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Culture and Leadership by Kate Harrad

May 4, 2011 - In Leadership in Management - No comments yet

It is probably true to say that there are very few companies in which the leader has total control and influence over the company’s culture, and also very few where they have no influence at all. Within this range of possibilities, however, it is difficult to generalise about the degree of impact that leadership has on organisational culture.

There are, however, patterns that can be identified, and phases through which companies tend to develop in terms of the way that their culture grows, and the effect that the leader has on it.

Founding
Like religions, companies tend to start off small and be dominated by a single person who is often regarded as dynamic and charismatic. At this stage, the company’s culture usually arises out of the leader’s beliefs and values, which lay the foundations for what the future, mature company will be like. If the leader’s beliefs are strong and effective and the organisation they have created supports them – which is likely, since the leader will tend to employ people whose values are similar to their own – then it is likely that the business will flourish and that a culture will develop based on the behaviours and opinions that have been proved to work.

Maturing
Companies often become larger as they get older. This growth and maturity will tend to change the culture in two ways. Firstly, because the company is larger it will probably divide into departments or equivalent sections, and each department is likely to develop its own ‘feel’ – i.e. its own subculture, heavily influenced by the departmental leader and by the type of work the department does. Thus the main culture will become diversified.

Secondly, the maturation of the business will often lead to company culture becoming more solid, with a consequent loss of flexibility and a disinclination to change. The culture assumes the status of tradition. But, like many traditions, its original meaning may become muddied, due to the effects of time and diversification. When people think they are upholding the company’s traditions, they may in reality be upholding a mutated version of them. It should also be borne in mind that at this stage, some employees will be supporting the culture because it has become part of the fabric of the company, not necessarily because they have a personal commitment to it for its own sake.

Becoming global
Obviously, the larger a company gets, the more it is likely to develop different versions of the basic culture. Although few companies will have spread as far as this, the example of Christianity shows how extreme diversification can get: to what extent are a Methodist in Essex, a Catholic in Italy and an evangelist in Texas related? They share certain common beliefs, but interpret many of them very differently and may not even consider each other as part of the same umbrella organisation – yet they all define themselves as Christian. A modified version of this can be true of large organisations, which can develop geographical, operational and hierarchical difference to the extent that they are only technically part of the same business. This is not necessarily a bad thing for the company, but it makes it harder for the CEO to retain control and shape the culture.

Relationship between leader and culture
But then, how much should a CEO influence and control organisational culture? There are obvious disadvantages to their having too much control: it means a great weight of responsibility. If the CEO actually embodies the culture, they will have to live up to it consistently and any deviation will undermine morale. Additionally, when they leave, the company will be thrown into cultural disarray. On the other hand, a CEO who is distanced from the prevailing culture will risk being seen as irrelevant or uncaring, and losing the respect of his or her people. In our article on Organisational Culture we mentioned Edgar Schein, in his book Organisational Psychology, describing “what happens when an organisation is seen as distant and unfeeling, i.e. when it stops paying attention to the underlying culture of individual personalities and extra-curricular behaviours. Individuals will often react to this by becoming transactional and viewing the organisation with complete cynicism.” The same thing can happen when it is the leader, not the company, which is seen as uncaring. And it is not difficult for a leader to acquire this reputation. The average pay of a UK chief executive is now over £2.5 million per annum; it has increased in the last year by four times the amount of average earnings. News stories of CEOs getting large bonuses while their companies struggle and their employees get laid off only enhance the perception that some chief executives have lost touch with their people.

A leader’s role is not to maintain tight control over every aspect of the organisation’s behaviours, beliefs and ways of operating, but to guide and shape where necessary. A leader has to ‘be’ as well as ‘do’.

Conclusion
Where it is possible, the CEO of a large company should, arguably, work towards achieving two levels of culture: a basic ethos, such as ‘customer satisfaction is paramount’, which should be consistent across the entire organisation, and also a more varied local selection of subcultures, variations on the theme. Recent research by the Work Foundation has produced some insights on the best way for CEOs to relate to the organisation: “Leaders at the top firms were visible to the workforce and tended to be stewards of their organisation rather than visionaries. Top performers also had good communication and shared knowledge with the whole workforce.” On the other hand, “poor performers tended to have a bureaucratic and hierarchical culture, with leaders more concerned with financial metrics than staff.” Good communication between the leader and the workforce will benefit the culture (as well as the company profits) and enhance the leader’s role in maintaining the culture by making it clear that he or she is aware of its nuances.

1. From Edgar Schein
(see http://www.tnellen.com/ted/tc/schein.html#diff) – Subcultures can be differentiated by:
1. Functional/occupational differentiation
2. Geographical decentralization
3. Differentiation by product, market, or technology
4. “Divisionization”
5. Differentiation by hierarchical level
6. Mergers and acquisitions
7. Joint ventures, strategic alliances,multi-organizational units
8. Structural opposition groups

2. The Guardian, August 4th, 2005



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