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Leadership & Corporate Culture

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I have had course to interact somewhat closely with some companies on a project and I have observed a remarkable difference in their corporate ethos on issues like punctuality, efficiency, transparency and disclosure etc. This experience led me to think about what accounts for this difference in culture. Leadership seems to be the short answer.

To be sure, environmental factors including type of industry and applicable regulation explain a company’s behavior. However, when all things are held equal, the character and behavior of senior management sets the tone for the organization.

Leaders define the values of an organization and how they are implemented in practice. Through a leader’s express and implied actions, organizational preferences and priorities are set. For example, a leader that emphasizes results at all costs promotes an excessive risk taking culture while leaders that show that they value people through their words and actions sets the clime for a culture of respect and cooperation. For example, the aggressive nature at Microsoft is said to be linked to the competitive nature of its founder, Bill Gates.

Also, the reward system promoted by a leader reinforces the culture within an organization. What a leader chooses to praise or reward gets reinforced and ingrained in the company.

Leaders must deliberately exemplify and engender the type of culture they want their organization to have. For example, a leader can foster a culture where people easily offer suggestions and contribute to discussions by asking questions and allowing for divergent perspectives.

Leaders should not solely rely on written mission and vision statements or a codified set of ethics. They have to embody the culture they want their organizations to have and should be conscious about even what they choose to be silent to. Leadership is a great responsibility and should be handled thus especially when one realizes that an individual’s action can define a group’s ethos.

image source: Mayr’s Organizational Management

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