Overview
Many
successful companies have proved that leadership has influenced to bring and
maintain a unique culture that attracts best pool of candidates to a company.
With globalization, organizations are realizing the growing importance of
investing more towards leadership and organizational culture as organizations
believe both concepts are intertwined (Kargas and Varoutas, 2015). As an
understanding of organization culture was obtained through the first post, this
examines the relationship of the two concepts through theory and findings.
The Formation of Organizational Culture
(Robbins
and Judge, 2013) exhibits in Figure 1 how initially the philosophy of the
founders lay the foundation for the organization culture by hiring employees
that match his/her philosophy and always influence the hiring process. The top
management will show the employees on what should or shouldn’t be done through
their behavior, words and processes. How employees socialize, interact and
adapt to the culture depends on the successfulness of selecting employees that
match their values and top management’s strategies used for socialization. This
is how eventually the culture of an Organization is formed.
Figure 1: Process of Culture Formation
Source:
(Robbins and Judge, 2013, p. 523)
The theory of (Schein, 2004, p.247) also explains how an organization culture is formed.
1. ‘One or more people (founders) have an idea for a new enterprise.
2. The founder brings in one or more other people and creates a core group that shares a common goal and vision with the founder; that is, they all believe that the idea is a good one, workable, worth running some risks for, and worth the investment of time, money, and energy required.
3. The founding group begins to act in concert to create an organization by raising funds, obtaining patents, incorporating, locating work space, and so on.
4. Others are brought into the organization, and a common history begins to be built. If the group remains fairly stable and has significant shared learning experiences, it will gradually develop assumptions about itself, its environment, and how to do things to survive and grow’.
When
the above two theories are analyzed, a similarity can be seen that both
theories suggest that founders and strategic leadership roles of the
organization has a major influence of creating an Organizational Culture which
will later on reflect through the employees. (Schein, 2004) further asserts
that leaders have the ability to ‘embed organizational culture through various
processes: mentoring, coaching, Role modelling, teaching and by the junior
employees watching how the leaders behave’.
(Egbuta,
2019) asserts that the style of leadership followed by the organization is
important in motivating and inspiring the employees to follow.
Leaders as ‘cultural change catalysts’
‘Leadership is the ability to
persuade others willingly to behave differently. It involves developing and
communicating a vision for the future, motivating people and securing their
engagement’ (Armstrong, 2012).
Through
technological advancements, situational factors, the world is moving in a fast
pace. In order to successfully navigate this, (Armstrong, 2009) suggests that,
organizations needs to carefully analyze whether the current elements of their organizational
culture is appropriate to achieve the goals of the organization or is it an
obstacle for the performance and take necessary actions to change the culture
of the organization. (Brown and Posner, 2001) asserts through his research that
leaders should create a sense of direction amidst the challenges and changes in
the internal or external environment creating a culture that is in alignment
with the particular vision, inspire their employees, bringing out their talents
and skills by communicating them the expected ultimate end result. When
analyzing research findings of both authors, it is prominent that leadership is
vital in organizational cultural change.
However, the human nature is such that individuals prefer to stay in their comfort zone and are mostly resistant to change. Therefore the role of leaders are crucial in an organization to communicate and aid the employees through the cultural change successfully (Yukl, 2014).
Practical approach of the theory
With the evidence of theory that organizational culture and Leadership is related, I’m sharing my own experience of how successful leadership can transform an organization culture in the current organization I’m working which is in the banking industry.
Figure
2: Transformation project ‘Everest’
(Source:
Hatton National Bank, 2020)
In 2018, our CEO had a vision which was named “Everest”, his idea was to initiate business structure reengineering, digital transformation, process reengineering, bank operational structure changes, people and culture transformation (Figure 2) to become a more ‘customer centric bank’ by 2020. He analyzed that change is needed not just to be in par with the technological advancements of the world but to create a happier, innovative place for employees and customers while maintaining business sustainability as the foundation of the other transformation pillars.
- The initial step he did was to involve the '100 leaders of the bank' to bring the entire branch network onboard this transformation.
- The entire network was communicated about this transformation in a transparent manner of what the end goals were. Each and every employee was given a role and nobody was laid off so all employees had an enthusiasm that their jobs were secure and realized the importance of their participation towards climbing this mountain of transformation.
By 2020, the COVID pandemic occurred but amidst the pandemic this is when the bank went through majority of the digital transformation by introducing many products such as an E-Wallet; a digital web store for online merchants, a mobile app for merchants who accept online fund transfers, an online platform for corporations to manage their finances real-time way before the intended launch dates to facilitate the growing need of online platforms during the pandemic.
By taking
that bold step, the bank was able to build a customer base which remained
throughout as the digital transformation made their lives more convenient. The
branch operating system transformation eased us to efficiently grant debt
moratoriums. As employees, we were
motivated as our managers and CEO were leaders who took us through the change
inspiring us and making us realize how transformation was indeed necessary and
beneficial to all stakeholders.
It was indeed a challenge to change a culture
of 132 years but through the leadership strategies and careful implementation,
communication and the whole network striving towards one goal made the climb to
the peak of the ‘Everest’ possible.
The below Video
1 contains the transformation vision of the CEO of HNB and explains the
challenges and strategies which were necessary to achieve the particular
vision.
Video
1: Interview about the transformation journey with the CEO of HNB
Source:
(The Asian Banker, 2019)
With
the theoretical aspects and the practical example shared through my own
experience, a clear relationship of the impact of leadership to the organizational
culture formation, maintenance and transformation can be identified.
References
Armstrong,
M. and Taylor, S. (2014). Armstrong’s Handbook of Human Resource Management Practice.
13th edn. London: Kogan Page.
Armstrong,
M. (2009). Handbook of Human Resource Management Practices. 11th
edn. London: Kogan Page.
Brown,
L. and Posner, B. (2001). Exploring the relationship between Learning and
Leadership. Leadership and Organizational
Development Journal. 22(5), pp. 274-280.
Egbuta,
O. (2019). The Impact of Leadership on Human Resources Management Practices in
the Organization. Journal of Education
and Human Development, 8(3), pp. 133-142.
Hatton
National Bank. (2020). Annual Report.
Available at: https://www.hnb.net/images/annual_reports/2020/integrated-report-2020.pdf
(Accessed: 10th April 2021).
Kargas,
A. and Varoutas, D. (2015). On the relation between organizational culture and
leadership: An empirical analysis. Cogent
Business & Management. 2(1). doi: 10.1080/23311975.2015.1055953.
Robbins,
S. and Judge, T. (2013). Organizational Behavior. 15th edn. United States:
Pearson Education.
Schein,
E. (2004). Organizational Culture and Leadership. 3rd edn. San Francisco:
Jossey-Bass.
The
Asian Banker. (2019). HNB’s Alles: Vision 2020 is all about
achieving qualitative goals.
Available at: https://live.theasianbanker.com/video/hnb%E2%80%99s-alles:-vision-2020-is-all-about-achieving-qualitative-goals (Accessed: 11th April 2021).
Yukhl, G. (2014). Leadership in Organizations. 8
edn. Noida: Pearson Education.
14 Comments
Yes, indeed Arjun. The leadership plays a vital role in creating an organizational culture which has a unique identity. As descrided by Szczepańska-Woszczyna (2015) in her study, leaders have a powerful source of influence on employees’ work behaviours. Especially, the leadership style practiced in an organization is an important determinant of innovation.
ReplyDeleteThank you for your feedback Oshadee. Yes, as suggested by Sarros et al., (2002) innovative cultures rely on transformative leaders who encourage changes in technology and stimulate others to come up with innovative ideas.
DeleteAgree with you Arjun, that leadership plays a main role in organizational culture. Leadership can structure culture through the development of competencies such as creating trusting relationships and establishing personal credibility (Becker et al., 2001). Many researchers have said that the leadership style could influence on organizational culture. The leader is the creator of the organizational culture, which reflects the unique values and beliefs( Schein, 2010).
ReplyDeleteThank you for your valuable input Nivethini. Yes, leaders exert a dominant influence on the norms and basic assumptions of the culture (Belias and Koustelios, 2014).
DeleteAgree with you Arjun. It doesn’t matter how far the organization has developed in its daily operation, if there is a unpleasant attitude towards the leadership the outlook for the organization will not be positive and as the leadership has created an unpleasant environment and lines between functions and duties are not clear the goal of implementing an effective organizational culture will not be achieved (Brown et al ,2015).
ReplyDeleteYes Pernalla, Sarros et al., (2002) suggests that companies can build a cooperative and competitive culture when leaders raise the expectations of employees about the objectives of the company and coach and mentor them to achieve those objectives.
DeleteAgreed with you Arjun, the leadership is vital role in an organizational culture, there is a shortage of nurses in clinical care, and good leaders can help any attrition. Furthermore, the leadership skills of nurse administrators can contribute to the success of their organization (Perra and Barbara Murdoch, 2001).
ReplyDeleteYes Eranda, Leadership is applicable to any industry. It is proven that leadership style is correlated to many functions of the organizations which results in the overall performance (Rowe et al., 2005).
DeleteIn this post, I have used an example of my own experience of leadership in the banking industry related to my current working place.
Yes, Arjun. An organizational culture emerges as a collective creation of members’ interaction with others as they strive to make sense of their environment. Leadership and management decisions and styles strongly
ReplyDeleteinfluence the human interactions in the firm. What emerges from these interactions are shared views of reality and agreed-upon behaviors that are considered important and appropriate compared to alternate behaviors (Trice & Beyer, 1993).
Yes, the founders create the philosophy of the organizational culture and then leadership always influence the organizational culture and the way they influence differs according to the hierarchical order as the leadership style differs from one person to another (Doina et al., 2008).
DeleteAgree with you. Walker (2011) citing Fincham and Rhodes (2005) believes that although culture has always been on the agenda of management theorists, it has not been endearingly linked to leadership. Indeed, leadership styles and organizational culture are not independent of each other and each plays an important role in determining organizational effectiveness.
ReplyDeleteYes Chamara, With the limited research done linking leadership and organizational culture, it is proved that there is a relationship between the two; For example: Transformational leadership creates a learning culture that encourages creativity and encourage employees to come up with new ideas which increases innovation and productivity of the organization which in turn leads to effectiveness (Rijal, 2014).
DeleteFurther to what you have explained transformational leadership will enable organization to establish an innovative and constructive culture that enhance employee morale, productivity and job satisfaction (Lock, 2001).
ReplyDeleteIndeed Chanaka, the characteristics of a transformational culture are idealized influence, inspired motivation, intellectual stimulation and individualized consideration which enhances the innovation and morale of the employees (Eagly et al., 2003).
Delete