How Does Leadership Influence Organizational Culture?

Leadership

May 5

Organizational culture is the heart of business. It reflects everything from the organizational values, people, working methodology, and how the organization seeks to grow in the long term.

The interesting thing is, people in the dominant positions in the workplace, or the leaders as we call them, don't just walk into the culture. They plant the culture, nurture and water it, and decide which parts to cut off and which to grow.

Whether you are the CEO or a departmental head, if you understand how your actions impact the organization, you can shape them to create a safe place for the people. Once the people are given such a safe space, they speak up, perform well, stay motivated, and most importantly, they stay.

So, how does leadership influence organizational culture? Keep reading to know!

What is Organizational Culture?

Organizational culture is a collection of the values, assumptions, beliefs, and norms. All of these attributes, together, guide the mindset and actions in the workplace.

Organizational culture holistically affects each and every aspect of business. It plays a role in shaping the way employees interact with each other. It affects the dynamics of work-life balance and influences how people respond to challenges.

Companies that focus on building a strong culture tend to have highly motivated teams. The quality of work is evident, and they are also able to meet the organizational goals more efficiently. Employees are also more likely to stay in an organization that values them and is more forgiving of their mistakes.

The thing about culture is that if we don’t create it, a negative one can emerge.

So, as a leader, you have the authority to (and must always) influence culture positively from the top.

How Does Leadership Influence Organizational Culture: Top Strategies that Work

Leadership plays a key role in shaping the organizational culture. They can mindfully and skilfully develop the culture by setting the tone, vision, and behavioural norms.

What the leaders do is that they first set a vision that puts all the people working in the organization under one single, purpose-driven goal. Thereon, they support them in achieving it.

How do they do that? Let’s find out.

Vision and Values

Most effective leaders are visionary. Their vision set the direction for the whole organization to follow.

Even the top world leaders live by the values they promote in their companies. For instance, Howard Schultz of Starbucks built the company's culture around inclusivity, respect, and community. He led by example, and these values were evident in the way he talked to the employees and held customer relationships. He is also known for his strong stance on ethics and famously turned down lucrative partnerships that conflicted with Starbucks’ ethical standards.

Facing Challenges

Another factor that has a powerful impact on culture is how leaders respond to challenges. Each personality behaves differently in the face of difficulty. Some people panic, others try to cover up and keep things under the carpet, and still others talk about this situation, embrace, and accept it.

How you react to the situation and what course you take will be followed by the entire team. When leaders approach challenges with resilience and a solutions-focused mindset, it sets a culture of trust and adaptability.

Mistakes As Learning Opportunities

One of the most important aspects of having an innovative culture is embracing mistakes as learning opportunities. Instead of viewing them as setbacks, we should see them as chances to grow and refine our decisions.

When leaders punish employees for making mistakes, they discourage creativity and also limit their ability to experiment with new ideas. The situation gets even worse as employees begin to withhold accountability, fearing failure.

In a place where people are penalized for mistakes (where there’s no psychological safety), they are unlikely to come up with solutions or drive innovation and growth.

Again, leaders set the tone. They can create an environment where employees feel empowered to share ideas, try new things, and learn from what works and what doesn’t. If they are not shamed or punished, but rather encouraged to speak up, a culture of learning develops where mistakes become stepping stones to success.

Emotional Intelligence

Leaders also direct the emotional state of the organization. As per a study published in the Harvard Business Review, leaders with high emotional intelligence have a productive work environment.

Now there are four components of EQ:

Self-awareness: It's about recognizing your own emotions and their impacts.
Self-management: This deals with controlling your emotional responses and reactions.
Social Awareness: It’s about understanding the emotions and feelings of others around you.
Relationship Management: Which is about using emotional awareness to positively interact and build strong bonds with people.

Modeling Behaviors

People follow their leaders' actions, not words. So great leaders lead by example. They consciously act in ways to create the culture they want. People follow their actions and gestures, and this way, the behaviors are mimicked down the line.

Whether it's a small act of maintaining cleanliness at work or taking accountability for your actions, people follow the leader and emulate their actions.

Effective Communication

The master skill all leaders possess is communication. They not only communicate well on their own but also adopt effective communication channels, like relying on the weekly newsletters to keep the team involved, engaged, and committed to the goal.

For effective communication, remember the 6 C’s:

Compassion: Your words must come from the heart in order to touch the hearts.
Clarity: Everything must be transparent and clear to have a lasting impact.
Conciseness: Keep your speech concise, brief, and meaningful.
Connection: Make sure to align each action with the end goal.
Conviction: Believe in your words, only then will others believe you.
Courage: Be honest, assertive, and direct, even if the situation is not very comfortable to talk about.

In this way, the employees become more receptive to receiving bad news. It gets easier for them to cite concerns and talk about the important issues at work. So, a culture is formed where people voice their opinions without any fear, and that changes the whole perspective for the team. In turn, the organization moves towards making better decisions and finding solutions.

Employee Empowerment

As per a report by McKinsey & Company, leaders and organizations who empower employees outperform their competitors by 202%.

Empowerment creates a flexible environment for the people where they feel more confident and encouraged to make key decisions. They develop a sense of pride and deeper accountability.

Delegation is a key component of empowerment. It shows you trust them with responsibilities and decision-making. This is likely to motivate them and increase their investment in their jobs while reducing your workload.

Talent Acquisition and Retention

Those organizations that have a strong culture actually attract and retain the top industrial talent. Since the leaders shape the culture, they give a sense of purpose to the team. The purpose-driven culture often wins when people weigh the job perks against the environment.

In fact, 73% of employees working in a purpose-driven company state they are more engaged in their jobs.

This is because people are more committed and likely to perform when they know their contributions are valued. The sense of purpose boosts their morale and motivation.

Adaptability

Adaptability is one of the prime traits of leaders, which is not just apparent in their actions but can also be seen in the organizational culture. Leaders create a culture where people are given flexibility. But the organization is also flexible to transition where the need may be.

We measure adaptability with AQ or Adaptability Quotient, which is the key factor in organizational success. A high AQ leads to better learning and responses during challenging times.

Great leaders make adaptability part of the culture by welcoming change and encouraging people to experiment and innovate.

Inclusion

As the world moves towards diversity, great leaders set the bar for the entire industry. They implement policies and training programs that unite their teams, creating an environment where open, unbiased discussions take place.

By leading by example, they demonstrate the value of diverse opinions and ensure every voice is heard. This inclusive approach makes employees feel valued and more likely to stay in an environment that truly listens to them.

Indra Nooyi, former CEO of PepsiCo, was a strong advocate for inclusion, particularly for women in leadership. She believed in empowering all voices, regardless of their background. As she put it, “Just because you are a minority doesn’t mean you have to be a victim. Don’t let anybody put you in a box.”

Wrap Up

Modern leadership is about empowerment, not micromanagement.

Great leaders don't hover over their teams; they inspire and trust them. They create a culture where the teams are free to take ownership of their actions, make decisions, and learn from their mistakes.

When leaders lead by example, their aura trickles down to the team, inspiring them to follow shared values while confidently paving their own path. This is how leadership influences organizational culture.

That’s just how the giants like Apple, Facebook, Disney, and Microsoft managed to change the world!

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Sheri Jacobs

Innovative CEO, bestselling author, and award-winning wildlife photographer, Sheri Jacobs empowers individuals and organizations to assess capacity, take risks, and solve complex challenges. Explore her unique insights and expertise.

https://sherijacobs.com