Organizational culture and leadership: why leaders can’t leave culture to HR

by Mike Sharkey

Organizational culture and leadership

Are leaders corporate culture makers? Or does corporate culture shape leaders? The truth is, it’s a bit of both - but leaders are key in creating a positive culture and Employee Experience in their organizations. Here’s why.

When we talk about corporate culture we’re really talking about what it feels like to work somewhere. Is work a place where we can be ourselves? Do we feel a sense of connectedness and belonging to our organization?

Lots of things contribute to this. Leadership experts Michael Z Hackman and Craig E Johnson describe organizational cultures as being like tribes with their own languages, hierarchies, customs, ceremonies and beliefs. Anyone who’s experienced a corporate culture shock when starting a new job will recognize the truth in this.

So culture doesn’t just come from the leadership team. It’s a collective force, with leaders having a unique role in building, sharing, and living the culture they want to see. But although leaders often say culture is essential, it’s not always top of their list. Just 21% identify culture as a top priority, with the issue coming way behind financial performance, innovation and talent.

In fact, as we’ll see, success in all priorities things comes out of a positive organizational culture.

How do leaders influence and change culture?

Some leaders are synonymous with the culture of their organizations. They seem to create it, exemplify it and project it to the wider world, even to the extent that their companies struggle to maintain their identity if they leave.

Think about the way Richard Branson’s personality underpins and permeates his Virgin empire. We look at him and think we know what it’s like working for one of his companies. Or how Body Shop founder Anita Roddick evolved the ethical beauty emporium’s culture through her commitment to environmentalism and human rights. Or Henry Ford, whose revolutionary assembly line method of manufacturing gave its name to a whole new philosophy of work: ‘Fordism’.

Of course, not all leaders are as innovative or high-profile. In fact, some are so anonymous to the outside world that they almost seem interchangeable. But even the least charismatic will be held to account for the culture of their organization.

Because, whatever the reality, culture is seen as emanating from the top. Leaders attract praise when an organization achieves recognition as a good place to work and they get the blame when things go wrong. Toxic leadership was held responsible for a 48% decrease in work effort and a 38% decrease in work quality according to one study.

How can leadership have a positive impact on organizational culture?

Leaders have a huge role to play in building and improving culture, particularly now in the post-pandemic world of hybrid working. The success of their organizations in navigating the new way of working might depend on it. Here are six tactics leaders can use:

  1. Improve employee experience

    Employee experience (EX) is one of the levers leaders could and should use to build culture – particularly in a fragmented hybrid working world. And it’s not just up to CEOs – all executive stakeholders should have an interest in EX.

    EX is all about building a more meaningful work experience for employees by giving them a sense of belonging. It’s not the same as employee engagement, which is more about getting people to achieve organizational goals. EX is something leaders need to think carefully about, as their perception of it may be very different from what’s really happening: 68% of leaders feel they create empowering environments for employees, but only 36% of employees agree.

  2. Define, implement and project positive values

    Organizational values are the building blocks of corporate culture. They can help with everything from attracting new talent to enhancing employee experience and engagement. But they don’t come about by chance. Culturally aware organizations know values can’t be taken for granted. They have to be explicitly defined, then put into practice.

    Leaders are a key part of this process, helping decide what their organization’s values should be, defining a strategy to implement them and bringing them to life in the way they themselves behave.

  3. Boost performance

    Research shows that effective leadership – especially particular styles of leadership – can have a positive impact on performance. A transformational leader who focuses on the details can motivate people and help them through times of change. A transactional leader who focuses on structure and results can help increase job satisfaction and people’s identification with their company.

  4. Encourage accountability and transparency

    Trust is essential in a positive company culture and employee experience. By encouraging an atmosphere of openness, where people take responsibility for their actions without blame, leaders can build a culture in which employees feel they can speak out and be heard.

  5. Foster innovation

    Leaders should foster an environment in which people feel safe to experiment and share ideas. Not being afraid to try new things – having the freedom to fail – will foster innovation and creativity. This is one of the crucial ways in which a positive corporate culture can help an organization get ahead of the competition.

  6. Build a more inclusive culture

    Leaders can help create a vibrant, diverse working culture where people feel free to be themselves. They can do this by speaking out about equality issues and holding themselves accountable for achieving greater inclusivity. As well as improving employee experience, this can have a big impact on the bottom line. It’s estimated, for example, that increasing the retention rate of women by 5% – in a company with 50,000 employees of whom half are women – could save a company $8 million a year.

How does culture affect leadership?

Business history is littered with stories of CEOs being parachuted in – and freefalling out – of companies for which they were the wrong cultural fit. That’s because culture and leadership are a two-way street. A leadership style that works in one culture won’t necessarily work in another.

In fact, leaders may well find an established culture a barrier when they move to a new organization. It might be difficult to implement new ideas if there’s already an entrenched way of doing things. So some flexibility is needed. It simply won’t work to try to impose a leadership style on an organization that’s really unsuited to it.

Similarly, leaders working in global organizations will need to adapt and build their cross-culture leadership skills to align with business cultures in other countries.

Leaders looking to make cultural change, first need to observe and understand the culture that’s already there. A few areas to focus on include:

  • Day-to-day working: having an intimate knowledge of the way an organization works and its dynamics are essential for leaders who want to make an impact on culture. But it’s an area where there’s room for improvement. According to research by OC Tanner, only 54% employees say their leaders actually know what they do.1

    Getting to know the details of your team’s working day isn’t a big stretch for leaders, but it can go a long way to understand and start to reshape culture.

  • Building relationships: strong relationships are key to a positive company culture. Regular, open communication is essential for leaders wanting to build up a rapport between them and their employees. That doesn’t necessarily mean making formal speeches and presentations – it can be something as small as responding to an employee’s post in a chat group. Every interaction is a chance for leaders to show the behaviors they want to embed in the culture.

  • Getting and acting on feedback: leaders need to understand what people feel about working for an organization and where cultural change needs to be made. One way to do this is to ask for feedback in the form or surveys and polls. But getting a response isn’t enough – to build trust leaders must be seen to act on what they’re told.

What is a leadership culture?

Discussions of leadership and culture often focus on the relationship between leaders and employees. But another key aspect of culture is how leaders interact with each other and what attitudes and values underpin their work. Leadership culture will filter down and have an enormous influence on the culture of the rest of the organization.

There are lots of theories about how leadership cultures work. The dynamic cultural leadership model (DLC), often used in healthcare organizations, focuses on how all the managerial levels in an organization can work together in harmony. The Centre for Creative Leadership, talks about three types of leadership cultures: Dependant, where people in authority are seen as responsible for leadership; Independent, where leadership comes from individual expertise; and Interdependent, which sees leadership as more collective.

Regardless of which, if any model, they’re based on, leadership cultures can be positive or negative. Negative cultures discourage connection. But positive leadership cultures are focused on connecting people with the organization, giving them a sense of belonging and developing their leadership skills. In this way, they spread a culture of leadership and positive employee experience throughout an organization, helping it to thrive and grow.

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