During commercial presentations, it happens quite often to see the commercial director explaining to a client what the company does, what kind of services provided, who are the potential customers and the best results recorded. Rarely, it is possible to assist to a presentation on who the company is. In fact, we tend to focus on the characteristics of a product or service; we leave out what drives us to produce, what choices we made, what we (leaders, managers and entrepreneurs) can inspire to the employees. Moreover, the vision that we have of our work and of our customers has left neglected. It is important to communicate the corporate culture, the vision that has been created over time, which influences strategies, objectives and ways of acting. It brings up the values and patterns of thought that leaders and executives developed in their cultural background and consolidated, through their common experiences, into the culture of the company.
In fact, organizational culture determines how an organization operates and how its members frame events both inside and outside the organization.In this paper, I have explored the basic concepts of organizational culture. I have described what an organizational culture is and its importance. Therefore, I have explained how it is formed, maintained, and changed by the active role of leaders in influencing the organizational culture. Moreover, I have define the role of leadership in promoting a healthy organizational culture and ethics. Concluding, I have highlighted the indissoluble link between leadership and organizational culture.
In 2007, the Italian Industrial Legacy launched a survey about corporate culture (Donaddio, 2007). The following are the most significant conclusions of that study: for the majority of the executive class, organizational culture is considered to be essential, while it is not very present in the imagination of citizens. Only 38% of normal employees know what is about, and the same for the 43% of small and medium entrepreneurs. For employers, corporate culture is creativity, innovation and responsibility, ability to integrate in a conscious way in the socioeconomic system, to take charge of other objectives in addition to profit. For citizens it is especially honesty, transparency, accountability, growth. The corporate culture provides for entrepreneurs competent people, the research and innovation while passion and motivation for the majority of citizens. In conclusion, this analysis revealed a common belief that the organizational culture of the company should pay for the development of the territory and the country in general, to stimulate the labor market and human resources, in a virtuous circle in the service of clients and consumers.
Definition of Organizational Culture
Organizational culture can be defined as a common set of values and beliefs shared by employees (Abrhiem, 2012). Schein (1990) defined the organizational culture as a set of implicit and explicit rules, norms and values that a group developed and were functional to resolve the group problem of adaptation and integration of external and internal environment respectively; since the set of rules worked effectively, has been considered valid and communicated to the new members of the group. It is important to define the organizational culture in order to understand how leaders can form, develop, modify and cancel it.
How Organizational Culture Starts and Evolves
In order to better define the organizational culture, it is important to understand how organizational culture forms, therefore, how the company founder shape the culture. With a specific purpose (e.g., profit), the founders establish the organizations. In general, the process can be described as the following steps (Schein, 1990): (a) A single person (founder) has an idea for a new enterprise; (b) The founder brings in one or more other people and creates a core group that shares a common vision with the founder; (c) The founding group begins to act in concert to create an organization; (d) Other people are brought into the organization, and a common record begins.Organizational Culture and Leadership Northouse (2013) defined organizational culture as rules, believes and principles that are shared by a group of people. Leadership, on the other hand, can be defined as a process where an individual influence a group of people and aim to achieve a common goal (Northouse, 2013). Therefore, there is a link between organizational culture and leadership. Leadership plays a direct or indirect role in shaping the organizational culture. In fact, leadership in organizations inspires moral decisions, creating a climate and organizational culture that stresses and reinforces the ethical behavior; This can be achieved through training, communication of key organizational values and coaching.
Values and Organizational Culture
Schein (2009) suggested that an organization’s culture develops to help it to cope with its environment and in order to change an organization one has to define and evaluate it. Schein (2009) argued that many of the problems confronting leaders can be referred to their inability to analyze and evaluate organizational cultures. Many leaders, when trying to implement new strategies or strategic plan leading to a new goal, may notice that their strategies will fail if they are inconsistent with the organization’s culture. Schein (2009) claimed that there are three levels of characteristics that a culture must consist of. The three levels are: behavior and artifactsvalues basic assumptions.
The most visible level is behavior and artifacts. This level consists of what one can observe, hear and feel (Schein, 2009). All may be visible displays of culture, but difficult to interpret. The next level is values, which is the most relevant. Values both generate and determine behavior, although they are not directly observable. Values are considered a sign of culture. The third level is the level of basic assumptions. Schein (2009) argued that fundamental assumptions develop until they become so evident and present that they may form a pattern and therefore culture. Cameron and Quinn (2006) stated that most of the highly effective companies are successful because of their organizational culture. Coca Cola or McDonalds are not successful just because their market force, but also thanks to the organizational values they have acquired (Cameron & Quinn, 2006).
Most of these organizations have a unique culture that is distinguished from other organizations. Moreover, Cameron and Quinn (2006) suggested that while is important to keep in consideration the markets where these companies operate, they claimed that their success is mainly due to the development and management of the organizational culture by the leadership. It has been demonstrated that culture plays a significant role when striving to insure long-term organizational effectiveness.
How Leaders Spread Organizational Culture
It is important to understand how the organizational culture evolves. There are, also, several mechanisms that contribute to the development of the culture, some of which are conscious and deliberate, while others are unconscious and unintended. These mechanisms can be divided into primary embedding mechanisms and secondary articulation and reinforcement mechanisms (Schein, 2009).Primary embedding mechanisms. The primary mechanisms for culture embedding and reinforcement are: (a) what leaders pay attention to, measure, and control; (b) leader reactions to critical incidents and organizational crises; (c) Deliberate role modeling, teaching and coaching by leaders; (d) Criteria for allocation of rewards and status; (e) Criteria for recruitment, selection, promotion, retirement and excommunication (Schein, 2009). What leaders pay attention to, measure and control: according to Schein (2009), leaders of the corporate companies focus on a certain area or issue systematically, which can be considered as formal control mechanisms and measurements.
Being systematic in paying attention to a certain issue can become a powerful way of communicating a message, especially if the leaders are consistent in their behavior. Moreover, the leader also encourages the employees to do the same. After a while everyone in the company has the same habit, therefore, a new element is added to the corporation’s organizational culture. Leader reactions to critical incidents and organizational crises: when a corporate company faces a crisis, the manner that the leader or others choose to deal with it creates new norms, values and working procedures. It is the leader’s responsibility to lead the team to come through a difficult time by proper and swift reaction. What action the leader takes and the policy used can reinforce or change the organizational culture. Furthermore, with combined efforts the members of the companies are more likely to remember what they have learned. Deliberate role modelling, teaching and coaching: Some corporate company has made a variety of presentations, which outline the company’s values, and material is used as part of the initial training. It proved to be a very effective way to give the new member a quick access to the organizational culture.
Criteria for allocation of rewards and status: according to Schein (2009), members learn from their experience with promotions, performance appraisals, and discussion with the manager on what the organization appraisers and what the organization punishes. It is reasonable that the employee do what exactly what the leader prefer in order to have a better career in the corporate company. Leaders shape and change the values and beliefs which are the essential parts of the organizational culture. Criteria for recruitment, selection, promotion, retirement and excommunications: the success of a culture lies in the success of the recruitment. Leaders choose the most suitable candidate to work for a corporate company in order to reinforce the organizational culture.
Besides, the leader will also choose different people to diversify the culture, making some beneficial change if necessary. Secondary articulation and reinforcement mechanisms. The most important secondary articulation and reinforcement mechanisms are: (a) the organization’s design and structure, (b) organizational systems and procedures, (c) design of physical space, facades, and building, (d) stories, legends, myths and parables about important events and people, and (e) formal statements of organizational philosophy, creeds and characters (Schein, 2009). Those mechanisms do not have much strong effect as the primary ones, and they are defined secondary because they work only if they are consistent with the primary mechanisms. When these mechanisms are consistent, they begin to build organizational ideologies. If they are inconsistent, they will be ignored and become useless.
Change in the Organizational Culture
Cameron and Quinn (2006) considered positive a change within an organization; they claimed that without change in the behavior of organizational members could become frustrated. When the organizational change starts, it is important that individuals in the organization are aligned to the new cultural values. If individuals are not willing to engage in the new behaviors, the organizational culture will not change. However, Cameron and Quinn (2006) believed an organization can change and does with the right instruments. Most researchers have understood the importance of culture within an organization, claiming that it has a powerful effect on performance and long-term effectiveness (Cameron & Quinn, 2006). In order to apply the change, a leader should have the necessary power. Normally, leaders have sufficient impact and power to develop a culture in one organization and share it to team members. The success, competitive advantages, profitability of an organization, employee satisfaction, etc. depend on how the shared culture meets the needs of market, customers and employees. Today in 21st century to be able to create an appropriate organizational culture for a healthy organization, the leader has to be skilled professional and have best personal characteristics.
Leaders have to use one of their five types of power, described by French and Raven (as cited in Northouse, 2013): (a) referent, (b) expert, (c) legitimate, (d) reward, and (e) coercive power. Leaders also have to choose suitable leadership style, to work on ethical issues in the organization. Style of Leadership that Promote Healthy Organization Culture When new leaders take over existing organizations, they find that the existing culture defines what kind of leadership style is expected and accepted, based on history and the beliefs, values, and assumptions of earlier leaders (Schein, 2009). Therefore, for a manager defining the proper leadership style is important for the continuity or the discontinuity of an organization and for concurring to a positive climate of the company. Climate is an overall atmosphere that is brought in an organization, in the way in which members interact with themselves, with clients and other parties (Lunenburg, 2011). Leaders create mechanisms for cultural development and the reinforcement of norms and behaviors expressed within the boundaries of the culture.
Cultural norms arise and change because of what leaders focus their attention on, how they react to crises, their style, and their capability to inspire and influence people. For instance, transformational leadership behaviors have been associated with followers’ identification with the leader and their identification with the organization. Organizational identification has been positively associated with employees’ work-related attitudes in time off, affecting both the satisfaction of the individual and the effectiveness of the organization. Rather than simply gaining compliance, transformational leadership motivates employees to go beyond standard expectations through the transformation of followers’ attitudes, beliefs and values (Bass, 1999). In fact, transformational leadership is required to align the individual’s values and beliefs and the requirements of the work position. When the alignment between personal and organizational values is missing, “attitudes will be formed which suppress motivation, hinder performance, and result in greater levels of dissatisfaction, turnover, and stress” (Posner, 2010, p. 536).
In particular, Selart and Johansen (2011) suggested that the stress influence the capability of people to elaborate ethical decisions and reduce their ability to act ethically. Therefore, lack of identification into corporate values, it will bring organizational stress and consequently will affect the organization both internally and externally. Besides, leadership plays a vital role in keeping the right tension on the organization. As Heifetz and Laurie (1997) concluded in their study, leadership also has to balance between having people feel the need to change and having them feel overwhelmed by change, keeping the right tension in the organization. Leaders play an important role in the case of unforeseen event such as crises. Crisis can be defined as an undesirable event that causes or may cause damage (loss).
In the case of a crisis, according with Vassilikopoulou, Lepetsos, Siomkos and Chatzipanagiotou (2009) there are four factors that contribute to the perception of customers about the brand of the company. These factors are the following: (a) company reputation and social responsibility, (b) company response to the crisis, (c) the magnitude of the crisis in terms of damage and (d) external effects such as media coverage and communication strategy. The reputation of the company is also responsible for the different reactions given to the crisis (Chen, Ganesan, & Liu, 2009). Leaders are responsible for all the above-mentioned factors. In fact, (a) they promote company reputation through the development of the organizational culture; (b) guide the response of the company to the crisis; (c) provide the necessary resources to prevent the loss or reduce its magnitude as low as reasonably possible (ALARP); (d) communicate efficiently inside and outside the company.
Applying Ethical Frameworks
There is a deep connection between creating of organizational culture for healthy organization and ethical issue. Ethics concerns the values and the moral of the person (Northouse, 2013). On this regard, leaders have a greater responsibility than others, as they influence person’s behavior and values to reach a common result (Northouse, 2013). Ethical theory consists of a system of rules and principles that guide leaders to make appropriate decisions, according to the ethical understanding of what is good, right or bad, wrong (Northouse, 2013). Culture also is an assumption of some kinds of behaviors based on an appropriate system of value. These two concepts are complementary and availability of both will create a suitable environment for a healthy organization.
For a leader, in order to develop and manage the organizational culture, it is important to understand what is the organizational culture, what contents culture covers, how to change it and how to assess it. It is dangerous to oversimplify this concept, because of the illusion created and the risk involved: one thing is to manage culture; another is to manage just a manifestation of it. Learning about culture requires effort. Leaders have to enlarge their perception and have to accept that there are other ways to think and do things. There are clear evidences to show that the formation and the development of the organizational culture are always combined with leadership. The formation and development of organizational culture are complex activities; however leadership is the dominant factor. In fact, there is a recursive effect between leadership and organizational culture. The next question should be the following: do leaders shape the organization culture or does organizational culture shape leaders?
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