Far East Journal of Marketing and Management Vol. 1 No.

1 December 2011
54

The impact of Islamic leadership on organizational Objectives

Yasir Majeed
Ms Scholar, University of Lahore Islamabad Campus, Pakistan

Zulqarnain Khalid
Ms Scholar, University of Lahore Islamabad Campus, Pakistan

Dr. Muhamamd Aslam Khan
Associate Professor, Preston University Islamabad, Pakistan
Email: aslamnuml@yahoo.com

ABSTRACT

It is our pleasure to present this research on Islamic leadership on organization performance,
which has been conducted in an attempt to develop standards for organization. During
preparation of this report, consideration is given to showing basic principles of Islamic
leadership and its impact on organizational performance. Shariah advisors and their relationship
with the value addition of the organization is also discussed. To conclude that Islamic leadership
is good or bad for our society according to Shariah. Islamic leadership with the help of
consultation, Justice, honesty and trust it has impact on the organizations performance in term off
achieving goals.
Key words: Islam and leadership (Alshura) principle of consultation, (al Adl) justice, Trust (al
Amanah), honesty (al Sidq), employee performance, value addition, organizations goals.
Paper Type: Research Paper

INTRODUCTION
The need of Islamic leadership is the main role in our society. In our society the people dont
know about the Islamic leadership. In the paper we will try to create awareness about the Islamic
leadership and find the impact of Islamic leadership on organizations performance. Like the
main concept of Islamic leadership is to lead to achieve and compete to be ahead of others to
seek the measure of ALLAH and success hereafter. So we will try to find this concept and its
impact and methodology on organizations performance.

The potential relation between religion beliefs, management practices and organizational output
has been merely ignored in the mainstream of management research.

PROBLEM STATEMENT
The main problem is to study the impact of Islamic Leadership on Organizational
Objectives/benefits in various organizations operating in different sectors of Pakistan.

RESEARCH OBJECTIVE
The main aim of our research is to investigate and study the knowledge management and
strategies of Islamic leadership. The following are the specific objectives of my research:
To find out the importance of Islamic leadership in our society.
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Investigate the leadership system is according to shariah or deviating from shariah rules.
Identify the association of leadership with prophet.
Investigate the system based on truth.
To conclude that Islamic leadership is good or bad for our society according to shariah.
SIGNIFICANCE OF THE STUDY
This study is important in a way that it has created awareness about the Islamic leadership and its
influence in the organizational objectives. This will create awareness that how the concept of
Islamic HRM implement in the organization and on what basics. It has covers historic detail
about the Islamic leadership.
LITERATURE REVIEW
The relationship between religion, management practices and organizational outcomes has been
ignored in the major management research. The fact is that here 80 per cent of people in all over
the world report that religion constitutes an important part of their daily life (Sedikides, 2010).
A lot of the research in business and management has considered organizations as a religion
neutral sphere, and as a result religion was not deemed worthy of study.

Leadership is a quality to explain a way to lead to a straight or to influence the actions of others.
(Majali, 1990).it is very important for a leader to respect al the processes within the organization.
The responsibility for a leader is to transform the values and ethics (Hamilton and Bean, 2005).
All the members of any organization are very influenced by the leaders of an organization. They
must be the role models for the whole organization and show happiness in every way of life
(Abbassi, Rehman and Afsar, 2009).

Leadership development is one of the important subjects in Islamic teachings. Anas (R.A.A), a
companion of the Prophet (PBUH), said that he worked for the Prophet (PBUH) for twenty years
and that the Prophet (PBUH) never asked him why he did what he did nor did he ask him to do
things that he did not do (Jabnoun, 1994). Following are some of the key attributes for effective
leadership from an Islamic perspective.

Principle of consultation (Alshura)
Islam has set a decision-making approach (Alshura) that can be applied in different forums and
stands. Since the inauguration of Islam, a consultative approach was applied when important
decisions were made. In theory, under the shadow of Alshura, Leaders cannot convey the
decision until extensive discussions have been given appropriate time, and until consultation is
provided.
In Islam Alshura means participation in the form of consultation in discussions leading to the
making of decision.

For IbnAlarabi (1957) Alshura in Islam is discussing about an issue so to allow each member in
the participation to consult others so as to draw out the general ideas on the issues.
Albadawi (1994) take it as the introduction of a particular matter to members and specialists to
keep an eye open on the matter until the correct decision is elaborated and made clear.

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Collective decision making contracts in the presence of holy revelations (Atfiysh, 1985). This is
helped by a verse (165) in Surat Alanaam It is he who hath made you his agents inheritors of
the earth, he hath raised you in ranks, some above others; that he may try you in the gifts he hath
given you: for thy lord is quick in punishment, yet he is indeed forgiving, most merciful.

According to Rida (in Alkhalili, 2000) this limitation remained during the first battle in Islam,
Badar. Prophet Mohammed ordered Muslim warriors to settle in the lowest part of the land. A
group of Muslims went to him and questioned whether he has chosen the place due to a
revelation or instruction from Allah or merely an idea which he has chosen due to the
circumstances. One Muslim went to the holy prophet and said to him that this place is not safe
according to the war point of view then after consultation with all Muslims prophet ordered them
to settle on other land.
Justice (Al-Adl)
Organization research over Justice (Al-Adl) in the previous four decades has shadowed the
importance of perceptions of justice for work behavior and motivation (Loi et al., 2006;
Colquitte et al., 2001).

The term justice in organization perspective narrates that the role of fairness as it is directly
related to the workplace. The leaders in the organizational justice is especially concerned with
the process in which employees determine either they have been treated fairly in their jobs and
the process in which those determinations cast effect on other work-related activities (Moorman,
1991).

Greenberg (1993) categorized the area of organization justice under two dimensions. The first
dimension is the classical differentiation of justice in which focused either on procedures or
outcomes. The second dimension discuss about the focal determinant (either structural or
interpersonal). Hassan (2002) reported same findings in Malaysia. Procedural justice was
considered as an important determinant of employees attitudinal and behavioral outcomes,
namely, satisfaction, commitment, and turnover intentions.

Trust (Al Amanah)
Everyone who has an post of leadership must have the public trust following verse of al Quran
explain that Islamic system motivates every member of the organization in general and
leadership in particular to be a trustworthy person (Alhabshi et al., 1994). Allah doth command
you to render back your Trusts to those to whom they are due; and when ye judge between man
and man, that ye judge with justice: : verily how excellent is the teaching which He giveth you!
For Allah is He Who heareth and seeth all things. (Al - Quran 4:58)

In Hadith Prophet Muhammad (PBUH) narrated that One of the signs of relying on ones own
deeds is the loss of hope when a downfall occurs. Al the Hikam of Ibn Ataillah, chapter 1, 1.
And another occasion said:
Among the signs of success at the end is the turning to Allah at the beginning. Al the Hikam of
Ibn Ataillah, chapter 2, 26

Honesty (Al Sidq)
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It is very surprising that every man is the creature of ALLAH in this world and faces the
predicament of value crisis. Other creations are obeying their natural values. No one of them is
behaving among their own species as human beings are behaving among themselves. The
category of animal other than human beings cannot find any fraud, lie, dishonesty, corruption etc
(Modudi, 2003).

Our Great prophet Muhammad (PBUH) said about honesty that An adulterer will not commit
adultery when he has full faith (in Allah), and a thief will not steal when he has full faith (in
Allah).

I bn-e-Majah

Only for Allah loves those who are really very fair (and just). (Al-Hujurat: 9) Justice is the key
point in managing people; it is the duty of a leader to guarantee justice across the organization.
Rawls (1971) affirm that the justice is the main virtue to control the whole organization. Once
justice is insure, every member of organization will be in comfort and reliance, because he or she
has knowledge that the leadership has quality to look the interest without any biasness. This
sooner or later brings motivation across organization and every member of the organization will
work with full commitment towards objectives.

The principle of consultation (al shura), Honesty (al Sidq) Trust (al Amanah) and justice (Al
Adl) are the main elements for a great leadership role in an organization. With the help and
influence of these qualities within an organization the performance and Goals will be achieved in
terms of employee performance and there comfort for commitment.
MODEL:
The model of the paper is as follow:









The Hypothesis on the basis of model is below:
H1: Principle of consultation (al shura) has a great influence on organization performance.
H2: Justice (al Adl) has an impact on the organization value addition.
Organization
performance
Islamic
Leadership

Consultation (al shura)
Justice (al Adl)
Trust (al Amanah
Honesty (al Sidq)

Employee Performance
Value addition

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58

H3: Trust (al amah) is the man key element for the achievement of organization Goals.
H4: Honesty (al Sidq) has significant impact on organization objectives.

METHODOLOGY:
Our study type is based on questionnaire. How the organizations use the Islamic concept in their
practices. We have gather data from different websites, Islamic financial books and other sources
like by using questionnaires from bank managers and shariah advisors and employees of the
Meezan Bank, Bank Islami and Pak Qatar Takaful.

Each question leads to other in such a way that feedback can easily be obtained. The
questionnaire is available in the paper. The sample from population is 120 and collection is
95.the data is taken from Rawalpindi and Islamabad. In the statistical analysis we use the
regression analysis for checking the relationship and impact between the variables. For this we
have use the SPSS tool linear regression and correlation between them.

ANALYSIS AND INTERPRETATION:
REGRESSION /MISSING LISTWISE /STATISTICS COEFF OUTS R ANOVA
/CRITERIA= PIN (.05) POUT(.10) /NOORIGIN /DEPENDENT V11 /METHOD=
ENTER education gender age status city V8.
Regression
Variables Entered/Removed
Model
Variables
Entered
Variables
Removed Method
1 Trust is the
key element
in the
organization.,
age, gender,
city,
education,
status
a

. Enter
a. All requested variables entered.


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Model Summary
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .82
a
.6724 .526 .372

a. Predictors: (Constant), Trust is the key element in
the organization., age, gender, city, education,
status
b. The correlation between observed values and
estimated values in the regression model is .82
which is strong correlation among the observations
of Dependent variable and the observations of
estimated line/value
c. From the above table R Square is 0.6724, it
indicates that 67% variation explained by the
independent variable like age, gender, city,
education and status in the dependent variable.
ANOVA
Model
Sum of
Squares df Mean Square F Sig.
1 Regression 7.130 6 1.188 2.082 .066
a

Residual 41.670 73 .571
Total 48.800 79

a. Predictors: (Constant), Trust is the key element in the organization., age,
gender, city, education, status
b. The ANOVA analysis indicates that the test is not rejected mean that
variables have no effect on performance of the organization
b. Dependent Variable: Justice improve the efficiency of the organization.
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Coefficients
a

Model
Unstandardized
Coefficients
Standardized
Coefficients
B Std. Error Beta
1 (Constant) 3.180 .426
education .000 .101 -.001
gender -.369 .207 -.201
age -.093 .206 -.059
status .115 .203 .074
city .095 .183 .061
Trust is the key element
in the organization.
.309 .132 .279
a. Dependent Variable: Justice improves the efficiency of the
organization.
b. The y intercept is 3.180, it means that when the effect of all
independent variable is zero or equal to zero then whole changes
will be due to y intercept in the dependent variable
c. Education has zero contribution. gender contributes -.369 which
is negative
d. Age effect is -.093 on dependent variable , status contribute
positive in dependent variable , similarly city contribution also
positive i.e. .095







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Coefficients
'

Model

T Sig.
1 (Constant) 3.434 .001
education -.008 .993
gender -1.779 .079
age -.453 .652
status .569 .571
city .518 .606
Trust is the key element
in the organization.
2.336 .022
a. Dependent Variable: Justice improve the
efficiency of the organization.
Between organizations activities and shura committee:
Variables Entered/Removed
Model
Variables
Entered
Variables
Removed Method
1 in the
organization
activities
honesty plays
major role
. Enter
a. All requested variables entered.
c. Dependent Variable: without shura
committee it is too difficult to manage
everything.




Model Summary
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Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .83
a
.680 .568 .37211
a. Predictors: (Constant), in the organization activities
honesty plays major role.
ANOVA
b

Model
Sum of
Squares df Mean Square F Sig.
1 Regression 8.175 8 2.175 6.882 .010
a

Residual 44.961 72 .536
Total 53.136 80
a. Predictors: (Constant), in the organization activities honesty plays major role.
b. Dependent Variable: without shura committee it is too difficult to manage
everything.
Coefficients
a

Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) 3.592 .396 9.080 .060
in the organization
activities honesty plays
major role.
.241 .092 .283 2.623 .010
a. Dependent Variable: without shura committee it is too difficult to manage everything.

Variables Entered/Removed
Model Variables Entered Variables Removed Method
1 justice is the key determinant of value addition in
organization
s

. Enter
a. All requested variables entered.
b. Dependent Variable: Trust is the key element
in the organization.

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Between justice and trust:
Model Summary

Model R R Square Adjusted R Square
Std. Error of the
Estimate
1 .85
a
.7225 .464 .368
a. Predictors: (Constant), justice is the key determinant of value addition in organization.
b. Strong R which is .85.
ANOVA
b

Model Sum of Squares df Mean Square F Sig.
1 Regression 8.043 1 3.043 6.466 .013
a

Residual 37.179 79 .471
Total 45.222 80
a. Predictors: (Constant), justice is the key determinant of value addition in organization.
b. Dependent Variable: Trust is the key element in the organization.

Coefficients
a

Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) 3.431 .420 8.166 .000
Justice is the key
determinant of value
addition in organization.
.245 .096 .275 2.543 .013
a. Dependent Variable: Trust is the key element in the organization.

CONCLUSION
As by applying the regression and coefficient tool the result shows the strong relationship
between the variables. So by the upper analysis it is concluded that the Islamic leadership has a
strong relationship with the organization performance. Islamic leadership with the help of
consultation, Justice, honesty and trust it has impact on the organizations performance in term off
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64

achieving goals. The R between them in all cases is greater than 70 percent so thats show a great
relation with the value addition of the organization.

The result can be seen in the upper pages. One thing more that we have find the impact of
Islamic Leadership on organizations performance but in future it can be found for the state,
province at governmental level activities.
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Albarawi, R. (1975), Alquran wa Alnoudom Alijtimaiyah Almuasirah (The Quran and Current
Social Systems), Dar Alnahdah Alarabiyah Publishing, Cairo.
Altamimi, A. (1985), Alshura Fy Alislam (Alshura in Islam), Royal Forum for Islamic
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Kamel Mellahi ,Pawan S. Budhwar,2010 Introduction: Islam and human resource management
www.emeraldinsight.com/0048-3486.htm
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APPENDIX - I
Questionnaire
Gender Male Female
Age 21-30 31-40 41-50 51-60
Marital status Married Single
Educational Level Intermediate Bachelors Masters M.S
Income per month 10000-20000 20000-40000 above
1. Without shura committee it is too difficult to
manage everything.
SD D N A SA
2. Shariah advisors pay a major role during the office
work in the organization.
SA A N D SD
3. Shariah committee is interlinked with the
employees performance in the organization.
SD D N A SA
4. Honesty adds value to the organization.
SD D N A SA
5. In the organization activities Honesty plays major
role.
SD D N A SA
6. Honesty plays role in attainment of Goals.
SD D N A SA
7. Employees have concerns about the trust in the
Organization.
SD D N A SA
8. Trust is the key element in the organization. SD D N A SA
9. The trust between the employees plays a major role
in the organization.
SD D N A SA
10. Justice is a key determinant of value addition in
organization.
SD D N A SA
11. Justice improve the efficiency of the organization SD D N A SA
12. Justice between the employees is the main element
in the organization.
SD D N A SA