that new directors too should cultivate a similar charisma in
their leadership style in order to achieve their goals. This should be a clear message need
to go from HR manager to two directors as the first very step and it could be done with a
training session arranged for the senior managers including 2 directors. Besides,
following are other proposals to new directors in order to arrest the current dilemmatic
situation
13

 Understanding of company vision, mission, goals and objectives and accordingly
planning of human resources
 Analysis of jobs of existing employees and train them if necessary in order to meet
the new requirements rather than recruiting of new employees
 Recruitment of new employees ,if any, only on a proper resource planning basis
and selection process .This way recruitment done on favoritism will be avoided.
 Avoidance of overnight or drastic changes of existing bonus, incentive and
motivation systems introduced by Rolex Mudalali without a real purpose
 To conduct seminars and meetings for employees only if necessary as an
additional brainstorming session for employees
 To avoid all unnecessary HR related expenses being done without devised results
 If necessary checking the possibilities of Rolex Mudalali to postpone his
retirement date for some period or whether he can play a role of a Business
consultant to company
07. Annexure - I
CASE STUDY – FALL OF EMPIRE
MODULE 01 – PQHRM
e always believed that the people who are working for him are the best assets he
possesses. He never stepped in to a school after Grade 6. He never studied the
management in business schools. He never read management books or doctrines
written by management gurus. At the age of 50, Rolex Mudalali is the leading
businessman in the hill country. He owns the largest and the one and only state of art
biscuit manufacturing plant in the country and over 2000 employees working for him. His
products had a 70 % market share in the local market and he exports his products to 20
countries including USA. Other than the main business, he had many other business
interests in hotels, travel, apparel and plantation sectors. He along with his wife went to
MRIA airport to receive his twin children who were returning from Bangalore on
completion of their Masters Degree in IT and Fashion Design. Rolex Mudalali who was
sitting in the back seat of his brand new Mercedes Benz was counting the days to hand
over his business empire to his two children in order to enjoy his retirement .
H
He always believed that it’s his prime responsibility to look after the welfare of his own
employees and their families. At the beginning of each month, he distributes a dry ration
pack worth Rs 1000.00 to all his employees. His people were well paid above the market
14

rate and they were fortunate to receive 03 month bonus just before every Sinhalese &
Tamil New Year. The employees who have worked more than 05 years in the company
were granted a soft loan to purchase a motor cycle and the best employee of the year was
gifted with a plot of land each year. The employees’ children, who were selected to
universities, were offered scholarships and most needy children were given school books
and other accessories to help with their education. He believed and practiced the open
door policy and he never hires professional managers to run his business activities. It’s a
common sight in the everyday morning that Rolex Mudalali is walking in the production
floor in his white attire exchanging a few words with everybody he meets. The senior
most employees in the company acted as supervisors in various functions and resignation
is a rare term in his companies. The employees loved Rolex Mudalali and they worked
very happily under him delivering their maximum efforts. Day by day his business grew
rapidly along with his popularity.
He was the happiest person in the world when he appointed his twin children, Roshan and
Roshani as the Director Operations and Director Marketing on the following day of their
arrival from Bangalore. Two secretaries were hired as Personal Assistants to newly
appointed directors, and within the first week, two air conditioned office rooms were
built for new Directors. Six of their classmates were hired as Managers of each function
i.e. Production, HR, Quality, Supply Chain, Marketing & Finance. Two weeks later
Roshani embarked on an overseas trip with her Marketing Manager. Roshan was
astonished when he come to know that the factory was running over 30 years without a
vision and a mission statement. He hired the best management consultant in the country
and within few weeks they came up with a very attractive vision for the next 05 years
along with comprehensive corporate plan. Printed cards were issued to all employees
with the vision and mission statement and Rs 01 million was spent on fixing digital sign
boards with the company’s vision in the prominent places in the companies. A month
later, 02 teams of foreign consultants were seen mixing with people in the production
lines. The employees had to attend series of seminars for weeks and most of their time
devoted for endless meetings in the work floor on various disciplines. HR Department
introduced new incentive scheme based on individual productivity and also announced
that annual bonus will be based on performance appraisals.
Rolex Mudalali confined his factory visit to once a week and most of the senior
employees left the company even without a proper employment.
Newly appointed HR Manager was extremely busy with recruiting new employees on
daily basis as the turnover of the company rose to all time high of 25 % during the first
03 months of appointment of new directors. More than a dozen shipments were rejected
by overseas buyers citing quality issues and Indian business manufacturer opened a new
plant in the vicinity of the factory attracting most of the talented employees who have
worked with Rolex Mudalali during their entire career. The production target was well
below the average throughout the past few months. Finance Manager circulated a
15

memorandum stating that the employees will not receive the bonus next April and all the
welfare measures had been stopped with immediate effect.
Three of the newly joined Managers including the HR Manager left the company even
without tendering a resignation letter. Rolex Mudalali, once a powerful business figure in
the city was received a court order saying that his property will be auctioned by the bank
in the coming month.
a) Discuss about the leadership approach of Rolex Mudalali and how the company was
benefitted for many years with his self-learned management skills and main
drawbacks of the process.
b) What are the short comings of the new approach taken by young directors and their
team in the change process?
c) Being the HR Manager after the failure, what is your proposal to young directors to
implement best HR practices and processes in this 30 year –old company with over
2000 employees?
16

08. Names and Index Numbers of Group Members
NAMES Index No
17