- Business and Employment
Leadership Behavior and Organizational Culture
In their book, Reframing Organizations, leadership theorists Bolman and Deal assert that “organizations exist to meet human needs (2013, 117)." They acknowledge the key role that organizations play in nearly every area of modern life and yet they also recognize the “darker side” of organizations (6). Studies have found that roughly half of senior executives fail within two years, 83 percent of mergers are unsuccessful (8), and 47% of CFOs claim that some unethical practices could be justified if they could help their company get through a difficult economy (Matthews, 2012). Each year organizations, once highly successful, turn to bankruptcy (8), and others are affected by fraud and unethical behavior such as the well-publicized cases of Enron, Lehman Brothers (The Seatle Times, 2010), Philip Morris (Boseley, 2014), and Chevron (CSRwire, 2015). Additionally, a recent Gallop survey found that most Americans are not happy in their organizations with 70% of respondents reporting that they not reaching their full potential at work and only 30 percent reporting they are engaged in their jobs (CBS News, 2013).
Contrast these statistics with this statement from a former airline executive:
An extraordinary example of our People helping the Company was during Desert Storm, when the cost of fuel was very high. Our employees came up with a program called Fuel from the Heart, whereby they could sign up to have a certain amount of money withdrawn from each paycheck to help the Company cover the cost of fuel. (Blanchard & Barrett, 2011, 54)
The executive is former Southwest Airlines CEO, Colleen Blanchard, and this is just one of many stories of employees of the company, or “members of the family,” contributing their ideas, energy, and even personal money to support the organization (54). A quick Internet search will demonstrate that there is a lot of chatter, new reports, and how-to articles centered on corporate culture. Whether it is the empirical research indicating higher performance (Xenikuo & Simosi, 2006, 566); the desire to follow the “cool” companies like Google, Zappos, and Southwest; or simply the hope of creating a more connected company, it seems that apparent that many leaders share a commitment to create a stronger, healthier, culture within their organizations. Whatever the case, there is clearly evidence that just as culture guru, Edgar Schien, indicates, culture can emit powerful forces which, if not understood, can bring harm to individuals and organizations (2010, 7).
What is Organizational Culture?
Understandably, scholars have presented a number of different definitions of organizational culture, but perhaps Bolman and Deal give most concise and simplified version as they refer to organizational culture as “superglue that bonds an organization, unites people, and helps an enterprise to accomplish desired ends (248).” Theorists Kanungo and Jaeger equate organizational culture with the idea that members within the organization are prone to understand “situations and management practices” with consistency because they hold shared interpretations of organizational events and objects (Shiva & Damodar, 2012, 688). In attempt to sum up the various definitions provided by well-known researchers including Schein, Deal, and Cooke, Kathy Ohm describes organizational culture as “the hidden sets of norms and expectation that underlie what people ‘expect’ and see as ‘expected of them’ when they come to work. It is the set of often unspoken interactions, relationships, and expectations that spell out ‘how we do business’ around here (2006, 15).”
In his work, Organizational Culture and Leadership, Schein discusses the abstract and subconscious nature of culture (7-13). He continues to educate readers on the multi-layered dynamics of culture along with discussing macrocultures, microcultures, and subcultures, all of which determine the context dictating the path of the organization’s culture (23-68). Clearly, organizational culture is a complex, multi-dimensional, issue that cannot be grasped easily. However, the complexity of the subject of organizational culture should not inhibit leaders from seeking to understand and improve the culture within their organization.
This paper will examine the research-based connections between culture, leadership, and organizational performance with the purpose of distilling a set of characteristics and behaviors which leaders desiring a healthier culture can emulate to enhance to and organization’s culture with the hope of ultimately, increasing performance. While context, specifically that of macro or national culture, is important for understanding distinctive traits of a single culture, this article will focus on general leadership practices which have been shown to impact culture on a global level. The research employed here comes from studies conducted in a number of different countries spanning three continents and a variety of organizational types including businesses, non-profit entities, and medical facilities. For clarity, the research will be presented in three segments, the link between leadership and organizational culture, the link between organizational culture and organizational performance, and the leadership styles and qualities best suited for cultural success.
Organizational Culture and Leadership
Leaders in the fields of both culture and leadership, Bass and Avolio (1993) and Schein (2010), have preached on the close connection between culture and leadership. Bass and Avolio note the reciprocal nature of leadership and culture, meaning that they have influence on each other (1993, 112) while Schein describes leadership and culture as “two sides of the same coin (2010, 3). There is no denying that organizational culture is related to leadership, but in what ways? What is the real impact of leadership on culture? The following segment will examine the findings from four unique studies conducted on this topic in various industries and geographic locations.
A study of 312 Non-Governmental Organizations (NGOs) within India revealed a positive relationship between transformational leadership and organizational culture. Researchers Shiva and Suar hypothesized this result stating that transformational leadership would bring about a culture which “creates effective and efficient organizational processes, improves interpersonal relations, inculcates effective decision making, and enhances job satisfaction (2011, 690, 701).” The SRW between organizational culture as the criterion variable and transformational leadership as the explanatory variable stands at 0.827, allowing the research team to conclude that “transformational leaders have extraordinary effects on NGO culture (702-703).” Especially, when starting at the top of the organization, transformational leadership principles highly influential in constructing organizational culture (701).
Another study, conducted in Greece by Xenikou and Simosi examined transformational leadership and its relationship to different culture orientations including humanistic, achievement, and adaptive, and in turn, the effect of these cultures on business performance. Similar to the study conducted in India, a survey of 300 individuals and 32 business units was conducted with the exception that respondents were taken from a single financial enterprise, rather than from scattered NGOs. The findings demonstrated a strong correlation between transformational leadership and an achievement orientated culture which lead to higher unit performances (2006, 566-575).
A third study conducted within Taiwanese healthcare organizations found a positive association between organizational culture and leadership behavior (Tsai, 2011, 7). This research, unlike the two studies discussed above, looks at the impact of culture on leadership and the effect of leadership on job satisfaction. There is a strong indication that the leader’s behavior and the leader’s relationship with employees induces healthier and more effective interactions between staff members and work teams (8).
A final study, this one facilitated in a manufacturing context in Pakistan, examines transformational leadership and organizational culture, taking into account situational strength. Researchers Masood, Dani, Burns, and Backhouse use the four types of culture as identified by Cameron and Quinn which include, hierarchy culture, market culture, clan culture, and adhocracy culture. The study found that transformational leaders do not need situational strength and are inclined to lead within adhocracy and clan cultures (Masood, Dani, Burns, & Backhouse, 2006, 941-948). Basically, this means that a transformational leader can operate successfully within an organizational climate where tasks and situations are not clearly defined and direction is not obvious (944-945). Further, the cultures which transformational leaders tend to associate with are more open and caring, or dynamic and creative. An organization with a clan-like culture can be characterized as a family and the adhocracy culture is known by innovation, entrepreneurialism, and a willingness to assume risk. These are contrasted with the hierarchy culture which uses top-down authoritative orientation and the market culture which is characterized by aggressive efforts to produce results and leaders who are “tough and demanding (943-944).” It can be inferred from this study that transformational leaders work best in, or try to create, cultures that most people would generally assume to be stronger, healthier, corporate environments.
While each of these studies approach the topic at hand from different angles and different contexts, they produce results which affirm the connection between leadership and culture and, in three of the four studies, it can be concluded that transformational leadership plays a significant role in building, improving, or maintaining a desired organizational culture. Kathy Ohm, speaking from an educational context, summarizes these outcomes well when she insists that leadership has the ability to shape “strategy, structural and human resource changes that will flavor the future character and capacity of the educational system—always while impacting the culture of the organization in place (2006, 27).” From manufacturing, to finance, to education, to community-development work, there is strong evidence to support the idea that leadership matters when it comes to organizational culture.
Organizational Culture and Performance
So what? Does organizational culture even mean anything? While the focus of this article is to examine research between the leadership which affects culture, it is imperative that the link between organizational culture and enhanced performance be either affirmed or denied. To do this, two of the four studies used in the above segment will be used in addition to a study conducted by Gordon and DiTomaso of Rutgers University on 11 insurance companies based in the United States.
The first two studies, conducted by Shiva and Suar in India and Xenikou and Simosi in Greece, produce almost identical findings. Both studies were unable to reveal a direct relationship between leadership and organizational effectiveness (2011, 701) or performance (2006, 575-576). However, there does exist a notable indirect link. According to Xenikou and Simosi, “organizational culture is found to be a filter through which leadership influences performance (576).” While there may be lack of clarity concerning leadership and outcomes, the research indicates that there is little room for dispute regarding the connection between culture and performance results. The study conducted in Greece shows a direct relationship between an achievement-oriented culture, which is supported by transformational leadership, and business unit performance (573). Likewise Shiva and Suar demonstrate the direct connection between organizational culture and organizational effectiveness and then the continued direct link between effectiveness and program outcomes which include, increases in community health, education, income, and happiness (700-701). Researchers attribute, among other factors, the increased effectiveness deriving from culture to a “spirit of teamwork” which improves interpersonal relationships (705). These same characteristics also enable the organizations to better implement the welfare programs they are committed to promote (707).
The third study, examining insurance companies, attempts to determine whether the claim that “strong culture” produces greater performance can be evidentially supported (Gordon & DiTomaso, 1992, 784). The study sample includes 11 companies ranging in size from $691 million to $18.7 billion in assets. Questionnaires were given to members of upper-level management in all of the companies with a total of 850 individuals participating (789). To measure success, the metric “growth in assets” is used since the more traditional measures of financial success including ROI or GAAP measured profits, do not apply well to firms within the insurance industry. The results of the study do support the idea that strong culture, particularly culture which embraces adaptability, is likely to bring short-term performance increases as companies with these characteristics “enjoyed greater growth over a three year period following the survey (794).”
These three studies all allow the conclusion to be made that organizational culture does make a difference and efforts from leaders to improve culture are unlikely to see a null return.
Culture Building Leadership
Now that the link between leadership, culture, and performance has been established, it is time to define and clarify the meaning of leadership and the specific behaviors leaders can adopt to bring about the best cultural results. This segment will begin by examining leadership through the lens of the researchers responsible for the studies mentioned above and other scholars who have conducted similar studies on leadership and culture. The segment will conclude with a discussion of the findings infused with this author’s opinion and perspective for the purpose the developing a set of leadership behavior styles which are designed to aid anyone seeking to create a better tomorrow for their organization.
Leadership is broadly used term that can have many meanings to many different people. Not only are there numerous definitions of leadership, there are also many different types of leadership including, but not limited to, situational/contingent, servant, risk, charismatic, and transformational. It is not within the scope of this article to give a detailed analysis of the various definitions and types of leadership. Instead, leadership, as discussed in this article will be built upon Bass’ work on transformational leadership as research has demonstrated that transformational leadership has a strong connection to organizational culture.
Transformational leadership is defined by four distinct leadership characteristics which include idealized influence, inspirational motivation, intellectual stimulation and individualized consideration (Bass & Avolio, 112). Often contrasted with transactional leadership, which is generally a carrot-stick approach to managing, transformational leaders view their followers as trustworthy and capable, with each one having purpose. They strive to invest in followers (individualized consideration), creating vision and meaning (inspirational motivation), they take responsibility (idealized influence) for their followers development and attempt to help followers reach their full potential (intellectual stimulation) (113). Peter Northhouse, in his book, Leadership: Theory and Practice, gives further insight:
As its name implies, transformational leadership is a process that changes and transforms people. It is concerned with emotions, values, ethics, standards, and long-term goals. It includes assessing followers’ motivates, satisfying their needs, and treating them as full human beings. (2013, p. 185)
It can be inferred from these comments that transformational leadership is an evolved form of leadership, one which reaches deeper, striving to bring out the best in each person. It is no wonder that such a form of leadership is predominately used in research studies addressing organizational culture.
Certainly, much about leader behavior can be taken out of this basic introduction to transactional leadership, but there are many more specific leadership characteristics which can be derived from organizational culture-based research. The study of Indian NGOs highlighted the ability to cast vision (703), but a leader who really wants to build culture cannot stop there. Shiva and Suar share a story about one of their respondents who went through the struggle of gaining the necessary resources for her organization. The process was long and tedious but this leader did not give up and in the meanwhile she used her own personal resources to fund the organization. Her staff admired her selflessness and she earned their respect. The funding did, eventually, come (704-704). While this story may be anecdotal, it characterizes a successful leader as one who not only is visionary, but who has resiliency, courage, and conviction.
Masood et al. discuss the effect of transformational leadership on organizations. They assert that transformational leaders will empower employees, giving them the opportunity to make decisions which leads to stronger morale. Whereas nontransformational leaders need a strong situation (which can more clearly define their authority), transformational leaders feel most comfortable operating in a “weak” situation where their employees have more freedom and changes can take place easily (948).
Leadership for culture building is not limited simply to empowerment and inspiration. A.S. Tsui et al. conducted a study in Mainland China on the organizational culture and correlating behaviors of CEO leaders. Among other findings, they point out that “culture leaders may not be dynamic or charismatic leaders but they are clearly institution builders, and they do so by creating sustaining systems and process (Tsui, Zhang, Wang, Xin, & Wu, 2006, 130).” Their conclusion demonstrates that leaders also need to be architects, with the ability to understand and design organizational structure. Without a “culture sustaining infrastructure,” Tusi explains, a visionary founder will not be able to develop strong organizational culture (131).
Closely related to the concept of structure is that of goal-setting. Xenikuo and Simosi, who identified that an achievement oriented culture leads to better performance, emphasize the importance of setting goals. They postulate that transformational leadership induces goal-setting, task achievement, and creates the raises the bar for performance (575-576).
Finally, Tsai, from the research conducted in an Asian healthcare context, shares the value of trust, clear vision, and consistent behavior. A leader must be able to not just create a vision, but communicate and sell the vision to followers. After “getting their acknowledgement of the vision,” Tsai argues, “it is possible to influence their work behavior and attitudes (8).” A leader can create a positive work environment with enhanced job satisfaction through effective team work and goal achievement which ultimately derive from good leader-follower relationships (8).
The discoveries and comments made by researchers provide valuable insights regarding leadership behaviors that are likely to indirectly improve organizational performance via organizational culture. Many different traits and leader characteristics were discussed including visionary, resiliency, courage, conviction, empowerment, investment in followers, ability to create structure, goal setting, communication, trust, and behavioral consistency. All of these seem good and reasonable, but it is really possible for a leader to embody all of these?
To assist in the application of these leader characteristics, I have organized them into three different categories of leader behaviors. They are: the leader as a parent, the leader as an architect, and the leader as a trail guide.
The leader as a parent. A good parent cares for their children; they make untold selfless investments in them, teaching and coaching them to achieve success. Likewise, an organizational leader should demonstrate the same kind of care and investment for the members of the organization. Just as a parent provides safety for their children as they grow up and empower them when the time comes, an organizational leader should look to protect followers and empower them to reach toward personal and group achievement. A natural by-product of this kind of action and environment is trust, which will bind together both leaders and followers in the pursuit of organizational goals. Parents strive to be good examples for their children. They are expected to model courage, to go first and protect; conviction, to stand up for what they believe in; and resiliency, the strength to never give up. Leadership theorist, author, and speaker Simon Sinek often compares leadership to parenting. He emphasizes parents’ desire to give their children the best possible future by teaching, disciplining, and providing them with good opportunities. An organizational leader should strive to do the same for his or her people (2014).
The leader as an architect. Just as an architect will draw up detailed plans, a leader must be able to create a blueprint for his or her organization. Understanding all of the organizational processes, determining parties responsible for each of those processes, and designing the structure by which the various processes interact and coordinate efforts are all a part of the organizational leader’s job. Organizations are complex and a leader should not become victim to the complexity, but rather manage it. Architects communicate using drawings, blueprints, and advanced software. Organizational leaders need to communicate using appropriate channels. Giving organizational members an understanding of infrastructure is just as important as creating it.
The leader as a trail guide. This leader behavior takes into account the visionary side of leadership. Any guide worth following has a destination, a place that he will help his followers to reach. Whether it is an ascent up one of the world’s tallest mountains or simply a day hike through the piedmont, a guide provides the group with a meaningful objective. Similarly, an organizational leader must know where the organization needs to go; he or she must be able to create a vision determining the direction of the company. However, a trail guide must do much more than have a destination. Communicating the destination to followers and then accompanying them until they reach the destination are equally important aspects of leading. Organizational leaders need to be able to clearly communicate vision to their people and be with them in the pursuit of long-term goals.
A leader should be rounded and able to be a parent, architect, and guide. Being all of this may not be easy, but research has provided evidence that these behaviors are necessary for creating strong culture, which then leads to higher performance and the accomplishment of organizational objectives. Colleen Barrett, who successfully led Southwest Airlines for eight years and who embodies the characteristics described above, made these comments about organizational culture: “Our People know we care. They know it’s genuine. We don’t do these things to get accolades; we do them because it’s the right thing to do (128).”
What is the result of Barrett’s effort to be a strong organization leader? Her people cared so much about the vision and the organization that they were willing to have money taken from their own paychecks to help the company in tough times. Sinek explains that when leaders are willing to sacrifice for their people, in turn, people are willing to make sacrifices for their leaders (2014), which is exactly what was evidenced at Southwest. And to quote Sinek, “isn’t that the organization that we would all like to work in (2014)?” When one considers all of the problems within organizations and the threats from outside, it only seems worthwhile to work diligently toward building a stronger organizational culture.
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