The Role of Leadership in Shaping Organizational Culture Essay

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The Role of Leadership in Shaping Organizational Culture


In this paper I have tried to analyze the role of leadership in shaping of organizational culture. Also I have briefly touched the definition of culture, historical overview of leadership theory development’s issue and what impact have traits approaches, skills approach, style approach and also ethical approach on creating of organizational culture for healthy organization.

The Role of Leadership in Shaping Organizational Culture

The Importance of Organizational Culture

Creating of organizational culture is crucial for organizations and leaders. The success of organization depends on an appropriate organizational culture. Organizations with an established organizational culture which have strong capabilities for change, strong team committed to innovation and internal trust have competitive advantage (Eccles, Perkins, & Serafeim, 2013). To go deeper into this issue, we have to define the culture and organizational culture separately.


A culture is a set of basic tacit assumptions about how the world is and ought to be that a group of people share and that determines their perceptions, thoughts, feelings, and, to some degree, their overt behavior (Schein, 1992). Organizational culture is the workplace environment formulated from the interaction of the employees in the workplace. The leaders play a significant role in defining organizational culture by their actions. The leadership and all employees contribute to the organizational culture (“Organizational Culture: Corporate Culture in Organizations,” 2013). Ravasi and Schultz (2006) state that organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behavior for various situations. Shein, (1996) has in very interesting and I would say genial way differenced three cultures of leadership which are “operator”, “engineering -” and “executive culture”.

Moreover, two of them have roots outside, that is why they are more fundamental and difficult to be changed. These two are connected with experience and knowledge gaining from outside (e.g. knowledge that drives technologies). One of them is created inside to move operational success. This is operator culture. Usually in organizations these three cultures are not aligned with each other that is why in such organizations we can observe ineffective teams which could not reach common business goals, namely new product development, hierarchical communications or interactions, appropriate supply change, marketing, innovation etc. If these cultures would not really match each other, this would cause failures and ineffective team (Shein, E. H., 1996). Conversely, if these three cultures would work synchronic, it will cause an effective team work. It means that three factors that I have mentioned in our discussion in module 4, which are leadership, shared vision, commitment and confidence would be available in organization. Figure 1shows us different assumptions of three cultures.

Figure 1

Assumptions of the Operator Culture

• Because the action of any organization is ultimately the action of people, the success of the enterprise depends on people’s knowledge, skill, learning ability, and commitment.

• The required knowledge and skill are “local” and based on the organization’s core technology.

• No matter how carefully engineered the production process is or how carefully rules and routines are specified, operators must have the capacity to learn and to deal with surprises.

• Most operations involve interdependencies between separate elements of the process; hence, operators must be able to work as a collaborative team in which communication, openness, mutual trust, and commitment are highly valued.

Assumptions of the Engineering Culture

• Engineers are proactively optimistic that they can and should master nature.

• Engineers are stimulated by puzzles and problems and are pragmatic perfectionists who prefer “people free” solutions.

• The ideal world is one of elegant machines and processes working in perfect precision and harmony without human intervention.

• Engineers are safety oriented and overdesign for safety.

• Engineers prefer linear, simple cause-and-effect, quantitative thinking.

Assumptions of the Executive Culture

Financial Focus

• Executives focus on financial survival and growth to ensure returns to shareholders and to society.

• Financial survival is equivalent to perpetual war with one’s connpetitors. Self-image: The Embattled Lone Hero

•The economic environment is perpetually competitive and potentially hostile, so the CEO is isolated and alone, yet appears omniscient, in total control, and feels indispensable.

• Executives cannot get reliable data from subordinates so they must trust their own judgment. Hierarchical and Individual Focus

• Organization and management are intrinsically hierarchical: the hierarchy is the measure of status and success and the primary means of maintaining control.

•The organization must be a team, but accountability has to be individual.

•The willingness to experiment and take risks extends only to those things that permit the executive to stay in control.

Task and Control Focus

• Because the organization is very large, it becomes depersonalized and abstract and, therefore, has to be run by rules, routines (systems), and rituals (“machine bureaucracy”).

• The inherent value of relationships and community is lost as an executive rises in the hierarchy.

•The attraction of the job is the challenge, the high level of responsibility, and the sense of accomplishment (not the relationships).

•The ideal world is one in which the organization performs like a well-oiled machine, needing only occasional maintenance and repair.

• People are a necessary evil, not an intrinsic value.

•The well-oiled organization does not need people, only activities that are
contracted for. __________________________________________________________________________ According to the above mentioned definitions and assumptions we can confess that organizational culture is a ground for appropriate employees’ and leader’s behavior that leads to success of whole organization. Nothing, no changes could be pushed in an organization with incomprehensible culture in organization and vice versa, with healthy culture the organization can achieve great outcomes. We could not predict or evaluate the culture of an organization only by short – term observing the overt behavior of employees, because culture is behavior based on particular system of values. To discover culture in an organization, one has to either observe behavior for a very long time or try to understand the system of values in organization that drives the behavior, thoughts, and perceptions of employees (Shein, E. H., 1983). The Figure 2 and Figure 3 show the real cultural essence, what members of the organization assume about.

Figure 2


1. The organization’s relationship to its environment. Reflecting even more basic assumptions about the relationship of humanity to nature, one can assess whether the key members of the organization view the relationship as one of dominance, submissiion, harmonizing, finding an appropriate niche, and so on.

2. The nature of reality and truth. Here are the linguistic and behavioral rules that define what is real and what is not, what is a “fact,” how truth is ultimately to be determined, and whether truth is “revealed” or “discovered”; basic concepts of time as linear or cyclical, monochronic or polychronic; basic concepts such as space as limited or infinite and property as communal or individual; and so forth.

3. The nature of human nature. What does it mean to be “human,” and what attributes are considered intrinsic or ultimate? Is human nature good, evil, or neutral? Are human beings perfectible or not? Which is better. Theory X or Theory Y?

4. The nature of human activity. What is the “right” thing for human beings to do, on the basis of the above assumptions about reality, the environment, and human nature: to be active, passive, self-developmental, fatalistic, or what7 What is work and what is play?

5. The nature of human relationships. What is considered to be the “right” way for people to relate to each other, to distribute power and love? Is life cooperative or competitive; individualistic, group collaborative, or communal; based on traditional lineal authority, law, or charisma; or what?

Figure 3


Each of the mechanisms listed below is used by founders and key leaders to embed a value or assumption they hold, though the message may be very implicit in the sense that the leader is not aware of sending it. Leaders also may be conflicted, which leads to conflicting messages. A given mechanism may convey the message very explicitly, ambiguously, or totally implicitly. The mechanisms are listed below from more or less explicit to more or less implicit ones.

1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization.

2. Design of physical spaces, facades, buildings.

3. Deliberate role modeling, teaching, and coaching by leaders.

4. Explicit reward and status system, promotion criteria.

5. Stories, legends, myths, and parables about key people and events. 6. What leaders pay attention to, measure, and control.

7. Leader reactions to critical incidents and organizational crises (times when organizational survival is threatened, norms are unclear or are chalienged, insubordination occurs, threatening or meaningless events occur, and so forth).

8. How the organization is designed and structured. {The design of work, who reports to whom, degree of decentralization, functional or other criteria for differentiation, and mechanisms used for integration carry implicit messages of what leaders assume and value.)

9. Organizational systems and procedures. (The types of information, control, and decision support systems in terms of categories of information, time cycles, who gets what information, and when and how performance appraisal and other review processes are conducted carry implicit messages of what leaders assume and value.)

10. Criteria used for recruitment, selection, promotion, leveling off, retirement, and “excommunication” of people (the implicit and possibly unconscious criteria that leaders use to determine who “fits” and who doesn’t “fit” membership roles and key slots in the organization). Shein, E. H. (1983).

The Role of Leadership in Organizational Culture

A business organization starts by leader (or leaders) who has vision or an idea which could be settled into life only with team. Of course, in this case only the leader, who created the organization, could take the responsibility for implementing appropriate organizational culture that will work properly and insure success. In this case only leader has assumption according to the future behavior of team members; s/he knows what kind of employees the organization needs to reach the vision and other aspects of day-by-day work. The main goal of leader in this case is shared organizational culture, which will help in creating an effective team to reach the common business goals. First the leader has to share the culture to the main team members, namely to upper management and after every top manager has to share it further. It means that first of all top management has to understand the assumption shares by leader to be able share it further.

Figure 4


Problems of External Adaptation and Survival

1. Developing consensus on the primary task, core mission, or manifest and latent functions of the group—or example, strategy.

2. Consensus on goals, such goals being the concrete reflection of the core mission.

3. Developing consensus on the means to be used in accomplishing the goals —for example, division of labor, organization structure, reward system, and so forth.

4. Developing consensus on the criteria to be used in measuring how well the group is doing against its goals and targets —for example, information and control systems.

5. Developing consensus on remedial or repair strategies as needed when the group is not accomplishing its goals.

Problems of Internal Integration

1. Common language and conceptual categories. If members cannot communicate with and understand each other, a group is impossible by definition.

2. Consensus on group boundaries and criteria for inclusion and exclusion. One of the most important areas of culture is the shared consensus on who is in, who is out, and by what criteria one determines membership,

3. Consensus on criteria for the allocation of power and status. Every organization must work out its pecking order and its rules for how one gets, maintains, and loses power. This area of consensus is crucial in helping members manage their own feelings of aggression.

4. Consensus on criteria for intimacy, friendship, and love. Every organization must work out its rules of the game for peer relationships, for relationships between the sexes, and for the manner in which openness and intimacy are to be handled in the context of managing the organization’s tasks. 5. Consensus on criteria for allocation of rewards and punishments. Every group must know what its heroic and sinful behaviors are; what gets rewarded with property, status, and power; and what gets punished through the withdrawal of rewards and, ultimately, excommunication. 6. Consensus on ideology and “religion.” Every organization, like every society, faces unexplainable events that must be given meaning so that members can respond to them and avoid the anxiety of dealing with the unexplainable and uncontrollable.

Normally, the leaders have sufficient impact and power to create a culture in one’s organization and share it to team members. The success, competitive advantages, profitability of organization, employee satisfaction etc. depend on how the shared culture meets the needs of market, customers and employees. Today in 21th century to be able to create an appropriate organizational culture for a healthy organization, the leader has to be really skilled professional and have best personal characteristics. He or she has not only to use one of his or her five types of power, described by French and Raven (1962), namely referent-, expert-, legitimate-, reward-, and coercive power, but also to choose suitable leadership style, to work on ethical issue in organization. Historical Overview

In the 19th century the researcher began to understand that the culture and especially above mentioned three cultures connected together is an important need. In this changing world to be competitive, leaders and managers of organizations have to try to be self effective, create an effective team to achieve the common business goals which have been changing and remain changeable enormous even jet. Also researchers have begun to pay more attention to leadership and management as a discipline to explain these phenomenon. Many of them believed that recognizing of leadership will help them to improve their personal, social and professional lives (Northouse, 2013).i The researcher began a sided study of leadership and put forward different approaches which I will go in details further.

In the beginning the researcher considered leadership as a trait and behavior and only after it has been considered as a process, as a relation between leaders and followers, although leaders should not be considered as better then followers (Hollander, 1992). They can be dominant, because it comes from personal qualities. This occurrence is known as emergent leadership in contrast to assigned leaders which are appointed from outside. (Smith & Foti, 1998). If at first the researchers thought that leadership is a trait and personal qualities and is could be studied, then after it became clear that leadership is a process, the researcher realized that it could be learned (Northouse, 2013).

After that the researchers have begun to substantiate the leadership as a process, they have tried also to separate and determinate separately the leadership and management. First of researchers, who argued that leadership and management is dissimilar was Kotter (1990). He wrote that main function of management is to provide order and consistency, whereas the main function of leadership is to produce change and movement. Kotter showed that leadership is quite deferent with management. Leaders usually create business and religious organizations, also political parties (Schein, 1983). Leaders change the way people think (Notrhouse, 2013). In generally it is the leaders who change history. The main reason of researcher was to find the key of effective leadership and management to implement it in many organizations. The opinions of researchers have differed, and year by year
they have been founding more and more effective leadership approaches. They could not find a single and universal method that would meet all needs. Trait Approach

Trait approach was one of the first systematic attempts to study leadership as discipline (Northouse, 2013). The weakness of this approach was the belief that people are born with appropriate trait, as leaders. This belief was as a reason that motivated researcher to determine the specific traits which distinguished leaders form followers (Bass, 1990; Jago, 1982). About six different studies were conducted since the 40s (Northouse, 2013). A lot of traits were provided and most common of these were: Intelligence, Self – confidence, Determination, Integrity and Sociability. But despite all these traits, Stogdill (1974) argued that to have the certain traits, is not enough to be a leader. In my opinion it is really not enough for successful leader only to possess the traits showed above. Trait approach is necessary for self assessment and also for evaluation the team members. With trait approach the assessing leader could apply a system approach. Although only with good traits the leader could not create an effective organizational culture for healthy organization. We can confess that the traits for leader are not a sufficient condition, but necessary. Skill Approach

In the early 1990s a lot of studies have been published about skills of leader (Northouse, 2013). The researcher have written about leadership’s skills, especially that except the traits, an effective leader is supposed to have and gain appropriate skills, to be able to solve organizational problems. Under this topic the researchers have been discussing two main models: first is “Management skills necessary at various levels of an organization” by Katz (1955), second is “Three components of the skills model”, by Mumford (2000). The first model is about three necessary skills used differently according to the management levels: top -, middle -, and supervisor management level. Three skills are: technical, human, conceptual.

All these skills are necessary for creating an appropriate culture for the healthy organizational and sharing it. I want to mention especially human skills. This skill means ability to work effectively with people: subordinates, peers, superiors. A leader can have many other characteristics, traits, skills, but absence of only human skill will inhibit the whole work of leader. Such leader could not be effective or create appropriate culture in organization. One example could be a perfect engineer with bad character. Such specialist could not be leader but only follower.

The second model examines the relationship between a leader’s knowledge, skills and leader’s performance. It consists of five components: competences, individual attributes, leadership outcomes, career experiences, and environmental influences. On the basis of this model, we can argue that the capability of a leader could be developed to be effective. In this sense, some of arguments of traits approaches dispel. As was above stated, all skills are necessary to be able to create an effective organization with healthy culture. I would give only one example to show the importance of skills in organizational leadership; social judgment skills are the capacity to understand employee and social systems. Like above given example, without proper understanding of humans could not be an effective organization.

Style Approach

Except traits and skills leaders have to choose the leadership style. With chosen style (it can be also a mix of different stiles) leaders give communication in organization and behave appropriate. The researcher have determined two general kinds of behaviors: task and relationship related. The both behaviors are very important to motivate subordinates and to have work done in organization. From the 40s the researchers have been searching a universal behavior for all situations in organizations (Northouse, 2013). They could not find it. But many of the researchers came to the conclusion that the best known and several times revised and refined model of managerial behavior is the Leadership (or Managerial) Grid (Blake & McCanse, 1991; Blake & Mouton, 1964, 1978, 1985). This model is very important for leaders.

According to the Leadership Grad leaders can evaluate the behavior which is needed in a specific situation or organization. The Leadership Grid has two factors: concern for production and concern for people. Through these two factors the leaders can correct one’s behavior for creating effective team and introduce organizational culture. The leaders have to decide, what style of leadership they are going to show: more people oriented (1.9 Country – Club Leadership), or more result oriented (9.1 Authority – Compliance Leadership), or more team oriented (9.9 Team Leadership). At first glance, one can assume that team leadership style is going to be effective in creating of healthy organizational culture, but on the other hand the efficiency of implemented style depends on many factors. For example in military and in software development companies the same style will perceived differently and have different impact on culture creation.

There are also many other theories and approaches, in which the scholars have been trying to suggest more optimal and efficient approaches to leadership theory, including: contingency theory, leadership theory, path – goal theory, leader – member exchange theory, transformational leadership, servant leadership, leadership ethics and many others. In mentioned theories, in this chapter, as in above written chapters also we see that all theories, approaches, styles, skills and traits are not for pattern use, but for self assessment of leaders in proper situations and organizations. Only leaders, who can make appropriate and realistic assessments of oneself, team potential, market situation, kind of organization, can create using all kinds of leadership theories, approaches, skills, traits an efficient organizational culture for healthy organization. The leaders should have sufficient motivation to identify and address any disparities that exist between their organization’s current culture and a productive healthy one.

Ethical Issue

There is deep connection between creating of organizational culture for healthy organization and ethical issue. The creation of healthy organizational culture is impossible without ethical behavior of leader and top management. 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). As we sow above, the culture also is an assumption of some kinds of behaviors based on appropriate system of value. These two concepts are complementary and availability of both will conduct really healthy organization.


There are not the universal approaches or system of traits or skills in leadership, which can be used as pattern to implement and be successful. We cannot apply templates to a social system. Leaders have to be very intelligent and skilled professionals to be able to create an appropriate culture for healthy organization. In my opinion the organizational culture creation is purely the responsibility of leaders. Organizational culture is very important, because with culture in organization the traditions are created also, which is based on the already correct actions that do not need unnecessary time to explain and teach ։ The organizational culture creates an healthy environment. The leader has to be an example for successful sharing of culture. We see also that all approaches and stiles and skills, traits not for pattern use, but for self assessment of leaders in proper situations and organizations.

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