“The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, culture manages you, and you may not even be aware of the extent to which this is happening.”
Edgar Schein
In the second article in our series on culture-management tools, we focus on leadership behavior. Managers’ formal and informal power—and their ability to influence others—make them one of the strongest forces shaping organizational culture for three main reasons:
1. Expectations
Leaders define acceptable and unacceptable behavior and establish what is expected of people in the organization.
2. Behavior and example
Because people naturally follow leaders, every decision, reaction, and behavior becomes a symbol through which employees interpret “how we do things here.”
3. Systems, structures, and processes
Leaders shape structures, processes, and systems, which in turn influence culture by guiding people’s behavior.
We will consider each of these elements in turn.
Expectations
Human beings are social, and we naturally follow established rules about what is acceptable or unacceptable in a particular situation. Most of us have a reasonably clear sense of how we are expected to behave at a business dinner, a parent–teacher meeting, or a drink with friends after a match. Those expectations guide our behavior. Managers shape workplace expectations in a similar way. This is not simply about business etiquette, but about the attitudes and behaviors expected in situations that matter to the work:
- what we do when we encounter a problem or challenge
- how we approach completing tasks
- whether we follow plans chaotically, flexibly, systematically, or rigidly; whether we compete or cooperate
- how we resolve professional disagreements and interpersonal tension
The list could be much longer. Managers create these expectations through what they reward and approve, what they criticize or sanction, and even what they fail to address. If professional disagreements begin turning into personal tension and the manager does nothing, the team may conclude that this behavior is acceptable. If the manager takes one side, employees may interpret taking sides as the “right” response. These processes often remain outside managers’ awareness. Focused on urgent tasks, goals, and day-to-day problems, many leaders fail to notice that their direct and indirect reactions establish the “rules of the game” and define acceptable, expected, and undesirable behavior in the team, department, or company—depending on the scope of their influence.
Another obstacle is managers’ fear of feedback, reluctance to use it, or failure to recognize how strongly it shapes the behavior, attitudes, and approach of people in the team. Feedback—whether immediate and everyday or part of a formal performance-management process—is the managerial tool that teaches people what they should and should not do to succeed in a particular company. Expectations must therefore be stated explicitly and communicated clearly. Competency models are useful here because, alongside role-specific competencies, they often include content connected to organizational values.
Leaders’ behavior and example
Every aspect of a leader’s behavior carries meaning for other people. Some situations have an especially strong cultural impact: leaders’ reactions during crises, the behavior they model, and the decisions that reveal what the organization truly values.
Crises heighten people’s attention, anxiety, and emotions, making them more sensitive to what happens around them. Lessons learned during a crisis are therefore particularly powerful and memorable. A decision to lay people off because revenue has fallen, reduce pay across the organization while retaining everyone, or respond through greater effort and creative problem-solving sends a clear message about how much people are valued and how they are expected to respond in similar situations in the future. This brings us back to leadership awareness: in a crisis, leaders need to avoid reacting impulsively or purely from emotion. They must choose deliberate response strategies that take account of both the immediate situation and the long-term consequences of their actions.
Whether charismatic or not, leaders inevitably become role models because of their position. People observe their behavior and learn from it. Most readers can probably recall competitive leaders who created intense competition in their department or company, innovative leaders who built a similar culture in their teams, or secretive and manipulative leaders who fostered gossip, distrust, and intrigue. Being a strong personal example requires leaders to:
- be clear about the working principles they expect their teams to follow and believe that the company’s values are right for its success
- state those principles and values and explain why they matter
- assess their own behavior and actions against the principles and values they have declared
We have met many managers who are wary of making this kind of commitment and prefer the comfort of being able to “judge each situation separately.” Yet clearly stated principles and values make decisions and dilemmas far easier: we do what our values tell us to do. Decisions made this way communicate unmistakably what the culture is and what matters.
Last year, we witnessed a powerful example while working with a client. During a culture-management project, the company leaders had to solve a scheduling issue – to hold a meeting of the company’s board or a session to analyze the results of a culture survey. The participants and timing overlapped, so one meeting had to be moved. The organizational leader made a quick and decisive choice: “The culture project is the top priority. The board meeting will be rescheduled.” This sent a very clear signal across the organization about the importance of the work. In the weeks that followed, it was striking to see that message translate into visibly stronger engagement among everyone involved in the project.
Systems, structures, and processes
At first glance, decisions about how to structure a company or department, design a process, or build an organizational system appear to be pragmatic business choices connected to the “hard” side of the organization. Yet they are never only neutral, rational solutions to a task. They also reflect the underlying assumptions of the leaders who create them. Underlying assumptions are the implicit beliefs each of us holds about how success is achieved, what matters in relationships, how motivation works, how much control is necessary, and similar questions.
When managers decide on the optimal departmental structure, the type of assessment to use in performance management, or which indicators should be used to measure people’s work—or whether to measure it at all—their beliefs and assumptions shape those decisions. In our work, we have encountered manufacturing companies with no production KPIs and technology companies attempting to quantify the output of software engineers. These are two contrasting examples of business solutions driven less by what is rational and effective than by managers’ beliefs.
Processes, structures, and systems frame people’s behavior and largely shape the choices available to them. In turn, they create beliefs about important aspects of organizational life: safety procedures are applied rigorously; both revenue and profitability are measured; every expense requires approval; budgets cannot be renegotiated; customer satisfaction is measured and improvement actions follow; knowledge sharing takes place through a clear formal process; the structure has only two management levels and anyone can speak directly with the CEO. Practices embedded in processes, systems, and structures create norms that influence culture. Fortunately, this relationship has been widely studied, and established principles are increasingly applied:
- Fewer layers of control create a culture of accountability, flexibility, and faster decision-making.
- Clear, well-explained, and relatively stable measures create a culture of accountability and high performance.
- Formal learning practices create a culture of continuous learning and development.
Once again, our recommendation is for managers to remain aware of the principles and norms they reinforce through the processes, systems, and structures they create.
Because of their influence and symbolic role, leaders have an enormous impact on the formation of culture. Across all three elements discussed here, the critical factor is leadership awareness: understanding how decisions, actions, inaction, and the way management tasks are handled shape the principles, rules, and beliefs that guide people’s behavior and choices. Using leadership successfully as a culture-management tool therefore requires more than an understanding of culture. It requires leaders with a high level of self-awareness and a strong grasp of how the organization’s different elements interact as a system, so that they can recognize the wider consequences of their decisions across the whole organization.
