Elsevier

Business Horizons

Volume 60, Issue 3, May–June 2017, Pages 395-404
Business Horizons

What leaders need to know about organizational culture

https://doi.org/10.1016/j.bushor.2017.01.011Get rights and content

Abstract

A major factor in the success of an organization is its culture. Organizational culture can significantly influence the performance and effectiveness of a company; the morale and productivity of its employees; and its ability to attract, motivate, and retain talented people. Unfortunately, many leaders are either unaware of the significant impact culture can have, are aware but overwhelmed by the extensive and sometimes conflicting information available on culture, or are not well informed about how to build and sustain cultures effectively. This article integrates the most consistent findings that leaders need to know about culture and what they can do to build strong, successful cultures that bring out the best in people. Developing organizational culture requires far more than talk about culture and emphasis on its importance. In order to achieve the best results, culture development requires leaders who see it as one of their key tasks and who understand the importance of aligning organization strategies and decision making with cultural ideals.

Section snippets

Culture matters

Culture has been the long-time focus of anthropologists as they seek to understand different groups around the globe. However, it has been only recently that organizational researchers have begun to discover the close links between culture, the performance of organizations, and the behavior and attitudes of people in organizations. Culture is recognized as such a significant factor in the success of organizations that Fortune’s annual 100 Best Companies To Work For report is based primarily on

Understanding organizational culture

Many definitions are available to describe culture. Formally, culture can be defined as “the [predominant] beliefs, values, attitudes, behaviors, and practices that are characteristic of a group of people” (Warrick, 2015, p. 4). In defining culture, Edgar Schein, a leading authority in the study of organizational culture, uses the word group to describe social units of all sizes (Schein, 1992). In other words, the term group could pertain to a whole organization or any group of people of any

The impact of organizational culture on performance and other factors

Especially in the late 1980s and thereafter, studies on organizational culture began to provide convincing evidence that culture can have a significant influence on performance, morale, job satisfaction, employee engagement and loyalty, employee attitudes and motivation, turnover, commitment to the organization, and efforts to attract and retain talented employees (e.g., Denison, 1990, Fisher, 2000, Marcoulides and Heck, 1993, Rollins and Roberts, 1998, Weiner, 1988).

One study in particular

Is culture primarily the cause or result of organization practices?

Some culture experts believe that culture is the cure for many organizational problems. In this view, the main remedy for problems at General Motors, the Veterans Administration, the government, and many other organizations is to fix the culture. Others believe that culture is the result of organizational practices and an outcome rather than a cause. Among these are Lorsch and McTague (2016, p. 98), who proposed that “cultural change is what you get after you’ve put new processes or structures

Insights about culture of which leaders need to be aware

For leaders to sort through and make sense of the many culture articles and books could be a daunting, complex, and at times confusing process. Therefore, an effort is made here to summarize some of the consistent findings about organizational culture of which leaders need to be aware. The point of making leaders aware of the many factors that can influence culture is not to preoccupy them with concerns about culture but rather to make them better informed and discerning about key factors and

Guidelines for building and sustaining organizational cultures

Culture can be built by design or default. In other words, culture can either be built in a purposeful way or left to chance. Leaders play a key role in building and sustaining cultures. To build culture by design takes intelligent and focused work. CEOs such as Bill Gates of Microsoft, Herb Kelleher (formerly) of Southwest Airlines, and Jeff Bezos of Amazon have all been known for their emphasis on culture and willingness to take specific culture-building actions. Often, other leaders

Summary of key insights about organizational culture

To reinforce how important it is that leaders understand and build culture purposefully, several key insights of which leaders should be aware are summarized here:

  • Culture matters. Culture can have a significant influence on what goes on in organizations, how things are done, how the organization is experienced by employees and customers, and the competitive advantage or disadvantage of organizations. It is important for leaders to understand that there is a significant body of research

Conclusion

It is important that leaders consider understanding, building, and sustaining culture as part of their leadership roles and that they be better trained in how to build healthy cultures and align culture and strategy. An abundance of research makes it clear that building strong cultures can play a significant role in the success of organizations and that, conversely, neglecting cultures can have many costs to organizations and their employees, customers, and stakeholders. Making cultural

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