Leadership is an ever-changing concept that evolves in accordance with social, cultural, and market changes and trends. For this reason, each historical period is associated with its own understanding of qualities that every excellent leader should posses. The Leader Mindset Profile model captures this constantly evolving nature of leadership and offers a categorization of leadership styles that are defined by environmental contexts and strategic business goals.
The model comprises seven Leader Mindset systems, ranging from the Basic Existence Era to the Complexity Era, and reflects disparate values and features associated with each of these evolutional periods. The Leader Mindset Profile will be applied in the present paper to critically evaluate the changes that occurred in leadership approaches within Omani oil and gas sector and Oman Oil Refineries and Petrochemical Industries Company (ORPIC). Within this theoretical framework, it will be shown how organizational leaders adapt to environmental changes in order to sustain business and increase competitiveness and what they yet need to do to achieve better management outcomes and mitigate risks.
Leadership Value Systems and Structures
Company Analysis
ORPIC is a state-owned company that operates across the hydrocarbon chain and provides high-quality refining services. The enterprise plays a vital role in the Omani economy as the main provider of fuel in the country. Its vision is as follows: “to become a competitive enterprise and a model for industrial excellence with a proficient workforce” (Oman Refineries and Petrochemicals Company LLC n.d., para. 4).
Along with this, a recent research by Khan and Al Mamari (2016) reveals that ORPIC also aims to contribute to the welfare of the local community and the nation by performing a wide range of corporate social responsibility (CSR) practices, including social infrastructure development, environmental protection, provision of support to art and culture activities, and so forth. These internal characteristics largely define the leadership approach implemented by managers in ORPIC.
The mentioned internal factors, such as the company’s ownership structure and an orientation towards increased competitiveness and excellence, are closely linked to distinct leadership systems. Since over 70% of the company shares are owned by the Government of Oman (Oman Refineries and Petrochemicals Company LLC n.d.), ORPIC has a hierarchical and formalised management structure.
It is possible to say that the main features associated with this internal factor are respect for authority and strict compliance with professional and moral standards (Leadership Mindsets 3 and 4). As for the strategic importance of ORPIC in the country, it provides ORPIC managers and their subordinates with a well-developed sense of purpose and responsibility (Leadership Mindset 4). Moreover, it is clear from the company’s vision that it values innovation and technology and is goal-oriented (Leadership Mindset 5), while its current investments in the development of human capital indicate that ORPIC aims to promote a sense of community and strengthen human bonds (Leadership Mindsets 2 and 6).
Overall, it is possible to say that the enterprise pursues its own interests and, at the same time, attempts to avoid harms to others and respond to environmental changes and demands during these pursuits. The latter observation demonstrates that ORPIC also shows some characteristics of Leadership Mindset 7. Table 1 summarises the seven structures and systems present in the organisation:
Table 1: ORPIC’s Leader Mindset Profile Map.
Impacts of Identified Leadership Value Systems and Structures on Stakeholders
The scoring results presented in Table 1 reveal that Leadership Mindset 4 is dominant in ORPIC. According to Dawlabani (2014), the fourth-level value system is order-driven, and organisations that have it are “hierarchical and rigid, with sharp lines between ranks” (p. 10). Leaders in this system are moralistic and value those employees who are loyal to the company and show productive behaviours, contributing to the firm’s success (Dawlabani 2014).
For instance, individuals who work more extended hours and are more efficient in performing certain job-related tasks have a greater chance to be rewarded. Career growth opportunities are utilised as one of the primary motivation tools in companies with the Professional Leader Mindset (Dawlabani 2014). In this way, leaders who adhere to this system values become able to align individual needs with the organisational ones and regulate employee behaviours better.
Notably, Leadership Mindset 4 can be explained by using the principles of Frederick W. Taylor’s Scientific Management Theory. Taylor ranked cooperation higher than individualism and saw it as the best way to increase production output and quality (Ferraro 2013). Cooperation implies the consideration of employees’ needs, including a comfortable work environment and fair compensation (Ferraro 2013). Work flexibility is considered to be one of the keys to greater employee motivation as well (Ferraro 2013).
However, ORPIC managers often strictly insist on following their ways and orders and limit workers’ autonomy and expression of opinions regarding leaders’ ideas. This feature is more associated with Leadership Mindset 3, which is more egocentric and exploitive. Although it is possible to achieve production efficiency by implementing such an approach, work in the environment where managers strive to maintain ultimate power often exposes employees to excess stress and instils the fear of punishment, which may lead to counterproductive outcomes instead as it entails reduced job satisfaction and lack of motivation.
Points of Differentiation
Power relationships in other Omani companies working with natural resources resemble those realised in ORPIC and, therefore, it is valid to say that in many of them, leaders also share Mindset 3 and 4 characteristics. For instance, Oman Gas Company that is specialised in natural gas transportation is fully owned by the Government of the Sultanate of Oman and has a hierarchical structure.
Additionally, it pursues excellence, efficiency, quality, and innovation similarly to ORPIC (Oman Gas Company 2018), which means that these enterprises have the same Leader Mindset 5 features: strategic thinking, extensive use of technology, and competitiveness (Dawlabani 2014). Based on this, the primary difference of ORPIC compared to other players in the domestic market is in the implementation of values pertaining to Leader Mindsets 5, 6, and 7.
The findings of the analysis of ten distinct enterprises operating in Sohar Port conducted by Khan and Al Mamari (2016) make it clear that ORPIC is the most dedicated to philanthropy, community service, enhancement of employee welfare, and promotion of religious conduct. This evidence indicates that the company exercises some humanitarian and systemic system values, including equal distribution of resources and recognition of diversity and natural systems (Dawlabani 2014).
Considering that in the present-day environment, stakeholders are becoming more and more aware of corporations’ influences on local and global communities, as well as firms’ roles in the promotion or deterioration of community welfare and ecological sustainability, they commence demanding greater transparency and fair treatment from organisational leaders and managers. For this reason, although ORPIC’s adherence to CSR and demonstration of holistic and humanistic practices is still rather limited, it becomes a positive point of differentiation. CSR initiatives help the company meet stakeholder interest better and develop a positive corporate image in this way.
Sector Analysis
Omani Oil and Gas Sector
The oil and gas sector started to develop rapidly in Oman in the late 1960s. At that time, natural resources were actively exploited to develop and enhance the country’s infrastructure, including various public institutions, roads, and so forth (International Trade Administration [ITA] 2018). While initially, the major focus in the industry was on the volume of outputs, nowadays, oil and gas enterprises strive to improve efficiency in response to lower oil prices (ITA 2018).
The best way to achieve this objective is through the application of advanced technologies and the hiring of a skilled workforce. In this way, at the current developmental stage, Omani sector requires the realisation of Leadership Mindset 5 system because the society believes in prosperity through “strategic thinking, technology, and competitiveness” (Dawlabani 2014, p. 11). An increased rate of investment in renewable sources of energy, as well as an emphasis on the improvement of operational efficiency and sustainability within the refinery sub-sector in which ORPIC operates (Alsaidi & Mo 2014), is in line with the fifth leadership value system as well. Through these endeavours, oil and gas enterprises mainly strive to win the competition and, at the same time, enhance the overall living conditions.
It is important to note that Oman has recently launched the In-Country Value (ICV) scheme across various sectors, including the oil and gas industry. The main objectives of the ICV are to maximise local investments and to develop and recruit local talents (Khan & Al Shezavi 2018). The given initiative allows shifting from individualistic systems and helps to strengthen the human capital by inviting various organisations to be more sensitive to stakeholders’ interests and needs and contribute to the improvement of community through networking, collaboration, and so forth. Therefore, it is valid to assert that a shift towards Leadership Mindset 6 is currently observed.
Global Oil and Gas Sector
The oil and gas sectors in distinct countries are evolving in accordance with the same trends as discussed above in the analysis of the Omani sector. However, since the modern global industry started developing before the first oil deposits were discovered and commercialised in Oman, it is possible to see how changes that took place over time in other states affected the approaches to leadership in various international oil and gas companies.
For instance, when the oil and gas industry just started to emerge in the 19th century in the United States (Hassan 2013), a lot of small firms producing and refining the resource were mainly concerned with the maintenance of their basic existence (Leadership Mindset 1). The leadership approach became linked to power and superiority, the features of the Industrial Era Leadership Mindset 3, when Rockefeller and Flagler seized control over the industry and monopolised it by creating the Standard Oil enterprise, which also became the first global industry player in 1861 (Hassan 2013). Leadership Mindset 3 dominated the global sector throughout the 20th century as more and more international oil and gas enterprises emerged and aimed to take their market share.
It is possible to say that a slow shift towards Leadership Mindset 4 occurred when a substantial number of exporting states, including Suadi Arabia, Iran, and Iraq, gained sovereignty over their natural resources through the establishment of the Organization of the Petroleum Exporting Countries (OPEC) in 1960. The main purpose of the organisation was and is to help member states to utilise their natural resources, which before were owned by multinational corporations, in order to foster national development (Hassan 2013). In this way, the industry in different countries started to serve some greater purpose beyond just financial gains.
Nevertheless, international oil and gas organisations are still operating in an environment characterised by intense rivalry. Moreover, they are exposed to market changes due to economic instability, social unrests, and demands for sustainable energy sources. Thus, many enterprises strive for excellence by using the latest technologies and implementing CSR strategies. For instance, the US Chevron Corporation, a successor of Standard Oil, realises the Operational Excellence Management System aimed to ensure safety, operational efficiency, stakeholder engagement, and so forth (Chevron Corporation 2018).
Overall, every international company operating in the global oil and gas industry have to increase innovativeness and flexibility and also be human-oriented in order to survive the competition. However, many countries do not have an integrated, nation-wide approach to achieve these goals, whereas Oman and some other states in the Persian Gulf region, such as the United Arab Emirates, have implemented strategies to align human, social, corporate, and national interests throughout a wide range of commercial and public activities. Performance in accordance with the ICV scheme is thus a positive point of differentiation for the Omani oil and gas sector, and it indicates that the country is undergoing a shift towards the Sustainable Leadership Mindset.
Sector Changes and Organisational Transformation
To sum up the findings on sector changes discussed above, it is possible to say that in both global and domestic oil and gas industries, humanitarian values obtain today more significance as companies aim to minimise harmful impacts on the environment and local communities and maximise the positive ones. It is worth noticing that the sector is characterised by a significant level of maturity and experience and such large enterprises as ORPIC have managed to achieve substantial financial success.
According to Dawlabani (2014), at the given developmental stage, organisations commence seeking greater purposes beyond pure capitalism and start to adhere to more egalitarian behaviours, for instance, promotion of equality. The latter is particularly related to the way leader-subordinate interactions are arranged in the firm. Dawlabani (2014) states that successful enterprises with Leadership Mindset 6 have horizontal relationships, foster reciprocal participation in decision-making, and encourage the sense of belonging throughout all organisational levels, as well as a broader community.
It was mentioned previously in the paper that ORPIC is at the forefront of current sector transformations. It adapts to the identified changes and encourages them through a plethora of CSR activities and stong ICV commitment. Employee welfare initiatives deserve special mentioning in this regard because they help to enhance relationships and establish partnerships between community members and the company. ORPIC actively invests in staff development and realises distinct training programs, including Communicate and Innovate Training Programme, as well as annual summer internship aimed to attract and engage emerging, local talents (Khan & Al Mamari 2016).
Nevertheless, other companies working in Omani oil and gas market are as active in community involvement and staff development endeavours as ORPIC. For example, Oman Gas Company has launched youth training programs to develop necessary competencies in young graduates and collaborated with the College of Science – Sultan Qaboos University to foster greater innovation and excellence in students through participation in Inspire Awards (Khan & Al Shezavi 2018).
Oman Gas Company also has leadership training programs that have a purpose of helping employees to improve their management skills and encouraging internal recruitment practices within the enterprise (Khan & Al Shezavi 2018). Overall, these findings indicate that companies’ ties with the community are enhancing as they become engaged in human capital development more.
Nevertheless, it is possible to say that no significant transformations in employee relationship structures and participation in decision-making are observed in ORPIC or other similar Omani companies. Additionally, according to Khan and Al Mamari (2016), the majority of large enterprises operating in Sohar Port have an inadequate employee work-life balance. This may indicate that ORPIC still puts pressure on workers through distinct reward and punishment measures in order to increase production output while not taking into account their personal interests and not aligning them with the organisational ones in a more sound way.
In addition to an increasing need for being more human-oriented, companies face a rising complexity of the general business environment. Complexity implies that relations among distinct external and internal elements in organisational systems are non-linear and may frequently lead to some unexpected and sudden results (Öztürk & Kızılkaya 2014). In accordance with the System Theory proposed by Ludwing Von Bertalanffy, firms should become more open if they want to adapt to environmental shifts easily and should integrate a holistic, “open-ended,” management approach characterised by “detachment, objectivity and control” (Chikere & Nwoka 2015, p. 2).
As such, it is clear from ORPIC’s ongoing strategic and corporate activities that it remains open to the external environment as it responds to current demands and needs and operates as part of larger systems: the society and the nation.
According to Chikere and Nwoka (2015) the number of variables considered by an organization also reveals the extent of it openness, whereas in closed systems such variables as cost and quality are usually regarded as the internal ones or, in other words, as factors “that need to be managed within the boundaries of a firm” (p. 4). In the case of ORPIC, quality and cost are regarded in close association to external influences. For instance, the company’s leaders understand that by investing in supplier relationships and partnerships (Khan & Al Shezavi 2018), they may foster greater cost-effectiveness and increase control over the quality of supplied materials.
Overall, the open system management approach is in line with Leadership Mindset 7 that is “interested in functional large-scale design where ideology and rigidity give way to flexibility and spontaneity” (Dawlabani 2014, p. 12). According to Dawlabani (2014), adherence to this system of values is pivotal as it ensures the healthiest approach to organisational management. It is true to note that ORPIC is relatively successful in adopting a multifunctional and integrated platform as it combines practices and values associated with several leadership mindsets. However, centralised decision-making structure still limits it spontaneity and flexibility. It will be discussed along with other key barriers to better organisational performance in greater detail in the following section.
Challenges and Action Plan
Key Issues
Financial interests are the dominant ones in any for-profit business and, for this reason, many leaders can be preoccupied with their companies’ viability, success, and competitive positions. At the same time, Dawlabani (2014) notes that the fifth-level leadership value system focused on individualism and success and characterised by a limited to no consideration of stakeholder interests poses significant risks to the global economy because it stimulates blind ambitions that frequently lead to surplus capacity in various economic sectors and a glut of goods. Based on this, the further alignment of organisational and stakeholder needs is the number one challenge for ORPIC.
For example, according to Alsaidi and Mo (2014), oil refinery stakeholders are currently demanding enterprises to add more value to products and services through operational sustainability. Thus, it is pivotal for ORPIC to find a quality-driven and technology-driven method that would allow both meeting these needs and increasing the competitiveness of the enterprise in the global market.
The second challenge faced by the company is a need for greater flexibility as it allows coping with growing environment complexity more efficiently. As the degree of ORPIC’s interaction and interdependence with other organisations (such as suppliers and various public entities) increases, it becomes more difficult to predetermine performance outcomes and various risks. However, it is valid to presume that the number of partnerships and networks may only grow in the future as it is one of the primary features of the digital era.
The findings of the study by Koch and Windsperger (2017) verify this assumption by revealing that inter-organisational network structures may serve as a “primary source of competitive advantage” in digitalised business ecosystems associated with “dissolving industry boundaries” and suggesting that many firms will aim to increase their networking capacities (p. 4). In this regard, it is necessary to implement more efficient decision-making models and change the overall corporate culture that would promote the view on ORPIC as merely a part of a whole.
Recommendations
The main barriers on the way to a better performance in ORPIC are the centralised decision making and task-orientedness. To address both of the identified challenges, the company should enable employees at distinct organisational levels to make decisions independently. It may be not feasible to provide complete power and authority to all employees in ORPIC because it contradicts broader Omani cultural values, which are conservative in nature. However, a flatter decision-making structure can still be created.
In his study, Bashir (2015) draws an example of Honey Well that moved from strict hierarchy to team-based decision-making and, as a result, became able to increase profitability and establish closer relationships with its customers. This observation is consistent with evidence provided by Chikere and Nwoka (2015) who state that centralised decision-making decreases employees’ responsiveness to situations because they are expected to comply with standards and policies. At the same time, it is valid to say that sometimes lower level managers and employees can be more aware of certain problems with which they deal on a daily basis than higher-level managers. Therefore, their involvement in decision-making and provision of greater autonomy to them can be beneficial in terms of quality and productivity improvement.
Secondly, it may be recommended for ORPIC to become more human-oriented than task- and competition-oriented. It was observed that currently the company realises many CSR initiatives. Nevertheless, Dawlabani (2014) states that many communal values associated with Leadership Mindset 7, including recognition of diversity, demonstration of interest in sustainability, and so forth, are repressed in the modern-day firms “because of the political correctness” and a desire not to offend “certain sensitivities” (p. 12).
Additionally, it can be said that CSR practices are often and mainly utilised as a measure to achieve success and win the competition. At the same time, a substantial shift towards Leader Mindset 7 will be possible only with the creation of an appropriate organisational culture. According to Chikere and Nwoka (2015), culture as an abstract system allows regulating individuals’ behaviours needed to create particular outputs through the development of causes or values (inputs). For example, ORPIC leaders may adopt a vision of the enterprise as part of increasingly larger systems: the oil and gas industry, the local society, and, consequently, the global economy.
The interconnectedness among these systems should be emphasised, and appropriate values should be created to increase favourable contributions of employees and the company as a whole to those larger systems. Notably, these values should reflect stakeholder demands and interests, such as transparency, equality, environmental sustainability, and others. Only by creating a holistic, open-system picture and developing an internal environment that would allow each employee to act consistently with identified values, will ORPIC be able to succeed in the Complexity Era.
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