According to Forbes, culture is a company’s single most powerful advantage with 88% of employees saying it’s vital for success. But who’s responsible for culture? Here, we look at what culture is and explore the intrinsic role that leaders play in shaping and maintaining a winning company culture.
What is company culture?
We can’t look at the role leaders play in shaping a winning company culture without defining what company culture is.
Company culture is a shared ethos, a set of goals, values, and practices that characterise an organisation.
Company culture is different from the company’s vision or mission statement, which are written down and set in stone. In contrast, company culture evolves more fluidly, it’s almost like a living thing.
This is where leadership comes into play. Influential leaders and managers embody an organisation’s goals and values in their behaviours. In turn, leaders empower employees to help create a positive workplace culture, which shapes a successful company.
The effects of company culture are far-reaching
In the last five to ten years, the importance of company culture has really come to the forefront of business leaders’ minds. As a result, it’s widely recognised that company culture affects:
- Employee engagement
The culture of your organisation can have a huge impact on your bottom line. That’s why it’s vital to understand the role that leadership plays in shaping a winning company culture and how to optimise their roles and influence.
Five major types of company culture
There are many different types of company culture with examples of high-profile companies for each. It’s not a case of which is best, but more a case of which one suits your industry and team.
Here, we identify five major types of company culture:
This type of organisation prioritises recruiting employees based on how well they fit with the rest of the team. This takes precedence over skills and expertise and is a more engagement-oriented approach.
Netflix is a great example of a team-first company culture.
2. Elite corporate culture
Businesses with an elite corporate culture focus on hiring top talent.
Recruitment processes prioritise leaders and innovators who go above and beyond what’s expected of them. Think Google.
3. Horizontal corporate culture
This type of culture is often seen in start-ups.
It’s a collaborative “everyone pitches in” mindset, where job titles don’t mean much. Basecamp is a great example of a company championing this start-up mentality.
4. Conventional corporate culture
This is exactly what it sounds like. A traditional hierarchical structure where the CEO takes all the decisions. Your local bank probably has this type of culture.
5. Progressive corporate culture
A culture brought about by a good deal of uncertainty due to mergers and acquisitions. LinkedIn (which acquired Lydia.com and was then bought out by Microsoft), is a good example.
Due to multiple cultural influences, cultural differences and divides can surface after organisation transformations. These can be tricky cultures to manage.
The chances are that your organisation may be a mixture of several of these five types of company culture. Whatever your current culture is, know that it likely won’t stay the same forever and that small changes can help shape the culture you’re striving for.
The link between leadership and corporate culture
Company culture starts from the top. Without outstanding leaders, there’s no one to embody and enforce your company’s values.
You may have made your goals and values public, but it’s your leadership that makes sure they become woven into your corporate culture.
How can leaders use their role to shape a winning company culture?
As Bill Gates once said;
“Leaders are those who empower others.”
This makes complete sense when you consider that a winning corporate culture is one where leaders help employees to thrive. When they thrive, they do their best work.
Ethical leadership promotes a culture of honesty, trust, integrity, and fairness. In an ideal world, leaders consistently exhibit behaviours that promote the company’s core values.
This then guides employees so that their own behaviour is reflective of the company values and, therefore, the desired culture.
Company culture can be negatively affected if leaders do not embody the company’s core values. Leaders who don’t lead by example can erode trust between the organisation and its employees.
A lack of trust is one of the warning signs of a toxic work culture.
Five ways leaders can positively affect corporate culture
So how can leaders help shape a successful culture? Below we’ve put together five ways you can ensure leaders and managers are contributing to crafting a winning company culture.
1. A culture of accountability helps motivate employees
Leaders who foster a positive corporate culture make accountability a priority.
Accountability is a major influencer in corporate structure and low levels of accountability lead to mistrust and low morale.
In a recent study, 84% of employees say the way leaders behave is the most important factor affecting accountability.
Characteristics of successful cultures include employees and leaders who understand what’s expected of them and are held accountable for achieving these goals.
2. Fostering effective communication builds trust
It’s hard to reinforce accountability without effective communication.
Great communication between leaders and employees ensures everyone is clear about their roles, responsibilities, and where to get support and help. Good communications also allows employees to understand the clear standards by which their work is assessed.
Communication should never be one-way. Your organisation should have multiple channels for employees to share their views and ensure their voices are heard by the leadership team. This boosts trust and integrity and increases morale.
There’s data to support this. Research from Cultureiq.com highlights the link between communication and a winning company culture. It found that 84% of employees working at organisations with successful cultures said their leaders listened to them.
3. A culture of learning means employees are valued
A culture of learning is essential for a positive company culture, and this also starts with leadership.
When leaders encourage an environment where everyone feels psychologically safe in sharing their opinions, this leads to more creative solutions and better decision making.
A learning culture can also help your organisation boost retention rates. According to LinkedIn, 94% of employees would stay with their current company if it invested in their career development.
A culture where knowledge and skills are valued encourages individual career strategies for employees so that their growth becomes aligned with that of the organisation.
Companies with low cultures of learning experience higher turnover rates. In contrast, leaders who care about employees and their development see higher engagement, better retention rates, and increased productivity.
4. Employee buy-in comes from feeling appreciated
Another way leaders can positively affect corporate culture is by encouraging recognition and appreciation.
Recognition improves engagement by 15%, which in turn has a positive impact on your company’s bottom line.
5. Leaders’ behaviour encapsulates the company’s core values
Core values are part of your company culture. But unless they’re consistently put into practice, they are simply words on paper.
A report by Mckinsey found that only 42% of employees feel their company’s purpose statement had any impact. This means that most companies are not successfully translating their core values into corporate culture.
If leaders don’t live those values themselves, it can undermine confidence between employees and the leadership team. A workforce that has low confidence in management is less engaged and less productive.
Ensuring leaders exhibit behaviours in line with company core values is the greatest indicator of a winning company culture. Research by Cultureiq found that 90% of employees at successful companies are confident in their leadership teams.
Optimise the role of leaders because a winning company culture affects all areas of your business
Engaged employees working in a dynamic and caring work culture are crucial to business success. That’s because a winning company culture permeates every aspect of your business.
Boost your brand reputation
Leaders who adhere to your company’s core values not only inspire confidence from employees but clients as well. A positive company culture affects not just how an organisation performs, but how it’s perceived in the marketplace by others.
Strong company cultures create brand ambassadors because current and past employees speak highly of the organisation.
Attract employees who share your culture
A reputation for integrity and solid values puts you in the best position to attract top talent. It’s a tight labour market out there and having a strong culture that develops and invests in talent can give you the edge.
According to Gallup 71% of workers say they use referrals from current employees to learn about job opportunities. When those who work for you can genuinely recommend your organisation as a great place to work, your talent pool widens.
Enjoy higher retention rates and productivity levels
A successful corporate culture promotes happier employees who are 12% more productive. They know that leadership cares about their career development and wellbeing and this encourages them to stay and grow with the company.
According to a Columbia University study, cultures has a huge impact on turnover rates. It found that organisations with a high company culture see employee turnover at 13.9% whereas in those with low company cultures, turnover is 48.4%.
Empower employees to make better decisions
Decision making is possibly one of the most important aspects in business. Poor decision making affects your bottom line and can destroy trust between employee and manager.
Research by global consultancy Bain & Company found that companies with winning cultures are 50% better at decision effectiveness.
Key takeaways for optimising the role of leaders in shaping a winning company culture:
Culture affects every aspect of your business, so it’s worth investing time and effort to get it spot on.
A company’s success is closely linked to their positive corporate culture.
Leaders have great responsibility in helping to shape a winning company culture. Coming out top is that leaders must translate company core values into corporate culture through their behaviours.
Outstanding leaders guide employees to embody the organisation’s values, spreading the culture they want to shape.