Business Leadership Today

How Leaders Influence Culture: The Crucial Role of Leadership in Shaping Organizational Culture


John Spence, Contributor

Leadership is not just a title; it’s a transformative force that shapes an organization’s culture from the ground up. 

With my three decades of experience and research backing this claim, you can be confident that effective leadership is the cornerstone of organizational success.

Leadership is pivotal in creating an organizational culture. Leaders mindfully guide the development of culture by setting the vision, emotional tone, and behavioral norms for their organizations. They empower employees for success by ensuring alignment between cultural values and the employee experience. 

It’s a multifaceted role that influences every aspect of an organization, from profitability to employee engagement.

Leaders profoundly influence culture by setting a vision that unites employees and creating a purpose-driven work environment that supports them as they work to achieve that vision. Their actions shape organizational behaviors, making their role in culture strategically imperative for sustained excellence.

Leaders shape organizational behaviors by cultivating emotional intelligence, modeling desired behaviors, fostering open communication, empowering employees, and attracting and retaining top talent through purpose-driven cultures. 

They also promote adaptability and inclusivity, driving innovation, transparency, and accountability; encourage decision-making at all levels; and uphold ethical conduct, establishing trust and integrity within the organization. 

In this article, I’ll discuss the 12 specific areas where leadership makes a significant impact on organizational culture, shaping it in ways that help employees reach their full potential and organizations achieve long-term success.

1. Setting the Vision: The North Star for Culture

Leaders are the visionaries who set the course for the organization. A compelling vision serves as the North Star, guiding all actions and decisions within the company. 

Steve Jobs serves as an iconic example of the power of a visionary leader. His vision for Apple wasn’t just about creating innovative products but about making technology an extension of oneself. This vision influenced every aspect of Apple’s culture, from product design to customer service.

According to a survey by the Harvard Business Review, companies whose employees understand the vision are twice as likely to be top performers. 

The vision should be clear, inspiring, and, most importantly, communicated effectively to all levels of the organization. Employees who can get behind an organization’s mission feel purpose at work, which keeps them motivated, engaged, and performing well. 

2. Emotional Intelligence: The Underpinning of a Positive Work Environment

Leaders are the emotional compasses of their organizations. Another study published in the Harvard Business Review confirms that leaders with high emotional intelligence are more likely to create positive, productive work environments. 

Microsoft’s CEO, Satya Nadella, serves as a case study of this behavior. He transformed the company culture from competitiveness to collaboration and empathy, significantly increasing Microsoft’s stock prices.

Emotional intelligence (EI, or, commonly, EQ) comprises four key elements: self-awareness, self-management, social awareness, and relationship management. 

  • Self-awareness involves recognizing one’s own emotions and their impact.
  • Self-management focuses on controlling emotional responses and acting purposefully. 
  • Social awareness entails understanding others’ emotions and the dynamics at play within a group. 
  • Relationship management involves leveraging emotional awareness to foster positive interactions and build strong bonds. 

Mastering these elements is crucial for effective leadership and team cohesion, serving as both a timeless skill set and a modern necessity in today’s collaborative work environments.

3. Modeling Behavior: The Living Code of Conduct

Leaders serve as living, breathing policy manuals. Their actions set the standard for acceptable behavior within the organization. 

Arianna Huffington’s emphasis on wellness at HuffPost serves as a prime example. She underscored the importance of work-life balance and well-being by introducing innovative features like nap rooms and meditation corners.

Symbol management is a practice where leaders consciously perform actions that serve as living examples of the culture they aim to cultivate. These subtle yet impactful symbolic acts send powerful messages to the team. 

For instance, a leader who picks up trash in the parking lot demonstrates a commitment to cleanliness and respect for communal spaces. 

Similarly, a leader who publicly acknowledges and corrects their own mistakes sets a precedent for accountability and continuous improvement. The leader underscores the value of collaboration and open dialogue by actively participating in a brainstorming session. 

These actions are not just performative; they are strategic moves in shaping the organizational culture, making symbol management a critical tool in a leader’s arsenal.

4. Communication: The Lifeline of an Organization

Effective communication is a cornerstone of successful leadership. Salesforce CEO Marc Benioff employs a specific framework known as the V2MOM process (Vision, Values, Methods, Obstacles, and Measures) to communicate company goals clearly and effectively. 

This approach highlights the necessity of regular communication channels, such as weekly newsletters or monthly town halls, to keep employees informed, engaged, and aligned with the company’s mission.

Open communication also involves being receptive to bad news and constructive criticism, as these insights are invaluable for continuous improvement. This sort of environment encourages team members to voice concerns, share ideas, and flag issues without fear of retribution. 

When employees feel safe, they are more likely to contribute innovative solutions and identify potential pitfalls, enhancing problem-solving and decision-making processes.

5. Employee Empowerment: The Engine of Success

Employee empowerment is not a buzzword; it’s a strategic necessity. According to a report by McKinsey & Company, companies with empowered employees outperform their competitors by up to 202%.

Empowerment goes beyond providing tools and resources; it involves creating an environment where employees feel confident and are encouraged to make decisions and resolve problems. 

This requires leaders to delegate and relinquish some control, trusting their teams to take ownership of their tasks and projects. 

The goal here is to delegate to the point of discomfort and then beyond. Employees empowered in this way are more likely to be engaged, innovative, and committed to the organization’s success. They will also take greater accountability for their actions. 

6. Talent Attraction and Retention: The Magnetic Effect

According to a Glassdoor survey, 80% of talent professionals agree that a strong culture helps attract and retain top talent. Leaders play a crucial role in shaping this culture. 

For example, Netflix’s Reed Hastings has been very explicit about the company’s culture, even publishing a culture deck that has been viewed millions of times. The deck is a clear message to potential employees about what the company stands for and who they want on their team.

It is important to note that a purpose-driven culture is increasingly becoming a non-negotiable for top talent, often rivaling or surpassing the allure of a hefty paycheck. A compelling organizational purpose catalyzes high levels of employee engagement, imbuing work with meaning and significance. 

People are more committed and motivated when they believe their contributions make a tangible difference. Leaders who successfully instill this sense of purpose elevate employee satisfaction and create a magnetic culture that attracts and retains the best and brightest. 

As the job market becomes increasingly competitive, a great culture—shaped intentionally by leadership—becomes a differentiator that people genuinely want to be a part of.

7. Adaptability: The Key to Longevity

In a rapidly changing business landscape, adaptability is vital. Leaders should foster a culture that values continuous learning and flexibility. 

A prime example is IBM’s transition from a hardware company to a cloud and cognitive solutions provider. Under the leadership of Ginni Rometty, IBM invested heavily in retraining its workforce, preparing them for new roles in cloud computing and artificial intelligence.

Adaptability Quotient (AQ) is recognized as a critical factor in organizational success, especially in today’s fast-paced, ever-changing business environment. A high AQ within a company fosters a culture of resilience, learning, and agility, enabling teams to pivot effectively in response to challenges or opportunities. 

Adaptability should be embedded into the organization’s DNA, requiring leaders to encourage change and innovation proactively. This might involve setting up cross-functional teams to tackle complex challenges or investing in upskilling programs to prepare employees for future roles.

8. Inclusivity and Diversity: More Than Just Buzzwords

Diversity and inclusion are not just ethical choices but business imperatives. A report by McKinsey shows that companies with diverse executive teams are 33% more likely to outperform their peers. 

Leaders like Mary Barra, CEO of General Motors, have been champions of diversity, setting a precedent for the entire industry.

Leaders must actively promote diversity and inclusion through comprehensive policies, training programs, and open dialogue. They should also be willing to challenge their own biases, setting a personal example for the rest of the organization. 

Inclusion goes beyond hiring practices to encompass every aspect of the business, from product development to marketing, ensuring that diverse perspectives are represented and valued. It plays a crucial role in building the kind of belonging needed for team cohesion and successful collaborative efforts. 

9. Transparency and Accountability: Building Trust

Transparency fosters trust, and accountability ensures integrity. When employees feel informed and valued, engagement levels rise. 

Leaders like Warren Buffet are known for their transparent communication, especially during times of crisis. Buffet’s annual letters to shareholders are a masterclass in transparency and accountability.

Leaders should strive for a culture where transparency and accountability are embraced. This involves being open about both successes and failures and holding everyone, including themselves, accountable for their actions. 

Transparency and accountability also extend to financial performance and business strategies, ensuring that employees understand the bigger picture and their role in it.

10. Innovation and Creativity: Fueling Growth

Innovation is the lifeblood of business success. Leaders should cultivate an environment where employees feel safe to express their ideas and take calculated risks. 

Companies like 3M have institutionalized this through their “15% time,” where engineers are encouraged to spend 15% of their time on projects of their choosing, leading to inventions like the Post-it Note.

Leaders should also be willing to invest in innovation, providing the necessary resources and support for creative initiatives. This might involve setting up dedicated innovation funds or offering incentives for groundbreaking ideas. 

According to a PwC report, 93% of business executives believe that organic growth through innovation will drive a more significant proportion of their revenue growth.

11. Decision-Making: The Art of Choice

Leadership is often about making tough decisions that impact the organization’s future. The quality of these decisions can significantly influence the culture. 

Jeff Bezos of Amazon is known for his “two-pizza rule,” which encourages small team sizes (the size that two pizzas could comfortably feed) to facilitate quicker and more effective decision-making.

Leaders should foster a culture where decision-making is not just top-down but also involves input from various levels of the organization. 

Delegating important work as far down in the organization as feasible creates a culture where people feel heard, trusted, and valued and where they strive to meet the challenges of more responsibility.

John Spence is a keynote speaker, consultant, and executive coach, who was named by the American Management Association as one of America’s Top 50 Leaders to Watch along with Sergey Brin and Larry Page of Google and Jeff Bezos of Amazon.  He is the author of the acclaimed book on business excellence, Awesomely Simple.

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