The Importance of Leadership and Culture in Organizations

By Indeed Editorial Team

Updated September 28, 2022 | Published September 29, 2021

Updated September 28, 2022

Published September 29, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

The organizational culture and leadership of any company can have a major role in its success. Positive company culture may extend throughout the workplace and improve the morale of all employees with the correct leadership. Learning more about the role leaders play in fostering a healthy organizational culture can help you create an engaged and focused team. In this article, we discuss why leadership and culture are important in an organization, explain what organizational culture is, outline how leadership affects organizational culture, and describe the steps that can lead to a successful change in workplace culture.

Why is leadership and culture in organizations important?

Leadership and culture in organizations are important because it helps to create a harmonious, collaborative, and trustworthy workplace. Leaders teach employees how to adopt the ideals of the organization. A leader's responsibility is to explain the company's mission, goals, and core values, along with defining, teaching, monitoring, and rewarding the culture they wish to promote. Ethical leadership promotes the success and growth of businesses. Ethical leaders foster an environment of honesty, integrity, trust, and justice. Employees are typically more engaged and happier when they work for leaders that have strong ethical standards.

Related: Leadership Skills: Definitions and Examples

What is organizational culture?

A company's organizational culture is a set of principles and values that define it, its mission, objectives, and operations. It specifies the behaviours and actions employees may adopt to improve workplace satisfaction and effectiveness. To help ensure understanding of the organization's culture by all employees, it is important to have a clear explanation of every aspect included.

Related: How To Use Organizational Culture To Find the Perfect Job

How leadership affects organizational culture

Here is a list of ways that leadership can influence organizational culture:

Teaches core values

The most important characteristics of organizational culture are the fundamental values that are organized, shared, and transferred by employees. Leaders can act as role models who exhibit behaviours that reflect the company's ideals, influencing their employees to do the same. It is the responsibility of a leader to translate an organization's mission into positive outcomes.

Promotes a desire to learn

A good leader shows genuine concern for their employees' development and readily shares their knowledge with others. They assist team members in determining a career path and provide knowledge to help them reach their career goals. Leaders encourage employees to learn from every opportunity. They may build a culture of learning and growth by motivating people to take risks to expand their knowledge. Employees who are willing to learn may find their jobs more rewarding and meaningful by following their guidance. This may also help them have a stronger desire to work together and learn from others.

Fosters a culture of recognition

Leaders establish a culture of appreciation and recognition by telling employees the significance of their contributions. The leader's job is to reward and promote exemplary work and behaviour. When leaders compliment staff, they often make them feel fulfilled and confident in their role. Leadership cultivates a culture of gratitude. Quality leaders encourage employees to recognize their teammates for their contributions. For instance, a manager may ask coworkers to identify specific examples when a colleague excelled during a team meeting. A positive work environment where everyone celebrates accomplishments can help lead to stronger and more effective teams.

Stimulates a shared vision

Leaders usually advocate for a positive and value-based vision of the future. They show team members how to achieve a goal by providing detailed steps. By doing this, they can help employees share a clear awareness of their position in any collective activity and also help them feel motivated to contribute to developing a shared vision for the future. Employees are more productive when they can relate to a realistic vision, and they also feel satisfied when they attain their goals.

Reforms the culture

Leaders often recognize that company culture evolves and changes over time. They can offer information about changes and help their team members navigate them as they occur. They can demonstrate to their team members the behaviours that are compatible with the cultural shifts that have occurred and which ones to modify.

Increases job satisfaction

Job satisfaction is the feeling of how well a workplace environment suits employees' needs and wants. It also relates to an employee's assessment of the company's beliefs and how closely they correspond to their core values. There are several factors, including leadership quality, that influence job satisfaction. Employees who are happy with their jobs are more likely to have increased performance in their roles. One of the most effective methods to increase job happiness is to choose a leadership style that benefits both the company and its employees. There are many leadership styles and it's common to use a combination of them.

Related: How To Motivate Employees

Ensures accountability

Accountability is vital for leaders who want to structure the culture of their organizations in a positive way. Leaders hold employees accountable to ensure that they complete their tasks on time. Leaders can explain to employees that company culture exists to help them succeed. A culture of responsibility begins with detailed job descriptions that identify performance metrics. A quality leader is open and honest with their team members about the criteria that they expect them to meet. Leaders can elaborate on expectations and work standards during performance reviews. Employees are more likely to achieve and surpass objectives if they have clear and measurable tasks or goals.

Related: How To Be a Lead at Work (With Steps)

Improves the socialization process

Onboarding programs and pamphlets describing the organization's history, legacy, and mission are usually the responsibility of leaders. New employees often observe what others are doing to learn what is required of them. Leaders typically communicate expectations, written and unwritten rules, policies, visions, and other information to new employees in a clear and concise manner. Leaders can also adjust their organization's socialization processes in order to have the best impact on organizational culture.

Implements a coaching system

Developing a framework that includes goals and the strategy necessary to change company culture is frequently part of the coaching approach used by leaders. These details can include a company's perspective on quality work, what constitutes a healthy working environment, and the company's values and rules. Leaders can regularly provide updates through a leadership blog, video, or by contacting and answering queries from staff through a forum. By doing this, employees usually gain a better understanding of the recognized cultural values.

How to implement culture change

Here are steps you can follow if you are interested in implementing a culture change in an organization:

1. Create the goal

Developing a new culture begins with an examination of the current one and utilizing a framework that the entire business can use. Leaders can analyze how the culture's objectives match the current and expected market and business conditions. Current business challenges, opportunities, goals, and trends can all be used to help frame change.

2. Select and develop leaders who align with the target culture

Leaders play a crucial role in creating change by promoting it at all levels of a company and fostering a safe environment for it to happen. Leaders can evaluate candidates for employment based on their alignment with these goals. Current leaders who are resistant to change can go through engaging and re-energizing programs about the relationship between culture and strategic direction. They are more likely to support the change if they understand its relevance, potential advantages, and impact on advancing the organization toward the goals.

3. Use organizational conversations about culture to outline the importance of change

During the transition stage, employees can talk to one another to share values and beliefs within the organization. Employees may behave differently once they realize their leaders constantly speak about new company outcomes. Organizational conversations, such as roadshows, listening tours, and structured group discussions can help support transformation. Influential leaders can use their language and actions to advocate for a cultural transition. By building a formal framework for conversations, you can create a significant improvement in company culture and employee engagement.

4. Reinforce the desired change through organizational design

When a company's structures, systems, and processes support the company's culture and goals, instilling new culture styles and behaviours becomes much easier. For example, performance management can be utilized to encourage people to represent organizational cultural traits. As the organization expands and hired new employees, training practices can help to promote the desired culture.

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