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The Role of Leadership in Shaping Organizational Culture

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11.11.2020
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Leaders are always under attention, and virtually all their actions are closely scrutinized by followers or subordinates. For this reason, they shape their organizational culture by exercising caution when making strategic decision, in order to ensure that equality and fairness exist among employees, and that the ethical standards are maintained internally and externally on a continuous basis. As a consequence, employees improve their effectiveness, which in turn results in an improved organizational competitiveness in regards to innovation, performance, and profitability. This paper explored the role of leadership in shaping organizational culture. The qualitative exploration of the subject showed that leadership is not only correlated to organizational culture, but it also impacts organizational culture by using the power, as well as through different leadership approaches.

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The Role of Leadership

While many leaders acknowledge the significance of organizational culture for the employees’ satisfaction, creativity, and innovativeness, few have failed to appreciate the direct impact of leadership in shaping the commitment to innovation and trustworthiness. It is oftentimes argued that cultures are predetermined; In fact, this assumption is incorrect (Northouse, 2016). Therefore, leaders at all organizational levels should be cognizant of their roles and responsibilities in perpetuation of a healthy workplace environment that improves and empowers employees, as well as increases their satisfaction (Miner, 2015). One of the key responsibilities, faced by leaders, is the creation and maintenance of organizational characteristics that encourage and reward collective efforts. These responsibilities are in line with the observation that competitive companies have organizational cultures, based on trust, change of capabilities, and innovation (Eccles, Perkins, & Serafeim, 2012). Organizational culture serves as one of the components of a system, which is meant to create and sustain a competitive advantage. Empirical and qualitative research of the strategic management provides impressive evidence of the role of leadership in shaping organizational culture, which in turn contributes to the performance of a company (Nguyen & Mohamed, 2011; Schein, 2010). The understanding of the entity’s core values can avert possible conflicts. It means that a good understanding of organizational culture helps leaders and managers to create a healthy working environment. Given that leadership mirrors the goals and the vision of an organization, it can significantly influence the behavior and attitudes of employees. Expectedly, the resultant attitudes and behaviors should be a reflection of an organization’s desired qualities and predefined values. These observations form the basis of this paper, which asserts that leadership plays a critical role in shaping the organizational culture.

Organizational Culture and Organizational Leadership

The central reason for the existing variations of the definition of organizational culture is the fact that it takes into consideration beliefs, values, standards, and rules that shape the behavior of its members and leaders, who facilitates the change, through words, narratives, gestures, and interpersonal relationships. For instance, Schein (2010) defined organizational culture as shared perceptions, beliefs, and values, held by employees within an organization or in a sub-unit of the organization. Additionally, organizational culture is viewed as a set of rules and behaviors that mirror the psychological environment of an organization (Harris & Moran, 2011). The ubiquity of organizational culture requires that the leadership team appreciates its foundational dimension and its effects on employee-related variables, including organizational commitment, job satisfaction, and organizational performance (Ayman & Korabik, 2010; Eagly & Lau Chin, 2010). In other words, leadership is related to organizational culture, which in turn shapes the entity’s performance.

Similarly to the organizational culture, there are numerous definitions for organizational leadership, but the central idea of it is that it entails change. Another theme in these definitions involves influencing and motivating employees to achieve the organizational goals (Miner, 2015; Nguyen & Mohamed, 2011). For instance, Schein (2010) viewed organizational leadership as the process of influencing members of an entity towards achieving a specified goal effectively. Similarly, Northhouse (2016) noted that organizational leadership is all about coping with transformation or change. Rationally, business entities need effective leaders or managers to deal with the business challenges, to empower followers or subordinates, and to inspire them to translate their efforts into reasonable business outcomes by sharing the company’s vision (Meyer, Srinivas, Lal, & Topolnytsky, 2007). Normally, most leaders tend to change the culture of the organization, so that it can fit their goals and reach preferred outcomes (Barton, Grant, & Horn, 2016). It is especially evident in situations, when there is a change in the organization’s leadership team. Therefore, companies tend to hire leaders or managers that they believe have the ability to empower and inspire people not only to improve their performances, but also to act in an ethical manner (Lawton & Páez, 2015). It is in line with the fact that a company can predict its success, basing on the nature of its leadership. Expectedly, a strong and visionary leadership can make an organization perform better (Schein, 2010).

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The Correlation Between Leadership and Organizational Culture

Competitive companies have organizational cultures based on trust, change of capabilities, and innovation. An organizational culture that is supportive of the corporate social responsibility increases the effectiveness of its leadership’s commitment and stakeholders’ engagement. Leadership engagement is vital for the transformational change (Eccles et al., 2012). In the same context, employees’ engagement promotes innovation, facilitates trust, and builds the mechanism that is essential for ensuring that innovation, launched in an organization, produces change. Observably, the engagement of employees is facilitated by an effective leadership approach or style. Leadership and organizational culture jointly contribute to the development, control, and enhancement of the organizational performance. Northhouse (2009) stressed the significance of both leadership and organizational culture. In that context, it is evident that the concept of leadership depends on the organizational theory. Schein (2010) mentioned that the organizational culture evolves from the entity’s leadership. In the same line, the author stated that the organizational culture also impacts the development of leadership. The former observation implies that the leadership is a component of the organizational culture, whereas the latter observation shows that the provisional reward of leadership, and especially the transformational leadership, is more prominent than the culture. These observations prove the fact that leaders create leadership tools or styles to change the existing norm or to develop the present organizational culture.

Such entities as Apple have a strong organizational culture, which is marked by creativity and innovativeness and has an influence on the leadership style. As of this writing, Apple continues to standout as one of the most innovative companies, regardless of the change in leadership, which followed the death of Steve Jobs. The fact that leadership and organizational culture tend to collectively contribute to the development of an innovative, motivated, and a highly productive working environment, implies that leadership can play a pivotal role in changing the entity’s culture, when necessary (Barton et al., 2016; Meyer et al., 2007; Miner, 2015). Additionally, strategic leadership can facilitate and impact organizational culture, when there is a plan or decision, approved by the strategic decision makers.

Leadership Traits and Skills that Are Valuable in Promoting a Healthy Organizational Culture

It is important to foster leadership skills and competencies for promoting a healthy organizational culture, because it gives a possibility to generate a better organizational performance. The present business environment is increasingly becoming complex and globalized (Barton et al., 2016; Eagly & Lau Chin, 2010). The same environment is also further complicated by the additional layers of responsibility within the context of a triple bottom line (Quinn & Baltes, 2007). This complexity requires leadership traits and skills that can inspire change in line with the present and future organizational dynamics. For instance, the identification and development of the leadership competencies, which can address the prerequisites of the triple bottom line, place an organization on a direction of a sustainable competitive advantage. Some of the leadership competencies, which are vital for adopting the required organizational culture, include effective communication, long-term view, and influence (Nguyen & Mohamed, 2011). In order to institute change and to ensure that the desired change is cultivated in an organization, leaders must have effective communicative and accommodative skills. Other leadership traits and competencies, necessary for promoting organizational culture, include collaboration, systems thinking, inclusivity, risk taking, and ability to understand other people’s perspectives. Some of the cultural components, viewed as important leadership traits, include empowerment, trust, trustworthiness, and consistency (Bonnici, 2011). In that regard, competent leaders institute support systems and other mechanisms, which not only give the staff an opportunity to empower themselves, but also enable the employees to move on the career ladder.

Leadership Styles that Promote a Healthy Organizational Culture

By leadership styles one means certain approaches, used to influence the change (Northouse, 2016). Given that there are unique needs, the styles, employed to induce the desired change, will also vary. Additionally, leaders have different leadership competencies and traits. For this reason, the styles, which they use, also vary (Bonnici, 2011). In essence, there is a no universally documented style that is effective for all organizations. In academic and business circles, there is a general consensus that leadership is connected to the performance of an entity. In other words, effective leadership translates into a culture that leads to high performance levels. Eissa, Fox, Webster and Kim (2012) highlighted that the prerequisite for optimal organizational performance entails having a consistent and sustained leadership approach or style. Therefore, from a strategic perspective, organizational leadership can be viewed as a strategic role that involves focusing on goals that elevate the growth of a company. Typically, leaders focus on vision as well as on the change of management. Accordingly, they work on leadership styles that are able to synchronize with the organizational dynamics (Barton et al., 2016; Schein, 2010). Additionally, they also strive to ensure that their leadership styles can attract prospects for improvement and enhance organizational creativity, innovativeness, and performance. According to Purvanova and Bono (2009), transformational leaders inspire people to form a value-based vision. In the same regard, they argue that leaders should have a deep understanding of many leadership styles and frameworks, because it enables them to be flexible and effective in handling various dilemmas.

According to Eissa et al. (2012), effective leaders have unique traits, including the ability to promote a shared vision, to challenge the existing processes, to encourage others, and to model the way. In the same context, effective leaders induce followers to act in a manner that would enable the entire organization to reach its goals by acting simultaneously in an ethically responsible way. This leads to the distinction between transactional and transformational leadership styles. According to Purvanova and Bono (2009), transformational leaders raise their followers’ awareness, regarding the importance of designated outcomes. Additionally, transformational leaders support their followers to transcend their personal interest for the benefit of the organization (Northouse, 2016). In contrast, Purvanova and Bono (2009), noted that transactional leadership is organized in such a manner that both followers and leaders support each other in order to sustain the appropriate levels of morality and motivation. Research also confirms that effective leadership is vital for the organizational change (Eccles et al., 2012). In the same regard, Northhouse (2006) noted that there is a direct correlation between effective leadership and the workforce performance. Moreover, it has a significant influence on the development of healthy relationships with stakeholders as well as with the followers and customers. However, leadership styles vary, depending on the leadership approaches and the desired culture. In fact, leadership styles vary from organization to organization due to a difference in the way the followers observe their organizational culture. Therefore, leaders have to adapt their approaches in order to fit the situations that they are required to handle.

The Use of Power to Promote Organizational Culture

The concepts of leadership and power have been and continue to be intertwined. While an individual within an organization can exert power without being a part of the leadership team, an individual can only become and be an effective leader by having power (Schein, 2010). After mentioning that leadership influences organizational culture, it is equally important to note that leaders use power to shape organizational culture. In line with Bonnici (2011), successful leadership entails an effective use of power. It means that leaders can use their power successfully to induce the change in the organizational culture. Power and strategic planning is needed for the management change, because it is often accompanied by resistance of various stakeholders (Harris & Moran, 2011). Apart from exerting power in order to achieve individual and team goals, leaders exert power to achieve organizational goals, which may take the form of the organizational changes. In order to induce high performances at individual and organizational levels, leaders must encourage followers to be creative, innovative, and productive (Barton et al., 2016). Additionally, leaders should also involve their colleagues and superiors in making strategic decisions, regarding cultural transformation. Lastly, leaders can promote organizational culture by making stakeholders contribute to the sustainability of an organization.

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There is a noteworthy link between the power of a leader and the leadership level in an organization. That is to say, leaders at the top of an organization tend to be more powerful than their colleagues at the lower level of the leadership pyramid (Northouse, 2016). Organizations that reward leaders, who empower their followers, tend to create a culture of employee empowerment. At all organizational levels leaders have access to power, but this power can be underutilized or unrecognized. The power of position is a form of power, which is the formal variant of authority, derived from an individual’s title or role. Effective leaders use the power of charisma to influence the change. Such power is created by the image or style of a leader. Other forms of power that can be used by leaders to promote organizational culture include the power of punishment, power of expertise, power of information, power of reward, and power of relationships. For example, by rewarding or recognizing followers, who meet expectations or adhere to the standard, it is possible to motivate people to maintain and propagate organizational culture.

Leadership as a Promoter of the Organizational Ethics

There is a close relationship between leadership and organizational ethics. Ethical organizations are marked by an effective managerial or leadership team. In other words, ethical products, processes, and behaviors are a reflection of an organizational culture, which values ethics (Lawton & Páez, 2015; Quinn & Baltes, 2007). Unquestionably, an ethical organizational culture is a product of ethical leadership. Consequentially, ethics plays an important role in the internal and external environment of an organization. As for the traditional perspective of a business entity, businesses exist chiefly in order to make profits (Barton et al., 2016). However, due to the fact profit is the main driving force of business, moral dilemmas arise as organizations strive to maintain their profitability. One of the moral dilemmas entails the obligation of organizational leaders to ensure that employees are treated fairly and equally on issues such as compensation and promotion (Ayman & Korabik, 2010). In the same context, leaders have to be gender sensitive in order to avoid conflicts, based on the gender biases. Other dilemmas may be related to conflict resolution and public relations. In line with the triple bottom line (TBL), which is a variant of a corporate social responsibility (CSR), organizational leaders are expected to tabulate their bottom-line results both in economic terms and in terms of the organizational effect on the society and on the environment (Quinn & Baltes, 2007). By following three aspect of responsibility separately, corporate leaders demonstrate their ethical values. Lawton and Paez (2015) asserted that moral decisions, made by leaders, should be founded on ethical principles. As a consequence, moral leadership decisions form ethical behaviors, which ensure that the interest of the humanity receives maximum attention. Citing Enron Corporation is an apt example of an ethical collapse, as it is evident that the behaviour of employees in an organisation is driven principally by the organisational culture, and that the leadership style or approach shapes ethical behaviour. Unethical practices of some of the Enron’s leaders resulted in a culture of greed. In summary, corporate leaders promote organizational ethics by demonstrating sustainability of the organization in terms of economic, social, and environmental aspects.

Conclusion

This paper states that leadership is not only correlated with organizational culture, but it also has an impact on the culture of an organization. Evidently, each leader employs an individual style, based on their traits, competencies, preferences, and organizational goals. It results in a diversity of leadership styles, used to influence the change in the organizational culture. The connection between the concepts of leadership and organizational culture jointly contribute to either minimization or optimization of the productivity in an organization. In means that leaders should have certain traits and the ability to employ effective leadership skills in order to promote a desirable organizational culture. In addition, leaders have to ensure that their systems, processes, and products are ethical and that they correspond to their social responsibilities.

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