How leadership can influence organisational culture

Table of Contents

i.Executive Summary

ii.Table of Contents

iii. List of Abbreviations

iv. List of Figures

v. List of Tables

1. Introduction
1.1 Problem Definition
1.2 Objective

2. Leadership
2.1 Leadership Styles

3.Organizational Culture
3.1 Structure of Organizational Culture
3.2 Levels of Culture

4. Leadership influencing organizational culture

5. Conclusion

Bibliography

Online Journals

ITM

i.Executive Summary

This assignment provides the reader with a descriptive analysis of organizational culture, including a comparative analysis of the most common leadership styles, to identify the influence of leadership on corporate culture.

Empirical studies including Geert Hofstede, Edgar Schein and Bernard Bass were used to identify similarities between a leadership style and contribution they have on organizational culture. Leaders have to know the companies’ core values, including employee’s practices and assumptions about their work. When these strong principles, behaviours and beliefs are communicated and developed, a strong organizational culture will emerge. The core values can be visuals like a dress code, or the subordinates beliefs and expectations, which have to be communicated and aligned by the leader. These results are backed up with a recent study of leadership in a hospital, were well- communicated core values and support increased job satisfaction and overall performance. A leader has to implement a companies objectives and values to build a corporate culture, depending on the cultural background the company operates in, it is important to choose the appropriate leadership style to bring across these values. A study identified that individualists, according to Hofstedes model, generated more ideas with a transactional leader, emphasising the fact that leaders should not change a corporate culture but only develop and strengthen it upon all subordinates.

iii. List of Abbreviations

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iv. List of Figures

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v. List of Tables

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1. Introduction

‘Leadership and culture is dependent from one another’ this statement has been researched variously by authors¹ but also through various academic studies². One can bring culture to an organization or down to groups within an organization, altering dress code or communication behaviour for instance. With the right leadership a culture can be manipulated and altered or newly implemented, a change in culture however also gives the organizations structure and meaning to its members. ³ Leaders try to form strong cultures that are enduring and distinctive enough to be successful. Culture is created by shared experience, but it is the leader who initiates this process by imposing his or her beliefs, values, and assumptions at the outset⁴.

It is therefore of high importance to identify the qualities that a trusted and motivating leader needs, but also to look at the various concepts of cultures and what qualities actually make a culture.

1.1 Problem Definition

There is a growing awareness of the need for a better understanding of the way leadership is enacted in various cultures⁵. One of the key drivers for any company to run sustainably and profitably is to have a leader and a strong culture. Therefore an organization requires tactical and strategic thinking and development but also ‘culture building’ by its leaders to motivate its employees and to thrive performance⁶. This paper will highlight the many touch points between various leadership styles and the resulted impact these can have on corporate culture.

1.2 Objective

The use of cultural models from Hofstede, Malby and Schein will help to critically analyse the fundamentals of a culture and the various leadership styles that influence it. Understanding the complexity of corporate culture and how it is being created will help to analyse how it can be altered. Comparing the different leadership styles of Lewins and Bass will emphasize the various impacts each leadership style has. Further research on case studies and analysing similarities between a companies culture and the leadership style being used will bring additional results to understand how leadership influences organizational culture.

2. Leadership

Leadership is a key indicator of an organizations performance. Employees follow and trust leaders that are competent, have character, but also leaders who are consistent and committed⁷. Integrity is a common word, which is used to explain a good leader, someone who exactly does what he/she promised he/she would do. Since Leadership has become such an important aspect in the management of an organization a lot of research has been done to identify the ideal leader. According to Schein (2014), the widely asked question about leadership is the characteristics of a leader; are leaders born or can leaders be made and trained⁸.

Relevant research from the Harvard University in 2001 has come to the assumption that people can be educated to acquire leadership skills, but also that sufficient education can make someone a good leader⁹. More detailed corporate studies from Rosabeth Kanter (1983) and various literatures from Peter Drucker (2002) support the observations. Leadership can be split into 3 subcategories; these are skills, character and styles. “Skills” is performance related and can be developed on the job, ‘Character’ depends on the leaders behaviour or personality, and lastly, “style” is the way a leader relates and does the job¹⁰. However, it is necessary to identify which leader fits into what kind of organization. According to a three-year study¹¹ including over 3,000 middle managers, discovered that a manager’s leadership style was responsible for 30% of the company’s bottom-line profitability.

2.1 Leadership Styles

Traditionally, leaders can apply 3 different styles to lead its people, these are known as Autocratic, Democratic (also known as participative leadership style) and Laissez-faire. This leadership framework however is very broad and does not only apply for the organizational context but also for coaching, educational purposes, etc. The table below highlights how each leadership style differentiates from one another.

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Table 1: Characteristics of 3 Leadership styles¹²

The 3 leadership styles in Table 1 are the result of a Lewin’s leadership studies in the 1930’s¹³. An autocratic leader tends to make decisions alone and is very goal orientated, this kind of work place is mostly regulated by rules and regulations. A democratic leader tends to initiate his followers in the decision making process, enhancing a teamwork spirit, whereas a laissez-faire type of leadership, also known as the ‘hands-off’ approach¹⁴, tends to have very little control and emphasises on the group.

Additionally there are transformational and transactional leadership styles. Firstly introduced in 1978 by Burns for his treatment of political leadership¹⁵, these leadership styles differ in terms of what the leader offers its followers and vice versa. Whereas transformational leaders offer purpose, which transcends short-term orientated goals but also focuses on higher order intrinsic needs, transactional leaders primarily focus on the exchange of resources¹⁶.

A few years later, Bernard, M. Bass has further evaluated the 2 leadership styles. He believed that transformational leadership consists of 4 dimensions, which are “charisma or idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration“¹⁷. On the other hand, transactional leadership only consists of three dimensions, which are “contingent reward, management by exception—active, and management by exception—passive“¹⁸. Management by exception relies on the timing when the leader will interact or get involved in the action of its employees¹⁹.

3.Organizational Culture

One leading factor that plays a role in many facets of business, as well as in the lives of those who conduct business is culture. The concept of culture is one that varies on many different scales. Every employee is surrounded by culture at some point or another during a normal work day, it is the set of structures, routines, rules and norms that guide our behavior and how we interact with our coworkers; all these elements can be shaped by leaders²⁰.

3.1 Structure of Organizational Culture

Before looking at how leaders interact or influence with organizational culture, it is necessary to have a look at the system and interactions a culture has. According to Malby and Fischer (1996), a cultural system is made out of 4 interacting pillars:

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Figure 1: Structure of Organizational Culture²¹

As seen in figure 1, culture is made of various aspects, including identity like rituals and language (for example: formal or informal) that is used within a company. Furthermore an organisational culture is specified by the availability of information and communication within all employees, this aspect can strongly differ between companies with either a flat or high corporate hierarchy. Also the relationships within the team members have to be taken in consideration, how employees deal with conflict and so on.

3.2 Levels of Culture

Furthermore, E.Schein (2014) has identified three levels of culture, which can be seen in figure 2 below:

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Figure 2: Levels of Culture²²

According to E. Schein, the first level of culture consists of the visible processes and structures of an organisation. These are most easily altered and come in forms of furniture’s, IT infrastructure but also the organizations dress code. Changing the artifacts of an organization can have tremendous effects on the employees motivation, for instance, setting up a ‘quiet room’ or ‘game room’ could possible make the employees feel more valued and consequently increase motivation. The second level of culture is known as ‘espoused beliefs and values ‘, addressing the organizations overall mission and objectives but also the companies philosophy to work towards goals. This level makes leadership a very important asset for every organisation to have everyone pulling on one string and identifying himself or herself with the company’s philosophy. Lastly, ‘underlying assumptions’ reflects the perception; beliefs or thoughts the employees have. These beliefs or thoughts are mostly unconsciously taken for granted, making it very difficult for a leader to change, especially in a short time frame.

Nevertheless, there has been one model which has to be included to identify a corporate culture and for a leader to fully utilise his leadership technique to reach the required goals and objectives. The Hofstedes 6 dimension of organizational culture originally consisting of 4 dimensions, Hofstede has added long-term orientation and indulgence after a successful research study at IBM between 1967 and 1973²³. Hofstede categorized the 6 dimensions as follows:

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Figure 3: Hofstedes 6 Dimensions of Organizational Culture (Own Illustration)

The first one being the power distance highlights how less powerful members are able to accept and expect unequal power distribution. An autocratic leader would be well suited for a big power distance culture, for instance an organisation with a high hierarchical structure, to give out demands and have a high level of responsibility.

Secondly, looking at individualism vs collectivism, whereas a democratic leadership approach would invoke collectivism and create a ‘we’ approach, a ‘laissez-faires’ leader is suited for an individualistic working approach. This assumption can be backed up with further research²⁴ speculating that transformational leadership is more effective in collectivist cultures, being enhanced by the respect for authority.

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¹ Schein, E.H. ( 2014)

² Northern Leadership Academy (2007)

³ Schein, E.H. ( 2014) p. 1

⁴ Schein, E.H. ( 2014) p. 225

⁵ House, R. J. (1995). P. 443

⁶ Bass, B. & Avolio, B. (1993) p.112

⁷ Adeniyi, M.A. (2007)

⁸ Schein, E.H. ( 2014) p.2

⁹ Summers, H.L. (2001)

¹⁰ Adeniyi, M.A. (2007)

¹¹ Goleman, D. (2000)

¹² Marquis, B., and Huston, C. (2008)

¹³ Nelson, D.L. and Quick, J.C. (2012) p.434

¹⁴ Nelson, D.L. and Quick, J.C. (2012) p.434

¹⁵ Burns, J. M. (1978)

¹⁶ Judge, T.A. and Ronald, F.P. (2004). P.755

¹⁷ Judge, T.A. and Ronald, F.P. (2004). P.755

¹⁸ Judge, T.A. and Ronald, F.P. (2004). P.755

¹⁹ Howell, J. M., & Avolio, B. J. (1993)

²⁰ Schein, E.H. (2014)

²¹ Malby, R. and Fischer, M. (2006)

²² Schein, E.H. (2014). P.26

²³ Hofstede, G. (2004)

²⁴ Jung et al. (1995)