Mhr 640 Project 2: the Ciputra Group

THE CIPUTRA GROUP: SHAPING THE CITY IN ASIA

Irena Petrovik

500359941

CMHR640 DJ0 - Leadership

Ryerson University

1. What are the problems facing the organization?

The major problem at The Ciputra Group is that the business is managed by family members that are not necessary the right people to hold the high positions at the company. Ciputra had four children and all of them had an equal ownership of the company, which was 15% each, including his wife, while Ciputra had 25% ownership of the company. All of the children had different leadership style, different ideas and ways of doing business.

The Ciputra Group was seen as a family business and all of the top positions at the company were held by family members, which were Ciputra’s children, wife and two of his son-in-law. The day to day management was in the hands of the family members and few professional executives, since it was a requirement by the Indonesian law to have few independent directors on the board.

2. What are the causes of these problems?

Ciputra had an ideal vision of his family running the business now, and eventually pass it to the next generations. Ciputra knew that his kids are talented and he thought that they will be able to keep the image and the brand name in the future.

3. What is the evidence of these problems and causes (that is, what are the symptoms)?

Since all of the top position at Ciputra were held by family members, it was hard to attract appropriate managerial talents. As person close to Ciputra said:

If you compare LIPPO Group with Ciputra, they are both good. Perhaps Ciputra has a better vision. But for the technical competences he relies too much on his children and sons-in-law. LIPPO has hired the best outsiders, and they have better people. That is why I think that, in the future, the Riady family, who controls LIPPO will overshadow Ciputra in real estate. (Dieleman, p.68)

Even though all of the children and sons-in-law each led one...