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Abstract
The focus on globalization and multiculturalism has led to the importance of understanding organizational productivity and team effectiveness. This paper focuses on the UAE business context by evaluating and comparing leadership styles in the UAE and their effect on the competitiveness of the country. Mainly, this paper evaluates the leadership styles of the UAE from private and public perspectives. Through an analysis of four case studies and the views of experts and managers in the UAE, this paper establishes that most UAE organizations are government and family-owned. The main leadership style that prevails throughout these organizations is the authoritative and consultative leadership styles.
However, based on the views of the respondents sampled in this paper, these leadership styles are uncompetitive in the global business environment. This paper, therefore, recommends the adoption of the participative and transformational leadership styles because they improve organizational effectiveness and competitiveness. Nonetheless, this paper recognizes the cultural differences and implications for adopting western-styled leadership and management styles in the UAE. Therefore, the management and leadership elements proposed in this study cut across the cultural divide. Through this understanding, it is crucial to mention that most leaders and managers in the UAE should appreciate the importance of change management in the standardization of local organizational practices with international standards of practice. Through the importance of change management, this paper finally proposes that UAE leaders should strive to improve their strength, by compensating for their weaknesses through the maximization of employee values.
Introduction
Many people have different interpretations of leadership. The different interpretations of leadership come from a broad understanding of the concept. In detail, leadership involves several factors including motivating people, the inclusion of peoples opinions in decision-making, and encouraging people to achieve their personal and organizational goals (this definition of leadership mainly applies to an organizational context). A leader is therefore someone who has the power and influence to affect organizational behavior. Recent interpretations of leadership and its effects on organizational performance show that leadership is a personal ability to influence employee behavior and organizational performance.
Since people participate in organizational activities to pursue personal goals, their commitment to participate in the organization largely depends on how they believe the organization will help them to achieve their personal goals (Fatokun & Salaam 2010). Conversely, many people will be committed to working in an organization that will help them to meet their personal goals and objectives. The failure to realize this outcome may affect (negatively) the employees commitment to the organization. Leadership styles often play an instrumental role in easing or inhibiting, the willingness of employees to contribute to organizational activities (Lieberson & OConnor 1972). Thus, managers should search for a leadership style that resonates with employee ambitions.
The importance of leadership styles on organizational productivity does not however end on influencing employee commitment alone; an employees ability to harness organizational resources also largely depends on leadership management styles. Relative to this view, Timothy & Andy (2011) say, Efficiency in resource mobilization, allocation, utilization, and enhancement of organizational performance depends, to a large extent, on leadership style, among other factors (p. 100).
Managers and leaders who do not adapt to the changes in modern times have been criticized by people who believe they do not change as fast as the global economy does (Timothy & Andy 2011). Consequently, many organizations lag in adapting to the demands of todays economic times. More specifically, most leadership styles fail to augur well with the current demands of a competitive global environment. As such, many businesses do not operate to their full potential. This is one challenge that faces many businesses today because they have to devise new strategies for improving their competitive advantages and stay afloat in a fiercely competitive global economy. Through this understanding, this paper brings to the fore, the importance of change management, as a strategy for businesses to cope with the demanding global environment of today. To achieve this objective, this paper focuses on change management by evaluating the influence of leadership and management styles in influencing the organizational performance of UAE firms.
Rationale
Many countries have experienced the effects of the rapidly changing globalized world, and the UAE is a part of it. International investors have especially streamed into Abu Dhabi (the capital city of UAE) to exploit the existing business opportunities that have emerged through globalization (Arabian Business 2013). The UAE has ridden on a high of booming oil prices and a vibrant property market to become among the most vibrant economies of the 21st century (World Economic Forum 2007, p. 1). The instrumental role of the oil sector in improving the economic prospects of the region has coupled with the equally vibrant tourism sector to sustain the economic growth of about 7% before the 2008 financial crisis started (World Economic Forum 2007). The diagram below shows the steady increase in the countrys gross domestic product from 1975 2009.
The International Monetary Fund (IMF) predicts that future GDP growth in the oil-rich nation may occur in the services, tourism, and trade industries (Arnold 2011). Even though the recent global economic crisis dented the economic performance of the Emirates, very few experts contradict the view that the UAE economy is on its way to recovery (Arabian Business 2013). Economic indicators in the region also affirm this fact. For example, Arnold (2011) says that consumer spending in the UAE increased in 2012, from a 2008 all-time low. The Department of Economic Development (Dubai) has also affirmed this fact by saying that investor confidence is not the only reliable indicator of positive economic prospects for the UAE because consumer confidence has also risen in the same regard (Arnold 2011).
High oil revenues and the centrality of Abu Dhabi within the UAE have especially attracted foreign investors to the city because Abu Dhabi provides them with an opportunity to integrate within the UAE. To explain the high influx of international investors in the UAE, the United Nations conference on trade and investments (cited in Arabian Business 2013) says, The UAE attracted US $7.68 billion of foreign direct investment from all countries in 2011, up from US $5.5 billion in 2010 (p. 11). Furthermore, according to Arabian Business (2013), UAE increased its foreign direct investments (FDI) to AED30 billion (US$ 8.2 billion) in 2012. Much of the increase in FDI stems from the Arab uprising and its aftermaths. This is because many investors withdrew their money from unstable Arab economies, such as Tunisia, Egypt, and Libya to invest in the UAE. Therefore, because of the relatively stable political environment of the UAE and the elevation of Dubai as a global business hub, many investors deem it safe to invest their money in the UAE (Arnold 2011).
From the renewed investor confidence in the UAE, many foreign enterprises have set up shop in the country, succeeded through increased market expansion, and improved profitability. For example, in the automobile industry, luxury carmaker, Rolls-Royce, has admitted that the gulf market was its best performing market in 2012 (Arabian Business 2013). In the cosmetic market, the giant company, Sephora, also reported that the gulf market was its highest selling market, globally. The success of the giant fast-food company, McDonald, also affirms this trend, when the Arabian Business (2013) reported that the company posted high growth rates of about 20% yearly. The success of these foreign businesses in the UAE informs the relatively stable growth rate of the country and the renewed vibrancy of the UAE stock market, which has hit a 40-month high in 2013. To explain the vibrancy of the stock market, the Arabian Business (2013) claims, The publicly listed Dubai Financial Market (DFM) posted profits of AED35.2 million ($9.6 million) in 2012 after recording a loss of about AED6.9 million the year before (p. 1).
In part, the success of the UAE economy stems from the introduction of investment reforms in the oil-rich nation. The introduction of these investment reforms has coupled with the diversification of the countrys economy and the increase in global oil prices to make the UAE a highly attractive destination for foreign investors (Al Farra 2007). Indeed, the reform of investment laws in the UAE has attracted many investors because they can have 100% foreign ownership, they do not have to pay any corporate or income tax, they incur low tariffs (about 5% for most goods), they do not experience limitations on profit or capital repatriation (among other factors) (Al Farra 2007). These legal provisions have created a fertile ground for the thriving of foreign investments in the UAE. From these favorable economic conditions, many foreign businesses have therefore thrived in the UAE
Investors have reinvested much of the assets acquired during the growth phase to further foster economic growth and diversity in the UAE economy (away from the over-reliance on the energy sector). Most of these efforts have occurred within the context of public and private partnerships to improve other equally important and lagging economic and social sectors, such as education and training (World Economic Forum 2007).
Despite the positive performance and success of the UAE economy, this paper realizes that the UAE faces crucial environmental, political, and economic challenges. Externally, the UAE faces many geopolitical challenges that have the potential to tear the national and intercultural fabric that holds the country together (USA International Business Publications 2007). These challenges also have the potential to distort the UAEs social structures. These challenges have only dampened the spirits of economic optimists who now question the ability of the UAE economy to expand successfully into the international market (World Economic Forum 2007). The volatility of the regional and international market provides one such challenge facing the UAEs quest to be a global economic powerhouse. Likewise, the possibility of strengthening protectionist measures to curb the excesses of globalization also shows that the future of the UAEs economy as a global economic powerhouse remains uncertain.
Internally, the UAE faces several social and political challenges, such as the social and political imbalances that exist in the country and how policymakers may solve the associated social and economic problems (such as unemployment, skewed income distribution, and fractures in the federal framework) (Facts on File Incorporated 2008). Besides, as an offshoot of these internal problems, the UAE still faces several environmental challenges that threaten the countrys water resources, marine life, and the quality of atmospheric conditions (these environmental factors support the countrys growing population and the vibrant tourism sector) (World Economic Forum 2007).
This paper realizes the role of leadership and management styles in solving most of these national problems. In detail, this paper relies on the fact that effective management and leadership styles may solve the environmental, social, economic, and political challenges facing the country. A key motivator for adopting this approach of the study is the instrumental role that private-public partnerships have contributed to solving some of these challenges. It is therefore unsurprising that the research questions for this paper largely take a private and public approach. Stated differently, the research questions intend to explore how government and private organizations aim to improve their productivity and efficiencies through the adoption of sound leadership and management styles.
The focus on private and public sector organizations arises from the fact that both groups of organizations usually have a different set of work ethos and organizational objectives (although their contribution is essential for the sustenance of growth in a growing economy such as UAEs). This paper, therefore, chooses to evaluate private and public sector organizations in the UAE because they are both crucial in the development of public-private partnerships (which form part of the backbone for the development of the UAE economy). Therefore, by understanding the differences in the leadership and management styles of government and private organizations in the UAE, it can be easy to understand how local enterprises in the UAE can better improve their efficiency and competitiveness in the wake of global competition.
To this extent of analysis, this paper intends to establish how private and public organizations in the UAE plan to adopt change management as a coping strategy to new competition and how they will change their leadership strategy, in tandem with the same quest. Furthermore, by exploiting modern theories of management and organizational behavior, this study explores how modern theories of leadership and management influence the competitiveness of UAE industries.
Research Aim
To explore how UAE organizations cope with the demanding global environment through the adoption of change management
Hypothesis
UAE organizations cope with the demanding global business environment by adopting change management through their flexibility in varying human factors and mental controls to affect organizational productivity
Research objectives
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To identify the best working practices of leadership management style in the Emirate of Abu Dhabi
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To find out if the management style adopted by government leaders and private organizations match their strategic goals and priorities (a comparison of private and government performances suffice)
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To recommend appropriate change management strategies for government and private organizations in the UAE
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To establish the importance of individual awareness to higher management levels
Structure of the Dissertation
This dissertation contains six chapters. The first chapter contains an introduction to the research problem, objectives, and rationale for conducting the research. The second chapter is the literature review and it contains an analysis of previous research. In this chapter, this paper explores several issues including the concepts of leadership and culture, factors determining leadership styles and managerial approaches, best working practices of leadership and management, managerial and leadership styles adopted in the UAE public sector, and the managerial and leadership styles adopted in the UAE private sector. The third chapter is the methodology section, which underpins the methods used in conducting the research. In this section, this paper shows that the mixed research approach and the use of questionnaires and surveys comprise the main pillars of the methodology. The findings section shows the responses from the interviews, survey, and case studies. Discussions of these findings occur in the fifth chapter of this dissertation discussion. The last chapter (conclusion and recommendation section) contains a summary of the main discussions and findings of this paper.
Research Methodology
As explained above, this dissertation is a product of the adoption of a mixed research approach. The collection of data occurred through structured questionnaires, surveys, and case studies. In sum, the interviewees and respondents included experts in the field of leadership and management and public and private sector managers in the UAE. The case studies included a balanced analysis (comparison) between UAE organizations and UK organizations.
Literature Review
Best Working Practices of Leadership Management Style
The understanding of the best working practices of leadership management style relies on the classification of leadership as the broad spectrum through which leaders interact with their subjects in the organization. Through this lens of analysis, the assertiveness of a leader, in the way he/she interacts with employees, is of special importance to this analysis. This conceptual perspective captures many aspects of leadership and management, including the philosophy of leadership that informs how leaders interact with other people in the organization and the beliefs that inform the choice of communication that most leaders adopt in the organization. Through this understanding, several fundamental questions arise in this section of the literature review including
What makes a leader draw people to himself or herself? Is it the leaders intelligence or education? Does a good leader dictate, demand and punish, or do good leaders reflect the wishes of the people? Does a leader push, or attract? Does a good leader force or show people how it is done? (Varadarajan & Majumdar 2012, p. 2).
Leadership and Culture
Experts ordinarily classify leadership styles into three distinctive types: delegation, autocratic, and democratic (Varadarajan & Majumdar 2012). These three distinct types of leadership styles mean that most leaders may choose to either involve employees in decision-making or exclude them from the process altogether. Regardless of whether leaders adopt democratic, autocratic, or delegation leadership styles, Varadarajan & Majumdar (2012) deem it crucial for leaders to appreciate the relationship between leadership styles and corporate culture as a key pillar for understanding best working practices of leadership and management. Leaders need to do so because extensive research has shown that the appreciation of this relationship has a long-term effect on influencing organizational productivity (Halldorsson 2007). This view stems from the understanding that intercultural diversity tends to diminish in a global business environment, as employees strive to fit-in.
At the center of this analysis are the effect of peoples cultural values and beliefs on leadership styles. Globally, research shows that different cultures and countries prefer unique leadership styles that appeal to their value systems. From this trend, Varadarajan & Majumdar (2012) say, to lead effectively in another culture, a leader must understand the social values, customs, norms, leadership behaviour, and work-related cultural values of the host countrys workforce (p. 2). Certainly, the effectiveness of leaders and the success of their leadership styles largely depend on the influence of culture because leadership and culture influence organizational systems as described below.
The influence of culture on systems and leaderships as explained above manifests because culture mainly dictates the nature of interaction among different people. Based on this understanding, it is important to say that what constitutes an effective leader in one cultural context may fail to constitute an effective leader in another cultural context. For example, in America and most western countries, leaders who exercise democratic leadership styles and include the contributions of employees in their decision-making processes largely define successful leaders. However, in other cultures, people may view leaders who often seek the contribution of other employees in their decision-making process as incompetent and lacking vital skills of governance. The same cultural setting shows that most people view the same leaders who take charge and make decisions without consulting other employees as more effective.
Proponents of intercultural diversity say that all cultures are the same because they equally contribute to humanity (Syed, J & Özbilgin 2010). People who hold this view try to make people who are uncomfortable with the notion of intercultural diversity to believe that it is okay to have a diverse society and a leadership acumen that respects cultural diversity. Through this realization, it is unsurprising to see that many local organizations in the UAE are in search of effective leadership styles to manage diverse workforces and lead them closer to realizing their organizational goals. Indeed, research shows that a positive corporate culture and an effective leadership style may go a long way in improving employee commitment, improving organizational productivity, and improving organizational competitiveness (Baumüller 2007).
Conclusion
Comprehensively, the above analogy shows that the best working practices in leadership and management mainly depend on how culturally accepted the practices would be. It is therefore wrong to assume that the best working practices in one organizational/cultural context could apply to different situations because different organizations and societies have different value systems. It is therefore prudent to take a broader understanding that the best working practices in leadership and management should appeal to the organizational and social context.
Management Styles Adopted By UAE Government Leaders and Private Organizations
Introduction
The UAE public and private sectors are distinct from each other in terms of their leadership and managerial approaches. Both sectors of the UAE economy abide by different organizational performance standards and management acumen. However, perhaps, the most significant distinction between both organizations is the difference in purpose. In other words, the public sector mainly has the purpose of improving the welfare of the people through the provision of goods and services. However, the private sector aims to improve the welfare of the shareholders. Through these differences, this section of the literature review explores the differences in managerial and leadership styles of both sectors.
Managerial and Leadership Styles adopted in the UAE Public Sector
Many researchers have tried to investigate the unique dynamics that make the UAE public sector distinct, but few have appreciated the influence of culture in defining these managerial approaches and leadership styles (McAdam & Keogh 2013). Total quality management (TQM) and business excellence measures are a few management tools that most managers in the UAE public sector have adopted to improve the competitiveness of the sector. Researchers have shown that the application and adoption of these factors have a significant impact on the way managers lead public sector organizations (although there is a great difference between the way public sector organizations in the UAE and western organizations implement the same managerial tools) (McAdam & Keogh 2013). Many of these tools are ground in western philosophies of management and therefore pose different implications for a different cultural context such as the UAEs. Nonetheless, researchers who have tried to investigate the impact of these cultural differences and the uniqueness of the Arab culture on leadership and management styles say that four cultural dimensions inform the leadership and management styles in UAE public enterprises.
One unique dimension of public sector managers and leaders in the UAE is their selective application of high power distance models of leadership and management. In detail, the high power distance presents a situation where there is limited upward mobility of personnel because of the existence of a caste or tribal system of association. In part, the existence of such a system creates a situation where there are very high inequalities of power and wealth within the UAE public sector. Most leaders in the UAE public sector therefore have a very profound presence of power within the organization and their decisions are often unquestioned by their subordinates. The high power distance between leaders and their subordinates also means that most leaders separate themselves from their teams (McAdam & Keogh 2013).
Another unique aspect of leadership and management styles in the UAE public sector is the presence of high uncertainty avoidance levels among most UAE managers. The high uncertainty avoidance informs why there is a relatively strong presence of bureaucracy within the UAE public sector. Strict rules, policies, and procedures are partly responsible for these bureaucracies. Public sector managers also exhibit a very low tolerance to uncertainty within the organization (Crawford 2004). The high uncertainty avoidance level has very significant limitations for the competitiveness of the public sector because it limits innovation and creativity. Similarly, the high uncertainty avoidance in the organization limits new learning within the public sector.
A close leadership dynamic that describes the attitude of most public sector managers in the UAE is a high depiction of masculinity in their leadership and managerial styles. The reliance on traditional power structures affects leadership and management styles because traditional power structures give a lot of freedom to leaders and managers to be assertive in the organization. Through the exercise of these traditional power structures, most public sector managers in the UAE tend to be insensitive and uncaring (Crawford 2004). Lastly, the leadership styles adopted by public sector managers in the UAE also show a low level of individualism. This is because most managers and leaders within this sector pledge their allegiance to the ruling family and therefore show no willingness to exercise personal preferences in the leadership styles (McAdam & Keogh 2013). Through the influence of Arab cultural norms in their leadership and management styles, it is inevitable to say that most Arab cultural practices do not fit openly with key tenets of western-styled tools of management and leadership. For example, open communication and employee inclusivity (in the decision-making process) does not augur well with the Arab culture.
Managerial and Leadership Styles adopted in the UAE Private Sector
Unlike the UAE public sector, the private sector adopts a variety of leadership and management styles. Naciri (2008) says it is difficult to isolate one leadership style that prevails in the UAE private sector. Indeed, because powerful families mainly manage most UAE private sector firms, the choice of management and leadership styles remain to be a preserve of family members. However, based on a general assessment of most private sector firms, many private sector managers adopt the consultative leadership approach (Varadarajan & Majumdar 2012). Some private-sector managers also adopt democratic leadership styles. An even smaller percentage of managers adopt the participative leadership style (Varadarajan & Majumdar 2012).
Nonetheless, because of the high prevalence of the consultative leadership style in UAE private sector organizations, Naciri (2008) says it is a common business practice for many managers in the UAE to consult with their peers. Indeed, in a country where multimillion-dollar deals occur in coffee shops and private meetings, many UAE managers prefer to adopt leadership and management styles that emerge from their consultations with family members and other people of influence (Naciri 2008). From this assessment, it is common to see many private sector leaders engaging with a close circle of people when they have to make strategic business decisions in the organization. This leadership structure closely resembles the top-down management structure where a selected group of employees have the privilege of interacting with top-level managers in making strategic choices for the organizations (Varadarajan & Majumdar 2012). In this context, the role of lower-level employees is to receive direction from top-level managers on how to implement the decisions that have emerged from such meetings.
Conclusion
Although the consultative leadership style is prevalent in most private sector organizations, some private companies in the UAE prefer to adopt western-styled leadership styles where leaders and managers make decisions democratically. In such organizations, lower-level employees have a wider space (compared to public sector organizations) of contributing to the decision-making process of the organization. Companies that have firmly embraced this leadership style prefer to seek the services of management professionals and consultancy firms in making their decisions. The number of firms that adopt this management style is however small.
Appropriate Change Management Strategies For Government And Private Organizations In The UAE
Introduction
There has been a very rapid development of different economic sectors in the UAE (including the tourism, banking, and service sectors) in the private and public sectors. All indicators show that this trend will continue in the coming years (Naciri 2008). Most of the businesses that drive growth in the UAE are family-owned businesses. Despite being successful corporate entities of the Middle East, sophisticated customer demands and increased competition from foreign firms have forced most of these businesses to adopt better and effective leadership and management styles to maintain their staff and remain in business. This need has created the importance of both private and public organizations to incorporate change management as an important business practice. This section of the literature review explores the appropriate change management strategies for government and private organizations in the UAE.
Culture and Region-Specific factors
Part of the evolving business landscape of the UAE is the diminishing number of expatriates in the private sector. The UAE government is now forcing many private enterprises to employ local people instead of importing foreigners to manage their organizations (in the quest to evolve them into global enterprises) (Naciri 2008). Before this pressure emerged, private companies enjoyed the discretion of employing whatever caliber of employee they wanted, without any repercussions. This leeway informs why the number of expatriates in the UAE almost surpasses the local population. The change of this trend is also in tandem with nationalistic pressures, which demand a more local presence in private firms. The nationalistic pressures have created a crisis of leadership and management because it has pit local leadership styles against foreign leadership styles. However, in todays globalized society, the importance of employing leaders who appreciate cultural diversity causes little dispute.
Appreciating intercultural diversity forms the background for the adoption of the best working practices in leadership and management. Concisely, it is crucial to adopt the best working practices in leadership and management to improve organizational productivity. However, according to Crawford (2004), the adoption of management best practice depends on many factors including, The nature of the task, the power available to the leader, the e
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