Organisational culture refers to the shared values, beliefs, and norms that shape the behaviour of individuals and groups within an organisation. Conversely, leadership is the process of influencing and guiding individuals or groups to achieve a common goal.
The relationship between organisational culture and leadership is complex and multifaceted, as an organisation’s culture can significantly impact how leadership is practised and effective.
Theories of organisational culture
Experts in the field have proposed many different theories of organisational culture. Some of the key theories include the following:
- Handy’s four types of culture: In this model, British management expert Charles Handy proposes four distinct types of organisational culture: power culture, role culture, task culture, and person culture. Each culture is characterised by specific values, beliefs, and behaviours, which can have different leadership implications.
- Edgar Schein’s three levels of organisational culture: In this model, organisational culture consists of three levels: artefacts and behaviours, values and beliefs, and basic assumptions. Artefacts and behaviours are the most visible and tangible aspects of organisational culture, including dress codes and office layout. Values and beliefs are the underlying principles that guide behaviour in the organisation, while basic assumptions are the deepest and most difficult-to-change elements of organisational culture.
- Competing values framework: The competing values framework is a model of organisational culture that identifies four different cultural orientations: clan, adhocracy, market, and hierarchy. These orientations represent different ways of organising and managing work and can have different implications for leadership.
- Cultural web: The cultural web is a model of organisational culture that identifies six elements that together make up the culture of an organisation: stories, rituals and routines, symbols, power structures, control systems, and organisational structure. Each of these elements can influence how leadership is practised in the organisation.
Many internal factors can influence the culture of an organisation. Some of the key internal influences on organisational culture include:
- Influence of the founder: The founder of an organisation can have a significant impact on the culture of the organisation, as they often set the initial values, beliefs, and norms that shape the behaviour of individuals and groups within the organisation.
- Size and stage of development: An organisation’s size and stage of development can also influence its culture. For example, smaller organisations may have a more informal and flexible culture, while larger organisations may have more formal and hierarchical cultures.
- Organisational structure: The organisational structure of an organisation, including the way that work is divided and managed, can also influence its culture. For example, a centralised organisational structure may foster a culture of control and standardisation, while a decentralised structure may foster a culture of autonomy and innovation.
- Policies and procedures: The policies and procedures of an organisation can also shape its culture. For example, policies that promote fairness and equality may foster a culture of inclusiveness and diversity. In contrast, policies prioritising efficiency and productivity may foster a culture of performance and accountability.
- Employee and management reward structures: The way that employees and managers are rewarded for their performance can also influence an organisation’s culture. For example, a reward structure that emphasises individual achievement may foster a culture of competition and individualism. In contrast, a reward structure that emphasises teamwork and collaboration may foster a culture of cooperation and interdependence.
- Leadership style: An organisation’s leadership style can also influence its culture. For example, a leadership style that is directive and controlling may foster a culture of obedience and conformity. In contrast, a leadership style that is participative and empowering may foster a culture of innovation and creativity.
- Working environment: The physical working environment can also influence an organisation’s culture. For example, an open and collaborative workspace may foster a more collaborative and creative culture. At the same time, a more traditional and formal office environment may promote a more hierarchical and bureaucratic culture.
- Nature of the work: The type of work performed in the organisation can also influence the culture. For example, organisations focused on creative and innovative work may have a culture that values creativity and risk-taking. In contrast, organisations focused on more routine and stable work may have a culture that emphasises stability and predictability.
- Attitudes to risk and innovation: The attitudes of individual employees and leaders towards risk and innovation can also shape the organisation’s culture. For example, an organisation that encourages employees to take risks and try new ideas may have a more open culture to change and experimentation. In contrast, an more risk-averse organisation may have a more conservative culture and resistance to change.
In addition to internal factors, many external factors can influence an organisation’s culture. Some of the key external influences on organisational culture include:
Market and industry: The market and industry in which the organisation operates can significantly impact its culture. For example, organisations in highly competitive markets may have a culture focused on achieving results and meeting targets. In contrast, organisations in more stable industries may have a culture more focused on long-term growth and sustainability.
Social influences: The broader social and cultural context in which the organisation operates can also influence its culture. For example, organisations that are located in more conservative and traditional societies may have a culture that reflects those values. In contrast, organisations in more progressive and forward-thinking societies may have a more open culture to change and innovation.
Legal influences: The legal framework in which the organisation operates can also shape its culture. For example, organisations operating in countries with strict labour laws may have a culture emphasising compliance and risk management. In contrast, organisations in countries with more relaxed labour laws may have a culture that is more focused on flexibility and agility.
Economic influences: The economic conditions in which the organisation operates can also affect its culture. For example, organisations that operate in times of economic growth and prosperity may have a culture focused on growth and expansion. In contrast, organisations that operate in times of economic uncertainty may have a culture that is more focused on cost control and efficiency.
Trading relationships: Finally, the nature of the organisation’s trading relationships with other organisations can also influence its culture. For example, organisations with strong partnerships and collaborations with other organisations may have a culture focused on cooperation and collaboration. In contrast, organisations that compete fiercely with other organisations may have a culture that focuses more on competition and winning.
Organisational diversity refers to the variety of differences among individuals and groups within an organisation. These differences can include age, gender, race, ethnicity, religion, sexual orientation, ability, cultural background, and differences in experience, education, and perspective. Organisations with a diverse workforce can benefit from a broader range of perspectives and ideas, which can help them innovate and adapt to changing conditions. However, managing diversity in the workplace can also be challenging and requires careful planning and effective leadership to ensure that all employees feel valued and included.
A multicultural workforce is a workforce that is made up of individuals from a variety of different cultural backgrounds. This can include differences in race, ethnicity, religion, national origin, cultural upbringing, language, customs, and values. A multicultural workforce can bring many benefits to an organisation, including a wider range of perspectives and experiences, increased creativity and innovation, and improved ability to serve diverse customers and markets.
The nine protected categories of individuals protected from discrimination under the Equality Act 2010 in the United Kingdom are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. This means that it is illegal to discriminate against individuals on the basis of any of these protected characteristics. The act applies to a wide range of areas, including employment, education, and the provision of goods, facilities, and services.
Organisational culture impact
The culture of an organisation can have a significant impact on the way that leadership is practised and effective. Different types of organisational culture can support different leadership styles and approaches and create different opportunities and challenges for leaders. Understanding the impact of different types of organisational culture on leadership is therefore important for anyone interested in the management and success of organisations.
The leadership style favoured by a particular organisational culture can vary depending on several factors, including the values and beliefs of the organisation, the nature of the work performed, and the broader social and economic context. However, general trends and patterns can be observed in the relationship between organisational culture and leadership style. For example:
- Bureaucratic organisational cultures, characterised by a strong emphasis on rules, procedures, and hierarchy, often favour authoritarian leadership styles. In these organisations, leaders are expected to be decisive and take charge and may use their authority to make decisions and direct the activities of others.
- Entrepreneurial organisational cultures focused on innovation, risk-taking, and growth often favour agile leadership styles. In these organisations, leaders are expected to be adaptable, flexible, and respond quickly to changing conditions. They may be more collaborative and participative in their leadership approach and encourage employees to take the initiative and try new ideas.
In contrast, some organisational cultures are more egalitarian and value cooperation and teamwork. These cultures may favour transformational leadership styles, which focus on building trust with employees, increasing their motivation and commitment to the organisation, and facilitating personal development.
Finally, certain cultures may be characterised by an emphasis on loyalty or tradition, which can lead to a preference for ethnocentric leadership. In these organisations, leaders often emphasise collective experiences and group identities as a basis for social cohesion.
As we see from this example, there is no simple relationship between organisational culture and leadership style; different factors will likely influence how each is applied in practice. However, general trends provide guidance when choosing a leadership approach within a particular organisational culture. It is essential to consider these factors when developing a leadership style that will successfully align with the values and goals of your organisation.
There can sometimes be tensions or conflicts between individual leaders’ values and leadership styles and the wider organisational culture. For example, a leader focused on achieving results and making decisions quickly may clash with an organisational culture emphasising collaboration and consensus-building. Similarly, a leader who is comfortable taking risks and experimenting may find it difficult to operate in a risk-averse organisational culture and resist change. These tensions can create challenges for leaders, who may need to adapt their leadership style to fit the organisation’s culture or may need to work to change the organisation’s culture to align with their values and leadership style.