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The Role Of Leadership In Shaping Organizational Culture

The Role Of Leadership In Shaping Organizational Culture

As a leader, you have to make many decisions that steer your business toward your strategic goals. However, inspiring your staff to align with your vision and perform accordingly, especially during high-pressure or stressful moments, can be challenging. While a motivational speech during an all-staff meeting can provide some inspiration, the true key to success lies in a deeper examination of your organizational culture.

Organizational culture is not just a concept; it's embodied by every member of your staff and guided by leadership. Though it may seem difficult to assess, several indicators, such as attrition and engagement rates, will help determine whether your work culture is positive or negative.

What Is Organizational Culture?

Organizational culture is the "personality" of your organization. It’s the shared set of values, beliefs, attitudes, customs, and behaviors that characterize how individuals within your organization interact with each other, as well as how they interact with external stakeholders such as customers, suppliers, and the community.

Organizational culture heavily impacts the success of your business. Companies with positive cultures report a 72% higher employee engagement rate than companies with dysfunctional or negative cultures. A poor culture can lead to staffing, morale, and employee satisfaction issues, which can bleed over into productivity issues, impacting your bottom line.

The good news is that organizational culture is not static; it can evolve and change over time due to various factors, including leadership changes, market condition shifts, mergers and acquisitions, and deliberate efforts to change the culture. Having a poor organizational culture doesn’t mean your business is doomed. There are tools you can implement that can make significant shifts throughout your business. The key is to remain vigilant.

Why Does Organizational Culture Matter?

Positive cultures exhibit greater resilience, reduced burnout, and lower attrition rates, leading organizations to prioritize culture and, therefore, consistently outperforming their counterparts. Additionally, investing in company culture saves time and money on recruiting and hiring. In the ever-competitive job market, attracting top talent can be difficult. As a business owner, to remain competitive, you’ll need to harness various strategies to attract and retain your team, and culture is a significant player. In fact, it’s so important that nearly half of the US workforce is willing to take a lower-paying position at an organization with a positive culture than a high-paying job at a company with a poor culture.

In other words, work culture is critical in hiring and retention efforts, as employees who feel fulfilled and supported are more likely to stay at an organization. Prioritizing and cultivating a positive organizational culture is essential for enhancing employee well-being, performance, and a strategic advantage that can positively impact your company’s bottom line.

What Makes A Good Organizational Culture? 

A strong organizational culture is a culture that promotes a positive work environment, encourages collaboration and innovation, and supports the well-being of its employees. Fundamental elements that contribute to an excellent organizational culture include:

Respect and trust

Respect and trust go hand in hand. You can demonstrate both through various avenues, including regularly recognizing employees’ efforts and actively seeking their thoughts and input. Implementing workplace flexibility, which allows employees to set their schedules, work remotely, or offer unlimited time off, is another way to demonstrate respect and trust. This empowerment not only strengthens the bond between employees and your organization but also promotes a sense of autonomy and accountability that can lead to enhanced productivity and job satisfaction.


A culture of accountability is a fundamental aspect of any successful organization. It extends to everyone in your company as individuals are held responsible for meeting their commitments. This fosters a sense of responsibility and trust among employees and across teams. When everyone is accountable for their own contributions, it promotes a healthy work environment where people can rely on each other to deliver on their promises. This, in turn, leads to increased efficiency, improved teamwork, and a greater likelihood of achieving organizational goals.

Psychological safety

Psychological safety in the workplace is vital to fostering a culture where innovation can thrive. Employees should feel empowered to take risks and get rewarded for generating new ideas that align with company objectives. Psychological safety encompasses creating an environment where open and honest feedback is not only encouraged but also valued, regardless of the direction it flows—from team member to team member, from team member to manager or leader, and vice versa. Cultivating these safe spaces enables employees to voice their concerns and share their ideas freely while fostering positive relationships. This, in turn, contributes to higher employee engagement and overall job satisfaction.

Alignment with business objectives

A strong culture has a clear set of values and a well-defined mission that guides the organization's purpose and direction. Regularly communicating your values and mission to all employees through various channels is important. Use company meetings, internal newsletters, intranet platforms, and other communication tools to reinforce these messages.

Performance driven

Cultivating a high-performing culture is achieved by making strategic investments in your team. This involves prioritizing professional development, providing training opportunities, and recognizing and rewarding employees for their valuable contributions and achievements. When employees sense this investment in their growth and well-being, it naturally boosts their engagement, resulting in improved performance. Empowered employees who feel supported by leadership are more inclined to go the extra mile and exhibit resilience in the face of challenges. This empowerment ultimately contributes to enhanced overall performance within the organization. Creating and maintaining a good work culture requires consistent effort and attention. While some universal principles can serve as a solid foundation for a healthy and productive work culture, customization to fit your organization's specific needs and values is crucial. Regularly assess your employees' needs, engagement, and productivity levels to determine which areas need attention.

How Leaders Influence Culture

Leaders play a crucial role in shaping the culture of your organization. They ensure your employees understand your company's mission, vision, and purpose and how their individual roles contribute to your business’ success. In addition, leaders act as beacons during challenging times or moments of distress. How you and your managers respond in high-pressure situations will significantly influence your team's reactions. Put simply, whatever behavior your leadership engages in, positive or negative, your staff will follow suit.

Leaders can effectively influence culture through a few core principles:

  • Integrity: Leaders must align words with actions. For instance, if you claim to trust your staff but micromanage or redo their work consistently, your words and actions don’t match, which can lead to frustrated and disengaged staff.
  • Fair treatment: Cultivating a culture of engaged employees necessitates setting aside any favoritism. While it's important to recognize and reward good behavior and accomplishments, it's equally crucial to prevent the formation of exclusive cliques within your organization.
  • Approachability: When your staff recognizes you as a dependable resource for support or guidance, they will be more likely to come to you with innovative ideas. Being approachable helps your team trust that you’ll take their thoughts, concerns, or issues seriously, which can significantly impact their overall engagement and job satisfaction.
  • Humanizing employees: Humanizing your staff is not only common sense but also crucial for building the rapport critical to a positive work culture. Treat your employees as individuals with unique backgrounds and aspirations. Taking a genuine interest in their well-being demonstrates that you care about them as people.

These core ideas should guide you and your leadership team's actions and behaviors, which the rest of your staff will adopt.

HR Audits

Assessing your company culture is no easy feat. Partnering with a professional employer organization (PEO) like GMS can help. Through our human resource audits, we can help you find areas that need assistance and even help create strategies for you to implement with your team. As your company grows, HR audits can help identify the strengths and weaknesses of your processes to ensure your efforts align with your organization’s strategic plan. Contact us today, and let us help you reach your business goals!

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