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. 13^th edn. London: Kogan Page.

Armstrong, M. (2009). Handbook of Human Resource Management Practices. 11^th 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: 10^th 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: 11^th April 2021).

Yukhl, G. (2014). Leadership in Organizations. 8 edn. Noida: Pearson Education.