How Leaders Shape The Organizational Culture

From early-stage startups to Fortune 100 enterprises, these organizations share one thing in common -- an underlying company culture. This culture isn’t necessarily tangible or visible, but it flows through every team member from the interns to the chief officers.

Culture can be defined by the ways departments collaborate with each other, how information is passed on through a company, how meetings are conducted, transparency from leadership, and much more. Cultivating a great company culture empowers teams to do their best work, and ensures the wants and needs of employees are being met. Of course, this is beneficial for both the organization and their customer base.

Organizations are also aware of its importance. According to a PWC survey on organizational culture, 86 percent of C-level executives and 84 percent of managers believe culture is vital to an organization’s success. A total of 60 percent followed up by saying culture is a bigger success factor than existing business models or strategies.

As the talent pool deepens and more power is shifted in the favor of job seekers, organizations must clearly define their culture and be willing to make changes where necessary. In today’s competitive landscape, this could be a matter of sink or swim.


A Common Pitfall in Organizational Culture

Company culture isn’t something that develops out of thin air. It is established in the earliest days of a organization’s existence, and the founders of a company must commit to setting the groundwork for a culture they see beneficial for everyone.

But as the groundwork sets and the organization grows, we begin to see a common pitfall occur -- the reliance on established social norms, practices, and processes within a company. Referred to as Uncertainty Avoidance, this typically happens in larger organizations that apply business models (that may have worked in the past) towards an evolving and disruptive market.

We see a lot of this in big companies. Once a company gets to a certain size, it starts to lose its appetite for risk. W.L. Gore—a 10,000-employee firm founded in 1958 was no exception. At some point, slow decision-making and a risk-averse culture weighed down Gore's business goals. When the executive realized the effects, they immediately addressed the problem and called out for an overhaul.

A survey conducted by Innosight asked executives from 91 different companies with revenues of more than $1 billion about the number one obstacle inhibiting cultural changes to meet new demands. 40 percent believed it was simply too hard to break free from the established model, with 24 percent blaming a lack of coherent vision for the future.

This fear of flexibility and inability to hear out and apply different approaches has lead to alarmingly high turnover rates, and is one of the main reasons why half of the S&P 500 companies are expected to be replaced over the next decade, claims the Innosight study. But leaders who are willing to assess their cultural gaps and make changes will be better equipped for future challenges.


Can Leaders Shape Organizational Culture?

Leaders set the foundation and the expectations for their employees, but the impact of an involved leader goes well beyond that. Let’s take for example the type of impact two of Apple’s most prominent CEOS had on Apple products during the company’s explosive period of growth.

John Sculley, who came from Pepsico, led Apple with a more market-focused, quick to disrupt type of attitude. Under Sculley, Apple went from having revenues of $569 million in 1983 to a whopping $8.3 billion in 1993. Steve Jobs, however, was the Apple pioneer. He understood that while Sculley had greatly contributed to the growth of Apple, he didn’t want the design and technicality of their products to suffer.

Jobs was obsessive, and many reported it being difficult to work with him. But for Apple to evolve into the giant it is today, the organization needed to take parts from both Sculley’s marketing-heavy initiatives and Jobs’ product-design initiatives. This decision didn’t just churn out revolutionary products time and time again, but it united the multiple cultures of Apple during this period of growth. Had the organization gone too far one way or the other, that could have created a rift in the company culture.

Leaders within an organization (however many there are) have a duty to their teams and stakeholders to establish a path and ensure every member is on board. Even as culture evolves and more people contribute to it, it’s up to the leaders to recognize this change and stay active in the cultural process.

As in the case of Gore, the executive team streamlined the decision-making and created an in-house team to incubate promising ideas. Employees were encouraged to explore new opportunities that created enthusiasm for some team members who were frustrated with the current structure.

It’s clear that every period of growth starts from the top.


How to Change the Organizational Culture

A company’s culture embodies so much, that it can be difficult to understand all the effects it has on your organization’s performance. If your organization’s culture has transformed into something it shouldn’t have, you may find yourself chasing top talent, or worse, losing valuable team members to your competitors. This may mean it’s time for a change.


1. Understand the current culture.

Creating a new culture starts by examining the current one. What are the values, subcultures, styles and dynamics that currently exist within your company? By pinpointing these areas, you’re able to get an overview of where your company’s strengths and weaknesses stem from.

Here are some target areas you should look at when moving forward with change:

  • Communication - What are some of the common ways team members interact with each other? Communication, or lack of it, is critical to any organization’s success. Whether this communication is in-person or through messaging platforms, make sure it aligns with the culture you set out to establish.
  • Conflict Resolution - How are conflicts resolved within the organization? Conflicts and disagreements are bound to happen, but a good company culture assures problems are nipped in the bud before they escalate. Take note on common issues that arise. These can be due to a disruption in the cultural environment. Also take note on who the solutionists are, and what are some of their methods.
  • Objects and Artifacts - Another neat way to assess culture is through objects and artifacts around the office. Are employees taking pride in their workplace? Are employees encouraged to collaborate and interact with their colleagues? Are common areas even being utilized?
  • Emotional Environment  - Assessing the emotions of your employees is crucial. The goal of any organization is the generate revenue and find opportunities for growth, but if your employees aren’t satisfied in their roles, this can have insidious effects. Conduct cultural interviews, or if your employees like to remain anonymous, pass out cultural surveys. Get insight on ways you can improve their work environment, engagement, and outlook on the company.


2. Articulate the change.

Leaders must understand the effect of the culture on the current and anticipated business conditions. As a leader, you should be able to articulate the purpose for change. For example, aligning your business model to be better prepared for challenges of the future. Many of today’s cultures are hidden or ambiguous, so vocalize the steps towards change and be receptive to feedback from your employees.


3. Develop leaders.

Leaders serve as the main catalyst for change. Re-train and re-energize leaders within your business that see value in the transformation. These leaders understand the relationship between culture and strategic direction. It may also be beneficial to find outside perspectives in the form of consultants to help adopt new cultural styles and behaviors.

It’s important to note that making cultural changes in an organization shouldn’t be abrupt; and they need to be done in a calculated manner to have desirable and lasting effects. Cisco’s Chief People Officer Fran Katsoudas also reminds us that “If you understand your team dynamics, the individuals on your team, and their strengths, you will have a much better lens on what is going well or where there are challenges.”

Stay connected with your employees, ensure their goals are being met, cultivate an environment of productivity and creativeness, and this will lead to a culture that’s in-line with your organizational vision. Feel free to check out our blog for more insights on improving employee and customer experiences.