How Does Leadership Influence Organizational Culture

Since Edgar Schein published his seminal work Organizational Culture and Leadership, leaders and researchers have engaged in a constant dialogue about the importance of culture, the ways to build culture, and the differences between a positive and toxic culture. But surprisingly little has been said about the question “how does leadership influence organizational culture?”

It’s not that no one talks about it.

It’s just that most attempts at building a positive culture focus on visible artifacts or perks and benefit programs. But culture isn’t a foosball table in the office and it’s not your flashy new vacation policy. Those things can be important, but they don’t impact culture as much as the actions and behaviors of leaders at all levels.

So, in this article, we’ll outline the six ways leaders influence organizational culture…which ironically were outlined by Schein himself in the very same book.

Who They Hire

The first way leaders influence organizational culture is in who they hire. Who is let into the organization has a massive effect on how the corporate culture changes or doesn’t change. Examining candidates based solely on credentials or past success can add talent. But if that talent is also toxic, then the culture suffers. In addition, “who they hire” also refers to who gets promoted, selected for development programs, and even who gets fired and why. Leaders that just look for results, and not also behaviors that build teamwork and collaboration, unknowingly create cultures that emphasize results at all costs—and often those costs are too high.

What They Measure

The second way leaders influence organizational culture is in what they measure. Every organization is measuring something, and many companies measure multiple things. But what gets chosen as the most important metrics will shape the focus and behaviors of everyone in the organization. Measuring solely profit or production might yield temporary gains, but at the cost of exhausted and overly competitive coworkers. Measuring efficiency might lower costs, but at the cost of a less innovative culture. Sometimes focusing on a single measurement can positively shape culture, like Paul O’Neill’s focus on safety at Alcoa. Often smart leaders choose measurements that balance each other out and create a culture that is productive, but also positive.

How They React

The third way leaders shape organizational culture is how they react. When a crisis hits or bad news breaks, how leaders respond in the moment usually determines how the rest of the crisis will play out and how that crisis will shape the culture. Leaders who focus on finding blame—or making sure blame doesn’t find them—create a culture where everyone runs from responsibility when times get hard. But leaders who focus on admitting failure and extracting lessons create a culture of psychological safety were crises become defining moments and the team is stronger as a result.

What They Fund

The fourth way leaders shape organizational culture is what they fund. What do they make room in the budget for? Some leaders draw up a budget based on maximizing profit, while others create space for experimentation that leads to innovation. Some organizations have a generous budget for learning and development, and others demand their people invest in themselves instead—and you can guess which one develops better new leaders. The departments and programs that get more funding get seen as more important, and as a result the organizational culture learns to respect and protect those and diminish others.

How They Act

The fifth way leaders shape organizational culture is how they act. Leaders who treat subordinates with civility and respect create cultures of psychological safety. Leaders who berate and degrade subordinates teach them to behave in the same manner. In fact, when researcher Christine Porath studied the reasons employees gave for poor behavior and incivility in their workplace, the number one reason was uncivil behavior by leaders in the organization. Leaders model the way, and how they act effects how everyone else acts as well. And that’s true at all levels, team leaders’ actions shape how teams act—even when they differ from how senior leaders behave.

What They Reward

The final way leaders shape organizational culture is what they reward. While people are irrational in a lot of situations, they’re generally rational when it comes to finding ways to make more money. The incentives that senior leaders put into place shape behavior in predictable if unexpected ways. Creating bonus programs solely on profits shapes culture one way, while a bonus structure based on a more balanced scorecard will shape culture another way. And this applies to team leaders as well. Even if team leaders lack the ability to pay monetary bonuses, the behaviors that get praised and celebrated get repeated. So, praise wisely.

 

While Edgar Schein was writing mostly about senior leaders and organizational culture, these six insights apply to team leaders and team cultures as well. Even in poor organizational cultures, there are great team leaders who shape great team cultures. And in positive organizational cultures, there are a few poor team leaders who create strife on their team. Leaders model the way at all levels, and make the difference between a toxic culture and one that helps everyone do their best work ever.

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