MBA THESIS

COVER SHEET FOR SUBMISSION THESIS TOPIC SUBMITTED BY: Leadership Styles and Theories

Ahmed Abdelhay

SUPERVISOR’S NAME INTAKE AND GROUP NUMBER Dr. Michel Delorme

Intake 6, Group 4

STUDENT ID: COUNTERPART: 987

Kuwait

THESES SUBMISSION DEADLINE

SUBMISSION DATE

15 June, 2009

15 June, 2009

This statement should be completed and signed by the student producing the thesis. Declaration and Statement of Authorship: 1. I hold a copy of this thesis, which can be produced if the original is lost/ damaged. 2. This thesis is my original work and no part of it has been copied from any other student’s work or from any

other source except where due acknowledgement is made. 3. No part of this thesis has been written for me by any other person except where such collaboration has been

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Source: This document has been adapted from http://mams.rmit.edu.au/7ksj9bbov094.doc

MBA THESIS

ASSESSING EFFECTIVENESS OF LEADERSHIP STYLE

IN FMCG COMPANIES IN KUWAIT

A CASE STUDY OF 3 FMCG COMPANIES.

BY

AHMED ABDELHAY

(KUWAIT)

A thesis submitted in partial fulfilment of the requirements for the degree of

Masters of Business Administration (MBA) of the Maastricht School of

Management (MSM), Maastricht, the Netherlands,

June 15, 2009

ACKNOWLEDGEMENT

I would like to dedicate this thesis to my parents who brought me up as best as they could, spared no effort or resource into my well being and inspired me to undertake the responsibility a man does at an early age.

I would also like to extend my profound thanks and appreciation to all those who marked my path with perseverance and willingness to succeed. Specifically, those who taught me the ABCs or professional life, my mentors, tutors, and not to forget, my close friends who value friendship above any materialistic value in life. Finally, for all my, KMBS colleagues and management staff, it was a blessing to have met you in life.

Ahmed Abdel-Hay

I

TABLE OF CONTENTS

ACKNOWLEDGEMENT .......................................................................................................................................... I TABLE OF CONTENTS ...........................................................................................................................................II ABSTRACT ................................................................................................................................................................V LIST OF FIGURES.................................................................................................................................................. VI LIST OF TABLES...................................................................................................................................................VII LIST OF ABBREVIATIONS ............................................................................................................................... VIII CHAPTER 1 – INTRODUCTION.............................................................................................................................1

1.1 OVERVIEW........................................................................................................................................................1 1.2 RELEVANCE OF THIS THESIS TO THE STATE OF KUWAIT .....................................................................2 1.3 PROBLEM DEFINITION...................................................................................................................................3 1.4 RESEARCH OBJECTIVE ..................................................................................................................................3 1.5 RESEARCH QUESTIONS .................................................................................................................................3 1.6 RESEARCH METHODOLOGY ........................................................................................................................4 1.7 DATA ANALYSIS METHOD............................................................................................................................5 1.8 THESIS STRUCTURE .......................................................................................................................................5

CHAPTER 2: LITERATURE REVIEW ..................................................................................................................6 2.1 HISTORY OF LEADERSHIP SCHOOLS, THEORIES AND WRITINGS .......................................................6 2.2 DEFINITIONS OF LEADERSHIP .....................................................................................................................8 2.3 THEORIES OF LEADERSHIP.........................................................................................................................10

2.3.1 GREAT MAN THEORY..............................................................................................................................10 2.3.2 TRAIT THEORY.........................................................................................................................................11 2.3.3 BEHAVIROAL LEADERSHIP THEORIES................................................................................................12 2.3.4 PARTICIPATIVE LEADERSHIP THEORIES ...........................................................................................13 2.3.5 SITUATIONAL LEADERSHIP THEORIES...............................................................................................15

PATH-GOAL LEADERSHIP THEORY: .........................................................................................................................18 2.3.6 CONTINGENCY THEORIES.....................................................................................................................18 2.3.7 TRANSACTIONAL LEADERSHIP THEORY ............................................................................................20 2.3.8 TRANSFORMATIONAL LEADERSHIP THEORIES.................................................................................21

2.4 TYPES/CLASSIFICATIONS OF LEADERSHIP STYLES.............................................................................23 2.4.1 CHARISMATIC LEADERSHIP .................................................................................................................23 2.4.2 PARTICIPATIVE LEADERSHIP...............................................................................................................25 2.4.3 SITUATIONAL LEADERSHIP ..................................................................................................................25 2.4.4 TRANSACTIONAL LEADERSHIP ............................................................................................................25 2.4.5 TRANSFORMATIONAL LEADERSHIP ....................................................................................................26

II

2.4.5.1 SIMILARITIES BETWEEN TRANSFORMATIONAL AND CHARISMATIC LEADRESHIP ...................... 28 2.5 THE INTEGRATION OF LEADERSHIP, STRATEGY AND PERFORMANCE...........................................28 2.6 CASE STUDY...................................................................................................................................................30

2.6.1 COMPANY 1..............................................................................................................................................30 2.6.2 COMPANY 2..............................................................................................................................................31 2.6.3 COMPANY 3..............................................................................................................................................32

2.7 OVERVIEW OF FMCG MARKET IN KUWAIT ............................................................................................33 CHAPTER 3 – RESEARCH METHODOLOGY AND RESEARCH DESIGN..................................................35

3.1 INTRODUCTION.............................................................................................................................................35 3.2 PROBLEM STATEMENT................................................................................................................................35 3.3 RESEARCH OBJECTIVE ................................................................................................................................35 3.4 METHODOLOGICAL FRAMEWORK...........................................................................................................36

3.4.1 MAJOR RESEARCH QUESTION..............................................................................................................37 3.4.2 MINOR RESEARCH QUESTIONS............................................................................................................37 3.4.3 PROPOSITIONS........................................................................................................................................38

3.5 RESEARCH DESIGN.......................................................................................................................................38 3.5.1 TARGET POPULATION AND SAMPLING METHOD.............................................................................39 3.5.2 DATA COLLECTION INSTRUMENT AND SOURCE ..............................................................................39

3.5.2.1 RESEARCHER’S ROLE ..................................................................................................................................... 39 3.5.2.2 DATA SOURCES................................................................................................................................................ 40 3.5.2.3 DATA COLLECTION INSTRUMENT .............................................................................................................. 40

3.6 DATA ANALYSIS METHOD..........................................................................................................................43 CHAPTER 4: DATA ANALYSIS, FINDINGS AND DISCUSSION....................................................................44

4.1 INTRODUCTION.............................................................................................................................................44 4.2 DATA ANALYSIS AND FINDINGS...............................................................................................................44

4.2.1 QUALITIES OF CHARISMATIC LEADERSHIP STYLE ..........................................................................45 4.2.2 ROLES OF TRANSFORMATIONAL LEADERSHIP.................................................................................50

4.3 DISCUSSION ...................................................................................................................................................56 4.4 DISCUSSION OF FINDINGS WITHIN THE CONTEXT OF KUWAIT ........................................................56

CHAPTER 5: CONCLUSION, RECOMMENDATIONS, AND FURTHER RESEARCH...............................57 5.1 CONCLUSION .................................................................................................................................................57

5.1.1 ANSWER TO THE QUESTION ON DOMINANT LEADERSHIP STYLE IN THE THREE COMPANIES57 5.1.2 ANSWER TO THE QUESTION ON STRATEGY FORMULATION AND IMPLEMENTATION...............58 5.1.3 ANSWER TO THE QUESTION ON INTEGRATION ................................................................................59

5.2 RECOMMENDATIONS ..................................................................................................................................60 5.3 RECOMMENDATIONS RELEVANT TO KUWAIT......................................................................................62 5.4 FUTURE RESEARCH......................................................................................................................................63

III

REFERENCE LIST ..................................................................................................................................................65 APPENDICES............................................................................................................................................................67

APPENDIX A – INTERVIEW GUIDE...................................................................................................................67

IV

ABSTRACT The practice of leadership is as old as the existence of earth with any creatures on it. Science and history have both proven this as a fact within each species that was every created. In his turn, man has learnt since early days that in order for a group to advance from point A to point B, a person must lay out the road and methodology, with consultation from others, to enable the rest of the group to reach the desired destination.

As man evolved and developed in every aspect of life, especially in the 19th century onwards, random leadership practices were no longer adequate to support the achieved progress. Best practices were researched and formulated into theories, and even more, styles of leadership. Until today, there's no specific leadership style that could guarantee success to each situation. Whether it is a business, personal or family decision, the leader must combine a wide range of skills with a large amount of experiences to make the right decision at the right time. In today's terms, this is known as "Effective Leadership".

Every business in existence seeks continued success and expanded growth. Fast Moving Consumer Goods "FMCG" companies are no exception. The critical role of leadership is the vessel that would enable any FMCG company to achieve higher marks on the success spectrum.

This study attempts to assess the existing leadership style in 3 of the FMCG companies in Kuwait with an analytical eye on leaders' qualities and roles in relation to their effect on strategy formulation, implementation and performance results. An adapted methodological framework is suggested combining qualities of charismatic leadership with roles of transformational leadership as the most appropriate style for researched companies. Important gaps between leaders and their subordinates were detected and discussed as recommendations for improvement were eventually formulated.

Key Words:

Leadership; Charismatic; Transformational; Transactional; Traits; Accountability; Style; Vision; Strategy Formulation; Strategy Implementation; Performance Results.

V

LIST OF FIGURES

Figure 2.1 Interaction Between Followers and Leader Behavior 14

Figure 2.2 Participative Decision Making Scale 14

Figure 2.3 Hersey and Blanchard's Situational Leadership Model 17

Figure 2.4 Broad Model of Charismatic Leadership 24

Figure 2.5 Cogner's Model of Charismatic Leadership 24

Figure 2.6 Transactional Leadership Model 26

Figure 2.7 Transformational Leadership Model 27

Figure 2.8 Company 1 Org Chart 31

Figure 2.9 Company 2 Org Chart 32

Figure 2.10 Company 3 Org Chart 33

Figure 3.1 Charismatic Transformational Leadership Model 36

VI

LIST OF TABLES

Table 2.1 Traits and Skills of Leadership 11

Table 2.2 Managerial Grid 13

Table 4.1 Interviewees List 44

VII

VIII

LIST OF ABBREVIATIONS

CEO Chief Executive Officer

COO Chief Operations Officer

CRT Cognitive Resources Theory

CTL Charismatic Transformational Leadership

FMCG Fast Moving Consumer Goods

GCC Gulf Cooperation Council

GDP Gross Domestic Product

GM General Manager

HR Human Resources

LMX Leader Member Exchange

LPC Least Preferred Co-worker

MD Managing Director

MENA Middle East and North Africa

SCT Strategic Contingency Theory

SLM Situational Leadership Model

SOP Standing Office Procedures

TARC The Audit Retail Company

WI Work Instructions

CHAPTER 1 – INTRODUCTION

1.1 OVERVIEW

The theories and styles of leadership have evolved through different stages over the years. In the early days, the Great Man theory dominated around the main idea that leaders are born with special qualities that followers do not have, thus forming a distinction between leaders and followers into two separate camps.

As man began to develop his thinking, understand his surrounding and apply some analytical techniques, various researches emerged addressing the Leadership Traits theory which advocated various qualities and skills that should exist in a successful and effective leader. This was probably man’s first step into turning leadership from a divine gift given to only an elite group to a physically sensible set of qualities and skills that could be promoted, educated and enhanced in those who have the physical and emotional willingness to absorb them into their systems.

Soon enough, it became clear that those qualities and skills would not be effective unless addressed with the proper behavior, thus opening the door to Behavioral Leadership theories. Almost simultaneously, leadership and management gurus were involved in extensive research to fine tune the emerging behavioral theories with a set of Situational Leadership theories and concepts as they were able to prove –a rather logical concept in today’s world- that not every behavior is suitable for every situation.

The last set of theories focused on the human element, as the relationship between the proper behaviors for each different situation was not enough to demonstrate effective leadership. The role of the leader was obviously extending beyond this scope to form a direct impact and influence followers as he or she leads them into a wider horizon of inspiration, motivation, and example setting.

A clear combination of the leader’s qualities and the roles he or she is able to successfully undertake within the organization made a great difference. In today’s practical world, it is becoming more evident that subordinates would not follow their leader unless they –willingly- fall under their “Charismatic” influence. Their following of their leaders’ path would then be sustained only by the effective “Transformational” roles that each leader is able to successfully instate into the organization.

In today’s world, leadership is the focal point of interest for organizations seeking sustained growth. The integrated effect of distinguished leadership on organizations’ strategy formulation and implementation is more comprehended than ever before. As a result, smart company owners, entrepreneurs, or boards of directors employ specialized head hunters to acquire leadership cadres that possess charismatic qualities and implement transformational roles as appropriate to the company’s line of activity, market forces, workforce specific talents and experiences.

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Indeed, that is why –today- leadership is more complex than ever. A leader must possess the qualities of a psychologist, business developer, planner, and mentor to be able to effectively lead and convince his or her followers of the shared vision, values and identity of the organization.

1.2 RELEVANCE OF THIS THESIS TO THE STATE OF KUWAIT

This thesis assesses the leadership style for 3 of the major existing companies that operate in the Fast Moving Consumer Goods (FMCG) domain in the state of Kuwait. As part of the “Trade” sector, the National Bank of Kuwait (2006), stated that this sector contributed to the national Gross Domestic Product (GDP) with a total of 4.3% “Trade, Hotels and Restaurants” within a total of 50.2% of the GDP contributed to by companies operating in the service sector. The potential growth for this sector (FMCG) is remarkably high as will be indicated later in the next chapter.

The nature of FMCG market in Kuwait is highly dynamic, with fierce competition and continued rates of growth. This necessitates that companies willing to survive and grow be willing to invest in capable leadership cadres that are qualified to achieve growth from the inside out. That is to address and fix all in-house deficiencies while managing external risks and handling outer forces to achieve a stable forward movement on strong foundations.

In order to achieve this top important goal, Kuwaiti large companies and those who would like to grow are racing to attain high calibers, obtain specialized consultancy studies to design and implement any required reforms with their systems, structures, etc.

Companies now, rising to the world class level of management, instate various evaluation techniques to continually collect performance data and relate it to the input they have invested in, in order to analyze the points of strength with the purpose of maintaining and enhancing them and the deficiencies with the purpose of understanding their nature and strategically addressing them within a course of continued improvement.

Our case study represents a typical example where 3 different organizations had a record of increased profitability over the years until by the end of the year 2007, structural changes took place in two of those companies that involved their top management, and –unfortunately- a subsequent degraded performance was observed by figures of profitability and market share. This is a typical situation that could be observed in a number of the large companies in Kuwait whose top leadership endured some changes that resulted in a complete change of the company’s strategy formulation and implementation, thus affecting the performance results of those companies positively or negatively.

It is therefore our belief that this study could be of a great benefit to all FMCG companies in Kuwait who easily benefit from its proposed adapted model to evaluate their own leadership styles, or –better yet - develop their own adaptation to include broader aspects and custom designed research that would suit each company’s profile.

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1.3 PROBLEM DEFINITION

Our case study is about 3 Kuwaiti companies specialized in the FMCG domain, Those are Company 1, Company 2 and Company 3. All 3 companies have enjoyed a good record of profitability and growth over the last few years. However, late in 2007, both Company 1 and Company 2 have endured a change in their leadership. In Company 1, the Managing Director who was running details of the business for so many years decided to create an extra layer (The General Manager) for whom he delegated full power and authority. The latter made several changes in the internal system to suit his preferred leadership style. In Company 2, both the Managing Director and the General Manager were changed by the Board of Directors. Naturally, the two new leaders instated their own changes across the company to suit their preferred leadership Style. During the period of the research, Company 3 maintained its leadership, and had no change of leadership style. Unfortunately, none of the changes instated within Company 1 or Company 2 showed positively in those companies’ performance results, while Company 3 maintained a steady record of growth and profitability.

Consequently, there was a need to explain the reasons behind this dangerous indicator and assess the role of leadership style in relation to the achieved results, thereby recommending possible corrections for deficient findings.

1.4 RESEARCH OBJECTIVE

The objective of this study is to assess the leadership effectiveness of the 3 researched companies. This will be done by analyzing the level of existence of the elements contributing to our proposed adapted Charismatic Transformational Leadership model (See figure 3.1). Those elements will be examined to identify points of strengths that should be maintained and also weaknesses that make up the opportunities for improvement within the researched companies’ leadership styles. With a clear identification, viable recommendations could be made to increase the overall effectiveness of those companies’ leadership endeavors.

1.5 RESEARCH QUESTIONS

In light of the problem identified above, our research comprised 1 Major question and 4 minor questions. The Major research question was:

Q1: What can the leader do to optimize his leadership style in order to positively affect his strategy and performance results?

In order to reach a sound answer for this question, 4 minor questions were formed. Those questions targeted the 4 elements that would lead to the answer from identifying the dominant leadership style in each company to identifying its strategy formulation, strategy implementation and defining the relationship between those 3 and the company’s performance results.

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Therefore, our minor questions were:

Q1A: What is the currently dominant leadership style in the successful company and that in the failing companies?

Q1B: In light of the dominant leadership style, how is strategy formulated and implemented in each of the researched companies?

Q1C: How was the leadership style related –through strategy formulation and implementation- to the company’s performance results?

1.6 RESEARCH METHODOLOGY

This thesis adopted a qualitative research methodology and is classified as an explanatory study that aimed at understanding the way each of the evaluation factors are formulated into each of the leadership style of the researched companies, thus, determining the dominant style, its proximity to the adapted model and its effect on the company’s strategy formulation, implementation and performance results.

The data collection instrument we used was a set of questions which the researcher succeeded to hold with 12 of the key managers in the 3 companies. Interview questions were derived from the elements of our adapted model which combined charismatic leadership qualities along with transformational leadership roles to formulate an optimized leadership style. Questions were slightly modified to fit into the scope and time frame allotted for this study. This resulted in each question addressing one of the contributing elements of our model making a total of 8 questions that were followed by 2 general questions that aimed at providing the opportunity for interviewed managers to express their own assessment of their current leadership styles, its relationship with the strategy and results and provide their own suggestions to improvements that they see necessary.

The sample targeted the 3 companies’ executive management and top management (Managing Director and General Manager "COO"), in addition to the Finance Manager and HR Manager of each company.

A Non-probability sampling technique was adopted as an alternative to probability sampling to enable in-depth study of the leadership elements being examined and provide information-rich answers for our research questions. A judgmental sampling was used with which the number of interviewed managers was selected. The sample was made of the 4 most influential characters in each company who would provide answers directly related to the leadership level that affects each company’s strategy and performance trends.

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1.7 DATA ANALYSIS METHOD

Data collected was analyzed in-line with the theoretical framework (see figure 3.1) as answers to the interview questions were analyzed with the element of the Transactional Transformational leadership model it was trying to measure within each researched company. Therefore, we have clearly separated the answers to the interview questions by company to enable the reader to follow the culture and lines of thought detected in each company individually.

The answers were then inductively analyzed in order to develop well-grounded explanations that would serve the assessment purpose. Findings were then presented in the form of answers reached for the minor research questions which formed the basis for our derived recommendations.

1.8 THESIS STRUCTURE

This thesis was structured in accordance with the academic guidelines stipulated by KMBS, and in constant coordination and review between the researcher and his academic supervisor. Accordingly, the thesis included the following chapters:

1. Introduction Introduces Leadership thinking over the years, and its relevance to Kuwait. Also provides an overview of the thesis, its boundaries and methodology.

2. Literature Review

Presents a discussion and analysis of available research on Leadership definitions, theories and styles with their incumbent models and frameworks, in addition to introducing the case study.

3. Methodology Highlights the adopted research methodology and explains its pertinent details such as data collection method, instrument, sampling, and analysis criteria.

4. Analysis Explores –with an analytical eye- the answers collected from the interviews and relates it to the analysis criteria. This chapter sets the ground for extracting conclusions and recommendations.

5. Conclusion and Recommendations

Provides answers to the minor research questions as it derives conclusions of the analysis in accordance with leadership elements of each contributing element to the adapted model. The recommendations are then suggested as the chapter reports the answer to the major research question. This chapter concludes with suggestions for further research beyond this thesis.

In the following chapter, we will present our critical review of the literature to highlight current available literature that covers the scope of this thesis.

CHAPTER 2: LITERATURE REVIEW

In this chapter, we will attempt to explore relevant literature of primary and secondary sources acquired during the search period. We will try to streamline the ideas explored to highlight the most important aspects of Leadership and its varied theories, starting with definitions of leadership, an overview of the various theories that addressed leadership, referring in parallel to theory originator, its applications, and the follow on updates that came upon it. As we continue on, we'll explore most widely known leadership styles in Kuwait and at the end; we will be explaining the business case of this research with pertinent information on the 3 participating companies.

2.1 LEADERSHIP SCHOOLS AND THEORIES

In their study of the history, Stone and Patterson (2005) (1), mention that the study of leadership has its roots in the beginning of civilization. From Egyptian rulers to Greek heroes and biblical patriarchs who shared leadership in common. There were numerous definitions and theories found which beard similarities concluding that leadership is an effort of influence and the power to induce compliance. As their study goes on to explore early leader studies in our modern age, it refers heavily to the shift of America’s economy from an agriculture base to the industrial revolution. This changed the way leaders would treat their followers. As a result of the industrial revolution, a new theory of leadership was formed where people gained power by virtue of their skills. However, according to Morgan (1997) in Stone and Patterson (2005) the new technology was accompanied and reinforced by mechanization of human thought and action, thus creating what is known as hierarchical bureaucracies. This era of management was also marked by one of the major contributors to its management and leadership theories by the name of Max Weber, a German sociologist who studies the parallel impact on mechanization on proliferation of bureaucratic forms of organization.

This extensive study then goes further to explore several theories, most important of which will be explained later in this chapter. Some of the most important theories explored by Stone and Patterson (2005) are:

1) Classical Management Theory and Scientific Management: Classical theorists focused on the design of the total organization while scientific managers focused on managing individual jobs in a systematic way. Bass (1990) and Morgan (1997) in Stone and Patterson (2005) indicate contradictions by classical theorists such as Fayol and Stauch who were advocates of bureaucratization and therefore devoted their efforts to identifying methods through which this kind of organizational structure could be achieved.

2) Hawthorne, Maslow, and Herzberg – Environment and Worker Needs: This era was described as an era where much organizational research was focused on overcoming perceived shortcomings of classical and scientific schools of management. With focus on

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the work situation and its effect on leaders and followers, it was clearly indicated that the reaction of human beings influence their work activities as much as the formal design and structure of the organization. Herzberg promoted his Dual Factor Theory explaining the evolution of intrinsic and extrinsic needs furthering Maslow’s known work (Maslow’s Needs Hierarchy). Those factors were simply the environmental factors such as working conditions, company policies, etc and the motivators such as factors pertaining to the job itself. Herzberg advocated addressing the two set of factors simultaneously.

3) The Shift to Behavioral Factors: Theorists of this age stressed on the importance of addressing human affairs as well as finding the best technological methods to improve output. Therefore, one of the landmarks of this era, was McGregor’s of Theory X and Theory Y. Theory X assumed that most people prefer to be directed, are not in preference to assume responsibility and that safety is their utmost concern. Theory Y on the other hand proposed that people can be self-directed, motivated and can be creative at work if properly motivated making one of management’s essential tasks is to unleash this potential in their employees. Therefore, McGregor proposed replacing direction and control of employees with humanistic motivation.

4) Transactional Leadership – Leadership Focus on Performance: Behling & McFillen (1996) and Hunt (1991) in Stone and Patterson (2005) state that in the late 1970s, leadership theory research passed beyond focusing on situational supervision to focus on organizational performance. This trend witnessed transactional leaders who lead through specific incentives and did motivate through an exchange of one thing for another.

5) Transformational Leaders Focus on the Organization: Research studied suggests that transformational leadership contradicts with transactional leadership as the latter focus only on where the company is today and strives to maintain the status quo, while transformational leadership, motivates individuals to work together to change organizations to create sustainable productivity, therefore looking at where the organization should be heading and deciding how to handle internal and external change and employee needs to reach that goal.

6) The Servant Leader Focus on the Followers: While both transformational leadership and servant leadership have theoretical frameworks that emphasize a high concern for people and production, the Servant Leadership involves a higher concern for people as the primary focus of a servant leader is on his/her followers. Stone and Patterson (2004) in Stone and Patterson (2005) state that Servant leadership is a logical extension of transformational leadership that focuses on the followers making them its main concern

In another perspective, and in his article, The Evolution of Leadership Theory, Stogdill (1975) states that earliest American writings on leadership were almost exclusively theoretical in nature. He explains that they were divided into two major schools of thought. Both situational school followed by personalistic school contained several subgroups where various theorists viewed

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leadership from different angles. As an example, Stogdill elaborates that Cooley (1902) and Mumford (1906-7) regarded leadership as a nucleus or focus of group processes. Later in 1909-1918, Mumford and Bogardis maintained that the leader time and circumstances produce the leader. This thinking trend focused on leadership growing out of group process, not leaving much for the leader as a person. During the decade of the 1920th, he further explains, the new ‘personalistic’ school thought emerged to emphasize on the importance of the leader as an individual to whom the group is largely subservient. It therefore believed in the leader’s role in directing the activities of the group.

The general theme detected from examining history of leadership studies and theories show that a new theory would develop when a current theoretical position no longer explains a phenomenon. Therefore, through each phase of leader theory development, leadership focus influenced the nature of the theoretical constructs. This opens the door for empirical investigation of each element of the workplace and leader behavior, to include the development of effective instruments to measure the theoretical constructs.

2.2 DEFINITIONS OF LEADERSHIP

According to Burns (1979), leadership implies inducing of followers to act for certain goals that represent values and motivations (the wants and needs) of the aspiration, and expectations of both groups (leaders and followers). He further adds that the genius of leadership lies in the manner in which leaders see and act on their own values and motivation and those of their followers. However, Moser and Jones (2001) state that Burns deplored the lack of any central concept of leadership which – in their view – was attributed to the deficiency in part because scholars have worked in separate disciplines and sub disciplines in pursuit of different and often unrelated questions and problems.

Manthey (2002) (3) states that leaders are people who influence others by what they say, how they say it and what they do. Within her definition, the clearest mandate for leaders is to creatively facilitate the development of their employees, through making the workplace an area for learning, growth and change.

Maude (1997), (6) defines leadership as the process of persuasion or example by which an individual induces a group to pursue objectives held by the leader or shared y the leader and his or her followers.

Weiss (1999) (7) adds that leadership is a responsibility that must be practiced full-time, indicating that leadership is a broader and more encompassing process than management.

Covey (2007), (8), being one of the most contemporary writers in leadership explains that leadership involves creating a culture behind a shared value system based on natural principles. According to him, this happens inside a family, inside a corporation, and inside a classroom.

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Covey’s newish explanation was long preceded by Michael (1958) (9) who defined leadership as the process of arising out of a social situation as a temporary acquisition of a specific amount of authority granted by a group or enterprise to an individual who is considered by the group or the enterprise as being most capable of satisfying immediate needs, this authority is withdrawn and transferred to other individuals if the primary source of authority doesn’t perceive observable progress toward goal attainment.

Hellriegel & Slocum (2004) define leadership as the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and making hard decisions about human and other resources.

Tichy (1989) in Hellriegel & Slocum (2004) defines leadership as “Accomplishing something through other people that wouldn’t have happened if you weren’t there. And in today’s world, that’s less and less through command and control, and more and more through changing people’s mindsets and hence altering the way they behave. Today, leadership is being able to mobilize ideas and values that energize other people”.

Gibson, et al (2006) refer the definition of the Handbook of Leadership which states that leadership is an interaction between members of a group and that leaders are agents of change, persons whose acts affect other people more than other people’s acts affect them. In this sense, the leadership definition implies the use of influence and involvement of leadership within the entire set of its interpersonal relationships.

Another interesting definition was stated by Curphy, & Hogan (1994) in Hughes, et al (2006) as “The ends of leadership involve getting results through others, and the means of leadership involves the ability to build cohesive, goal-oriented teams. Good leaders those who build teams to get results across a variety of situations”.

As easily seen, the definitions above all differ in many ways in respect to their focus points and angles of research which resulted in various researchers exploring very different aspects of leadership. Therefore, it is important to understand that there’s no single correct definition for leadership. However, the variety found in leadership definitions can help us appreciate the multitude of leadership’s affecting factors as well as the different perspectives from which to view it. Some researchers choose to treat leadership as a psychological phenomenon while others see it as a sociological phenomenon. This was summarized by Bass (1990) in Pierce and Newstrom (2003) who explained that there are (11) approaches to the definition of leadership. Those were summarized in the following bullets:

Leadership as a focus of group processes: Definitions that position the leader as the hub, nucleus, and/or pivotal point for group activity.

Leadership as personality and its effects: Definitions that focus on the personality attributes and strength of character of the leader himself.

Leadership as a n act or behavior: Definitions that focused on the acts of leadership.

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Leadership as an instrument of goal achievement: Definitions that ascribes an instrumental value to the act of leadership.

Leadership as an emerging effect of interaction: Definitions which casts leadership as an effect or outgrowth of group interaction.

Leadership as a differentiated role: Definitions emerging out of the role theory and its perspective that members of social systems do occupy different roles that are required to advance the system and therefore leadership is one of several well-defined roles.

Leadership as the initiation of structure: Definitions that continue on the role theme to the definition of leadership, those who view leadership as an initiation of structure in expectation and interaction.

Leadership as the art of inducing compliance: Definitions that tend to case leadership in terms of the molding of the group around the will, intentions, and/or wishes of the leader.

Leadership as the exercise of influence: Definitions that appear to employ the concept of influence as separate and distinct from dominance, control, or the forcing of compliance.

Leadership as a form of persuasion: Definitions that reflect the movement of others through strongly held convictions and/or reason.

Leadership as a power relationship: Definitions that focused on the key role played by power.

For the purpose of this research, we define leadership according to, Bass (1990), as

“Leadership is an interaction between two or more members of a group that often involves a structuring or restructuring of the situation and the perceptions and expectations of the members”.

2.3 THEORIES OF LEADERSHIP

The search for comprehensive literature sources on leadership theories proved to be a cumbersome job. Authors who addressed the topic focused on certain theories in great detail while omitting or totally neglecting to mention parts or all of others. This was understandable due to the purpose of each research and publication that was being prepared. In the following few sub paragraphs; we will explore the 8 major theories and some of their derivatives

2.3.1 GREAT MAN THEORY

In their book, Leaders and the Leadership Process, Pierce and Newstrom (2003), explain that “in the nineteenth century and early twentieth century, “Great Man” leadership theories were highly popular. Those theories confirmed that leadership qualities were inherited, especially by people from the upper class”. This signifies the main assumption of this theory that leaders are born and not made and that great leaders will arise when there is a great need.

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Stogdill (1974) in Hughes et al (2006) states that the roots of the Great Man theory can be traced back to the early 1900s when both researchers and press maintained that leaders and followers were fundamentally different. Within the same statement came a reference to Stogdill’s earlier study (1948) in which he summarized results of hundreds of studies that examined whether certain personality traits, physical attributes, intelligence, or personal values differentiated leaders from followers. The two major conclusions of this study were first, that leaders were not qualitatively different than followers as many leaders were just as tall, smart, outgoing and ambitious as the people who were leading them. Second major finding was that some characteristics, such as initiative, tolerance for stress, intelligence, friendliness, responsibility and dominance were only modestly related to leadership success. Such traits would enable more success in influencing a group to accomplish its goals than people who were less smart, lazy, impulsive, and grumpy or did not like giving orders.

The results of Stogdill’s research and many that followed assured the two major findings and therefore focused on two trends, one is that people with the right stuff will be qualified to lead and the other is that leaders were not fundamentally different than followers.

2.3.2 TRAIT THEORY

According to changing minds organization (www.Changingminds.org), some inherited traits or characteristics was studied in successful leaders with the underlying assumption that if other people would be found with these traits, then they too could become great leaders. In the same talking Stogdill’s traits and skills were summarized in table 2.1

Traits Skills Adaptable to situations Alert to social environment Ambitious and achievement-orientated Assertive Cooperative Decisive Dependable Dominant (desire to influence others) Energetic (high activity level) Persistent Self-confident Tolerant of stress Willing to assume responsibility

Clever (intelligent) Conceptually skilled Creative Diplomatic and tactful Fluent in speaking Knowledgeable about group task Organized (administrative ability) Persuasive Socially skilled

Table 2.1: Traits and Skills of Leadership Source: www.Changingminds.org

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2.3.3 BEHAVIROAL LEADERSHIP THEORIES

“Behavioral leadership theories rely on basic assumptions that leaders can be made rather than born. Therefore, successful leadership is based on definable learnable behavior” Changing Minds (2009). They further explain that Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at what leaders actually do. Accordingly, if success can be defined in terms of describable actions, then it should be relatively easy for other people to act in the same way. This is easier to teach and learn then to adopt the more ephemeral 'traits' or 'capabilities'.

The methodology of developing behavioral leadership in this line of thought will rely on measuring certain behavior and successful leaders’ actions and then finding the correlation between them that signifies effective leadership behaviors.

Gibson et al (2006) state similar conception that leadership behavior can be studied by analyzing what leaders do in relation to accomplishing the task and to maintaining the effort of people doing the task. This opens the door to 4 common classifications they briefly discussed as: Job-Centered Leadership: A leadership process where the leader will closely supervise and observe the work of others. Employee-Centered Leadership: A leadership process characterized by a leader who only generally supervises the work of others and attempts to permit others to sense autonomy and support. Initiating Structure Leadership: A set of leadership acts that imply the structuring of job tasks and responsibilities for followers. Consideration Leadership: A set of leadership acts stemming from a supportive leader who shows concern for the followers in a group.

Hellriegel & Slocum (2004) stress on the importance for leaders who rank high on initiating structure to also give high consideration to employees in order to avoid having a lot of grievances, absenteeism or high employees turn-over rate. Some of those symptoms will be reflected in our case study objects later on in this chapter.

Two of the derivatives found under this theory classification were the Role Theory and the Managerial Grid.

The Role Theory: Hugh et al (2006) refer to situational demands that cause the leader’s behavior to depend on his or her perception of several critical aspects of the situation such as rules and regulations, expected roles of subordinates, peers and superiors and both nature of the task at hand and feedback on subordinates’ performance.

The Managerial Grid: is a model that was defined by Blake and Mouton in the early 1960s as shown in Table 2.2 below:

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High Country Club management Team management

Medium Middle of the road management Concern for People

Low Impoverished management Authority-compliance

Low Medium High Concern for Production (Task)

Table 2: Managerial Grid Source: Changing Minds.Org

This grid suggests the following types of leadership:

Impoverished management: Where minimum effort to get the work done dominates and instates a basically lazy approach that avoids as much work as possible.

Authority-compliance: Leadership with a strong focus on task, but with little concern for people. Its main focus is on efficiency and the elimination of people wherever possible.

Country Club management: Leadership that invests a lot of care and concern for the people, with a comfortable and friendly environment and collegial style while taking a low focus on task which will naturally give questionable results.

Middle of the road management: Leadership that exhibits a weak balance of focus on both people and the work. Therefore, doing enough to get things done, but not pushing the boundaries of what may be possible.

Team management: Leadership that fires on all cylinders where people are committed to task and the leader is committed to people as well as the task at hand.

2.3.4 PARTICIPATIVE LEADERSHIP THEORIES

One of the leading consultancy organizations ‘Changing Minds’ describes the main assumption behind this group of theories is that involvement in decision-making improves the understanding of the issues involved by those who must carry out the decisions. They state that people are more committed to actions where they have been involved in the relevant decision-making. This involvement makes people less competitive and more collaborative since they are working on shared goals. Also, when people make decisions together, the social commitment to one another is greater and thus increases their commitment to the decision. Another highlighted benefit is that when several people are deciding together would be more likely to make better decisions than an individual person alone. Changingminds.org (2009).

While the previous outline signifies the benefits of adopting participative leadership, Hugh et al (2006) refer to a strong engagement by participative leaders in the behaviors that mark the consultative and group behaviors described by Vroom and Yotten (1973). In this context, there’s a clear tendency to share work problems with followers, soliciting their suggestions, concerns

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and recommendations before weighing all of these as inputs that lead to the decision-making process.

The resulting relationship creates a range of participative leadership degrees that is represented by Figure 2.1 below.

Figure 2.1 Interaction between followers and leader behavior.

This scope is further illustrated with the scale below (Not participative to highly participative) indicating 5 degrees of decision making that fall within the scale

< Not participative Highly participative >

Autocratic decision by leader

Leader proposes decision, listens to feedback, then

decides

Team proposes decision, leader

has final decision

Joint decision with team as

equals

Full delegation of decision to team

Figure 2.2 Participative Decision Making Scale Source: http://www.Changingminds.org

Pierce and Newstrom (2003), Hugh et al (2006) and Changingminds.org (2009) referred to both definitions of participative leadership styles within the participative leadership theory by two of the most contemporary researchers Kurt Lewin’s and Rensis Likert. Lewin’s introduced styles were: Autocratic Style: Where all decisions are made without any consultation and found to cause the highest level of discontent. Democratic: Where the leader will involve the followers in the decision making process while maintaining the final say in each decision. This style was found to achieve a high level of satisfaction especially for those who have been used to an autocratic style of leadership. Laissez-Faire: Where leadership involvement in the decision making is minimal and leaders do make their own decisions while the leader remains responsible for the final outcome. “This style has been found useful in organizations with certain activities characterized by being highly intellectual such as consultancy firms but not necessarily useful –and sometimes highly risky- in organizations where commercial activity is dominant” Schaeffer (2002).

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Likert identified four leadership styles in the participative leadership theory. Those were: Exploitive Authoritative: On the far negative end of his identified styles, Likert describes this style as one with no concern for employees, downward communication stream and fear-based methods utilized for achieving conformance. Benevolent Authoritative: This leadership style adds a little concern for followers with rewards for conformance and minimal delegation while maintaining full authority for all major decisions. Consultative: This leader makes genuine efforts to listen to his followers and there’s a line of cautious upward communication. However, still all major decisions are centrally taken by the leader. Participative: A participative leader maximally involves lower level employees in the decision making individuals across the organizations closer together and enable tighter work bindings at all levels.

2.3.5 SITUATIONAL LEADERSHIP THEORIES

Gibson et al (2006) introduce their literature on situational leadership theories stating that research was directed towards the situation upon inconclusive and –sometimes- contradictory results have evolved from much of the early trait and personal-behavior research. In a general context, they define situational theories of leadership as “An approach to leadership that advocates that leaders understand their own behavior, the behavior of their subordinates, and the situation before utilizing a particular leadership style. This approach requires the leader to have diagnostic skills in human behavior”

Yukl (1989) in Changingminds.org (2009) identifies six variables that affect situational leadership Those are:

Subordinate effort: represents the level motivation and actual effort expended.

Subordinate ability and role clarity: represents followers’ awareness of goal and methodology.

Organization of the work: represents the structure of the work and degree of resources utilization.

Cooperation and cohesiveness: represents the level of flexibility, cooperation and bonding while the group is working together.

Resources and support: Refers to the availability of all supporting tools, materials, people, etc.

External coordination: represents the need to collaborate with other external groups.

Tannenbaum and Schmidt (1958) in Changingminds.org (2009) identified three forces that formulate the leader's actions: situational forces, followers’ forces and leaders’ forces, thus recognizing the high variability of the leader’s style that might be affected with the force of a distant element such as a family argument in a given day which can result in a more aggressive approach or displacement of a certain activity.

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Furthermore, Maier (1963) in Changingminds.org (2009) noted that leaders not only consider the importance of getting things done as well as the likelihood of a follower accepting a suggestion,. Thus in critical situations, leaders are more likely to adopt a directive style due to fear of failure implications.

Hugh et al (2006), Gibson et al (2006), Hellriegel & Slocum (2004), Pierce & Newstrom 2003 address and Changingminds.org elaborated on 3 major leadership models that have been characterized in this set of theories. Those are briefly summarized below:

Hersey-Blanchard Situational Leadership Model (SLM):

This model is based on the amount of relationship (supportive) and task (directive) behavior that a leader addresses to subordinates in a given situation. The amount of relationship or task behavior relies mainly on the followers’ readiness to perform the required tasks. In this context, they note the following explanations:

Task Behavior: is the extent to which level of clarity does the leader spell out what to do, how to do it, where to do it, and all other relevant details to the task at hand.

Relationship Behavior: is the extent to which leaders involve subordinates in the decision-making process and provide support and encouragement where necessary.

Followers’ Readiness: is the subordinate’s willingness and ability to perform the tasks.

The association between task and relationship behavior creates four leadership styles that are represented in figure 2.3 which outlines the following 4 leadership styles:

Telling Style: Provides clear and specific instructions (High task, low relationship). Followers’ readiness that necessitate this style is their inability or unwillingness to perform.

Selling Style: Provides a mixture of relationship and task behavior. Followers’ readiness that necessitate this style is their willingness to perform but with a lack of ability.

Participating Style: Requires maintenance of a two-way communication and high level of support to followers in their prominent competencies. This style works best when followers are able but not fully confident of their ability.

Delegating Style: Provides both little task and relationship behavior. A situation that enables this style is when followers are empowered to make decision (have the ability, skill, desire and willingness).

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Figure 2.3: Hersey and Blanchard’s Situational Leadership Model Source: http://www.holyspiritinteractive.net/columns/stevehemler/lifeslittlelearnings/25.asp

Vroom and Yetton’s Normative Model:

In this model, decision acceptance increases commitment and effectiveness of an action while participation would increase the acceptance of a decision. The model was elaborated by describing decision quality as the selection of the best alternative amongst all possible ones. This is especially true when failure to select the best alternative will result in negative implications.

Decision acceptance was addressed here as the degree to which a follower accepts a decision taken by their leader. Leaders focus more on decision acceptance when decision quality is more important.

Vroom and Yetton defined five different decision procedures. Two are autocratic (A1 and A2), two are consultative (C1 and C2) and one is Group based (G2). A1: The leader relies on known information and decides individually. A2: The leader acquires information from followers, and then decides individually. C1: The leader shares problems with followers individually, listens to ideas and then decides

alone. C2: The leader shares problems with followers as a group, listens to ideas and then decides

alone.

G2 The leader shares problems with the followers as a group and then seeks and accepts consensus agreement.

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Path-Goal Leadership Theory:

The Path-Goal Theory of Leadership describes the way that leaders encourage and support their followers to achieve the goals that have been set by making the path that they should take clear and easy.

The specific activities leaders will undertake in this approach are:

• Clarify the path so subordinates know which way to go. • Remove roadblocks that are stopping them going there. • Adopt an incremental rewarding system along the route.

House and Mitchell (1974) in Changingminds.org describe four styles of leadership:

Supportive leadership

Leadership that considers the needs of the followers shows genuine concern for their welfare and creates a friendly working environment. This includes increasing self-esteem of the followers and instating creativity in the job to make it more interesting. This approach works best when the work is stressful, boring or hazardous.

Directive leadership

Leadership that tells followers what needs to be done while providing appropriate guidance along the way such as specific work schedules and timings. An incremental rewarding scheme may also be used while decreasing role ambiguity. This approach works best when the task is unstructured and complex while the followers are inexperienced.

Participative leadership

Leadership that consults its followers and takes their ideas into account when making decisions. This approach works best when the followers are experts and their advice is both needed and expected.

Achievement-oriented leadership

Leadership that sets challenging goals, both at work and for self-improvement. High standards are expected and demonstrated. The leader shows faith in his followers’ capabilities and their ability to succeed. This approach works best when the task is complex.

2.3.6 CONTINGENCY THEORIES

“Developed by Fiedler (1987), the contingency model of leadership effectiveness postulates that the performance of groups is dependent on the interaction between leadership style and situational favorableness” Gibson et al (2006). Theories that stemmed under this line more or less state that a leader's ability to lead is contingent upon various situational factors, including

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the leader's preferred style, the capabilities and behaviors of followers and also various other situational factors.

Changing Minds organization believes that Contingency theories are a class of behavioral theory that contend that there is no best way of leading for all situations, simply meaning that that a leadership style that is effective in one given situation may not be successful in others. The direct effect of this theoretical assumption is that leaders who are very effective at one place and time may become totally unsuccessful either when they are transplanted to another situation or when the factors around them change dramatically.

Pierce and Newstrom (2003) simply puts it as “different strokes for different folks” and/or “different strokes for the same folks at different points in time”.

Despite the similarity exhibited by this thinking with the situational theory, literature sources suggest that the main difference between the two is that situational theory tends to focus more on the behaviors that the leader should adopt, given situational factors (often about follower behavior), whereas contingency theory takes a broader view that includes contingent factors about leader capability and other variables within the situation.

Derivatives of contingency leadership theories were Fiedler’s Least Preferred Co-worker (LPC) theory, Cognitive Resource Theory and Strategic Contingencies Theory. The main concepts of those theories will be summarized in the following paragraphs.

Fiedler’s Least Preferred Co-worker (LPC) Theory:

Hugh et al (2006) referred to this theory as the LPC scale and presented their detailed explanation of it where a leader is asked to think a the single individual with whom he or she had the greatest difficulty working (being the least preferred co-worker) and then describe that individual in terms of bipolar adjectives (like friendly-unfriendly, interesting-boring, etc). The ratings given by the leader are then converted to a numerical score. Unlike what might be thought of those emerging scores being representative of the individual chosen by the leader, they are indeed representative of the leader, not the individual he or she has rated, thus creating two categories of leaders:

Low-LPC leaders (Task Oriented): Those are leaders who put the task first and only turn to relationship when they’re satisfied with performance.

High-LPC leaders (Relationship Oriented): Those are leaders who enjoy close and positive relationships and act in a supportive way prioritizing relationship before the task.

In a study of the contingency model application in military organizations, Utecht and Heier (1986) explain the three major situational variables that determine whether a group situation is favorable or unfavorable to a leader. Those are:

Leader-member relations: This concerns the amount of tension that exists in the interpersonal relationships between the leader and his followers and partly relates it to the leader’s personality.

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Task Structure: refers to whether the job is structured (step by step) or unstructured.

Leader position power: Is the degree to which the leader’s position enables him or her to get the followers to comply with and accept direction and leadership.

Although the major finding of their research was unexpectedly negative as the link between task oriented leaders and successful military leadership was not signified, the overall indication was that leaders may be successful even if they held positions in group situations that are adverse to their favorable leadership style.

Cognitive Resource Theory (CRT):

According to Changing Minds the cognitive resource theory indicate the intelligence and experience along with other factors support a leader’s success. However, they are not enough to guarantee success as stress impacts the leader’s ability to make decisions. In this context they explain the cognitive resource theory predicts that:

A) A leader’s cognitive ability contributes to the performance of the team only when the leader adopts a directive approach.

B) Stress affects intelligence and therefore decision quality.

C) Experience plays a positive role to decision making in highly stressful situations.

D) Leader intelligence and experience are irrelevant for simple tasks.

Strategic Contingency Theory (SCT):

Hickson et al (1971) in Changingminds.org explain the core of this theory that intra-organizational power depend on three factors:

Problem skills: If the leader has the ability to solve complex problems smoothly, he or she is going to be in demand, thus having the upper hand.

Actor centrality: If the leader is responsible for a central part of the workflow, he or she will easily get noticed as failure of their part affects the whole show.

Uniqueness of skills: If the leader possesses skills that are difficult to replace, then he or she will be difficult to replace even if they have made enemies up in the hierarchy.

This theory is therefore totally geared towards success of the leader as an individual within the organization

2.3.7 TRANSACTIONAL LEADERSHIP THEORY

The changing mind organization (2009) introduces their literature on Transactional Leadership Theory by stating assumptions laid out within its conceptuality. They describe the main elements of it as people being motivated by reward and punishment, Social systems working in its best form when there’s a clear chain of command, people ceding all authority to their leader once

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they have agreed to do a job and that the prime purpose of subordinates is to do what their leaders request them to do.

Burns (1978) in Hugh et al (2006) believed that leadership could talk the form of a Transactional leadership when leaders and followers were in some type of exchange relationship with the purpose of having needs met. He further illustrates that this exchange could be economic, political, or psychological in nature and examples might include exchanging money for work, votes for political favors, loyalty for consideration and so forth.

Leader-Member Exchange (LMX) Theory:

According to Gibson et al (2006), Graen proposed the leader-member exchange (LMX) theory which suggests that there’s no such thing as a consistent leader behavior across subordinates. This means that a leader may have a tendency towards some subordinates while being so rigid and structured towards others. Gibson et al further explain that leaders classify subordinates into in-group members who share a common bond and value system and out-group members who have less in common with their leader and therefore do not share much with him or her. Naturally, in-group members are likely to receive more challenging assignments and more meaningful rewards in exchange for their higher job performance and positive attitude towards the organization and its goals.

Therefore, it is easily to see that the LMX approach rests on the assumption that a leader’s perception of his followers influences his behavior which then influences the followers’ behavior

2.3.8 TRANSFORMATIONAL LEADERSHIP THEORIES

Hugh et al (2006) relate the Transformational Leadership Theories to Bass’s (1985, 1997) studies. Bass believed that transformational leaders possess those characteristics that enable them to inspire their followers and achieve great results.

In their study called “From Trait to Transformation: The Evolution of Leadership Theories”, Johns and Moser (2001) explore the transformational abilities of the leader and state it to be the focus of the most recent view of leadership sociology and the achievement of change within the organization.

Hellriegel & Slocum (2004) have illustrated the model of transformational leadership as shown in figure (2.7) later in this chapter which indicates the 4 components of the model: Inspirational motivation, Intellectual stimulation, Idealized influence and individualized consideration.

In another view, changing minds organization (2009) explain the 4 consecutive activities of leaders within the transformational theory as follows:

Developing the Vision: Transformational Leadership starts with the development of a vision. Whether this vision have been developed by the leader, by the senior team or emerged from a broad series of discussions, the important factor is the leader buys into it, hook, line and sinker.

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Selling the Vision: The next continuous step, is to constantly sell the vision. This effort takes energy and commitment, as few people will immediately buy into a radical vision, and some will join the show much more slowly than others.

Finding the way forwards: This is a parallel activity to the selling of the vision. Some Transformational Leaders know the way, and simply want others to follow them. Others do not have a strategy ready, but will enthusiastically lead the exploration journey for possible routes to the Promised Land.

Leading the Change: Transformational Leaders are always upfront and will stand up to be counted rather than hide behind their followers. They show by their attitudes and actions how everyone else should behave.

Gibson et al (2006), Hugh et al (2006), Hellriegel & Slocum (2004), Pierce & Newstrom (2003) and Johns and Moser (2001) have explained the different bits and pieces of theories included in this set of theories. The sum up of this literature is stated below:

Bass’s Transformational Leadership Theory:

The two main assumptions behind Bass’s theory were that (1) Awareness of the task importance increases motivation and that directing focus towards the team or the organization produces better performance.

In this context, Bass describes the transformational leader as he or she who is able to inspire trust, respect and admiration in his followers’ minds. This transformation process requires the leader to undertake certain activities like increasing the team’s awareness of the task importance, getting them to focus on the organizational goals rather than their own interests and activating their higher-order needs.

Burn’s Transformational Leadership Theory:

Burns defines transformational leadership as a process where both leaders and their followers are engaged in a mutual incremental motivation process. The leader is the one to raise the bar by appealing to higher ideals and values of followers, thus making themselves as the model and utilizing charismatic methods to attract followers to their values. This prospective is what makes Burns believe that transformational leadership is better than transactional leadership since it appeals to social values which encourages people to collaborate rather than working individually or competitively. It is also viewed as an ongoing process that is not limited by the discrete exchange of the transactional approach.

Kouzes and Posner’s Leadership Participation Inventory:

Kouzes and Posner developed the “Leadership Practices Inventory” survey that enquired about a list of the seven most common leader characteristics they would admire and would willingly follow. The list of characteristics found was long but the first seven on the list were:

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Honest / Forward-looking / Competent / Inspiring / Intelligent / Fair-minded / Broad-minded. Characteristics that followed were (Supportive, Straightforward, Dependable, Cooperative, Determined, Imaginative, Ambitious, Courageous, Caring, Mature, Loyal, Self-controlled and Independent).

The essential part of their effort, was in the form of their identification of the five action they identify as the key for successful leadership. Those are:

Model the way: This means going first and living the behaviors on a daily basis to form the example for others to follow. This is the most effective way to get the followers to believe and embrace the values the leader advocates.

Inspire a shared vision: This activity refers mainly to the artistic touch the leader can utilize to inspire sharing of an existing vision with his or her followers in a manner that makes them take it as their own.

Challenge the process: Leaders accumulate their experiences from going through adversity and difficult situations. In this context, they represent the true early adapters of innovation.

Enable others to act: Proper empowerment of followers will inspire dedication and commitment as followers will not only be encouraged by words, but by their own ability to think, decide for themselves and put their ideas into action.

Encourage the heart: Leaders should invest in unleashing the enthusiasm of their followers with passionate stories of their own to reflect on the followers’ passion about what they are doing.

Upon reviewing the various literature sources that addressed leadership theories, a number of prominent leadership styles were detected. In the following few paragraphs we will summarize those styles and try to outline their most important features and their related models.

2.4 TYPES/CLASSIFICATIONS OF LEADERSHIP STYLES

In this section we will present the most widely known set of leadership styles found in sources of literature explored.

2.4.1 CHARISMATIC LEADERSHIP

Hellriegel and Slocum (2004) describe the features of charismatic leadership as motivating and directing followers by developing a strong emotional commitment within them to a common vision and a set of shared values. The broad model of charismatic leadership explored by Hellriegel and Slocum is illustrated in Figure (2.4).

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Figure 2.4: Broad Model of Charismatic Leadership

Gibson et al (2006) defines charismatic leadership by explaining the meaning of its Greek origin ‘gift’ and states that it represents powers that could not be clearly explained by logical means. While they state that there’s no definitive definition currently given on charismatic leadership, they support the suggestion that charismatic leaders are those who have charismatic effects on their followers to a unusually high degree.

Conger’s model for charismatic leadership is illustrated in Figure (2.5):

Figure 2.5: Cogner’s Model of Charismatic Leadership

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2.4.2 PARTICIPATIVE LEADERSHIP

“Participative leaders engage in the behaviors that mark the consultative and group ehaviors described by Vroom and Yetton (1973). As such, they tend to share work problems with followers; solicit their suggestions, concerns, and recommendations; and weigh these inputs in the decision-making process.” Hugh et al (2006). The elaboration of this style’s features and the interaction between followers and leaders was illustrated in Figure 2.1 and explained in paragraph 2.3.4. The scale of participative leadership within each leader was also stated within the following degrees: Autocratic Style: All decisions are made without any consultation. Democratic: Leader involves followers in the decision making process but maintains the final say. Laissez-Faire: Leader’s involvement in the decision making is minimal.

2.4.3 SITUATIONAL LEADERSHIP

Gibson et al (2006) addressed situational leadership as an approach to leadership that advocates that leaders understand their own behavior, the behavior of their followers, and the situation before utilizing a particular leadership style. This approach requires the leader to have diagnostic skills in human behavior.

According to Fiedler in Pierce and Newstrom (2003), the interaction of the leader’s orientation toward others and the favorability of the leadership situation is a very important part of the leadership process within this style. Since some leaders will have a strong interpersonal orientation, these will need to develop and maintain close interpersonal relationships and task accomplishment will come in second to them. Other leaders who have a strong task orientation will focus their attention on task accomplishment with the development of good interpersonal relationships coming second. Theories that addressed situational leadership were explored in paragraph 2.3.5 under Hersey Blanchard Situational Leadership Model, Vroom and Yetton’s Normative Model and the Path-Goal Leadership Theories.

House and Mitchell (Path-Goal Theory) in Pierce and Newstrom (2003), define four important dimensions to leader behavior. Supportive (consideration), Directive (initiating structure), participative and achievement-oriented. Those dimensions formulate the leader behavior under different situational conditions.

2.4.4 TRANSACTIONAL LEADERSHIP

In this literature review, the Transactional Leadership Theory was explained in Paragraph 2.3.6 and represented by the Leader-Member Exchange (LMX) theory. According to Gibson et al (2006), this theory suggests that leaders classify subordinates into in-group members and out-group members. In explanation of leadership qualities and effectiveness elements, they state that

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a leader must be adaptive, since there is no such thing as consistent leader behavior across subordinates. Therefore the leader’s effectiveness stems from his or her ability to adapt their style to fit followers’ needs. In a transactional leadership style, a leader’s main role is to identify what followers want or prefer and help them achieve level of performance that results in rewards that satisfy them. This was illustrated in Figure 2.7 below.

Figure 2.6: Transactional Leadership Roles

2.4.5 TRANSFORMATIONAL LEADERSHIP

“Transformational leadership involves anticipating future trends, inspiring followers to understand and embrace a new vision of possibilities, developing others to be leaders or better leaders, and building the organization or group into a community of challenged and rewarded learners” Hellriegel & Slocum (2004). The transformational leadership model builds on and extends the features of transactional and charismatic leadership. It is therefore the most challenging and comprehensive model to implement for a leader.

Figure 2.7 indicates the transformational leadership model and its four main components.

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Figure 2.7: Transformational Leadership Model

As indicated in Figure 2.7 and in line with Hugh et all (2006), Gibson et al (2006), Pierce & Newstrom (2003) and Hellriegel & Slocum (2004), the components of the transformational leadership model that relate mainly to followers include the following:

Inspirational Motivation: Represents behaviors and communication that provide guidance to followers and equip them with a sense of meaning and challenge. As one leadership expert sums it up in Hellriegel & Slocum (2004), “Transformational leaders are shapers of values, creators, interpreters of institutional purpose, exemplars, and makers of meaning, pathfinders, and molders of organizational culture. They are persistent and consistent. Their vision is so compelling that they know what they want from every interaction. Their vision doesn't blind others, but empower them”.

Intellectual Stimulation: Refers the encouragement given to followers to be creative and innovative. In this context, a transformational leader would urge his/her followers to question assumptions, explore new ideas and methods in addition to approaching old situations with new perspectives. They also seek new ideas and creative solutions from followers. To achieve a two way communication in this regard, they enjoy high tolerance for mistakes and abstain from criticizing their followers’ ideas just because they differ with their own. Criticism is never done in public and the focus with each problem is on the ‘What’ and ‘How to solve’ rather than on the ‘Who to blame’.

Idealized Influence: Represents the behaviors of transformational leaders that followers would do their best to mirror or imitate. This stems from followers’ admiration, respect and trust for their leaders. This becomes extremely apparent when followers willingly give extra effort because of the intrinsic rewarding obtained from performing well. Leaders sustain their earning of such influence by considering the needs and interests of followers over their own needs. By sacrificing some of their needs for the sake of their followers, they can be more trusted while demonstrating high standards of ethical and moral conduct.

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Individualized consideration: Refers to the special attention a transformation leader pays to each of his/her followers’ needs for achievement and growth. In this capacity, transformational leaders may act as coaches, mentors, teachers, facilitators, confidants and counselors. Followers on the other hand are encouraged to invest in their own self development in order to advance to higher levels of their potentials. Individual differences are also observed, embraced, and rewarded to enhance the concept of creativity and innovation. The fruit of this individualized consideration appears in a level of empowerment that is granted to the followers while –at the same time- they would be monitored to determine whether they need additional support or guidance.

2.4.5.1 SIMILARITIES BETWEEN TRANSFORMATIONAL AND CHARISMATIC LEADRESHIP

As Hellriegel & Slocum (2006) explained the components of the transformational leadership model and their statement of that model being an extension of both transactional and charismatic leadership, Hugh et al (2006) supported the same concept and went further on the list the similarities found between both, which we will briefly list below:

Leadership Characteristics:

Vision: Both transformational and charismatic leaders are inherently future-oriented. They help their followers get from here to there “being the future”.

Rhetorical Skills: Both transformational and charismatic leaders have superb rhetorical skills that heighten their followers’ emotional levels and inspire them to embrace their vision.

Image and Trust Building: Both transformational and charismatic leaders build trust in their leadership and attainability of their goals through an image of solid self confidence, strength of moral conviction, personal example and sacrifice.

Personalized Leadership: The personal nature of the leader’s power is one of the most important aspects of charismatic and transformational leaderships alike. In this meaning, these leaders share strong personal bonds with followers, even when the leader occupies a formal organizational role.

Sustaining the same concept, O’Regan and Ghobadian (2004) state that a transformational leadership style is made of a number of attributes that relate to the ability to develop a futuristic vision. They add that transformational leaders tend to be charismatic, inspiring and stimulating as they instill trust, support and encourage new concepts and ideas, and practice sufficient flexibility to meet their –often- ambitious targets.

2.5 THE INTEGRATION OF LEADERSHIP, STRATEGY AND PERFORMANCE

There has been numerous studies that attempted to study the impact on leadership style on strategy formulation and implementation, and consequently, the organization’s performance.

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O’Regan and Ghobadian (2004), in their research titled “Leadership and Strategy: Making it Happen”, contend that the gap between the strategy and intended strategy is, among other factors, a function of the quality of the organization’s leadership style, thus signifying quality of leadership and strategy being instrumental in maintaining and improving competitive performance for the organization. They supported existing studies that advocated the existence of a dynamic and circular relationship between leadership, strategy and performance.

Wheelen & Hunger (2005), supports the integration between executive leadership and strategic vision. They describe successful CEO’s as individuals who are noted for having a clear strategic vision, a strong passion for their organization and the ability to communicate well with others. In this sense, they have many characteristics in common with transformational leaders who provide change and movement in an organization by providing the appropriate vision for it. They further state that these transformational leaders are able to command respect and to influence strategy formulation and implementation – thus influencing performance – because they tend to have key characteristics which are:

o Articulating a strategic vision for the organization.

o Presenting a role for others to identify with and to follow.

o Communicating high performance standards and showing confidence in the followers’ abilities to meet those standards.

Shamir and Hooijberg (2008) expressed their view with slightly different terms as they advocated the receipt of a new role by leaders which they called “Leaders of Meaning”. In this context they explain that within organizations, leaders manage meanings in order to create shared perceptions and interpretations for guidance of members’ actions, justifying their actions and the change they introduce to the organization and Recruiting followers and motivating members of the organization to support their actions.

In the same talking, Nahavandi and Malekzadeh (1993) introduced an integrative model for the role of leadership style in strategy formulation and implementation and concluded their study with a core finding proposing that challenge seeking and control are two integrative strategic leadership dimensions. They explain that the former addresses the degree of risk-taking and innovation which was found to be pertinent to the formulation of strategy; while the latter focuses on degree of openness and participation which is often mentioned as a key to implementation of strategy.

As a fruit of their extensive literature review, O’Regan and Ghobadian (2004), identify characteristics of strategy within their research as being:

o External orientation o Internal orientation o Functional integration o The use of analytical techniques

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o Resources for the strategy o Creativity o Focus on control

Our case study explained in paragraph 2.6, works as a practical example of this integration between leadership style, strategy formulation, implementation and the organization’s overall performance through 3 of the leading companies that operate in the Fast Moving Consumer Goods (FMCG) domain in Kuwait.

2.6 CASE STUDY

Our case study aims at discovering the most appropriate leadership style in Fast Moving Consumer Goods (FMCG) companies working in Kuwait. Therefore, it represents 3 major companies working in the FMCG domain within the state of Kuwait. The study was inspired by the varied results that took place within each company between the years 2006 – 2008 and its possible relation to its leadership style and subsequent leadership behaviors.

2.6.1 COMPANY 1

Company Profile:

Company 1 is specialized in distribution of cooked meat products, frozen meat products, and pastry products including sandwiches and salads. They are also distributors of foodstuff, beverages, chocolates, tomato ketchup, baby food, baby juices, baby cereals, rusks, confectionery, cheese, tobacco, canned food, and oriental food. The company runs numerous agencies and brand names such as Company 1, Cadbury International, Onion Choco Pie, Heinze International, Company 2, Koki, Dieterba Baby Food, Farley’s International, HP/LP, Divella pasta, Temmy’s, Rashidi Al-Mizan and others. In addition to distribution, the company is also manufacturing food items, beverages and other food stuff and importing and selling such food stuff at wholesale and at retail stores within the State of Kuwait . It also invests its excess funds in investment portfolios managed by professional investment managers.

Organizational Structure:

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Figure 2.8: Company 1 Org Chart Source: Company 1 Business Management

Turnover and Profit Rate:

The following table indicates trends with total sales and profit for the years 2005-2008 2005 2006 2007 2008 Total sales 10.012.000 13.680.000 15.829.000 10.211.000 Profit 1.033.000 1.180.000 1.250.000 712.000

2.6.2 COMPANY 2

Company Profile:

Company 2 is a group of 3 factories: (1) Company 2 CO. In 1989 Company 2 established a modern factory for the production of fava beans (Foul) and chick peas in Dubai, using the latest technology in canned food production, and governed by quality standards such as ISO and HACCP. Company 2 deals with over 50 regional and international distributors for canned food. It also has multiple brands like Mazraa, Bella, Heinz and it is located in UAE, (2) ECC (Egyptian Canning Co.) for all canned and Jared olive manufacturing. It is located in Egypt since 1994 and (3) Gulfa Water Co. for water bottling and processing and it is located in Ajman, UAE since 1977

Organizational Structure:

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Figure 2.9: Company 2 Org Chart Source: Company 2 Business Management

Turnover and Profit Rate:

The following table indicates trends with total sales and profit for the years 2005-2008 2005 2006 2007 2008 Total sales 70,500,000 82,900,000 120,000,000 81,200,000 Profit 8,170,000 9,780,000 15,550,000 6,020,000

2.6.3 COMPANY 3

This company was established in Kuwait in 1963. It is fully owned by KIPCO since September 1997. In December 2003, SAFAT holding acquired 51% of the company shares leaving only 30% to KIPCO and 19% to private investors. The company is listed in Kuwait Stock Exchange in 2004. COMPANY 3 are the exclusive importers and distributors for Basateen Foods of Saudi Arabia (Mazola oil, Ghee & Mayonnaise), Nestle Waters Marketing and Distribution (Perrier water), S.C. Johnson Was (Air care, home cleaning, insect control, & personal care products), Nestrade Nestle World Corporation (Garber baby food & Juice), Zanae Nicoglou Bakers Yeast (Canned food), Saudi Dairy & Foodstuff Co (Dairy products, juices and tomato paste), Movenpick (Swiss Ice-Cream), Luigi Zaini SPA (Disney chocolate egg and OSCAR Weil (Steel wool). The company is boarding the Persian gulf between Iraq and Saudi Arabia. Its retail trade is conducted within Kuwait through co-operatives.

Organizational Structure:

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Figure 2.10: Company 3 Org Chart Source: COMPANY 3 Business Management

Turnover and Profit Rate:

The following table indicates trends with total sales and profit for the years 2005-2008 2005 2006 2007 2008 Total sales 3.275.000 3.990.000 4.750.000 6.000.000 Profit 470.000 573.400 682.346 860.000

This research will attempt to dive a little bit into the leadership style and behaviors of each of the three companies in order to explore the possible connection between its incurred elements and each company’s strategy and performance.

2.7 OVERVIEW OF FMCG MARKET IN KUWAIT

As we looked into the FMCG market in Kuwait, we have come across some interesting facts that are important to layout.

Market Size:

Kuwait has a large FMCG market. The annual market value by the end of 2007 was 0.9 Billion KD. The market comprises almost 3000 different food related products.. Those vary from hard grains, to dairy products, from canned food to frozen vegetables, from beverages to sweets and bakery products, etc. This variation was created because of the wide diversity in the community which has – in addition to Kuwaiti nationals- expatriates from almost every where on the planet. This necessitated that companies in all fields, not to mention FMCG, respond to this diversified large demand.

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This large market is shared amongst various Parties as follows:

Hospitality Services (Catering, Restaurants, Hotels, and Coffee Shops) 45%

Key Account (Private supermarkets & Coops) 33% Grocery stores and wholesale 15% Exportation 7%

The number of outlets representing the percentages above is as follows:

Restaurants, Hotels, and Coffee Shops 1240 Main Cooperatives 57 Cooperative Branches 362 Private Supermarkets 18 Grocery Stores 3600

Growth Opportunities:

The official 'FMCG Audit' presented by TARC 'The Audit Retail Company' revealed that the range for growth opportunities remains wide in Kuwait. The government has announced its plan to increase the number of local Cooperatives with 30 new centers and more than 200 branches to be placed in service within the next 5 years. Moreover, our initial statistical studies indicate that every year, there's an average of 25 new restaurants open, and 1 grocery store per week.

Average annual growth percentages are as follows:

Restaurants, Hotels, and Coffee Shops 60 – 80% FMCG Retail & Distribution 25 – 35%

As described in paragraph 2.7 above, the FMCG market is a highly dynamic with a fierce competition environment that necessitates leadership’s appropriate guidance to their followers in order to tide the company over this competition, maintain its market share, and – better yet – increases it to guarantee continuity and growth. The fluctuating results amongst the companies being researched have posed the significant question this study is trying to answer (What is the most effective leadership style for FMCG companies in Kuwait?) and (What can be done with leadership style to improve performance results of FMCG companies whose performance measures are deteriorating?).

The next chapter will describe our methodology and research design that were implemented in order to attempt answering the research questions.

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CHAPTER 3 – RESEARCH METHODOLOGY AND RESEARCH DESIGN

3.1 INTRODUCTION

In Chapter 2, we introduced a rather comprehensive brief of Leadership history, theories and styles. The similarities between two of those leadership styles, namely charismatic and transformational leadership, were explored, in addition to various sources of literature that address and emphasize the relationship between the company’s leadership style, its strategy and therefore its performance. We then introduced the Fast Moving Consumer Goods (FMCG) market in Kuwait and followed that with a condensed summary of our case study around 3 major FMCG companies in Kuwait whose results were analytically viewed for the years 2005 – 2008 showing fluctuating trends in their total sales and profit numbers.

As discussed in Chapter 2, both Company 1 and Company 2 showed a downward trend in their sales and profit numbers through the research period while COMPANY 3 showed an upward trend with their same set of numbers. This pointed a direct arrow to the leadership style of all 3 companies, and inspired this research.

3.2 PROBLEM STATEMENT

The nature of FMCG market in general, and in Kuwait in particular, necessitates some delicacy in handling this study as prevailing leadership styles would typically be influenced by cultural elements deeply rooted within the Arab peninsula. The 3 researched companies are 3 major companies operating in the Kuwaiti FMCG market. Both company 1 and company 2 have experienced a change of their leader “The Managing Director” in the year 2007 while Company 3 maintained its MD to date. Unfortunately, a rapid negative trend with the company’s result figures was observed in the two companies whose leadership –and therefore leadership style- was changed. As such a dangerous indicator as the company’s results between the years 2005 – 2008 suggest, the relationship between the company’s performance, its results and its leadership style should be looked into to determine how much a possible change in the two companies’ leadership style has affected their performance and therefore their results.

3.3 RESEARCH OBJECTIVE

The researcher believes that companies that operate within a commercial activity that entails daily market changes within highly dynamic such as in FMCG companies, require a leadership style that combines a mixture of both Charismatic and Transformational leadership styles. A successful combination of the qualities of a charismatic leader and the roles played by the transformational leader would enable FMCG companies to tide through such a stormy market. The objective of this study is therefore to assess the level of existence of such a combination

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within the 3 companies being studied by exploring the level of each contributing element that pertains to the adapted methodological framework explained in paragraph 3.4. Those elements are:

1. Shared vision and values 2. Shared identity 3. Exhibition of desired behaviors 4. Reflection of strength 5. Inspirational motivation 6. Intellectual stimulation 7. Idealized influence 8. Individualized consideration

This assessment aimed at identifying points of strengths in the current leadership style and reasons behind weaknesses in the companies’ results in order to recommend solutions and improvements that would restore positive progress to the deteriorating companies.

3.4 METHODOLOGICAL FRAMEWORK

In this study, we have used an adapted model that comprised qualities of a charismatic leader and roles of a transformational leader. This resulted in our Charismatic Transformational Leadership Model (CTL) as previously introduced – in parts - in Chapter 2.

Figure 3.1 Charismatic Transformational Leadership Model (CTL) Source: Adapted from Hellriegel & Slocum (2004) by Ahmed Abdelhay (2009)

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The adapted model – indicated in Figure 3.1 – attempted to assess the existence of each of the elements contained in its charismatic-transformational mix of qualities and roles.

This study aimed at assessing the prevailing leadership style, relying on the logical known fact by most business leaders and sustained by all literature sources explored, of the direct impact of a company’s leadership on its strategy formulation, implementation and subsequently, its performance as indicated in its results.

It is therefore that this research focused on strategy formulation and implementation methodologies within the existing leadership style in each of the companies being researched, linking it – through data analysis – to the company’s performance.

Consequently, the feedback provided through any leadership style assessed within this framework should provide strengths, and weaknesses in each of these elements for each leadership qualities and roles practiced, thus, highlighting deficiencies in need of correction in addition to opportunities for improvement.

3.4.1 MAJOR RESEARCH QUESTION

Leadership of organizations working in the commercial “Trading” field, and specifically in the FMCG market, have a large burden to carry with very little room for error. A leader, or group of leaders can –with lots of struggle and endeavor- raise the company to unprecedented heights of success, or can –very easily- send its future down the drains. Stakeholders –of all types- look up to the leader for accountability with such responsibility.

Regardless of any possible reasons for success or failure, it is the dominant leadership style for the leading individual/group that direct the company’s progress in either directions of success. A slow and silent degradation of any organization’s performance poses a real threat to the organizations’ long-term growth, competitiveness, and its overall economic existence. The major question that each FMCG specialized organization should then be asking itself, similarly asked in our case study are:

Q1 what can a leader do to optimize its leadership style in order to positively affect its strategy and performance results?

3.4.2 MINOR RESEARCH QUESTIONS

In order to answer our major question stated in 3.4.1, a number of minor questions had to be answered, properly analyzed and benchmarked against our adapted model with specific analysis criteria in order to reach feasible and useful recommendations. Those minor questions were:

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Q1A: What is the currently dominant leadership style in the successful company and that in the failing companies?

Q1B: In light of the dominant leadership style, how is strategy formulated and implemented in each of the researched companies?

Q1C: How was the leadership style related –through strategy formulation and implementation- to the company’s performance results?

3.4.3 PROPOSITIONS

This research was conducted with the following assumptions in mind:

• All factors other than those studied in this research – whether internal or external - are assumed constant and have no influence on the research results.

• Interviewees’ answers represent their true statements of the examined leadership qualities and roles within their companies and their contributions are backed up by their long and profound experiences in their respective areas of responsibility.

3.5 RESEARCH DESIGN

This research is classified as an explanatory study that aimed at understanding the way each of the adapted model elements are formulated into each of the researched organizations, and its overall contribution to the organization’s strategy formulation, implementation and performance results. (Figure 3.1).

According to Morris and Wood (1991), in Saunders et al, (2007), the case study strategy will be of particular interest to a researcher if he/she wishes to gain a rich understanding of the research and the processes being enacted.

Furthermore, according to Yin (2003) in Saunders et al, (2007) if a research is concerned with achieving a deep understanding of a specific phenomenon, a multiple case study approach would be an appropriate venue to achieve this understanding. This is indeed the case with this research which examined the leadership style in 3 of the major FMCG companies operating in Kuwait due to its fluctuating results between the years 2005 – 2008. as outlined in the problem definition (paragraph 3.2) above.

To achieve the purpose of this research, a set of interview questions has been carefully designed. Those questions were originally formulated around elements comprised in our adapted model (Figure 3.1) and in consultation with the researcher’s supervisor.

The interview contained a total of 10 questions, 8 of which addressed the 8 elements of our adapted model (Figure 3.1) and the last 2 questions were dedicated to the interviewees’ general

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input in order to collect their overall assessment of their companies’ leadership, its effect on strategy and performance and their suggestions for improvement of its success.

The interview questions will be further explored in paragraph 3.5.2.3 below.

3.5.1 TARGET POPULATION AND SAMPLING METHOD

Target Population: In light of the objective of this research the most logical path for the researcher was to target a sample of leaders within each organization that would be representative of its leadership (those who can make a change) with highest possible levels of power within their organization.

Since our study was of an explanatory nature, therefore relying on qualitative research, a non-probability sampling technique was adopted as an alternative to probability sampling. The main aim behind adoption of this technique was to enable in-depth study of the process areas being examined and provide information-rich answers for our research questions.

Sampling Method: According to Neuman (2000) in Saunders et al (2007), purposive or judgmental sampling enables the researcher to select cases that will best provide answers to research questions and meet the research’s objectives and also when you wish to select particularly informative cases.

Therefore, the sampling technique that was adopted was based on judgmental sampling as the researcher –with the advice of his academic supervisor- have determined the adequate number of leaders to be interviewed from each researched organization by selecting those managers who have the greatest impact on strategy formulation, implementation and company performance. The sample size was then determined to be 12 leadership positions as follows:

• (3) Managing directors (MD of each organization) • (3) Chief operations officers (COO of each organization) • (3) Finance directors (Finance director of each organization) • (3) Human resources directors (HR director of each organization)

The size of the sample was deemed appropriate as it contained the 4 most powerful and influential positions in each company. This sample was therefore believed to be both adequate in size and representative of the leadership, operational, financial and human resources areas. Therefore, expected feedback was to be varied, rich, and comprehensive.

3.5.2 DATA COLLECTION INSTRUMENT AND SOURCE

3.5.2.1 RESEARCHER’S ROLE

In this study, the researcher clearly played the role of a participant as observer mainly because of the following two reasons:

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• The researcher’s identity was fully revealed due to working relationships with the companies being researched.

• Managers who participated were keen on providing their analytical views of the areas being examined with genuine interest in contributing to a cursory and effective solution.

3.5.2.2 DATA SOURCES

There were two data sources utilized in this research:

Indirect data sources: Some basic company documents were researched for collection of basic information such as the organizational structure, results figures, and other Standing Operating Procedures (SOPs) of relevance.

Direct data sources: This source was used through a non standardized, semi-structured interview. The interview was designed in conformance with the combined elements of our adapted Charismatic Transformational Leadership (CTL) model in order to address the major and minor research questions stated earlier. Interviews were held upon negotiating permission with each company’s leaderships with the researcher’s verbal and trusted promise of complete confidentiality.

3.5.2.3 DATA COLLECTION INSTRUMENT

The instrument that was used to collect data was a semi-structured interview that was carefully designed to address the research areas. Our interview guide is presented in Appendix “A”. Most basic questions were asked and probing questions were added in some cases to help further explore answers, especially when the interviewee was not of the talkative type.

Average duration of each interview was 45-60 minutes. The interview questions and their measurement intent are elaborated upon in the following paragraphs.

Questions on Charismatic Leadership Qualities:

Shared Vision and Values:

1) How are the company’s vision, mission and values formulated and how are they transferred to subordinates?

Measuring: - How the leader instates or participates in inspiring subordinates with the

company’s vision, mission and values. - The dominant methods of communication within each company, their

appropriateness and efficiency.

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Shared Identity:

2) How is the company’s identity reflected in its organizational structure, its organizational culture and its decision making process?

Measuring: - The suitability of each company’s organizational structure and its organizational

culture to its functioning needs. - Speed, flexibility and mobility of decision making within the company’s

organizational layers.

Exhibition of Desired Behaviors:

3) How important is the application of the code of ethics in your company and how is it instated within your employees?

Measuring: - The extent to which leaders commit themselves to high standards to form the role

model for their subordinates. - Methodology utilized for promoting a high standards environment within each

company.

Reflection of Strength:

4) What are the most important values, elements of competitiveness edge and competencies you are keen to be known of?

Measuring: - Visualization of each leader’s image as a powerful, confident and resourceful

individual the subordinates. - Differential thinking of the most important elements in the eyes of interviewed

leaders.

Questions on Transformational Leadership Roles:

Inspirational Motivation:

5) What are the motivational tools utilized in your company to stimulate employees for increased productivity?

Measuring: - Tools of motivation utilized by each leader within his/her rein of power. - Appropriateness of utilized tools to activity and prevailing market environment.

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Intellectual Stimulation:

6) In your opinion, how much innovation and creativity can the company absorb and how is that formulated within your policies?

Measuring: - Extent of innovation and creativity allowed within each company. - How deeply instated is the importance of innovation and creativity in the mindset

of each of the interviewees.

Idealized Influence:

7) How are employees’ competencies and skill set evaluated in your company?

Measuring: - Level of promotion of each leader to the image of the “ideal employee” within

their respective organizations? - Level of effectiveness of the applied tools of evaluation?

Individualized Consideration:

8) What are the available venues in your company for gathering employees’ feedback and how is input from those venues analyzed?

Measuring: - Importance of individualized consideration in the eyes of the interviewed leaders. - Tools utilized to analyze followers’ voice.

General Questions

9) How do you evaluate the company’s leadership style in terms of its effect on the company’s strategy and its performance?

Measuring: - Controversial view between the top leaders (MDs) and their supporting directors

(COO, Finance Director and HR Director). - Rich analysis by interviewed leaders of the suggested integrated effect

(Leadership – Strategy formulation and implementation – Performance results).

10) What are the things related to leadership issues that could be done to improve the company’s success?

Measuring: - Constructive input by the interviewees with recommendations to improve or

enhance their respective companies’ success

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3.6 DATA ANALYSIS METHOD

Each interview was conducted in the following sequence:

Part 1: Introduction (Maximum 5 minutes)

Explain the purpose of the research

Part 2: Interview questions and taking notes (Average 60 minutes per interview) the list of questions is stated here below:

Part 3: Conclusion (3 – 4 minutes) where the following took place:

The researcher asked the interviewee whether there was anything he would like to add.

The researcher acknowledged the interviewee’s participation and extended his appreciation for the time offered for the interview.

In order to analyze the search problem, we have used an analytical approach based on the themes provided by our conceptual framework (each question represents a theme). To achieve that we have utilized a simplistic methodology in analyzing interviewee’s answers as each questions 1 – 4 addressed the qualities of a Charismatic leader and questions 5 – 8 addressed roles of a transformational leader. We then grouped answers to the interview questions according to its effect on strategy formulation, implementation and performance results.

The answers were then discussed in pertinence with each model element highlighting both opinions that were shared by a number of interviewees and all other opinions found to be in conflict with relevant quotes from the interviewee’s answers. Our initial findings were presented within the context of discussion of each model element in order to link the reader’s follow up with the explanations attained in the leadership style element being analyzed.

An overall analysis was then presented in light of the collective answers of all questions by all interviewed directors. In the following chapter, we will present our data analysis in detail.

CHAPTER 4: DATA ANALYSIS, FINDINGS AND DISCUSSION

4.1 INTRODUCTION

In this chapter, we will explore, in detail, the findings from the interviews that were held to understand the existence level of our proposed model elements into the leadership style of each of the researched companies as per our methodological framework, including the combination of the 4 main Charismatic Leadership qualities and the 4 main Transformational Leadership roles. We will include a specific quote by any of the interviewees where appropriate or necessary to highlight a certain similarity in findings, or otherwise a completely different view throughout their answers to the interview questions. Answers to question no. 9 and 10 indicated pattern of thinking dominant within each company concerning their analysis of the relationship of the leadership style and the strategy formulation and implementation in addition to their own views of what could be done to improve each respective company’s performance results.

We will then end this chapter with an overall discussion of the findings, and how they relate to the literature explored about the evaluation process adopted within our proposed Charismatic Transformational Leadership Model (CTL).

4.2 DATA ANALYSIS AND FINDINGS

In this section we will explore detailed findings of examined leadership qualities and roles and their relation to the strategy formulation and implementation of each company, (see figure 3.1) in addition to the overall recommendations by interviewees.

The managers who were interviewed are presented in the following table:

Table 4.1: Interviewees List No Position Title Company (1) Managing Director Company 1 (2) General Manager (COO) Company 1 (3) Finance Manager Company 1 (4) Human Resources Manager Company 1 (5) Managing Director (COO) Company 2 (6) General Manager Company 2 (7) Finance Manager Company 2 (8) Human Resources Manager Company 2 (9) Managing Director Company 3 (10) General Manager (COO) Company 3 (11) Finance Manager Company 3 (12) Human Resources Manager Company 3

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In the following paragraphs we will explore the answers collected during the interviews to include the most outstanding statements given by the above managers and our findings thereto:

4.2.1 QUALITIES OF CHARISMATIC LEADERSHIP STYLE

Shared Vision and Values:

Q#1 How are the company’s vision, mission and values formulated and how are they transferred to subordinates?

- Company 1:

o The MD expressed the company’s vision as to Build a world class operation committed to quality and dedicated to excellence while the mission was to develop and maintain leadership in the market, acquire and maintain no. 1 position in the field and to excel in anticipating and quickly responding to customers. He had a belief in sharing this vision with all as he said “In my opinion, everyone starting from juniors to the top of the pyramid has to share this dream and live to raise those values”.

o Conversely, the General Manager had a different opinion as he believed in sharing the vision and values with concerned staff only. His statement was specific when he said “I prefer to give each employee what he needs to know according to his job and seniority”. The Finance Manager shared this vision – with a focus on what he referred to as “financial policies and values”. His own statement in this concern was “I don’t think that a junior accountant or even a senior accountant should know beyond his role”.

o Interestingly, the HR manager said “We have a gap between the seniors and subordinates when it comes to our formulated vision and values” He was also not sure of the level of sharing of vision and values as he said “I think it has been communicated to all of the employee base according to his rules”.

- Company 2:

o "We are a consumer driven one that has consistently demonstrated its ability to expand its market share and profitability in the face of declining industry volumes and increasing economic, legislative and social challenges" said the Managing Director. He also added "I have no doubt that the momentum, which the group had built up during the last 40 years, will be maintained in this century and beyond". The core of his expression revolved around commitment to the long-term success of the core business, providing shareholders with a handsome return on their investment, offering employees challenging and rewarding careers and serving consumers with excellent quality products at great value.

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o The General Manager shared the same view and further indicated that the vision is inherited from both the owner and the board of directors. He added "I think we have to stick to this vision as our organizational law where those who obey the law will be welcomed".

o With this clear focus on the company's success and a clear trend from both the MD and the GM to impose their vision, both Finance manager and HR manager expressed a gap between the MD and GM and the lower layers in the organization.

- Company 3:

o The MD stated that COMPANY 3 started as a small family business "entrepreneurial" and continued to grow for over 40 years. He stated that "Within those years, we learned to share everything with all the family members as well as our staff to formulate our vision together and agree on our values. This is mainly what kept us growing over the years". He added "I insist to continue doing the same but within the initial framework of my vision".

o GM, Finance manager, and HR manager all expressed similar thought pattern which was signified by the GM's statement "I have to discuss all the policies, missions and values with all the related staff. I also require that each of them do the same with their subordinates.

Shared Identity:

Q#2 How is the company’s identity reflected in its organizational structure, its organizational culture and its decision making process?

- Company 1:

o Taking into consideration the organizational change that took place by the end of 2007, where an additional layer "The General Manager" was instated to run the show, while the MD continued to "Observe" the business growth and not interfere with any decisions, we can hopefully understand answers of this question in addition to the previous one, as –again- the MD expressed a view of shared identity that he promotes, but does not exist any more. One of his explanatory statements to this concept was "my vision since 1991 was to enhance the Autonomy i.e. giving the power or decision making to each manager in his area recently I'm no more interfering with operations as I gave this responsibility to the GM. I'm assuming he's still committed to this method of management".

o The natural reflection of the MD's statement was obvious in the GM's statement as he said "Since I became in charge of operations, I noticed that due to the remote management we may lose a lot of control so I'm doing my best to re-

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organize the structure and change the culture. It's not logical at all to let every one do what he wants whenever he wants when I know that my mission is to enhance the result and increase the profit". This got even clearer in the following sentence he stated "I have to approve everything related to the business in advance".

o While the Finance manager presented a similar concept in his answer, the HR manager exhibited a different thought pattern as he said "I personally believe in the bottom up decision making, but I don't see it here as our GM holds all keys to all doors".

- Company 2:

o Both MD and GM believe in central management as the successful way of running business. The MD showed a willingness to give some room for decision making for a "few trusted individuals" as he put it, but he made it very clear that he withholds the right to cancel such decisions without discussion based on what he would see fit best. The GM added "Many of our subordinates are not yet qualified to be even involved".

o The Finance and HR managers –cautiously - showed an adverse line of thinking which indicated to the researcher a hidden disagreement waiting to erupt.

- Company 3:

o Similar to the MD of Company 1, the MD and GM of COMPANY 3 expressed promotion of shared identity through empowerment of his subordinates to take decisions around the shared vision and values. The MD further expressed that he refuses to take off any power from his subordinate managers as he said "If I can't trust my selected managers to make good decisions, then probably all I needed was to hire supervisors or superintendents".

o The Finance manager presented a different approach as he thought that due to the risk involved in financial decision making, all risk elements should be thoroughly examined by those who have sufficient knowledge and experience. This answer is understandable in light of the volume of responsibilities he is undertaking. The HR manager concurred with the MD and GM in his approach.

Exhibition of Desired Behaviors:

Q#3 How important is the application of the code of ethics in your company and how is it instated within your employees?

- Company 1:

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o While all interviewees from Company 1 said that the code of business ethics is essential to them, the GM stressed a little deviation from the general thought as he added "It is essential as long as it is aligned with high productivity and profit increase".

o The Finance manager interestingly said "It is essential but sometimes you find some deviations and I can accept these deviations if it's in the company's interest but I'm very tough against any one trying to get personal benefits or give any of our distributors what's not rightfully theirs".

- Company 2:

o The MD expressed in detail his personal interest in application of sound ethics within, but –interestingly enough- he said "I have my own reasons to make me believe that my GM is not 100% committed to the same level". All other interviewees did not differ on the importance of ethics and its sound application within the organization.

- Company 3:

o Answers of Company 3 interviewees came no different of those in their counterpart companies as they have elaborated in different ways and in their own stories about situations where the proper application of the code of ethics was an instrumental factor in sustaining the company's reputation and therefore its market share.

Strength Reflection:

Q#4 What are the most important values, elements of competitiveness edge and competencies you are keen to be known of?

- Company 1:

o Another controversial set of answers emerged of this question as the MD heavily focused on manpower as the number 1 asset. He expressed this in a comprehensive statement "My way with them used to be democratic, selling ideas, participating in decisions, delegating power, supporting them to grow and directing whenever needed". He also stated that he used to encourage followers to be creative and innovative. In addition to providing them with the elements of success like big brands, high tech manufacturing, proper trust in the company's products, reasonable prices comparing to their regions, .etc.

o Differently – again – the GM did not consider the human element as an asset as he specifically said "Our major competitive advantage is high quality, premium products and brand names and the highest technology of food manufacturing.

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Finance manager coincided with the GM in his view with a deeper focus on company finances and the elements it has to employ to gain financial superiority.

o Interestingly, the HR manager referred to what he called "A big gap" between what used to be done before (referring to the time when the MD ran the show) and what's on the ground today (referring to the domineering policies of the GM).

- Company 2:

o In answering this question, interviewees divided into two clear teams, the MD and his GM were of a similar opinion to that of having high productivity, high quality, premium products and brand names and the highest technologies available in all sectors of the company. The other team, namely Finance manager and HR manager referred to the importance of the human element and almost identically criticized their top management (MD and GM) for not placing these elements at the top of competitive edge elements.

o A clear description of that division was clear in the HR statement "Our top management views employees as numbers, not assets". When asked to explain that statement he said "They simply believe that anybody can be replaced at any time".

- Company 3:

o The MD believed in ethics as a major competitive advantage in the trading business plus people's quality as well as the big brand names he has to distribute. His GM expressed more or less the same concept but added "We have to also consider quick response to market and consumer needs and the transparency with the regional and international supplier as one of our most important competitive advantages with which we have sustained a continued growth".

o The Finance manager, in addition to demonstrating similar concepts, added the scope of what he called "Financial Honesty" which when asked, he explained as "Transparency in all transactions, making due payments on time, and living up to all financial liabilities and obligations".

o An important remark was made by the HR manager who said "I have some doubts about recently hired staff" and when asked to explain this comment, he answered that some of their actions do not imply a full understanding of what should be the elements on which they should focus on their performance to sustain the competitive advantage of the company which gives an indication that they are not well aware of it to begin with.

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4.2.2 ROLES OF TRANSFORMATIONAL LEADERSHIP

Inspirational Motivation:

Q#5 What are the motivational tools utilized in your company to stimulate employees for increased productivity?

- Company 1:

o The MD stated economic, autonomy, sharing good time and bad times, promotion, employment stability and feeling in house security in their firm. The GM and Finance manager focused on high incentive schemes, and providing employees with all the support they need to be "highly productive".

o Adversely, the HR managers believes that the days for employee motivation are history as he feels that this atmosphere has been changed by the modified business environment which relied on outsourced higher skilled staff while old staff are being either frozen or dismissed. In this context, he sees that the new management uses only financial motivation.

- Company 2:

o The MD proudly stated that "We offer the best compensation packages in the region, offer high training programs, and bring on the best senior level staff from multinational companies". The GM's statement was close in meaning but slightly different in expression.

o The Finance and HR managers outlined the existing focus on motivation by rewards and criticized the level of training programs offered by the company in comparison to the training requirements. In this taking, the HR manager said "It's true that the company finances expenses programs for managers, but they're always external that the manager elects to enroll in as a personal preference regardless of its importance to the business".

- Company 3:

o The MD –realistically- said "We know we can't be competitive with the larger companies unless we grow together and upgrade our staff. It is also vitally important to have employees placed in positions that are appropriate to their qualifications". Another important statement of his was "We build trust and walk the talk" and "Training is only limited by our budgets, but we make sure we upgrade talented employees to higher positions where their skills could be fully utilized".

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o The GM added another prospective as he said "I believe in motivation by commission based on accountability and I think that stability is a key word plus letting employees feel shared ownership of the company and nothing less".

o The Finance and HR managers proudly reiterated similar concepts and stressed on stability, dream sharing, and proper rewarding for extraordinary performance which makes employees feel they're being treated fairly and fires up their motivation to improve their performance to attain a remarkable rewarding.

Intellectual Stimulation:

Q#6 In your opinion, how much innovation and creativity can the company absorb and how is that formulated within your policies?

- Company 1:

o "We're open to all new beneficial ideas, ready to implement them after discussion and mutual agreement" said the MD, while his GM had a totally different approach as he indicated saying "I can hear only from the qualified individual as there's no time to hear ideas from all direction. This is just a waste of time. I prefer to have the internal and external consultant opinions directly and let every one do his job".

o The Finance manager saw innovation as being "critical". However, he clearly stated that "as long as those innovative ideas fall within the general policies' framework, I'd be willing to listen and implement".

o In an obviously recurring reference to "before" and "after" current management, the HR manager said "We used to be open for innovation but today's management thought that the ideas must come from their side and our role is just to implement what they dream for us".

- Company 2:

o Both MD and GM of Company 2 showed little attention and capacity to innovation. Their conservative statements revealed lack of interest in the concept of innovation altogether. This was exemplified by the GM's comment "Innovation is by all means a good thing to have, but, as you know, in our field, there's not much room to be creative as the market has its own rules that cannot be betrayed".

o The Finance HR manager shared an open approach to creativity and innovation and spoke about it as "The healthy way to keep a successful business" as expressed by the Finance manager, or as "The only road to continued success" as expressed by the HR manager.

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- Company 3:

o All COMPANY 3 interviewed managers expressed unlimited support to creativity and innovation. The MD's clear statement "As I told you, as a family, we must discuss and learn from each member of the family and when we reach an agreement on any idea, it will immediately be implemented" was a clear example of this trend. In the same talking, the GM said " I can listen a lot and have a lot of investigation but once we're all convinced we'll go ahead for unlimited creative ideas as far as it's beneficial"

Idealized Influence:

Q#7 How are employees’ competencies and skill set evaluated in your company?

- Company 1:

o The MD had a detailed statement describing this process in his company as he said "We have an appraisal form, plus a performance monitor to each of our employees". He further explained "But I have to take into consideration the market dynamics and external environmental changes as well as employees' cultural differences and their record with the company". This further indicated the clear gap between the MD and his GM who said "Mainly, performance and productivity are my main concern".

o The Finance manager continued his line of focus with his answer which included him stating that "For us, only figures talk". This was reflected in the HR manager's answer who said believed that today's measures became directed more towards profitability without any other elements taken into consideration.

- Company 2:

o The MD and GM both focused in their responses on performance and productivity of the employees as the indicator for their skill level. To both of them, sales figures distinguish a highly skilled employee from another poorly skilled one. The Finance manager shared the same conception, while the only exception was the HR manager, who –rather sarcastically- said "Our evaluation process needs to be evaluated, do I need to tell you more".

- Company 3:

o COMPANY 3 managers interviewed described what could be ascribed largely to a 360 degrees evaluation. In their various responses, they described what the HR manager called "a dual evaluation process" and the GM referred to as "two way evaluation". In this process, the MD explained that while each manager is required to provide a full set of performance evaluations on each of his employees

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to the HR department on a timely manner in order to decide the employee's continued employment with the company and whether or not there would be benefits improvements to his or her package, the employees are also required to fill an evaluation form where they evaluate their immediate leader up the hierarchy. Those evaluations are collected by HR department and sent directly to the next higher manager of the one being evaluated. The researcher –though never expressed it during the interviews- found that processed to be rather unique and a very good tool that must be utilized in other companies.

Individualized Consideration:

Q#8 What are the available venues in your company for gathering employees’ feedback and how is input from those venues analyzed?

- Company 1:

o In answering this question, the MD said "As I said we hold regular meetings with the senior staff plus I have my personal channels open with all the staff which enables me to analyze their comments and if needed I’ll take an action". The GM said "As I mentioned in my response to one of your earlier questions, I prefer to rely on specialists rather than all the staff". This was yet another indication of the big gap of thinking between the MD and GM in this company.

o The Finance and HR managers talked about having a direct connection with all their staff "open door policy" while the Finance manager added "I'm also open for internal and external auditors".

- Company 2:

o The MD, GM and Finance manager described their adopted methodology of collecting employees' voice through the different layers as employees would report to their higher ranking employees, who would elevate their voice to the next manager up until it reaches department managers who report on employees' concerns during the senior managers' meeting. There was no indication of a methodology in place to verify that all employee concerns are being addressed to top management.

o The HR manager stated that he believes current senior managers are not listening to the staff unlike the previous MD & GM. This supported our observation of the non-existence of a real employee voice program.

- Company 3:

o MD of COMPANY 3 explained their system of having a weekly meeting where all employees' ideas, concerns, worries, and even relevant personal news is

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shared, studied and decided upon for immediate dealing with employees' input. In this context, the MD said "I have a direct contact with all staff as I'm what you can call a manager by walking and talking".

o Responses from remaining interviewed managers did not differ much from the MD's statement and sustained his methodology in closely handling employees' voice as an invaluable source of information for analytical purposes.

General Assessment and Analysis:

Q#9 How do you evaluate the company’s leadership style in terms of its effect on the company’s strategy and its performance?

- Company 1:

o The MD of Company 1 was keen to mention his start of the company as an entrepreneur until he transferred his vision to the GM with which he entrusted to inspire all staff to share his dreams. This was sustained by 10 years of continuous success and growth. The GM –in his turn- defended his own leadership style as he said "The current situation requires a leader who can think, make decisions and follow on their implementation" He indicated that "Sometimes you have to turn everything 180 degrees to manage changes and implement process re-engineering and also change the organization's culture from flat to proper hierarchy".

o Both Finance and HR managers expressed their belief that leadership style has changed with the changes that took place in management by the end of 2007 from a style that was open for ideas and brainstorming to a set of predesigned policies that are imposed on all staff. This –in their view- negatively affected the general performance which clearly translated into negative figures.

- Company 2:

o "Our declining figures are the greatest indicator of gaps that need to be filled in our leadership actions and decisions" said the MD. This clearly courageous statement was no more than a confirmation of lack of visibility to the depth and importance of leadership style on the company's performance. The researcher reached this explanation through common line of thought indicated by the interviewees with evidencing statements like the Finance manager's quote "We can either be traditional and blame leadership, or choose to be insightful and track performance failure throughout the company".

- Company 3:

o Most of COMPANY 3 interviewed managers expressed pride in their leadership style whether it was the MD reiterating the benefits the company gained from his

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preferred style of dealing with everybody as a family, listening to all, analyzing the voice of everyone and taking steps towards continued growth with the human element on top of his priorities. The GM and other managers' responses came within the same context of the MD statements as all were obviously proud of the increasing trend of their performance results over the last few years and were also keen on pointing out the happy environment in which they operate.

Q#10 What are the things related to leadership issues that could be done to improve the company’s success?

- Company 1:

o The MD advised that his GM should adopt an enhanced approach where more discussion with all subordinates is encouraged to eventually instate the feelings of belonging and loyalty in their attitude towards their work duties.

o The GM said "Subordinates need to follow up strictly what we give them and the senior managers need to be stronger".

o Finance and HR managers both addressed the existing gap between the MD and GM styles with a tendency to believe in the MD's leadership style as the preferred and more effective approach to leading Company 1.

- Company 2:

o Interviewed managers in Company 2 did not appear to have specific or detailed recommendations, but they supported enhanced communication between company layers.

o The Finance manager specifically advised more participation with staff and the need to formulate a way to involve employees in the decision making process.

o The HR manager added that employees need to be given a feeling of job security in an attempt to reduce the remarkably high turn over rate.

- Company 3:

o A collective look into COMPANY 3 interviewed managers' recommendations showed that they advise more communication, more communication, enhancement of accountability system, scanning the external markets for growth opportunities, sustaining current manpower with new blood to inject varied experiences in the organization and the HR manager's comment was the only one on the company structure as he said "We need to settle some issues to identify the proper structure for this company".

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4.3 DISCUSSION

As discussed earlier in chapter 2, our CTL adapted model combined the elements of Charismatic leadership qualities with the roles of the Transformational leader and used the emerging set of elements to assess the current level of utilization for this model within the companies being researched in this study. Questions asked during the interviews were geared towards discovering ‘on a limited level’ how close or far each of the 3 companies was to our proposed model. In general, the researcher has observed obvious gaps of thinking between the Managing Director, the General Manager, and the other senior managers interviewed in many of the areas that were questioned. An obvious change in leadership style took place in both Company 1 and Company 2 functioned as the engine for this diversity and directly contributed to troubled systems and ill results.

Therefore, the analysis of answers was not an easy task, yet provided a preliminary image of the current situation in all 3 companies. It also disclosed a number of gaps that need to be addressed in order to improve the strategy formulation, implementation and eventually the companies' results. This will be discussed in detail in the next chapter during our attempt to answer our research questions.

4.4 DISCUSSION OF FINDINGS WITHIN THE CONTEXT OF KUWAIT

The findings of this research relate to existing conditions in Kuwait at large. The researcher's own knowledge and observation sustained by his personal experiences over 14 years in Kuwait, would make him positively state that company leaderships vary greatly in their leadership styles. In fact, we can go as far as saying that only very few leaders have adopted a scientific approach towards their leadership to their lead organizations. Elements of other influence such as cultural diversity, family business forces, lack of proper education or experience, and other numerous factors, do play a major role with large and small organizations alike. As our progressive review of the literature sources suggested, leadership skills can be taught and not necessarily inherited. Therefore, in a country with a lot of financial power like Kuwait, and with emerging Kuwaiti generations eager to take bigger roles in the development of their country's economy and promotion of its people's prosperity, one or more aspects of this study can be directly found in any Kuwaiti organization which makes it a guiding tool, or at least a starting point for those organizations who would be serious about looking inside and fixing what's broken.

In the next chapter, we will conclude the summary of our findings in the format of gaps (weaknesses) detected and derive our recommendations (opportunities) for improvement.

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CHAPTER 5: CONCLUSION, RECOMMENDATIONS, AND FURTHER RESEARCH

In this chapter we will provide a comprehensive wrap up of our research in 3 parts. At first, we will explore the most outstanding findings detected during the interviews in adequate summary. This part will then be concluded by answering our major research question and its minor research questions. Secondly, we will be presenting our recommendations for problem solution in line with the findings. Lastly, relevance of findings to Kuwait environment and recommended research for future endeavor will be presented.

5.1 CONCLUSION

According to Saunders et al (2007), the most important criteria in presenting the conclusion of a research, is the extent to which the researcher was able to answer the research questions and link to the research objectives. In this context, we will refer back to paragraph 3.3 where our research objective was clearly stated. It was simply to assess the level of existence of the suggested combination of Charismatic and Transformational leadership styles as the most effective model for running commercial activity based companies in general and FMCG specialized companies in particular. Those combined elements were (Shared vision and values, shared identity, exhibition of desired behaviors, reflection of strength, inspirational motivation, intellectual stimulation, idealized influence and individualized consideration).

Our efforts towards achieving the research objective was a cumulative effort of the interviews as they were designed, conducted, transcribed and analyzed. It is therefore that we were eventually able to answer the research questions.

The answer to our major research question will make up the recommendations section of this chapter paragraph (5.2). This will represent a logical derivation from the answers to the minor research questions. It is why we will begin with our suggested answers to the minor questions in this section.

5.1.1 ANSWER TO THE QUESTION ON DOMINANT LEADERSHIP STYLE IN THE THREE COMPANIES

Q1A. What is the currently dominant leadership style in the successful company and that in the failing companies?

In answer to Q1A, the following were our findings:

Company 1: It’s clear that the current management leadership style in this co is the autocratic style with a telling approach rather than selling, which seeks to dominate and wants to convey instructions

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and gather all the authorities to themselves without any selling ideas but expecting that every subordinate will follow as per the hierarchy and they’re relying on the authority to tell all the subordinates what to do. Their major problem is that they managed to transfer a passive and aggressive spirit into their subordinates. The passive side occurs when one agrees. The aggressive side occurs when a variety of rationalizations, delaying tactics, insincere apologies, Ego feeds, etc. are used to fend off the dominant persons orders.

Company 2: In this organization they passed through two types of the leadership styles. The MD (Entrepreneurial of this firm) used to lead depending on his charismatic style, while today new management style tend to use the legitimate power with a great tendency towards a telling style. This indicates a high tendency towards a transactional leadership style being the dominant in this company as the GM believes in reward in a financial reward only and penalty in the form of firing employees without taking into consideration any effect of external environment factors.

Company 3: It’s clear that the transformational leadership style looks to be the most dominant in this organization as the MD tends to inspire his subordinates take initiative and take hard decisions that leads to business growth, but also in a very loose way as the degree of delegation is to the extreme at the same time it looks that even the vision of the entrepreneur is missed between all the staff’s opinions and visions. In addition to this tremendous sharing of vision, the MD accumulates all the group experiences to go through the tough environmental situations especially those endured during the last financial recession period in Kuwait. He is also encouraging his subordinates spiritually and supporting them to face market difficulties and to move forward towards the aspired growth. A clear charismatic style is also found through building an image to the staff and the company in addition to holding direct personal relationship with subordinates at all levels within a dominant idealized atmosphere that could be clearly noticed within the company.

5.1.2 ANSWER TO THE QUESTION ON STRATEGY FORMULATION AND IMPLEMENTATION

Q1B. In light of the dominant leadership style, how is strategy formulated and implemented in each of the researched companies?

In answer to Q1B, the following were our findings:

Company 1: Along with the previously detected telling style, strategy formulation within this company is not shared with subordinates as it is preplanned and conveyed to them for implementation. At the

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same time, subordinates are held accountable for the implementation of a strategy they did not participate in formulating. This is known as up-down management

Company 2: Until the year 2007, this company enjoyed a down-up leadership style. With the change of leadership that took place, this company has clearly changed its leadership style to that of a similar approach to Co1 “up-down”. As the new GM became solely responsible for performance results, he controlled the entire leadership process, seized delegation, and pursued his sole dreams with implementation while holding subordinates accountable for any deficiency with the implementation. Any subordinate who shows difference in opinion is considered antagonized to the GM which results in that particular subordinate’s termination of employment.

Company 3: Although there was a wide sharing scope in strategy formulation derived from the initial leadership style, which results in all company levels taking pride in the implementation of the company’s strategy, the accountability for performance was clearly lacking as any negative results does not affect a certain person/group. Luckily, until the time of this research, strategy formulation and implementation did work for this company in good faith. However, total accountability rules for deficiencies or failures are not clear due to the dominant personalized influence between the leadership and subordinates at all levels.

5.1.3 ANSWER TO THE QUESTION ON INTEGRATION

Q1C. How was the leadership style related –through strategy formulation and implementation- to the company’s performance results?

In answer to Q1D, the following were our findings:

Company 1: As we measured the performance results of this company, a clear drop in sales, market share, and therefore profitability was detected. The legitimate power practiced over subordinates resulted in loss of motivation, loyalty and high turnover. Sources of literature reviewed and personal knowledge also revealed deteriorating relationship with international suppliers which threatened loss of this agency altogether. This increases future risk of even lower sales and profitability on the long term.

Company 2: This company showed similar failing trend to Co1 with a loss of market share, sales and profitability. Quality of manufacturing dropped as competition activity was not taken into consideration which urges customers to seek competitors’ products. This current leadership style caused several senior managers to experience a feeling of depression and a tendency to leave the company which – in the long run – will have an even greater impact on performance. The

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international sales have also begun to be affected as the company started losing the good relationships and credibility previously enjoyed with them in a number of countries ‘like KSA, Jordan, Lebanon and Egypt’.

Company 3: The company enjoys a healthy growth pattern. It is obviously keeping an excellent relation with its suppliers as they share the vision, strategy formulation and implementation. This is apparent in the good growth level and high profitability the company enjoys “approx 20% annually”. Adversely, the company does not show willingness to boost the business growth with a 100% growth –though possible- as the major concern for leadership is to maintain high motivation rather than applying any pressure on subordinates to realize higher growth levels.

5.2 RECOMMENDATIONS

After conducting an in-depth review of the findings stated in paragraph 5.1, it was concluded that our suggested model exists to a low extent in Company 1, partially exists in Company 2 and largely exists in Company 3. This variance holds the main explanation behind fluctuating results and also the failing trend for both Company 1 and Company 2. The large existence of the model elements is also the main reason behind the rising trend of COMPANY 3’s performance results. As our assessment is now clear, we can begin to address our major research question below with our recommendations for this study:

Q1: what can the leader do to optimize his leadership style in order to positively affect his company’s strategy and performance results?

The recommendations we came up with are what we believe to be the most important requirements that would address the opportunities for improvement detected through the findings. Those recommendations have been presented as follows:

1. Incremental Application of Transformational Charismatic Leadership Mix: Leadership of FMCG companies requires a mix of transformational charismatic leadership as suggested by the researcher within this study. Should a leader desire to successfully take over this responsibility, he or she must study previous leadership style prior to instating any re-engineering process within the company. This must be a neutral endeavor aiming at identifying elements of success and elements of failure in the previous performance with the purpose of sustaining and building on success while detecting negative elements and eliminating deficiencies that led to them with the purpose of minimizing its effect on the company performance. This should all be coupled with maintaining the company's identity rather than eliminating its heritage to build ones' own career "i.e. building over success, not creating the leader's own story".

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2. Building a Leader's Depot "Second Line of Leaders": Every successful leader must perform with the company's continued success and growth in mind. In this context, he or she must place a high priority to building a second line of leaders who would be ready to move in and assume responsibility at any position or situation to guarantee high level of performance at all times. This should be possible only via a participative style as suggested by the methodological framework adopted in this research. By virtue of this mix, prospect leaders would be trained -while still under direct supervision of their superiors- to handle various levels of situations by suggesting possible solutions and/or decisions that would be reviewed and corrected –if required- by the leader with full explanation of all the missed elements in order for those prospect leaders to accumulate invaluable experiences that would qualify them for their future assumed tasks. The targeted sector with this recommendation would be mid-level managers by default who –with proven qualification and performance record- would move up in the hierarchy to assume wider scope of responsibility as required. It is critically important here to note that, such an effort would not be successful unless the leader(s) create leadership models through their own idealized influence "Walk the Talk".

3. Instate Periodic Strategy Conventions and Performance Review Meetings: In order to sustain the leadership process at the current level, and with second line leaders as well, a systematic set of strategy conventions must be organized by the company's leadership that would be specified to strategy and follow up of its implementation with a direct link to performance results. Specifically, we suggest the following:

- An Annual Strategy Convention: This would be an annual meeting with all senior managers and their mid-level managers "second line leaders". The purpose of this meeting would be solely formulation of the company's strategy for the coming fiscal year. Performance information would be prepared and presented by mid-level managers, commented on by all, while senior managers would present their proposed strategy and even mid-level managers would be allowed to make contribution as appropriate.

- A Quarterly Review Convention: This would be a quarterly meeting designed in a way that allows all managers to present their performance with a focus on the difficulties they faced during the strategy implementation and link that –as appropriate- to the performance achieved within the review period. This would provide a comprehensive analytical environment that would enrich the implementation process through the year.

- A Weekly Review Meeting: This is a department level meeting that would be compulsory in every department for senior managers to meet with their

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subordinate managers and –closely- follow up on their day to day activities during the previous week, and their intended efforts for the week ahead.

4. Enhance Control and Accountability Systems: Within a mix of transformational charismatic leadership style, every leader must maintain rules of control and accountability to a balanced level. Internal policies and procedures must be carefully restudied to address internal issues affecting performance such as employees' motivation, turnover rates, and the company's ability to attract qualified personnel. This would cover all the internal systems without exception. At the same time, accountability systems must be carefully designed to bench-mark the company's performance against external indicators such as the company's market share, sales volume, profit volume and its share price, taking into consideration the influence of external forces in order to apply fair and effective accountability that would sustain the internal efforts earlier referred to with the company's policies and procedures.

5.3 RECOMMENDATIONS RELEVANT TO KUWAIT

This thesis represented an explanatory effort to create an understanding of the level of existence of our proposed CTL model into 3 of the major FMCG companies in Kuwait. Leadership in Kuwait varies from one sector to another and from one company to another within the same sector. Numerous studies (audit reports) show that this sector is growing by the day and since it is directly related to customers' basic needs, the impact of any economic difficulties tends to be much less in companies working in this domain. This opens the door for growth opportunities, but also adds pressure to the sector as more investors turn to it as one of the safest investment venues in existence.

On the other hand, the researcher states that all recommendations stated above, are indeed relevant to Kuwait and would be of great benefit to any company to look into regardless of the company's current and actual situation. Specifically, the following recommendations could be added and considered vitally important to Kuwait:

1. Create and Mandate Leadership Training Programs for Promising Caders amongst Kuwaiti employees in all sectors: With the spread of management schools in Kuwait recently, distinguished and promising students must be enrolled in on the job training in Kuwaiti companies as their main outlet to accumulate experience and enrich the local leadership base. It is therefore that we recommend a mandatory leadership training program imposed by the government on all companies that has a certain number of manpower "300 or more". The reason behind specifying this number is that –normally- a company with 300 employees or more in its organization is of a relatively large size which makes it a suitable ground for practice as such companies would be expected to

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possess full scaled structures and internal systems and policies within which emerging leaders would be able to derive live and valuable experience.

2. Hold a Quarterly Leadership Seminar Sponsored by Ministry of Social Affairs and Labor: As the main source of care for Kuwait manpower, the Ministry of Social Affairs and Labor should designate a quarterly seminar to emphasize the most recent leadership concepts, styles, and theories world wide and host global speakers to participate with their wealth of knowledge in enriching the Kuwaiti cadres' leadership talents.

5.4 FUTURE RESEARCH

At the end of this research, we do state our belief that it was a very beneficial discovery effort which provided a basic image that aimed at assessing the researched companies’ leadership styles through interviews with its leadership members. It is noteworthy to mention that none of the recommendations above would yield measureable results unless leaderships of companies researched would merges opportunities for improvement highlighted in this research within its strategic formulation and implementation. If that endeavor is seriously undertaken, the “before” and “after” performance could be measured for further analysis and sustainment.

During the different stages of this study, the researcher came to realize the tremendous effort needed to thoroughly address a problematic leadership style in adequate detail. Therefore, it is recommended that future research would take on a broader scope in an attempt to cover more ground by possibly looking into some, all, or even more of the topics suggested below.

• Conduct an in-depth qualitative study on FMCG companies to identify whether the company would be in continuous need to the entrepreneurial leader at all stages of the company's life, or only at the initial and good will building stage that could be sustained by only managers.

• Study the conflict between leadership styles whether consecutive "A leader taking over another" or concurrent "A top leader delegating to a subordinate leader" and its effect on the internal elements such as employee motivation, strategy formulation or external elements such as the company profitability or its entire existence.

• Conduct a cross country study in Middle East and North Africa (MENA) region and in Gulf Cooperation Council (GCC) regions to identify whether the proposed leadership style in this study will prove to be the most appropriate to them as well, or whether cultural elements specific to each region would necessitate a different approach.

• Administer a full scale survey within the researched companies to discover the effect of individual leadership style on the lower levels of subordinates' motivation and productivity and whether changes that formulate as the rising leader assumes greater

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responsibilities have negative/positive effect on immediate followers and front line employees.

REFERENCE LIST

1. Changing Minds, (2009) 'Miscellaneous Articles on Leadership Theories and Leadership Styles, Available at: http://www.Changingminds.org (Accessed: Feb-May 2009)).

2. Covey, Stephen (2007). 'Developing Leaders': Training: Vol. 44, Issue 2, PP 22-24

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APPENDICES

APPENDIX A – INTERVIEW GUIDE

Each interview was conducted in the following sequence:

Part 1: Introduction (Maximum 5 minutes)

Explain the purpose of the research

Part 2: Interview questions and taking notes (Average 60 minutes per interview) the list of questions is stated here below:

Questions on Charismatic Leadership Qualities:

Shared Vision and Values:

1) How are the company’s vision, mission and values formulated and how are they transferred to subordinates?

Shared Identity:

2) How is the company’s identity reflected in its organizational structure, its organizational culture and its decision making process?

Exhibition of Desired Behaviors:

3) How important is the application of the code of ethics in your company and how is it instated within your employees?

Reflection of Strength:

4) What are the most important values, elements of competitiveness edge and competencies you are keen to be known of?

Questions on Transformational Leadership Roles:

Inspirational Motivation:

5) What are the motivational tools utilized in your company to stimulate employees for increased productivity?

Intellectual Stimulation:

6) In your opinion, how much innovation and creativity can the company absorb and how is that formulated within your policies?

Idealized Influence:

7) How are employees’ competencies and skill set evaluated in your company?

Individualized Consideration:

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8) What are the available venues in your company for gathering employees’ feedback and how is input from those venues analyzed?

General Questions

9) How do you evaluate the company’s leadership style in terms of its effect on the company’s strategy and its performance?

10) What are the things related to leadership issues that could be done to improve the company’s success?

Part 3: Conclusion (3 – 4 minutes) where the following took place:

The researcher asked the interviewee whether there was anything he would like to add.

The researcher acknowledged the interviewee’s participation and extended his appreciation for the time offered for the interview.