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The Role of Leadership in Shaping Organizational Culture

The Role of Leadership in Shaping Organizational Culture

Recent research stated that �[c]companies with an established organizational culture that includes
strong capabilities for change, commitment to innovation and a high level of trust have a significant
advantage� when attempting to adopt a strategy of broad-based corporate sustainability (Eccles,
Perkins, & Serafeim, 2013). Yet an Ethics Resource Center (2012) survey found that 42% of respondents
felt their organizations exhibited signs of a weak ethics culture with a low degree of trust and
transparency. Organizational leaders should have a strong incentive to identify and address any
disparities that exist between their organization�s current culture and a productive healthy one. They
must understand the impact they can have as leaders in facilitating an organizational culture, determining
the necessary steps to build that culture, and taking the necessary action to create a healthy

organizational culture.


The Role of Leadership in Shaping Organizational Culture

It is widely agreed that leadership forms, shapes, and embeds organizational culture, and
in turn, contributes to the long-term effectiveness and productivity of an organization.
Organizational culture sets the context within which the employees in a firm strive for excellence
and work together in realizing the goals of the company (Yafang, 2011). An organization’s
culture is characterized by the collective set of habits and values that condition actions of
members within it. It is the written and unwritten rules of how a company’s employees work with
each other, customers, and stakeholders (Belias & Koustelios, 2014). Culture becomes ingrained
over a period as a response to the actions and style of an influential leader (DeRue & Ashford,
2010). There is also a common hypothesis postulating that culture plays a significant role in the
ability of the firm to execute its own strategic plans successfully. Moreover, successful leaders
shape the organizational culture instead of allowing it to shape the company. A strong culture
which exhibits a well-targeted and effective set of behavior patterns and specified values, forms
the basis for an organization to perform better.
The systems approach posits that organizations have an identity, the enduring distinctive
character of the organization as reflected in the values, symbols, traditions, as well as in the way
the organization translates and interprets its environment (DeRue & Ashford, 2010). Leaders, in

this regard, are the architects of the identity of an entity, how an organization makes sense of its
environment and work, relationships that matter, feedback that counts, and available information.
At the same time, the views and behaviors of the organizational leadership are, in turn, shaped by
the norms and boundaries of the organization (Belias & Koustelios, 2014). As such, the
organization’s ability to manage identity confirmation in work groups is likely to achieve higher
cooperation. Again, convergence around the collective identity enhances the organizational
commitment, strengthens the organizational culture, and mobilizes cooperation.
Shaping the organizational culture is a comprehensive, methodical, and integrated
approach to shifting the it from the top management and leadership to the bottom levels (Belias
& Koustelios, 2014). Therefore, building a healthy, high-performance culture entails changing
the behaviors of teams and individuals that constitute the organization. Personal transformation
is the foundation of a cultural transformation. DeRue and Ashford (2010) posit that creating a
thriving, high-performance culture that is aligned with the company’s values, goals, and vision is
a vital strategy for success. Shaping the organizational culture is a journey that requires a well-
coordinated and integrated approach. The process requires an integrated approach starting from
the top and then embedded throughout the entire organization. A leader cannot, therefore, shape
an organization’s culture in isolation. When done correctly, shaping of the organizational culture
can be very successful, rewarding, and stimulating process.
Culture happens by design or default and is notably a critical aspect of the company’s
business strategy and competitive advantage. Shaping the organizational culture requires a
complete and comprehensive approach to change, with an awareness of and emphasies on some
key principles such as purposeful leadership, personal change, and focused sustainability
(Aitken, 2008). The leadership must own and lead the process of shaping the culture. They need

to have a clear, compelling purpose for the organization and for themselves coupled with a
powerful business rationale to inspire a thriving organizational culture. Just like any other
business strategy, the process requires to have resources and a systematic execution plan. Culture
needs to be explicitly defined through values and behaviors and at the same time modeled by the
senior team. There is a need for the company’s employees to unfreeze existing habits and to
make personal behavior change on an emotional level through insight-based learning in natural
work teams to shift thinking and in turn reinforce change (Belias & Koustelios, 2014). People
must understand the need shaping their culture. The process requires momentum, energy, and
critical mass in order to engage all employees, since cultures are likely to resist change.
Institutional practices, performance capabilities and drivers, and systems need to drive towards
the desired culture in terms of communication, measurement, training, rewards and
reinforcement, HR practices, performance management, and physical layout.
Several studies have highlighted the correlation between leadership strategies, the
effectiveness in leadership role, and the impact that leaders have on others (Yafang, 2011).
Leadership has a role in shaping the organizational culture while the culture in turn shapes
leadership. Both leadership and culture drive performance. Organization culture is very crucial in
terms of creating a healthy working environment and in promoting and communicating the goals
and vision of the organization to employees. This, to a great extent, influences employee’s job
satisfaction and motivation (DeRue & Ashford, 2010). Effective leadership styles and culture
form the basis for employees to make greater contribution to team collaboration and
communication, and will be motivated to achieve the objectives of the organization.
Research has demonstrated the relationship between leadership behavior and work
satisfaction of employees (Eagly & Lau Chin, 2010). Leadership behavior and job satisfaction

depend on the organizational context. Culture is a socially learned and transmitted aspect by the
members providing the rules for behavior within organizations. Organizational culture is,
therefore, supposed to guide employees in understanding what is expected of them including
values, assumptions, and values about their work. The core values in a company begin with its
leadership and then evolve into a leadership style. The other staff members are guided by the
behavior of the leaders and the values. Once a strong, unified behavior, beliefs, and values have
been developed, a strong organization culture then emerges (Ilies et al., 2006). When leaders are
able to appreciate their function in maintaining the organizational culture, they are able to
maintain a consistent behavior of the staff and to reduce conflicts thus creating a healthy working
Research has revealed the close correlation between organizational culture and
leadership, as well as between leadership styles and performance. Evidence demonstrates that the
relationship between leadership effectiveness and leadership is mediated by cultural congruence
(Belias & Koustelios, 2014). In describing organizational culture, it is important to highlight the
various aspects in terms of the visible organizational actions and structures such as facilities,
procedures, and actions. The other aspect is the one of expounding values manifest in public
images of the organization such as goals, philosophies, and strategies. The third level consists of
basic assumptions, perceptions, feelings, and thoughts. The visible elements created by a
company act as the objective organization culture while the two other elements are related to
subjective organizational culture. In order to function successfully, leaders need to balance
between the different roles and competencies.
The rational goal model, which focuses on the director and producer roles, is a directive
and goal oriented. The primary roles of this approach are those of the director and producer

(Aitken, 2008). As a director, the manager provides direction and is expected to provide
clarification of expectations through goal setting and planning. The leaders are supposed to be
decisive initiators capable of defining problems, generating solutions, clarifying tasks, giving
instructions, and establishing rules and procedures. The producer, on the other hand, is expected
to increase production and to facilitate goal accomplishment. A producer has high motivation
and energy and can accept responsibilities, maintain high productivity, and accomplish stated
goals. The internal process model focusing on coordinating and monitoring roles as a leadership
style is conservative and cautious (Aitken, 2008). The role of the manager is to keep track of the
activities and to ensure that people follow the rules and procedures. A monitor is entrusted at
analyzing all the facts and details. The human relations model of leadership styles concerns
facilitator and mentor roles. This type of leadership is supportive and concerned. The roles of the
facilitator are to build cohesion and teamwork (Aitken, 2008).
The transformational leadership theory emphasizes on the need for motivational leaders
to articulate vision and direction, strengthening culture, and valuing and nurturing their staff,
thereby enhancing performance. The transformational leadership approach strives to promote
fellowship effectiveness (Jones, 2012). Distributed leadership identifies the need for the top
leadership as part of a wider leadership capability. Although the distributed leadership approach
recognizes the need for the top leadership, it champions for leadership in practice stretched over
the situational and social contexts of the organization (Eagly & Lau Chin, 2010). In this model of
leadership, the efforts of the leaders is a product the leaders thinking and behavior, the people,
and the context. This model posits that strong leadership is characterized by the top leadership
relinquishing power to others in the system, and recognizing interdependency. The systems
approach identifies leadership as taking place in multiple systems whereby every organizational

member is a member of that system. Leadership is practiced in different ways in these systems
and is determined by the complexity of the work within that system. Leaders in complex systems
that characterize today’s business environment are expected to provide clarity of purpose and
expectations and to provide congruent and consistent decisions. The leaders also have a duty to
guide on the system’s boundaries and expectations as well as to help the system make sense of
the context within which it works (Jones, 2012).
Organization culture can be described as the framework that is used to guide decision-
making and to resolve problems within the organization and in its external environment.
Organizational culture depends on communication, shared interests and goals, collaborations,
and social interactions among the employees (Eagly & Lau Chin, 2010). The main challenge for
the leaders is, therefore, to influence and energize others to embrace a shared vision within the
culture. They must be able to lead others into emulating and supporting the actions and behaviors
that establish a strong, positive organizational culture that is capable of thriving and forging
ahead into the future. According to Jones (2012), some of the effective leadership behaviors that
would foster a healthy organizational culture include being a mover, empowering others,
fostering good communication, building trust, managing conflict, and performance evaluation.
Leaders ought to apply several techniques geared towards molding a healthy
organizational culture. These techniques involve adopting and integrating effective leadership
behaviors and acting as a mentor by sharing knowledge and expertise gained from experience.
Leaders as role models provide guidance in regard to value-based behaviors and standards of
conduct (Latham, 2013). The leaders should also establish a shared vision, guide and motivate
staff, and boost communication among the staff. By nurturing a sense of self-worth and
commitment, leaders are able to develop an empowered organization.

Empowering others is a crucial recipe to realizing the great potential and creativity in
them. Through empowerment, people feel significant and are willing to make a contribution to
the company (Heifetz & Laurie, 1997). This is because they know that their contribution is
important and valued by others in the workplace. Another important role of the leader is to unify.
This entails creating a team of staff working towards a common shared vision. This can be
achieved through a two-way communication between the leadership and the employees. When
people feel empowered, in the workplace they take full responsibility of situations. They conduct
themselves with a sense of personal power and control, flexibility, as well as trust from the
leadership. In an organization where employees feel empowered, they take full control,
responsibility, and charge of programs to achieve the organizational goals creating a culture of
commitment and responsibility where everyone is committed to achieving the purpose.
Fostering good communication is a critical element of the organizational culture and acts
to facilitate quality outcomes (Latham, 2013). For leadership to realize a healthy organizational
culture, they must ensure that there is regular and comprehensive communication among the staff
and the leadership. In addition, there is a need for timely and accurate flow of information among
all the stakeholders of the company. Effective communication as such allows all those involved
to express their opinions, receive constructive feedback, and resolve conflicts.
Leaders striving to create a healthy working culture ought to develop a culture that
supports trusting connections with individuals and groups within the organization (Avolio et al.,
2009). Leaders can achieve this by being accessible, listening actively, and keeping in touch. By
inviting others to contact them, leaders show their trust, availability, and willingness to focus on
their concerns. Consequently, people know that they are valued and respected when they are
listened to.

The authority and power of the leaders may be established in many ways, and the sources
of power may either be positive or negative. A positive organizational culture focuses on the
ability of the management to establish a positive authority (Eagly & Lau Chin, 2010). Leaders
can achieve positive authority by establishing reward power and influencing others to follow
their guidance in holding valued rewards. Consequently, they can establish referent power by
socializing with employees and demonstrating various admirable traits that influence the
followers to perform on the basis of a desire for approval or admiration. In addition, they can
establish expert power by gaining expertise and knowledge and by encouraging the staff to learn
and gain from their experience. Notably, to manage organizational culture so that it supports the
core values and believes entails understanding and recognizing the conflicts and dynamics within
the organization (Latham, 2013). This helps them to understand and effectively diagnose issues
related to organizational culture. Conflict management is, therefore, a critical component of a
healthy organizational culture. Conflict and differences are inherent aspects of an organization,
and effective leaders view them as an important source of vitality.
In conclusion, it can be argued that managers and leaders play a very crucial role in
influencing an organization’s culture. Culture serves as the foundation for all the systems,
strategies, and processes in a company. Leaders have the central role in shaping the culture in an
organization. Successful leaders are able to develop a positive and healthy corporate culture for
their organization by motivating the employees to perform at a higher level, establishing positive
authority, and promoting open communication.



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