Based on the five core strategic leadership actions Essay Example
Based on the five core strategic leadership actions Essay Example

Based on the five core strategic leadership actions Essay Example

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  • Pages: 7 (1775 words)
  • Published: January 22, 2018
  • Type: Case Study
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The strategic leadership of TTT Durra and Eunice Tat can be compared based on the five core strategic leadership actions. Both leaders demonstrated the first action of determining strategic direction by setting clear goals for NEFF and communicating them consistently throughout the organization. Durra's direction was focused on generating profits and raising funds, while Tat emphasized the need to provide proper care for patients and uphold the organization's fiduciary duty to its donors. This difference resulted in a market-based approach for NEFF under Durra's leadership, which treated patients as customers rather than improving their wellbeing as a charity organization. TAT's approach, on the other hand, aimed to satisfy donors by improving patient care, reflecting NEFF's objective of providing a full-fledged renal program focused on prevention, early detection, and intervention.

The main distinction between for-profit an


d not-for-profit organizations lies in the fact that for commercial enterprises, the exchange of their product or service for money marks the end of their obligations, allowing them to allocate the proceeds towards their business goals. Conversely, charities have an ongoing responsibility to ensure that donations have maximum impact on the beneficiaries, as they act as stewards of the donors' money. With this in mind, Nef's strategic direction is more aligned with its altruistic purpose, recognizing that it owes a fiduciary duty to its donors. Nef seeks to deliver high-quality programs in collaboration with its donors. This differs from Durum's approach, which prioritizes maximizing public funding utilization over revenue growth. Tat, who became CEO in 2004, has demonstrably improved patient-to-dialysis-center and patient-to-employee ratios (as shown in Figure 1) since taking over.Tat's strategic direction focused on maximizing the effectiveness of

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existing resources, something ignored during Durum's tenure. Figure 1 illustrates the NEFF patient to dialysis center ratio from 1992 to 2008, with Table 1 presenting the NEFF patient to employee ratio from 2002 to 2008. One of the key strategic leadership actions was to establish balanced organizational controls. NEFF caters to patients who cannot afford expensive private dialysis treatment, making them highly dependent on NEFF for timely medical support and dialysis treatment. As Chairman E emphasized, work cannot stop even if management changes occur because patients require their treatment thrice a week to survive. Organizational controls serve two purposes: ensuring patients receive timely treatment and ensuring donors' money is used prudently rather than misused for personal gain.During his tenure at NEFF, Durra lacked the implementation of organizational controls leading to unchecked decision-making power. Durra held a reputation intertwined with that of the organization and had too much power due to the absence of controls. The crisis may have been avoided if appropriate controls had been in place. Contrastingly, Tat implemented numerous controls during her time as CEO, which were absent before the crisis. Transparency and disclosure were key control mechanisms Tat used, which were absent during Durum's leadership. For instance, there was a severe lack of transparency on donor money spending and management. However, under Tat's leadership, NEFF was transparent, posting key statistics such as number of dialysis patients, donations collected, and expenses on their website in addition to financial statements. Tat also ensured the segregation of duties was implemented, whereas before, NEFF operations were conducted through 48 departments with all heads reporting directly to Durra.Durra had complete control over NEFF, including areas that should

have been separate, as he held authorization, recording, and custodian functions within the organization. This made it easy for him to commit fraud and mismanage resources, which was facilitated by the fact that he left the Director of Finance position vacant since 2002. Tat then divided NEFF operations into separate Clinical, Finance and Administration, Operations, and HRS divisions, which ensured decision-making powers were not concentrated on the CEO. Prior to crisis, the old board had delegated all authority to Durra, despite good corporate governance dictating the board should maintain oversight of management. However, the old board was weak and easily manipulated by a powerful CEO. Under Tat, a new board with experienced members from various fields was installed, and committees were created to ensure transparent decision-making and prevent delegation to a single person.

During Durra's tenure, NEFF lacked guidelines for basic operational functions. Under Tat's leadership, even small purchases like stationary required three different quotations, and staff had to justify selecting a certain party for a contract. To manage the firm's resource portfolio, Durum shifted NEFF's core competency from being a provider of low-cost palliative dialysis treatment to becoming a fundraising powerhouse. However, this shift resulted in neglecting NEFF's primary business of providing affordable dialysis treatment - highlighted by the fact that dialysis expenses only formed 40% of total staff expenses. Although NEFF became proficient in fundraising - raising income from $51 million in 2000 to $59 million in 2002 - it began to overlook its core business.

During Durum's tenure, NEFF neglected its core business and relied heavily on income from dialysis fees, which almost matched the expenses. NEFF treated its patients as customers and

sought revenue from them, even treating discounts on drugs as donations. Conversely, under Tat's leadership, NEFF prioritized providing low-cost dialysis treatment and heavily subsidized it, with 53% of homeostasis patients paying only $50 or less out of pocket and the remainder paying between $50-$400 per month. As a result, dialysis expenses rose to 78% of Neff's total expenses in 2007, with NEFF subsidizing 35.3% of the costs compared to Durum's time.Tat's approach to patient care differed from Durum's as she implemented group therapy, nutrition and exercise programs to improve overall patient well-being. Durum's sole focus was on dialysis treatments, which left many patients feeling "depressed and suicidal." Tat also improved the clinical to non-clinical staff ratio, sending a message that NEFF prioritized healthcare over fundraising. Thanks to her efforts, NEFF became one of the most affordable dialysis service providers in Singapore.

Durra prioritized employee development and training, conducting weekly training sessions lasting up to two hours for all staff and separate sessions for management. However, with 60% of nursing staff being foreigners, staff turnover remained high, preventing local talent from being developed. It seemed that Durra's focus was more on fundraising than nursing competencies. In contrast, Tat believed that reducing staff turnover was crucial for organizational growth and by early 2008, attrition fell to less than two percent.The CEO implemented various people-centered initiatives to promote communication, team bonding, staff welfare, and development. The training program aimed to improve the skills of clinical and non-clinical staff and not just fundraising abilities. Additionally, the CEO sought to enhance the organization's human capital and knowledge base by reducing foreign nurse hires and providing nursing scholarships in Singapore. This

resulted in improved patient service quality and decreased staff attrition rates. Both leaders also focused on developing social capital by building relationships outside the organization. Durra established a strong public relations team that secured support from external sponsors and donors for Neff events. This helped increase the organization's social capital, as evidenced by the growth of Neff from six dialysis centers in 1992 to 21 in 2004, all of which were fully sponsored by corporate partners. The press coverage further ensured that sponsors received maximum benefits from their investments.NEFF's international presence was evident through its endorsements by foreign institutions, articles in global journals, and participation in embryology conferences. However, while Durra instilled loyalty among the staff, it was to him and not to NEFF. The lack of attachment among employees and the absence of a leadership pipeline created a paralysis in the organization after Durra's departure. In contrast, Tat focused on improving the relationships with existing Lifeblood donors by increasing communication channels and organizing regular events. Under Tat, transparency and accountability improved as NEFF treated its donors like shareholders.Key Strategic Leadership Action 4 focuses on maintaining an Effective Organizational Culture across the entire firm. However, in the case of NEFF, there were two distinct cultures present. The non-executive staff were indoctrinated to be loyal to Durra, due to his charismatic personality and communication style. They believed that NEFF desperately needed funds for its patients and therefore scrimped and saved wherever possible. However, they were unaware that the amount they were fighting for was insignificant compared to the bonuses that were being provided. Durra had deceived them. In contrast, the management was focused on profit minimization

and personally benefiting from their position of power. They were able to do this because of the lack of transparency and governance within NEFF, which led to a culture of deceit and oppression at the management level. This behavior was demonstrated by the defamation lawsuits against employees, as well as inflating treatment costs and patient numbers to attract more donations.Tat made a conscious effort to establish a unified set of values and culture throughout the organization. She believed that management and ground staff should share the same values. To achieve this, she created a vision and mission statement that served as guiding principles for all decisions. To stay connected with the staff, she organized coffee sessions where she listened to the concerns of 10-14 employees from across the foundation. Tat visited all of NEFF's 21 dialysis centers in her first year as CEO, demonstrating her commitment to patient care. She encouraged staff to follow the values of compassion, communication, commitment, collaboration, and consistency. This was different from Durra's leadership style, as he failed to emphasize ethical practices and even sued those who spoke out against him.

Durra created a climate of fear within the organization, which made employees afraid to challenge any unethical behavior. NEFF lost its ethical bearings due to the lack of a proper whistle-blower policy and formal policies or corporate governance. NEFF did not have a formal remuneration policy, resulting in some employees receiving frequent salary increases and promotions while others received large ex-gratia employment orientation payments up to 10 months' salary. The board should have determined management's remuneration, but management set their own salaries and bonuses, misrepresenting fund-raising expenses to attract

more donations, breaching trust. In contrast, Tat advocated for ethical practices and implemented measures to prevent power concentration in one person. She set up committees covering key management areas such as audit, remuneration, and finance to prevent individual decisions from benefiting only themselves.

The remuneration committee's task is to guarantee that suitable policies are in place for remuneration and to make decisions regarding Senior Executives' remuneration. On the other hand, the patient appeal committee's duty is to scrutinize appeal cases that don't meet Neff's standard approval criteria of patients who seek financial and social assistance. Under Durra, the CEO used to have the final say on patients' appeals for more financial or social support.

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