How Does Leadership Influence Organizational Culture?

Effective leadership is one of the greatest fundamentals to building great organizational cultures. A leader can be anyone who has influence or authority, regardless of title, and leaders set the tone for organizational culture.

Leaders can reinforce values while simultaneously holding people accountable. This influence over others can be either positive or negative based on the leadership style and execution of strategy, but both effective and ineffective leadership will influence and build organizational culture in the workplace. SHRM advises leaders to be deliberate in creating a culture where employees can thrive. Failing to build a strong culture is detrimental to employees and the bottom line.

Why is organizational culture important?

When the above aspects of culture are instilled by a leader in a workplace, the workforce becomes more engaged. Some benefits of higher employee engagement include:

• Higher quality and safety. Engaged employees are committed to meeting a standard of quality and excellence. Because of this, they make smarter decisions, pay closer attention to detail, and approach their work with thoughtfulness. These same actions also go far in promoting and maintaining workplace safety.

• Better work/life balance. When a company encourages and supports a healthier balance for employees, they don’t just work harder, but smarter. Being able to better juggle these two important parts of life makes way for motivation and efficiency to take hold. It also decreases absenteeism and increases loyalty to the organization.

• Excellent customer service. Employees who are valued end up valuing their customers, clients, team members, and everyone else they come into contact with each day. When more care is taken to answer questions, address concerns, solve problems, and generally be of help to others, soaring sales are sure to follow.

• Greater retention rates. All of these benefits aren’t only enjoyed by the employer. Employees of companies that cultivate such a culture are apt to stay put for the long term. Why? There’s simply no reason to leave when you’re feeling appreciated, heard, and allowed to advance.

• Growing profitability. With an upward trajectory of engagement that fuels these benefits comes a general growth in profit, due to impressive productivity delivered from every member of the workforce.

What contributes to a strong organizational culture?

A positive culture should be the foundation of an organization. Meaningful work, appreciation, wellbeing, leadership, and connection are all aspects that contribute to your culture.

1) Meaningful Work
Employees spending nearly 1/3 of their lives at work should feel a deep and personal connection with the work they do daily. Hopefully, they also have a sense of opportunity and motivation to be the best they can be in their role.

Having a vision within their role allows people to develop and feel more connected to the work they do. Seeing new and additional opportunities at work helps employees stay engaged and contribute in an impactful way.

2) Appreciation
Don’t let top talent leave because of poor company culture. Invest in your employees by celebrating career milestones and achievements. Personal recognition makes employees feel valued by peers, friends, leaders, and family members.

3) Wellbeing
Wellbeing is more than just physical fitness and healthy eating habits. It also encompasses emotional and social wellness that can be felt when people are part of a strong support system. While your organizational culture should reinforce a healthy lifestyle, it should also foster a healthy sense of community.

4) Connection
Our research shows there has been an increase in isolation and burnout at work in recent years. Interactions have been replaced by social media tools that were created to connect us. However, employees are still not as connected to their organization or sharing as many experiences collectively as in times past. This lack of connection inhibits collaboration and can lead to a decreased sense of belonging and purpose at work.

5) Leadership
Leadership influences company culture heavily. Leaders can reinforce organizational values by helping their people grow and develop through goal setting, opportunities, and recognition. Elevate employees through frequent one-on-ones and regular two-way feedback. When employees have open and ongoing dialogue about their work, their trust in their leader strengthens.

What is leadership culture?

Leadership culture is important to building organizational culture. Leadership culture is how leaders interact with one another and their team members. It’s the way leaders operate, communicate, and make decisions. And it’s about the everyday working environment: their behaviors, interactions, beliefs, and values.

Is the way leadership influences culture contributing to your desired culture? Are the ways they hire people, create high-performance teams, execute business strategy, and engage their employees for the long term helping you build a strong corporate culture?

Leaders must understand their role in shaping an organization’s culture, and organizations must make intentional efforts to help develop their leaders. Effective leadership development goes beyond training classes, adding on to your organizational structure, or even determining the right cultural fit when hiring new leaders. The best way to ensure your leadership culture is positively contributing to your organizational culture is to create modern leaders.

What does a good leader look like?

At a high level, a good leader cares about and brings out the best in others through coaching, mentoring, and listening. The best leaders are modern leaders.

Modern leaders are leaders who mentor and coach rather than micromanage and gatekeep. They advocate for their people and empower them to do great work rather than trying to do it all themselves. They appreciate their employees, provide opportunities, and share success. Modern leaders are naturally inclusive and build connections for their teams.

Modern leaders help people grow by connecting employees to three pillars:

• Purpose
• Accomplishment
• One another

When leaders connect their people to these pillars, employees are 373% more likely to have a strong sense of purpose and 747% more likely to be highly engaged while at work.

Leaders can help their people feel connected through frequent one-to-one conversations. One-to-ones allow leaders to regularly check in with employees, provide mentorship and coaching, show appreciation, and reinforce culture. Tools like O.C. Tanner’s Culture Cloud can help you show appreciation, connect with employees, and reinforce and strengthen organizational culture.

What aspects of company culture can leaders control?

Leaders have a tremendous impact on company culture. They set the agenda, prioritize work, manage, lead, and delegate. Strong leaders provide a sense of vision, purpose, mentorship, and inspiration to those they lead.

Today’s diverse workforce is reshaping what it means to achieve personal and professional success. Traditional leadership styles and types of leadership culture are not resonating with younger generations who thrive upon more growth and coaching.

For example, our research shows that only 54% of employees report their leaders know what they do while at work, a mere 26% feel their leader encourages collaboration, and just 59% believe their leader values them.

The relationship between a leader and an employee is a critical connection. If the link is weak or negative, our research also shows that employees will be disconnected from other aspects of culture as well.

7 ways leaders can focus on company culture

Leaders significantly affect an organization’s culture, so doing a good job at inspiring others should be a big focus of every leadership strategy. This can be done a multitude of ways, but here are seven that stand out:

1. Be a role model. Those at the top must exemplify the culture they preach—no exceptions. If trust is ever breached, a solid apology (and, depending on the situation, perhaps even consequences) better follow in a timely manner.

2. Observe for insights. Sometimes just sitting back for a bit and soaking in what’s happening around the office will be quite telling. Take in subtle details about the work environment and employee behavior. You might be surprised by how much can be learned when there is a moment to step back.

3. Provide an open communication platform. When anyone at any level has access to participate in Q&A sessions with senior leaders, answers can be given on the spot. This helps employees be heard, but it’s also a good way to reinforce the company’s goals and values.

4. Take meaningful action on feedback. Asking for feedback is only as useful as the action that follows. Feigning a listening ear won’t go unnoticed.

5. Empower employees. A culture of autonomy allows for more problem solving and greater innovation. When employees are trusted to contribute (with accountability), they will outperform everyone’s expectations.

6. Remind workers that failing isn’t fatal. Failure is inevitable, no matter who you are. It just means that chances were taken and growth is occurring. Don’t punish people for trying, but encourage them to learn from what went wrong and make improvements the next time around.

7. Recognize a job well done. Employees who are openly shown appreciation at work are happier and more productive. When they know their contribution matters, that what they do is meaningful, and that their superiors take the time to express thanks, employees are more loyal to their team and the company as a whole.

12 myths about how leadership impacts company culture

It is more apparent than ever that today’s workforce needs an effective leadership style that transcends changing organizational principles.

Effective leadership shapes the employee experience, engagement, and wellbeing, all which are critical to a thriving workplace culture. To help leaders know where to begin, we’ve looked at 12 myths about how leadership impacts company culture:

1. Culture is only about how people interact with each other. FALSE. Yes, it’s good when people can just “get along” with each other. However, culture entails much more than that—it takes into account unspoken behavioral norms as well. Things like beliefs, clarity, commitment, purpose, and outcomes are all big players in an organization's culture.

2. A company’s culture should organically develop. FALSE. Culture is rooted in the everyday values, interactions, and behaviors experienced at an organization. This means that without intentionally laying a foundation of good principles, the wrong type of culture can take hold quicker than can be imagined.

3. Leaders can’t rebuild company culture. FALSE. A broken culture can be a byproduct of poor leadership; therefore, strong leadership can repair and rebuild. However, new (or improved) leaders can better connect with employees for the common purpose of achieving a more positive, supportive company culture. Creating a dialogue and sense of accomplishment where people feel valued will help establish a culture of appreciation.

4. Culture is HR’s responsibility. FALSE. A common misconception is that the human resource department is the sole instigator and cultivator of organizational culture. The fact is, every leader and employee must be on board for a cohesive and meaningful culture to propagate.

5. Culture is all about having fun. FALSE. Although “fun” work cultures seem to capture a lot of attention, having social events and employee perks can only go so far. Ultimately, having the right processes in place—propped up with strong support and supplemented with good attitudes—will drive positive culture much further than field trips ever could.

6. Company culture doesn’t inform performance. FALSE. There’s no getting around it—company culture correlates closely with its performance on just about every benchmark. When employees have confidence in their leaders, they’re more willing to work hard for them. Good leadership influences efficiency and effectiveness, which goes on to dictate success.

7. Mentorship is ineffective. FALSE. One of the most useful things a leader can do is focus on developing the people who report to them. Leaders are in the unique position to advocate for and mentor their teams. Organizations should teach managers how to support their employees, instead of just being the gatekeeper to their internal careers.

8. The annual review is effective. FALSE. When done incorrectly, relying on performance reviews alone can actually cause more harm than good, as they don’t inspire or improve overall performance. Frequent and effective feedback is the new standard.

According to Gallup, managers who provide weekly feedback have employees who are 5.2x more likely to agree that they receive meaningful feedback, 3.2x more likely to be motivated to do outstanding work, and 2.7x more likely to be engaged at work.

Regular check-ins provide more of an opportunity to ensure employees are aligning their work to purpose, finding development opportunities, and creating a more impactful dialogue.

9. Creating a strong culture costs a lot of money. FALSE. Big brands have big budgets that can go toward implementing and promoting a great culture, but that doesn’t mean it has to be that way. The biggest investment in organizational culture takes is time. Putting in the effort and practicing some patience will pay off more in the end than only throwing cash at the problem.

10. Pay raises lead to a better culture. FALSE. This is an antiquated thought. While fair compensation is necessary for a better culture, other things also come into heavy play. Providing positive opportunities and interactions, being inclusive, and having integrity lead to great overall satisfaction.

11. Appreciation isn’t that important. FALSE. C-suite leaders often have trouble emotionally connecting with employees on the front line, but praising their positive behavior exemplifies strong company values. Recognition programs are an excellent way to embed appreciation into daily work because they hold people accountable in a positive way, no matter their role.

12. Employee recognition doesn’t matter. FALSE. Standup recognition moments provide opportunities for leaders (and peers) to let employees know their work is meaningful and show they are a valuable part of the company.

Why recognition matters for company culture

Many of the 12 myths about company culture ultimately have to do with:

• Valuing what employees have to offer with their skills and experience
• Recognizing employees’ worth to the success of the organization
• Appreciating employee efforts and loyalty

When all this is done openly and in an established, consistent way, all members of the organization from top to bottom can share mutual trust, a strong sense of security, and reciprocal loyalty.

Ways leaders can recognize employees

There are an endless number of ways leaders can encourage a thriving team culture through recognition. A few events that can be recognized are:

• Daily wins
• Team-building triumphs
• Big victories
• Safety improvements
• Service operations
• Health achievements
• Workplace anniversaries
• Holidays
• Company-wide celebrations

Here are just a few tangible ideas that professional companies have used to communicate value and appreciation:

• Certificates or plaques
• Gift cards to stores or restaurants
• Watches or jewelry
• Electronics
• Housewares
• Flowers or plants
• Art or sculptures
• Concert or event tickets

Leaders can choose which products to award their employees, but oftentimes letting the employee choose for themselves is even better. A company-wide recognition program, like O.C. Tanner’s Culture Cloud, can make it easy for leaders to appreciate and recognize their people in a way that also strengthens and reinforces your organizational culture. Either way, make sure the award appropriately reflects the accomplishment.

Invest in your culture

Want more information? The O.C. Tanner Institute's Global Culture Report offers simple, actionable steps you can use right away to create an engaged, thriving workplace culture.