The Leader Lakshmi Mittal Management Essay

Lakshmi Niwas Mittal, a steel magnet was born in Rajasthan, India on 15 June, 1950. After completing his graduation in accounting from St. Xaviers College Kolkata he started his career in early 1970’s from Ispat steel Limited located in Kolkata itself. He started his journey from Indonesian steel mill which was on its last legs. His craziness for being a steel magnet took him out of his boundaries to forgotten divisions of the world. Therefore he turned many at a standstill steelworks into productive operations. Kazakhstan’s redirected steel plant (Foroohar, 2005); Trinidad, Algeria and Mexico’s acquired steel mills strengthened his empire in terms of raw ore. After his shifting to London, Mittal merged his company with other big steel firms located in US and China. That made him world’s largest steel producer and wealthiest British. Acquiring Arcelor was one of his major victories. That is currently known as ArcelorMittal (Encyclopedia of world biography, 2007).

Leadership:

Leadership concept has always been mysterious as Stogdill (1974, p.259) defines,’ Leadership has got as many as definitions as there are people who have tried to describe the notion’ (Bolden, 2004, p. 4). In new era organisations are transiting from hierarchical structures to open networks. Therefore leadership role is to shift participants towards common goal through accountability and responsiveness (Hickman, 1998).

Business leadership approach

Vast study of effective leadership approach evaluated a constitutive idea of charismatic, transactional and transformational leadership. Charismatic leadership however developed from word charisma (Weber, 1947, pp.358-359) which means an exceptional quality a person that distinguishes him from others. House (1977) argues followers nominate their leader through an attribution process on the basis of certain behaviours exhibited by their leader. Conger and Kanungo (1998) studied this concept thoroughly and presented an idea as charismatic leadership generally constitutes four characteristics: possession and articulation of vision, enthusiasm to take risks for fulfilling vision, exhibition of compassion towards follower’s needs and demonstration of novel conduct.

Bass and Avolio (1991) presented a modified form of leadership approach in the form of transactional and transformational leadership through Full Range Leadership Model. In this model transactional leadership falls under passive and ineffective dimension whereas transformational goes under active and effective dimension. Transactional leadership moves from Laissez Faire towards Management by action (passive–>active) and Contingency Reward. Therefore, this is a participative type of leadership as if leader’s participation declines than leader becomes ineffective and rests at Laissez Faire. Therefore Contingency Reward is the best fit dimension for transactional leadership.

http://1.bp.blogspot.com/-biQ1GjCwwI8/T0k07i2TKiI/AAAAAAAAANg/dNMlYz2Mx6s/s1600/FRLM-Graphic.png (Source: fromdarknesstolight-somoteitbe.blogspot.co.uk/2012/02/leadership-in-freemasonry-complicated.html).

Whereas looking into transformational leadership, it is complementary to transactional leadership and basically depends upon four I’s: Idealized influence (charismatic), inspirational motivation, intellectual stimulation (questioning & challenging) and individualized consideration (intension towards individual needs) (Bass, 1985). Therefore a leader should be both transactional and transformational (Judge et. al, 2006 pp. 204-205).

Lakshmi Mittal has got transformational leadership approach towards his followers. Mittal through ArcelorMittal organization prioritised leadership as one of the important core values along with the quality of the product and sustainability of the organization in corporate world. Therefore, a reliable management strategy is prepared in terms of diversification and globalization. Mittal’s motive to improve its organizational leadership strategy is not only improving our selves but also fostering talents and responsibilities within the individuals to give their best in what they doing. His vision of building a largest steel empire and mission to fulfil that vision through consolidating various acquisitions throughout the world made him Europe’s richest man. For Inspiring and motivating followers, Mittal organised Transforming Tomorrow programme, in which volunteers are granted with mini grants for not for profit purposes. Mittal’s employees not only earn good salary but they are also getting so many motivational benefits as a reward for their performance through bonus schemes, worldwide mobility and training in ArcelorMittal university(ArcelorMittal, 2012).

In terms of individual consideration and Intellectual stimulation Mittal distributed leadership within BOD, governance, senior management and GMB. Eight member of Arcelor Mittal’s Group Management Board are free to give their thoughts on the company strategy and its core priorities. Through Annual report group management board is asked questions about management policies. Mittal engaged his organization in various skill requirement and training programmes. These programmes assure the participation of various talents throughout the world. For different level of leadership, different leadership programmes are designed i.e. GEDP for strategic management, diversity & inclusion policy for flexibility on work place, JMO for online resource management, business leader programme for fresh graduates ( ArcelorMittal Annual report 2009). On the part of shareholder liability Mittal’s company arranges annual general meeting held in May (ArcelorMittal, 2012)

Key personal attributes

Leadership trait theory:

Any character that an individual keeps inside is crucial for leadership purpose. However, Shaw (1976) and Fraser (1978) suggested that it is a mixed ability of a leader to score higher than average in terms of knowledge, intelligence, sociability and motivational capability (Bolden, 2004, p. 9). Whereas other researchers vastly examined this concept and determined inter relation between physical, cognitive and social characteristics. Question of, as if there are some particular personal characteristics that distinguish between leader and follower actually distinguished five main individual traits: extraversion, meticulousness, emotional steadiness, supportiveness, understanding (Digman, 1990). However Hogan, Curphy and Hogan (1994) distinguished these characteristics as of an emergent leader that is actually appointed from within the group (Tolbert & Hall, 2009, pp. 92-93). However, Ghiselli’s trait theory is highly profound among others. Six traits he mentioned are: Supervisory ability; Initiative; Need for accomplishing mission; Decisiveness, Intelligence and Self-declaration (McGraw-Hill companies, 2008, p.16).

Lakshmi Mittal is highly motivated person who has set a strong vision in front of him and worked hard to achieve that target. He is a very humorous and family loving man. Undoubtedly due to slave labor and chemical emission he had been in news, yet he has various good qualities as of a perfect man that led him so far.

Assimilation: Due to assimilation trait he got his degree with merit grades. Whatever professional knowledge he exerted through his studies and father, he implemented that into his business (Sondhi, 2007, p. 132).

Visionary and creative: Lakshmi knows steel business in depth. His vision to take opportunities anywhere in the world helped him to acquire and refurnish failed steel cites He not only leads on corporate level but also got experience on hand to operate industrial machinery. Due to negotiation and adaptability skills he sounds very tough in business (Emerald, 2008, pp. 15-17). Even after 2009 crisis when company lost half of its shares Mittal run his business with consistency and courage that lead his organization towards monopoly in steel business.

Empowering and interactive: All four levels of leadership based at ArcelorMittal work together in terms of risk management, stretching goals, decision making, corporate responsibilities and managing people. Daily meetings are held at Mittal’s residence.

Philanthropy: Construction of ArcelorMittal Orbit for London Olympics 2012 evidences his interest in charities. Abhinav Bindra received award of Rs. 1.5 Crore from Mittal champion trust for winning gold medal in Olympics 2008.

Conspicuous fortune: he has got $29 million personal fortune; $500 million palaces at billionaires’ road; colossal bus and moreover he has been conspicuous due to daughter’s wedding worth $100 million (New Internationalist Magazine, 2010). While being world’s fifth riches man he avoids to be conspicuous and says the day person goes high profile is the day he begins to fall (Milmo, 2004).

Leadership style

Leadership style is an action of a leader towards his perception about other human beings. Douglas McGregor (1960) proposed two theories, theory X and theory Y to measure a leadership style. Here in theory X a leader is pessimistic about follower as majority of them are less interested in work and resist working hard, consequently, wants to keep a strong command. Therefore are known as autocratic leader. Whereas in theory Y, leaders believe that physical and mental outflow in work is very similar to other human activities like taking rest and playing. Thus, an individual tends to take responsibilities under appropriate conditions and learns well. This type of leader tends to accept participative leadership style (Bolden, 2004, pp. 9-10). Various researchers distinguished different leadership styles. Supporting House’s (1971) decision making leadership concept, Vroom and Yetton (1973) introduced four kind of managerial styles: autocratic, participative, delegative and consultative (Tolbert & Hall, 2009, pp. 94-95). In addition House’s path-goal leadership theory also illustrates four leadership styles: directive, supportive, participative and achievement-oriented

Lakshmi Mittal has got democratic leadership style. He has got well defined leadership structure within his organisation to help him make decisions together on the basis of agreement and that is divided into four fellow leadership divisions:

Governance: reason for building governance is to maintain a practice standard which basically upholds legal requirements, stakeholder consideration, risk management and maintaining company position.

Board of directors: eleven members of board of directors involve highly qualified independent and non independent corporate people. They basically run governance and appoint senior management.

Group management board: GMB perform operational tasks and watch over business management by implementing business strategy.

Management committee: management committee involves GMB and CEO’s of acquisitioned subdivisions. Role of management committee is to promote the entrepreneurial skills within the organisation therefore higher level and lower level leaders take part in discussion(ArcelorMittal,2012)

Evaluation of leader in different context

Leadership solely depends upon the situational context within which leadership occurs. However, Supporting this approach Hersey and Blanchard (1960&1988, chap.8) introduced situational Leadership theory. For the purpose leader must feel the pulse of an organisation in which he is going to perform and adapt the organizational environment to fit well. According to this theory leader’s style entirely rely upon the followers’ readiness on which he is going to manipulate. Moreover, leadership styles available for leader are between two dimensions supportive behaviour and task behaviour. Supportive behaviour shows the leader-follower engagement, whereas task orientation shows the allotment of duties and progression of task. Engagement level of leader within task- relationship behaviour context shows the actual leadership style (Sage Publication, 2008, pp. 175-177).

http://resume.mywebtraining.net/images/SituationalLeadership.jpgManagerial Grid

According to above mentioned managerial currently Lakshmi Mittal holding High directive and high supportive managerial style. But if he could shift to any other organization for example Nippon Steel & Sumitomo Metal Corporation the second largest steel company after ArcelorMittal where there are two leader heads Mr Shoji Muneoka and Hiroshi Tomono and organizational structure is in hierarchical form than he should first observe the organization behaviour. Observation shows that other organization has transactional approach and participative decision making process. Mittal first has to change his style from democratic to participative through which ideas would be shared but final decision will be made by the CEO and COO. Certainly, with the support of personal traits a leader can change the perspective of any organization.

If we look as Mittal’s current leadership strategy, he has successfully imposed his transformational leadership in versatile form. He established his real estate business in different parts of the world. He has got stake in Queen’s Park Ranger and Goldman Sachs. He has various leadership positions at European aeronautic Defence and Space company, Kellogg school of Management and world Steel association. Due to his high adaptability and long term experience it has become his strength. Therefore, Mittal as a leader can best fit in any context.

Conclusion

Leadership approach affects organization behaviour and vice versa. However, through various key attributes a leader develops his leadership style and these leadership styles vary as per situation. In ArcelorMittal leadership framework, followers are consulted and strategies are formed on the basis of common opinion. Along with, followers are highly directed for risk management of business opportunities and lost business opportunities. However, through various leadership traits Lakshmi Mittal has framed a well managed leadership structure that is the key to his success.