Leadership Styles Impact on Organizational Performance in UAE

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Introduction

Back Ground of the Study

Leadership is one of the most defining factors in the success of a given company. In the current competitive business environment, companies are under pressure to deliver excellent results to their clients using the least possible cost. Sofi (2015) notes that it is the responsibility of those in positions of power to develop the right policies and to coordinate activities that would help realize the set goals. One can choose to use one of the various leadership styles based on the factors that they face in their operations. In the United Arab Emirates, the government has been keen on supporting local companies to enable them to compete favorably against multinational corporations. The support that these organizations receive can only be meaningful if their leaders understand what is expected of them and remain committed to achieving success. In this paper, the researcher seeks to analyze the impact of leadership styles on the performance of the Abu Dhabi National Oil Company (ADNOC).

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Statement of the Problem

The Abu Dhabi National Oil Company is one of the largest companies in the United Arab Emirates responsible for the extraction, processing, and exportation of oil in the country. The company has received massive support from the government to enable it to compete favorably in the global market against major rivals such as Saudi Aramco, ExxonMobil, BP, and Chevron among other major players in the industry (Khajeh, 2018). However, the ability of this company to achieve the desired level of success depends on the strategies that it employs in its operations. The leadership style that the company uses defines how motivated its workers are. Davis (2017) observes that highly motivated employees tend to be more productive than those who are not. Studying leadership styles and their impact on this organization will help to define strategies that the company can embrace to achieve success.

Aims and Objectives of the Study

The aim of this study is to investigate the impact of leadership styles on organizational performance, basing the study on ADNOC, one of the largest companies in the United Arab Emirates. The following are the specific objectives that the researcher sought to achieve through this investigation:

  • To identify leadership styles that have gained popularity over the recent past;
  • To determine the impact that various styles of leadership may have on organizational performance;
  • To determine the relevance of various leadership styles at Abu Dhabi National Oil Company;
  • To advise the management of ADNOC on the best leadership styles that it should embrace to enhance its performance in the global market.

Scope of the Project

The concept of leadership has attracted the attention of scholars over the past decades because of its significance in the overall performance of a firm. When conducting this investigation, it was essential to define the boundaries within which the study will be conducted. The scope of primary data collection will be limited to participants within the city of Abu Dhabi because of time constraints and the current global problem of the COVID-19 pandemic. The researcher will strictly focus on the effect that various leadership styles have on organizations, giving special attention to ADNOC.

The focus of the Study

The project focuses on investigating the impact of leadership styles on organizational performance at ADNOC. The investigation will look at how the performance of this organization can be enhanced by embracing specific leadership styles. As Alvinius (2017) observes, the aristocratic leadership style was popular in the past, but currently it may not be the effective approach of leading large organizations in a highly competitive business environment. It means that top managers must understand leadership approaches that are relevant to them based on the internal and external forces that they face in their operations. The investigation will focus on these issues in the context of Abu Dhabi National Oil Company.

Significance of the Study

The study focuses on finding ways of improving the performance at ADNOC through the use of unique leadership strategies. The outcome of this study is expected to inform policies at the company. The top management unit at ADNOC can use the information to help conduct an internal assessment, identify weaknesses in its current leadership style, and develop new policies that will address weaknesses identified. This investigation will also enhance knowledge in the field of leadership, especially in the context of the United Arab Emirates. Companies in the country and within the MENA region can apply recommendations made in this study to enhance their overall performance.

Hypotheses

The researcher expects specific outcomes in the study based on the preliminary investigation that had been conducted. These expected outcomes have been outlined in the form of hypotheses, as shown below:

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  • H1. The style of leadership that an organization embraces directly affects its performance
  • H2. Coach-style leadership, transformational leadership, and strategic leadership are popular approaches to managing organizations in the modern society
  • H3. The performance of Abu Dhabi National Oil Company has been significantly affected by the leadership approach that it has been using.

Research Questions

Leadership as a field of study is broad and has been investigated over the past decades. As such, it was necessary to narrow down the investigation to ensure that desired data are collected. The following are the specific questions that guided the process of collecting primary and secondary data.

  1. Which leadership styles have gained popularity over the recent past in the UAE?
  2. What is the impact of various styles of leadership on organizational performance?
  3. What is the relevance of various leadership styles at Abu Dhabi National Oil Company?
  4. How can the management of ADNOC enhance its performance in the global market through leadership?

Research Limitations

It is important to note that the researcher encountered limitations when collecting data in this study. One of the limitations was the inability to meet participants physically during the data collection process because of the current COVID-19 pandemic. The researcher had to rely on phone calls and social media platforms to reach out to them. Some of the participants failed to answer questionnaires within the time provided. They had to be replaced to ensure that sample saturation was realized. Primary data collection was limited to Abu Dhabi because of the time within which the study had to be completed.

Literature Review

The concept of leadership has attracted the past several decades. According to Saleh et al. (2018), the ability of an organization to achieve success depends on the vision and the ability of the leader to guide subordinates appropriately. Many companies often face different challenges because of leadership issues. This chapter will review what other scholars have found out in this topic, specifically focusing on different styles of leadership that are currently popular and analyzing factors that define the choice of leadership that an organization embraces.

Common Leadership Styles

Leadership can take many forms, depending on one’s personality, organizational culture, and forces that an individual or the company faces. A good leader needs to understand the situation they are dealing with and devise a proper plan that can help address the issue they are facing. According to Sofi (2015), sometimes a leader may have to be assertive while in other instances, they need to be considerate with their employees. When faced with an emergency, an organization needs a leader who can make quick decisions and facilitate its implementation. On the other hand, it may be necessary for a leader to take time and consult as many stakeholders as possible when it is necessary to make important policies (Yasir & Kamal, 2019). Such flexibility is essential to achieve success in a dynamic environment.

Transformational leadership is one of the most common models of management, which has gained massive popularity over the recent past. It emphasizes the need to maintain continuous improvement in an organization by creating a vision and guiding employees towards its realization (Gantino et al., 2019). It is based on four elements of intellectual stimulation, inspirational motivation, idealized influence, and individualized consideration. It requires a leader to focus on the individual employee, understand their capability, determine areas that they need to improve in, and then offer them the inspiration and guidance they need to improve. It discourages the use of coercion to make employees achieve a given goal.

Transactional leadership is another common approach to managing people. A transactional leader’s goal is to promote compliance and to ensure that a given task is completed within a specified period (Saleh et al., 2018). The manager must ensure that subordinates remain motivated and committed to a given goal within a short period. It becomes irrelevant as soon as the intended objective is realized. The leader may be forced to use reward and punishment to ensure that followers stick to the short-term guidelines. Coaching leadership is another model that has gained massive popularity over the recent past. In this case, a leader gets directly and actively involved in the professional and personal development of the followers. It requires close and regular engagement with subordinates to understand their strengths and weaknesses (Karam & Kitana, 2020). The leader is then expected to develop a roadmap for individual employees that can help them achieve growth. The holistic growth of the employee is considered the best approach to improving their output and the general performance of the organization.

Bureaucratic leadership places emphasis on developing fixed official duties based on a given hierarchy of authority and rules. Every member of the organization must work within the system and follow the set rules religiously without question (Yasir & Kamal, 2019). The decision is expected to flow from the top management unit to junior managers and subordinate staff. On the other hand, strategic leadership emphasizes the need for a leader to develop a strategic vision and persuade members of the organization to pursue it (Davis, 2017). It requires the leader to explain the vision to followers articulately and convince them about its benefits if it is realized. Other common strategies include autocratic, democratic, and laissez-faire leadership styles

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Factors that Define the Choice of Leadership Style

A leader will always be faced with situations where they need to employ a different style of governing to achieve specific goals. It is also important to note that some of the styles are appropriate in the short term while others should be used for the long term (Karam & Kitana, 2020). For instance, strategic, coaching and transformational leadership are applicable when defining a long-term approach to managing employees. On the other hand, transactional leadership is applied when focusing on a specific task that needs to be accomplished within a short period. When faced with an emergency, Prince (2019) explains that a more assertive strategy that requires quick decision-making and implementation should be encouraged. However, a leader should ensure that they involve many stakeholders when developing policies that may have major implications within the organization. The goal is to always create an environment where everyone feels respected.

A leader has the responsibility to assess the situation before selecting the most appropriate leadership style that needs to be used. One of the issues that should guide such decisions is cultural practices and beliefs within a country. In the west, employees highly value democratic and consultative approaches to leadership. On the other hand, people in some countries such as North Korea have become used to the aristocratic approach to leadership. Understanding socio-cultural forces help in determining whether a given approach may work in a given country despite its desirability (Gantino et al., 2019). For instance, bureaucratic and autocratic leadership strategies may not work in the west, but they can be applicable in a country such as North Korea or Iran. The goal that a leader seeks to achieve may also define the leadership approach that is needed.

Research Design and Methodology

Research Design

When conducting research, one of the first factors that one has to determine is the design that is appropriate for the study. Kumar (2019) advises that when choosing an appropriate design, one has to take into consideration factors such as the primary goal of the study and research question. The design must make it possible to achieve the aim of the study. The researcher considered it appropriate to use mixed research methods as the most appropriate design. It involves the use of both qualitative and quantitative research designs. Using the quantitative design, it was possible to understand the prevalence of specific leadership styles within the company and the degree of impact that they have on the performance of the organization. Qualitative methods made it possible to explain how the management of the company can enhance its performance through the adoption of effective leadership strategies.

Sources of Data

In this research, the researcher used both primary and secondary data sources to inform the study. Secondary data was obtained from books, journal articles, and reliable online sources. The school has limited access to the library as a way of containing the spread of the coronavirus based on the guidelines provided by health experts. as such, the researcher had to rely on information from online databases. Google Scholar, JSTOR, and Directory of Open Access Journals were essential in enabling the researcher to have access to the needed materials. Chapter 2 of this report formed the basis of discussing findings made from the secondary sources. Primary data was obtained from a sample of respondents. This chapter discusses how information from primary sources was obtained and processed to inform the study.

Sample Size

Leadership is an issue that affects everyone within an organizational setting irrespective of their position in the management. However, it was not possible to collect data from the entire population of employees at ADNOC because of the limited time within which this study had to be completed. As such, a small sample of the employees was selected using judgmental sampling. This method of sampling was appropriate because it was necessary to engage employees in the top management, mid-management, and non-managerial levels. Instead of randomly selecting participants from the entire population, it was necessary to ensure that a specific number of them fell under specific classes (Devi, 2017). It is always advisable to collect the views of participants in different managerial ranks to have a comprehensive understanding of the issue under investigation. A sample of 20 participants was selected using this method.

Methods of Data Collection

When a sample has been identified, it is always necessary to choose an appropriate method that can be used to collect data from them. The researcher was keen on conducting face-to-face interviews with sampled participants. It was considered the most effective way of investigating an issue, especially when it is possible for the researcher to reach out to the participants (Pettey, et al., 2017). Unfortunately, the current COVID-19 pandemic made it impossible to have such physical interactions. The online survey was used instead. Participants were contacted through their phones and social media platforms. The significance of the study was explained to them, including the role that they were expected to play. The researcher then developed a questionnaire that captured all the important issues in the study and then sent the document to individual participants through e-mail addresses they provided. They were told to fill the questionnaire and return it within one week.

Data Analysis

Once raw data was obtained from the participants, the next step was to conduct an analysis in a way that answers all the questions and meets the aim of the study. As explained in the research design section above, the analysis was conducted both qualitatively and quantitatively. Responses to the structured questions were entered into a Microsoft Excel spreadsheet and analyzed statistically. The outcome of the analysis was presented in graphs and charts. The strategy made it easy to understand the views of the respondents on each of the questions based on their knowledge and experience at the company. Qualitative analysis was conducted by reviewing the responses that participants provided. Using open-ended questions, the researcher requested participants to provide detailed explanations of issues under investigation. Using direct quotes from these participants, it was possible to bring out themes as identified by participants.

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Analysis and Interpretation of Data

The previous chapter has provided a detailed discussion of the method that was used to collect and analyze data from primary sources. This chapter presents findings made based on the outcome of the analysis. Data were analyzed both qualitatively and quantitatively. It was necessary to test the hypotheses that were set and answer the research question to meet the aim of the study.

H1. The style of leadership that an organization embraces directly affects its performance

The first hypothesis posits that the style of leadership that an organization embraces directly affects its performance. It was necessary to ascertain the truth behind this argument based on the knowledge and experience of participants. Figure 1 below shows how these participants responded to the questions. It is evident that a significant majority of the participants (85%) strongly agree with the argument that the leadership style of an organization is directly linked to its leadership style. Another 10% of the participants agree with this statement. One participant was non-committal as they stated that they are not sure about this issue. None of the respondents had a contrary opinion. From this statistical analysis, the hypothesis above was confirmed. The performance of a company in the current competitive business environment is highly affected by the leadership style that it embraces.

Relationship between a firm’s performance and leadership style that it uses
Figure 1. Relationship between a firm’s performance and leadership style that it uses

H2. Coach-style leadership, transformational leadership, and strategic leadership are popular approaches to managing organizations in the modern society

In the second hypothesis, the researcher identified some of the leadership styles believed to be most desirable at Abu Dhabi National Oil Company based on the internal and external forces in the market that it faces. Respondents were asked to mention one leadership style that they believe is most relevant to their organization that can enhance its success based on challenges that it faces. Figure 2 below shows the responses that they made. Coach-style leadership had the highest frequency, with 7 participants stating that it would help the company to improve the overall performance. The transformational leadership style was the second-most popular leadership style for the participants. They explained that this style makes it possible for workers to achieve continuous growth through the support of those who are in positions of power. Strategic leadership came third among the most popular styles that participants believed can help propel this company to success. The other styles that respondents felt are also relevant in enhancing the success of ADNOC include transactional leadership and the democratic style of governance. The outcome of this analysis shows that the hypothesis above was confirmed.

The most relevant leadership styles for ADNOC
Figure 2. The most relevant leadership styles for ADNOC

H3. The performance of Abu Dhabi National Oil Company has been significantly affected by the leadership approach that it has been using

In the third hypothesis, the researcher was interested in determining whether this company has been significantly affected by its leadership style. Respondents were required to base their response based on their experience other than their knowledge. They were to state if they believe that the current or past performance of the company was direct as a result of its leadership strategies. An overwhelming majority of the respondents (90%) strongly agreed with the argument that the performance of ADNOC has been directly influenced by leadership approaches that it has been embracing. Another 5% agreed with the same statement. They explained that the leadership approach defines policies that the company embraces, the approach that it takes when undertaking its projects, procurement and logistics policies, and its marketing strategies. Almost every action and transaction that the company does reflects its leadership style. One participant stated that they were not sure about this relationship. None of the participants had a contrary opinion over this issue.

Impact of ADNOC’s leadership style on its performance
Figure 3. Impact of ADNOC’s leadership style on its performance

How can the management of ADNOC enhance its performance in the global market through leadership?

The researcher asked the respondents to state their views on how the company can enhance its performance in the global market using leadership styles. Based on the above responses, it was evident that the company’s competitive capabilities depend on the leadership style that it embraces.

Participant 4 said, “The management should be flexible enough to change from one leadership to another based on what it is facing both internally and in the external environment.

A number of other participants shared the same view, explaining that the company cannot stick to one style of leadership. Issues may emerge that may require a change of approach to leadership. For instance, in cases of crisis, it may be necessary to use a different leadership approach from that which is used under normal circumstances. Of importance is to assess the situation and respond to it with an effective leadership strategy that can ensure that the desired goal is realized.

Participant 1 stated, “The performance of ADNOC can be enhanced if it develops an organizational culture that is based on socio-cultural, political, and economic forces in the country. It should also reflect realities that the company faces in the international market.”

The respondent felt that effective leadership in an organization starts with developing a culture that all stakeholders find acceptable. The acceptability of the organizational culture should be based on its consistency with local practices. However, it should not ignore international forces because the company competes at a global level.

Conclusions, Observations and Recommendations

It is evident from the review of the literature and the analysis of primary data that the leadership style that ADNOC employs has a major impact on its performance. As the level of competition continues to be stiff in the global oil and gas market, it is becoming necessary for companies to employ unique strategies that can enable them to achieve their desired goals. The approach that they take to manage their employees directly affects the productivity of the company. As shown in the paper, employees’ performance tends to increase when they are motivated. Some people often believe that financial reward is the best way of motivating employees. However, the outcome of the study shows that even when a company pays its workers high salaries when they feel disrespected and undervalued, their performance will drop. Managers must learn to use leadership strategies that make employees feel challenged, but in a positive way that encourages continuous growth. It explains why coaching-style and transformational leadership emerged as the most popular styles for the participants. The study also indicated that managers must be flexible enough to change the leadership style depending on the internal and external environmental forces.

The researcher made specific observations worth discussing at this stage of the report. One of the most important observations made was that employees of ADNOC feel that although the current leadership at the company is adequately meeting their expectations, measures can still be taken to improve it. The management should be flexible enough to adopt some of the emerging trends based on best practices. The researcher observed that in most the cases, leadership style at the company is defined by the pressure that the management is facing. When it has to work under a tight schedule to deliver, it became evident that the company is likely to use an autocratic leadership strategy to achieve specific goals. The trend is common in many companies when they are faced with a crisis. Top managers tend to transfer the pressure they are facing to their subordinates, hoping that a quick solution will be obtained. Based on the findings made, the researcher makes the following recommendations:

  • The management of ADNOC should consider creating an organizational culture that promotes flexibility in leadership. It should be easy for the managers to change from one leadership style to another when faced with different forces in the market without causing frustration among employees.
  • When defining an appropriate leadership style that should be embraced, the management of this company should take into consideration socio-political and economic factors within the country. At the same time, it should not ignore global forces that may compromise its ability to compete favorably among other companies.
  • It is important for the management of this company to involve all stakeholders, especially employees who may not be directly responsible for policy formulation when developing new leadership practices. They will feel respected and valued by the company, and as such, are more likely to support such policies.

References

Alvinius, A. (2017). Contemporary leadership challenges. InTech.

Davis, C. J. (Ed.). (2017). Servant leadership and followership: Examining the impact on workplace behavior. Palgrave Macmillan.

Devi, P. (2017). Research methodology: A handbook for beginners. Notion Press.

Gantino, R., Ruswanti, E., & Rahman, T. (2019). Leadership style, intellectual capital, corporate social responsibility and corporate performance: A comparative study between two Indonesian industries. Journal of Accounting Research, Organization and Economics, 2(3), 90-97.

Karam, A., & Kitana, F. (2020). An exploratory study to identify the impact of leadership styles on achieving institutional excellence in the public sector: United Arab Emirates. International Journal of Business and Management, 15(6), 16-26.

Khajeh, E. (2018). Impact of leadership styles on organizational performance. Journal of Human Resources Management Research, 3(2), 1-9.

Kumar, R. (2019). Research methodology: A step-by-step guide for beginners (5th ed.). Sage Publications.

Pettey, G., Bracken, C., & Pask, E. (2017). Communication research methodology: A strategic approach to applied research. Taylor & Francis.

Prince, T. (2019). Top of the mountain leadership: The future of performance and productivity in a technology-changing world. First Edition Design Publishing.

Saleh, R. M., Nusari, M., Habtoor, N., & Osama, I. (2018). The effect of leadership style on organizational performance: Organizational commitment as a mediator variable in the manufacturing sector of Yemen. International Journal of Management and Human Science, 2(4), 13-24.

Sofi, M. A. (2015). Impact of leadership styles on organizational performance: An empirical assessment of banking sector in Jammu and Kashmir (India). Journal of Business and Management, 17(8), 31-45.

Yasir, H. M., & Kamal, S. (Eds.). (2019). Servant leadership styles and strategic decision making. Information Science Reference.

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BusinessEssay. 2022. "Leadership Styles Impact on Organizational Performance in UAE." January 3, 2022. https://business-essay.com/leadership-styles-impact-on-organizational-performance-in-uae/.

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BusinessEssay. "Leadership Styles Impact on Organizational Performance in UAE." January 3, 2022. https://business-essay.com/leadership-styles-impact-on-organizational-performance-in-uae/.