Organisational Leadership in Bank Dhofar - Essay Example

Leadership Analysis of Organisational Leadership Introduction Background of Bank Dhofar Bank Dhofar is established in Oman andis a publicly listed company. The bank offers financial services including banking, securities brokers and traders, asset management and investment banking. The vision of Bank Dhofar is to be the best bank in the Gulf. The CEO of the ban argues that at Bank Dhofar, they strive to be the best by making banking easy for all customers. Currently, Bank Dhofar is controlling a nationwide network of branches, Automated Teller Machines, and 52 CDMs in the Sultanate. According to the bank’s marketing manager, having 67 branches, 142 ATMs, and 52 CDMs by end of 2014 was such a great achievement. Bank Dhofar is one of the financial services firms growing at unprecedented rates in the Sultanate. The management team is proud of the quality of the services the bank offers. Project finance services, consumer banking, treasury services, and corporate banking are designed to satisfy the diverse needs of consumers, small and medium size businesses, and medium-size companies across the Sultanate. The history of incorporation of Bank Dhofar traces back to January 1990. By then, the bank was referred to as Bank Dhofar al Oman al Fransi. There were only two branches at Salaash and Muscat. During this time, Oman was still an absolute monarchy characterised by widespread autocracy. Bank Dhofar extended its network in 1992 by acquiring Bank of Credit and Commerce International from the Central Bank of Oman. The year 1999 saw the bank inaugurating the head office in the Commercial Business District. More improvements were witnessed when the bank purchased 16 commercial bank branches in 2000, mergered with Majan International Bank in 2002, obtained all regulatory and administrative approvals in 2003, and launched Maisarah Islamic Banking Services in 2013. Presently, Bank Dhofar is the second largest bank in Oman based on the market share. The bank has changed leadership styles over time to keep pace with the market dynamisms. The reputation concerning strong commitment to consistency and growth has helped boost the popularity of Bank Dhofar as financial institution. Managing employees across all branches requires fair, but strict leadership policies in order to avoid laxity at work and ensure that workers are highly motivated to work towards improved performance. The Leadership Style in Bank Dhofar Bank Dhofar has a vision of maintaining their status as the best bank in the Gulf. The vision will be achieved through delivering the best experiences to the bank’s customers and creating both personal and collective development opportunities for their employees. The bank emphasises the necessity o continually creating value for the community, employees, customers, and shareholders. This explains the reason for Bank Dhofar having revised their leadership styles across time. The bank wants to adopt leadership approaches that have the potential for enabling their vision of creating value for all the stakeholders. According to Gilmore, Hu, Wei, Tetrick, Zaccaro (2013), organisations should emphasise the necessity of good leadership than other aspects of operation because it determines success or failure of the enterprises. Effective leadership that characterise Bank Dhofar has always been the major factor contributing to its successful growth across time and place. The leadership styles in Bank Dhofar can be categorised into two main phases. The first phase started from its establishment in 1990 to the year 1995 when the bank made a merger with Majan Bank. The second phase began after the merger and is applied up to present day. Between the first and second phases, there were dramatic changes in leadership styles caused by demands to lead according to modernisation. Leadership in the First Phase Six different Chief Executive Officers were hired to lead Bank Dhofar between the time of establishment and the year 2005. The performance of the bank was not up to standards in terms employee welfare maintenance and satisfaction of customer needs (Ganguly, 2012). According to Grant (2012), none of the CEOs who managed the bank during the early years of establishment had excellent leadership qualities. Most of the CEOs applied Oman’s autocracy leadership imitated from the nation’s way of administration. These leaders, according to Gilmore, Hu, Wei, Tetrick and Zaccaro (2013), did not have a proper background of effective leadership and managing particularly in aspects concerning staff motivation, team building and personal development. The common factor among Bank Dhofar CEOs was that they had minimal administration experience. Job rotation was very rare because most of the departmental heads maintained their job positions for more than two decades. Bank Dhofar’s leadership in the first phase can be described as bureaucratic. Whenever an employee wanted to see any departmental head, he or she had to knock more than three doors. Further knocking on doors was necessitated if one wanted to see departmental heads of related issues. The hierarchy system was characterised by classical organisation structure comprising of five management levels. Operations were performed through heavy work, strict routines, and formulations. Flexibility was considered one way of leading to organisational failure. The management team failed to recognise the necessity of flexibility in enabling organisations alter their operations in order to rhyme with the dynamisms of the business environment. The management, during this time, perhaps believed that the cultures of reason and consistency constituted the primary determinants of improved performance. Bank Dhofar, just like any other bureaucratic organisations, used bureaucratic style through issuing of memos and formal letters to transmit information to lower level staff. Between 2000 and 2004, the autocratic leadership in Bank Dhofar took a different route. The management started encouraging some extent of employee participation in management decision making. The lower level staff members started being given opportunities to suggest ideas towards a particular alternative, but the final decision still remained at the discretion of the top management. There was no delegation of duties; if one of the employees left work on annual leave or any other emergency, their work greatly impacted on other employees since no staff would process such tasks until he or she comes back. The management began to recognise the potential for motivation to increase productivity. This is evidenced by rewards that were given to employees at the end of the year in forms of bonuses, promotions and annual increment. However, these rewards were subjected to widespread criticisms since an employee receiving any incentive had to get strong support from one of the executives. Thus, incentives were still not fair and lacked the motivation effect. Other motivational approaches that the bank began to use included recognition letters and sponsored trainings. In the year 2004, the rate of staff turnover reduced by 20%. The company began searching for avenues of new job opportunities. The problems experienced in the company were caused by poor leadership approaches at the bank. Leadership in the Second Phase The second phase of leadership began after the merger of Bank Dhofar and Majan Bank. The merger caused several changes such as the rearrangement of the management team and appointment of a new CEO. When changes occur in any organisation, leadership must be closely scrutinised to ensure that the executive members have the vision of the organisation at heart. A PhD holder was appointed as the CEO of the bank; the new CEO saw the necessity of replacing the heads of departments with new and educated staff. Grant (2012) believes that educated staff members have the necessary skills, knowledge and experience for handling critical tasks into a successful completion. With the current wake of the age knowledge, people who have been schooled understand various leadership styles, where to apply each leadership style, associated theories, merits and demerits of every style of leadership. The newly appointed CEO might have recognised that through education, the new departmental heads have been sharpened to be effective leaders. This is unlike the uneducated leaders who do not recognise the necessity of flexibility to some extent when it becomes necessary. Additionally, the new CEO has a master in Business Administration and has a fourteen years experience in commercial banking. Due to this transformation, the new Bank Dhofar executive management has established new strategies with the aim of rebuilding the internal structure. The objective of this initiative constitutes adding more value to the organisation and recovering employees trust. The company, thus, has adopted a democratic style of leadership concentrating on various aspects of the staff. The democratic leadership style has been linked to various recommendations meant to improve leadership skills and staff productivity. These recommendations are: First, the management shares their vision with all the members of staff. Unlike in the first phase of leadership where the management team owned the bank’s vision, the current situation provides for sharing of vision between the management and junior employees. Khan (2013) asserts that sharing of vision is the most important part of any organisation improvement in performance. When a vision is shared, all members of the organisation realises the necessity of working towards achieving it. The new CEO has reminded the new heads of departments that the vision of Bank Dhofar is to be the best bank in the Gulf. The new departmental heads have designed strategies for ensuring that Bank Dhofar becomes the best bank in the region. Since the year 2005, the bank has made several achievements. Most of these achievements came in the year 2014. For example, Bank Dhofar was awarded the Bank of the Year by Banker. Bank Dhofar received The Sultan Qaboos Award for Excellence in e-Government for the best mobile service in 2014. Additionally, the Global Financial Market Review awarded Bank Dhofar the Best Islamic Community Support Bank and Best Evolved Brand Award of 2014. The new management has indeed shared the vision of the bank with the employees; all of them have assumed a collective responsibility of ensuring Bank Dhofar becomes the best bank in the Gulf. Second, the new CEO focuses on respecting and developing the potential of the employees. The bank no longer treats people like machines as the former team of management used to do. Democracy actually gives employees opportunities to express their views. The organisation cannot discard the views of employees if they are characterised by rationality. Bank Dhofar has pioneered the formation of quality circles with the aim of encouraging contributions of views from employees. The bureaucracies have also been eliminated to enable employees access the executive management without having to knock several doors. Developing of employees involves exposing them to wide sources of knowledge such as seminars, workshops, and conferences. Trainings can also be implemented to equip employees with knowledge, skills and experience. Through these forums, the staff members also get opportunities to interact with the staff of other organisations, thus, further extending the learning experiences. Third, the newly established democratic leadership style in Bank Dhofar emphasises employee motivation. Motivation is the creation of the drives or forces that make employees to work extra harder as they strive to achieve organisational prosperity. Bank Dhofar offers employees various incentives such as employee of the year awards, end of year parties, financial incentives, subsidises employee school fees for advancement degrees, and certificates of performance. When employees are rewarded, they feel recognised and become attached to the company. This makes them feel that they have a responsibility and this responsibility can only be performed by ensuring quality service delivery. In companies were autocracy is the order of the day, motivation remains a simple impossibility since the management team does not see any need to motivate workers. Workers are supposed to receive orders from above and are required to do as they are instructed. Autocratic leaders believe that workers do not have any voice to complain on any aspect of the organisation; hence, whether motivated or not, they have to work and produce results. This is unlike in democratic environments where workers have the right to question various aspects of operation. When they are not motivated, workers may limit productivity; hence, the management team finds it critical to concentrate on motivation. The hierarchical organisational structure that existed in Bank Dhofar has been replaced by a new flat system. Currently, there is no need of knocking too many doors to see any executive. The new management has established an open office plan where all members of the management are accessible in one office. To maintain the flow of work when an officer is absent, the new management allows for delegation of duties. The establishment of a high quality performance department has furthered democracy in Bank Dhofar since it has opened doors for more employees to contribute to decisions made by the strategic management. The high quality department reviews service processes and has motivating incentives at the end of financial year. Theoretical Exploration of Democratic Leadership Style The modern business arena is characterized by widespread dynamisms in demographics. Changes in demographics make leadership an aspect of critical necessity because the war of talents is getting harder than ever before. Most people are getting educated on matters related to leadership. This has made it necessary for leaders to change their styles and adopt leadership approaches that are effective in meeting the objectives of organizations. According to Kwak (2012), the best leadership makes companies realize their objectives in addition to changing faces of organizations. This implies that managers have the responsibility of selecting the best possible leadership style from the many available and ensure that they live up to the requirements of such leadership style in order to enhance organisational performance. The democratic leadership style is characterised by openness and collectivism. All members of the organisation are allowed to join in the discussions leading to making decisions that can affect the operations of a business enterprise. Democratic firms encourage all members to attend managerial decision-making meetings and give each of them opportunities to contribute their views and ideas. Sometimes, openness is enhanced through formation of quality circles and teams where all employees have chances of speaking unlike large meetings that are usually dominated by executives. The spirit of collectivism that characterise democratic organisations ensures that each member of the organisation has a seat at the table where various decisions are made. The officials ensure that discussions are relatively free-flowing throughout the discussion meeting. Although some employees may not be willing to speak out their ideas in meetings, at least a good number of workers would have given out their ideas, which could be similar to those who failed to get chances of speaking. Kwak (2012) describes democratic leadership as a style of leadership that involves the leader allowing participation of subordinates in the process of decision making. However, the final decision usually involves the leader facilitating a consensus in the group. The responsibility of the leader is to listen to the team’s ideas and consider them in making the final decision. Ganguly (2012) argues that there is contribution of the team members in the final decision made, thus, creating a sense of ownership as well as satisfaction. The team gets clear understanding of the changes, increasing their willingness to integrate into the changes proposed. By providing for employee involvement in management decision-making, there is minimized intolerance and resistance to change. Lian, Brown, Tanzer & Che (2011) emphasise the necessity of democratic leadership in the contemporary dynamic and complex organisations. Modern organisations are usually subjected to rapid transformations across time and place. The management teams have completely shunned rigidity and launched widespread flexibility. Only little aspects of operation can be taken as constant due to the need to maintain consistency. According to Schyns & Schilling (2011), every option for improvement must be taken into consideration in fast moving organisations. The reason for this is to prevent organisations from falling obsolete. The primary aims of adopting democratic leadership style are to facilitate conversations, encourage people to share ideas, and synthesise all available information into the best possible decision. The ability to communicate the decision made back to the group remains the core role of the democratic leader. Communicating the decision back to the group enhances the relevance of the decision and brings unity to all employees as they embark on the implementation stage. Situations where Democratic Leadership Theory is Applicable First, democratic leadership is suitable in situations featuring frequent changes. Most modern organisations do not want to lag behind in the path of organisational improvement. Organisations focusing on rapid growth must permit frequent organisational changes in their structures. These changes cannot be possible in organisations using autocracy as the leadership style. Autocracy is highly bureaucratic and requires widespread rigidity. Democratic leadership offers a great deal of flexibility that enables organisations to adapt to new ways of doing things (Schyns & Schilling, 2011). Although democratic leadership may limit the speed the speed of decision-making, it may allow organisations to embrace new and better ways of doing things with the aim of increasing the speed of performing tasks. Democratic leadership style is the most appropriate approach in organisations that have exceptionally experienced and professional teams. The management team must comprise of people who have experience in various aspects of organisational operation. This is the reason why the qualification requirements for executive members of the organisation are demanding. For example, the CEO of companies is required to have at least a Masters Degree in business related fields. Organisations also emphasise the necessity of employing technicians who have undergone relevant training in their fields. For example, engineers must have formal training in the engineering field, accountants must have formal training as accountants, and database managers must be IT experts. Laissez-faire organisations require even more trained and specialised employees because employees are left to do what they want in their own ways (Schyns & Schilling, 2011). The reason for democratic organisations requiring this kind of training is to capitalise on the skills and talents of employees. This is achieved by letting them to share their views instead of simply expecting them to conform to the company’s guidelines. In most organisations, operational level employees do not have any relevant formal training on specific jobs. Due to their lack of specialisation, low level employees are not given the full discretion of deciding ideas that should be implemented. Khan (2013) argues that principles of democracy are effectively suitable in situations requiring making complex and broad decisions. Complex decisions require the input of the staff from various departments. According to the principles of total quality management, all functional units of the organisation must integrate their efforts if they want to realise quality. Functional units of an organisation include operations, accounting, marketing, production, research and development, and customer service. A complex and broad decision touches on several departments; therefore, all heads of the affected departments have rights and duties of arguing for or against the implementation of decisions based on implications on their departments. Thus, a democratic leader shines when he or she allows participation of different areas of expertise to represent and contribute towards making a complex and broad decision. Strengths of Democratic Leadership Democratic leadership enhances workers’ satisfaction in their jobs. Job satisfaction constitutes employees’ attitudinal responses to their jobs. ....() notes that job satisfaction comprises of cognitive, affective, and behavioural components. Workers become satisfied with their jobs when implementing tasks that they have contributed towards making decisions for performing them. In bureaucratic leadership style, workers are forced to implement decisions that they did not participate in arriving at them. This kills their morale, making them completely dissatisfied with their organisations and jobs. Democratic leaders recognise that some decisions have implications on particular workers. Therefore, these leaders strive to strike a balance between the implication of ideas on workers and organisational interests. Even consulting subordinate staff to participate in making decisions makes them feel recognised, hence satisfied. Democratic leadership increases productivity in organisations. Increased in productivity is brought about by workers striving to produce more in terms of quality and quantity (Khan, 2013). Democratic leadership creates awareness among workers concerning the happenings in the organisation. This awareness makes workers to take interest in producing more products since they understand all the critical factors of the organisation. Another advantage of democratic leadership is that it gives subordinates full opportunity for utilizing their capabilities. Democracy in organisational leadership is all about affording workers opportunities to utilise their potentialities. Grant (2012) believes that even the most uneducated employee can give a suggestion that can save a business a great deal of failure. Different workers have different talents and capabilities even at the same capacities. It is critical for organisations to consider the fact that even the cleaners have ideas to contribute towards decisions made since they are either directly or indirectly affected by management decisions. The process of democratic leadership encourages organisational members to share thoughts. Because of this, democratic leadership leads to better ideas and more creative solutions to problems. Group members feel more involved and committed to projects (Grant, 2012). This implies that the employees have more possibilities of caring about the end results of projects. However, leaders should be careful and avoid allowing excessive freedom since it may undermine productivity if employees are not exceptionally qualified. Shortcomings of Democratic Leadership Although democratic leadership is associated with several advantages, there are some instances where it can be disadvantageous unless leaders are careful when applying principles of democracy. Power is not centralised in democratic organisations. Lack of centralisation is detrimental to organisations since accountability and responsibility are not well defined in such contexts. Centralisation of power occurs when decision-making is kept firmly kept to the top management. These contexts are similar to autocracy since the top management makes decisions and operation-level employees are required to implement them. Centralisation is critical in fast-moving enterprises such as McDonalds, Burger King and Pizza hut. These enterprises require strict control if employees have to perform. Businesses with several outlets require some extent of power centralisation in order to avoid confusions arising from inability to work under directive from one source. The primary reason why centralisation is necessary is the need for these enterprises to maintain consistency of customer experience and quality across all locations and branches. Decentralisation occurs when decision-making is spread out to include more subordinates in the hierarchy and individual business units and trading locations. Major supermarkets such as WM Morrison, Asda UK and Tesco use decentralisation since each supermarket have a store manager who is responsible for decisions concerning such a branch. Democratic organisations are characterised by delayed decision-making processes. Decisions must go through a process and each member of the organisation must agree to such decision. Different stakeholders have diverse interests in the organisation. People, therefore, widely differ in viewpoints and opinions. Trying to establish a point of equilibrium for all the opinions requires a lot of explanations, which may be time-consuming. This implies that democratic leadership is not applicable when it is necessary to make emergency decisions. During emergency cases, leaders resort to autocracy to make decisions and such decisions must be implemented without question. This is why Grant (2012) argues that there is no organisation that is purely autocratic or purely democratic. Situational approach to leadership is usually applied under such circumstances. Benchmarking Bank Dhofar’s Best Practice Recommendations for Effective Implementation of the Theory1 Reflection of Own Leadership6 Conclusion0.5 References Gilmore, P. L., Hu, X., Wei, F., Tetrick, L. E., & Zaccaro, S. J. (2013). Positive affectivity neutralizes transformational leaderships influence on creative performance and organizational citizenship behaviors. Journal of Organizational Behavior, 34(8), 1061-1075. Grant, A. M. (2012). Leading with meaning: Beneficiary contact, prosocial impact, and the performance effects of transformational leadership. Academy of Management Journal, 55(2), 458-476. Khan, R. N. (2013) Leadership styles and Organizational Citizenship Behavior in Small and Medium Scale Firms. Journal of Arts, Science and Commerce, (4)2, 144-158. Kwak, J.W. (2012). Charismatic Leadership Influence on Empowered and Less Empowered Followers’ Voice: A Mediated Moderation Model. Journal of Leadership, Accountability and Ethics, (9) 1, 56-70. Lian, H., Brown, D. J., Tanzer, N. K., & Che, H. (2011). Distal charismatic leadership and follower effects: An examination of Conger and Kanungo’s conceptualization of charisma in China. Leadership, 7(3), 251-273. Schyns, B., & Schilling, J. (2011). Implicit leadership theories: Think leader, think effective? Journal of Management Inquiry, 20(2), 141-150. Ganguly, K. (2012). Transactional and Transformational leadership: Development through changes. International Journal for Quality Research, (6)3, 285-296. Read More