Kwek Leng Beng, like every other successful entrepreneur, works very hard. He once declared to a Singapore reporter, “My motto has always been to work hard, say less and do more”. Rising before 6. 00a. m, he often starts his day by reading biographies of powerful men who had changed world history and business magazines to keep abreast of current issues. By 6. 30a. m. he would be on the phone to offices around the world.
His early phone calls would be followed by breakfast at home with both his wife and younger son aged 17. He would arrive at work by 7. 30a. m. and a typical day would end 16 hours later, ideally capped by drinks with a friend. Described as possessing an innate business sense coupled with a gambler’s instincts, Kwek Leng Beng presents visitors with an air of soft-spoken reticence and informality. He is modest for a billionaire and does not like to be photographed. He is often not recognized even by his own employees. People who have dealt with Kwek invariable describe him as having lots of energy and stress tolerance. He is self-confident and has a high achievement motivation. Intuitive approach to decision making
Kwek has a rather intuitive approach to decision-making and relies on his own hands-on experience. He makes decision based on extensive knowledge and experience without the detailed analyses of hard data to make quick decisions. His managers are expected to know first hand the products, markets, business environments and industries. Many of his long serving cousins and managers remain active in all aspects of the business past retirement age. These levels of involvement appear necessary for the management to comfortably make the right decisions without data support.
Hence Kwek’s in-depth knowledge of the local hotel industry and markets allowed him to make rapid decisions. Kwek Leng Beng expects his relatives to be active and participate in all the important aspects of the organization’s activities and markets. This experience gives the leadership the intimate, incisive knowledge of the business, which forms the keystone to the intuitive decision-making. Through its web of associates, the leadership, where possible, also pursues preferential treatment, and lobby for or against the promulgation of laws, regulations, and privileged positions within the industries.
In this fashion, the leadership strives to enhance patterns of change and continuity that enhances its strengths and minimizes weaknesses. Kwek always uses external sources of information when making strategic decisions. He is less likely to refer to documented evidence or data in published form. He prefers to use sources of often qualitative, even subjective information, such as friends, business associates, government officials, and other people whose judgement he trusts.
He may often travel to local scenes to check personally on the reliability of local information, rather than to rely on secondary information that may not be published. Speed in decision making Kwek can be quick in his decision making when situations demand it. As he explains in an interview with Singapore Business magazine in November 1996 on his acquisition strategy: “If we want to do it, we do it very quickly. When someone approaches me to sell a hotel, I ask the price, the number of rooms, the location, and whether the deal includes a management.
If it doesn’t fulfill these conditions, I say ‘no’. And I say no quickly. ” He often makes decisions without consulting anyone. This speed has, in the past, enabled Kwek to seize business opportunities before local competitors sense they exist. Kwek zealously maintains secrecy over the sources of information that guide his investments. As a core competence, his networks provide potential access to various markets. This practice of ‘guanxi’ leads to a high degree of reliance on trust. The strategic planning behavior can thus be classified as ad hoc and reactive.
The only important, market-related factor is centered on the Chairman’s personal knowledge of the markets. It reflects a highly centralized decision-making; specifically the Chairman’s personal knowledge of the market assumes importance, not the company’s or the marketing manager’s. Participative leadership and delegation Kwek’s leadership can hardly be considered participative, since participative leadership would involve efforts by him to encourage and facilitate participation by others in making decisions that would otherwise be made by him alone.
This is a pity since a broader participation by his senior managers would result in better quality decisions and a greater acceptance of decisions by staff who will implement them or be affected by them. His managers are likely to be more effective if they can use decision procedures that are appropriate for the decision. Although Kwek leaves the day to day running of the various companies to his numerous executives, he still makes all decisions pertaining to acquisitions or strategic directions.
He does not delegate the authority to make these decisions which tends to frustrate many capable managers who find it difficult to develop or grow within the organization. As a result, turnover rate is very high. For example, he recently lost two of his key staff, David Cook the financial directir of CDL’s listed subsidiary, Millenium ; Copthorne Hotels and Miguel Ko, a longtime executive of CDL, had quit to take the job of managing Starwood’s Asian operations only ten months after being promoted to be CEO of CDL.
This is also seen in the hotel arm, CDL Hotels Limited, the Hong Kong listed company, which has seen 8 CEOs come and go within six years from 1994-2000. Obviously, Kwek has difficulty retaining good executives. He seems to have a lack of confidence in his subordinates and his probable desire to consolidate power prevents him from delegating important matters as much as he should. Paternalism The leadership is paternalistic; Kwek demands absolute loyalty from employees. This has resulted in a culture where employees are fearful of him. As mentioned earlier, management is rarely participative.
Scaling the corporate reflects one’s trustworthiness rather than one’s inherent productivity. This has resulted in a culture where senior managers are always right even if they are wrong, and junior employees should not express their opinions before their seniors do, because it means their superiors have no room to move should their view be contrary. Kwek cannot be seen to be contradicted by a staff member, as this would imply a loss of authority. He expects employees to say only what is expected and to keep one’s real feelings private. Orders are passed down from the top. Vision building
Hitherto, vision building lies entirely with Kwek and his two trusted right-hand men, who solely guide the direction of the organization. Essentially his circle of trusted managers mingle and exchange information with their networks and through these provides feedback and recommendations on new directions for the organization. For example, one of his Directors, through contacts with outside market sources, surmised that there is a real need in the Singapore property market for New York-style executive studio apartment housing and recommended that the Group cater to this potential niche.
Without further consultation or research to confirm this hunch, Kwek launched a search for a suitable site for such housing. The focus of the organization then shifted to providing more studio type housing for the local market. There were no demographics to support this. Outsiders must work hard to earn trust, and very rarely achieve it fully; whereas unconditional trust is automatically awarded to insiders, particularly family members. One problem with family control is that the family is stuck if none of its immediate members is interested in the business.
Kwek has tried to solve this by trawling the outer reaches of his family to look for those who have the right skills to take senior management positions in the family firm. Sometimes the links to the family can be somewhat tenuous, but as long as they can somehow be defined as ‘family’, they are deemed to fit the bill. Although Kwek is acutely aware of the need to have new skills injected into the organization, he is still unable to cede management control to outsiders.
The children are sent overseas for a Western education, particularly to study for an MBA and they return to assume management positions. Kwek typically invests in a new market not because of research but on the basis of local connections. That is probably why the group generally sticks to real estate, which is relatively risk-free and doesn’t require a great deal of research or supervision. The organization’s dislike for service inputs is an attribute that needs to change for a healthy demand for services is the sign of a maturing organization.
Although Kwek’s intuitive approach to decision making has enabled him to make quick and valuable acquisitions in the past, it is ad hoc and the absence of a legible methodology makes it hard for the employees to understand or grasp the strategic intents of the leadership. The leadership’s sparse vision building and decision-making are always focussed on a small, tightly knitted and trusted group. Directions are passed down to middle management via closed-door meetings and are then disseminated to the rest of the organization through general meetings.
Occasionally, they are reinforced by company newsletters. This does little to enhance understanding or enthusiastic participation by employees at large. Leadership in teams Because of Kwek’s rather intuitive approach to decision-making, there is hardly any real teamwork since middle managers tend to array themselves like pieces in a chess game whose next move is contingent on everyone else’s. Of course any organization anywhere that promotes and rewards on the basis of personality and where procedures for advancement lack transparency, will exhibit some of these characteristics.
Staff and especially senior staff, who leave the company to join other companies or competitors, are seen as treacherous. Their departure implies a rejection of, and therefore a loss of ‘face’ to the leadership. Often there will be a great deal of demonizing of departed staff after they leave; or they are never mentioned again, as if they had never worked there at all. The remaining staff would certainly not want to openly canvas the true reasons for their former colleague’s departure-the conclusions might be an affront to management.