Leadership influence on organizational culture and performance

How do leaders influence culture within an organization and how does culture influence performance? Leaders influence culture within an organization by being an example for others to follow. For instance, at Enron, leaders Jeff Skilling and Andy Fastow celebrated their ability to work fast and loose with rules and regulations and to twist the letter of the law until they could find ways to hide losses and make debt look like profit to shareholders (McLean & Nocera, 2010). They created a culture of fraud by their own example, often exhibiting a cavalier attitude towards transparency and ethical accounting. Had they demonstrated authentic leadership it would have been a much different story at Enron. They would have been more focused on people and principles than on quick profits.
Culture influences performance significantly. The culture that leaders promote is what will determine performance. Enron’s leaders were myopic and interested in enriching shareholders—similar to Boeing’s leaders. Boeing spent billions buying back shares on the open market instead of investing in technology—and the result was that Boeing’s 737 Max became a noose around the company’s neck: it twice crashed, killing hundreds, and buy orders for the plane quickly vanished. Boeing’s stock plummeted. Its leaders, by focusing on buybacks, were only putting shareholders first, which is what Friedman said they should do. However, there is a problem with this. Managers are responsible for agents according to Friedman. They are responsible to stakeholders according to Freeman (Jennings, 2008). According to feminist critics, there is a flaw in both perspectives because each uses masculinist metaphors that undermine the significant role that social relations play in determining interests (Machold, Ahmed & Farquhar, 2007). While each of these points of view presents aside, the fullest and most holistic perspective on the matter of the responsibilities of leaders is one that integrates all three perspectives. This is possible because each one is to some degree correct. Shareholders obviously matter, since they are owners. Stakeholders obviously matter since they both impact and are impacted by corporations. Social relations also matter since they determine the nature of the subject and the interests at the heart of the matter. The idea that corporations ought to be managed for someone’s or some group’s benefit but at the expense of someone else or some other group is somewhat cynical. Is there a reason a corporation cannot be led so that it is a win-win for all? From the feminist perspective, it can be argued that there is, for “a central feature of feminist ethical theories is the emphasis on relationships rather than the individual, independent, atomized self that is so prominent in masculinist moral reasoning” (Machold et. al, 2007, p. 670). Establishing a care ethic is the first step for leaders in promoting the right culture and impacting performance in a positive way.
Machold et al. (2007) make the point that a care ethic does not have to be applied at the expense of justice considerations. Rather, leaders should “embed the values of care in internal and external systems and procedures” so that they can bring care into the workplace and spread it among all stakeholders (Machold et al., 2007, p. 674). The reason for this is that people truly do live in a tightly related world, where technology has integrated communities all over the planet. The interconnected and cooperative fact of our social nature has to be acknowledged by leaders of organizations if they wish to thrive. This social nature is what supports the production because production is inherently a social process. Adam Smith’s Wealth of Nations was predicated on the assumption that people would not lose sight of that inherently social nature—but with the rise of technology and industrialization and even the division of labor that Smith recommended the social nature of man and the social nature of production has been lost sight of. Leaders have to instill in their culture the social values that matter to help improve production. How do leaders achieve job satisfaction for employees in the Workplace? Job satisfaction is important for workers, and when they do not feel satisfied with their work it typically leads to higher turnover rates (Rungruang, 2012; Twibell, 2012). Because job satisfaction is important for employees in the workplace, leaders should make an effort to ensure that workers are happy in their jobs. There are several ways to do that.
The study by Ooi and Arumugam (2006) found that communication, training and development, reward and recognition, and teamwork were all positively associated with employees’ job satisfaction and intention to stay with the organization. The most important dimension of corporate culture for employees was communication. If communication channels were open and workers felt they could communicate easily with others, then they had a greater intention to stay.
Training and development, reward and recognition, and teamwork are all also important for employees, and leaders should focus on providing these dimensions to ensure greater job satisfaction and commitment and reduce the risk of turnover among employees (Ooi & Arumugam, 2006). Employees want to feel valued and appreciated for their hard work, which is why rewards and recognitions are also wanted by employees. Each of the dimensions of culture was viewed as important in the results of the survey and none of them could be discounted.
Other ways to help workers feel more satisfied with their jobs are to give them opportunities to develop their skills and to learn on the job. Employees want to feel that there is room for them to grow with the company and if they believe they may have a chance for a bright future at the company they are going to feel more satisfied; thus, leaders should give workers a chance to go to instructional seminars, attend classes at college, and so on. Starbucks is one example of a company that does this for employees: it offers workers a chance to go to school and provides funding for this if the workers meet certain requirements.
Leaders can also achieve job satisfaction by communicating with employees on a routine basis in a way that demonstrates equality and respect. Individuals are more likely to feel valued and appreciated by their workplace if they feel that leaders are taking the time to get to know them. Leaders should also incorporate aspects of servant leadership into their approaches so that workers feel supported. Leaders who micro-manage tend to increase the level of dissatisfaction among workers. However, leaders like Herb Kelleher, who has implemented a servant leadership strategy at Southwest Airlines and has hired people to do the jobs they were hired to do and has not impeded their ability to work and use the skills and knowledge they have—they are the leaders who help to ensure that job satisfaction levels are high (Gallo, 2013). Putting people before profits is what leaders have to make sure they are doing if they want to maintain the good will of their employees as Kelleher has done at Southwest. This is the best way to look at leadership because, as Kelleher has shown with his own company, when one puts people first the profits are not going to be far behind. People need one another, and they need to realize that they must be part of a whole. There will be those who seek to exploit—but the right culture of care and the right attitude of leadership can help to diminish that risk. Leaders like Kelleher and Richard Branson at Virgin are good examples of how leadership must look at bringing workers on board: workers are most satisfied when they are trusted by leadership to do the jobs they were hired to do (De Vries, 1998). What would the potential disadvantages of selecting a team leader who is highly charismatic and visionary? While charismatic and visionary leaders like Elon Musk help to inspire stakeholders and can lead to massive gains in a company’s share price, there are also potential disadvantages of having a team leader who is highly charismatic and visionary. For example, a team leader should have good management skills and be able to help team members get along and work in unison in complementary ways. Conflict can arise among team members especially if a team leader is too charismatic and unstable. Visionary leaders tend to be more ethereal in their orientation and less practical and focused on the day-to-day. Team leaders need to be grounded and focused on the day to day activities because they are there to help guide and support the team. It requires negotiation in many ways, and charismatic/visionary leaders are not always interested in compromise: they want it to be their way because they believe so strongly in their vision (De Vries, 1998). This is why it is often better to have practical-minded team leaders who can keep people together and focused while also helping them to buy into the vision that has been communicated.
Conflict is the result of individual parties wanting different or opposing things. Conflict theory can help to explain conflict especially in light of negotiation, as it is based on the idea of Marx and is predicated on the notion that society is engaged in a continuous struggle that comes about as a result of there only being a finite supply of resources. From this seed, conflict theory emerged in sociology in response to structural functionalism, which posits that society functions as a result of various groups and organizations working together in a stable and functioning manner (Ritzer & Stepnisky, 2017). However, stability is but one face of society, in conflict theory—the other face is one of conflict. There are those who conform and those who do not. There are those who accept integration even if it means subjugation and those who do not because they see themselves as valid and as having a value that is being denied them by the powers of the ruling class.
The key to reducing the risk of conflict is to be mindful of the ways in which conflict is exacerbated. The strategy, therefore, is to adopt a cooperative strategy and to avoid attribution, i.e., the practice of attributing fault to others. For instance, if one group member wants to go about his tasks one way while another wants him to do it in a different way, instead of dismissing that person and attributing ignorance to him and thus setting off a powder keg of emotions likely inflamed by the stress of the situation, it is better to acknowledge the person’s thoughts and feelings and agree that, yes, his way will get the job done but there may be an even better way.
Cooperation is what will help most in this negotiation as everyone is literally in the same boat. It would not be helpful to adopt a competitive strategy or a defensive strategy, which would put others on the offensive. Cooperation is best here because a favorable outcome relies on recognizing that any decision must be viewed as a win-win for all sides. Dismissing the needs of others will not help anyone—thus, if one party has a vision but cannot get others to buy into it, the team leader has to be there to facilitate communication and discussion and to prevent conflict from escalating or getting out of hand. The team leader has to be more concerned with helping workers “get to yes” rather than battle over minor differences and what the right approach to tasks might be (Fisher & Ury, 1991). Why is motivation one of the most important parts of a leader's job? Leaders have to be able to motivate workers—that is one of the essential elements of most leadership styles, from transformational leadership to transactional leadership to servant leadership. Leaders are there to get workers moving and performing at a high level. If leaders cannot motivate or are not engaged with their employees it can actually decrease the performance of workers and create a toxic environment in which workers try to sabotage the company (Schyns & Schilling, 2013). Thus motivation is a very important part of the leader’s job—if it is missing the organization itself could suffer and fail to reach objectives.
There are various ways in which leaders can motivate. Some of them are extrinsic and some of them are intrinsic. Extrinsic motivation refers to the use of external rewards, such as benefits, raises, promotions, vacation time, parties or bonuses for workers who reach goals (Gerhart & Fang, 2015). Employees are motivated to perform at a high level when they know that there will be a bonus involved for them. However, not every organization can afford to dole out bonuses and rewards year long. Companies need workers to perform at a high level routinely, so extrinsic motivation is not always the best option.
The other option is to promote and foster a culture in which intrinsic motivation is developed within workers. Intrinsic motivators can include the feeling of satisfaction for having accomplished something that is worthwhile and good in and of itself, or the sense that one has learned something and become a better worker as a result. Leaders can facilitate this type of intrinsic motivation by giving workers supportive praise and thanking them for their hard work, which helps to increase the workers’ self-esteem levels and can move them towards becoming more self-actualizing.
As Maslow (1943) points out in his theory of human motivation and model of the hierarchy of needs, people cannot become self-motivated and self-actualized unless they have all their lower-level needs met first: these include shelter, food, stability, love, respect, friendship and esteem. Once these needs are met then the individual feels confident and secure and no longer relies on external motivations to drive him. He has intrinsic motivation—i.e., the desire to achieve goals and to excel for the sake of doing something good in and of itself (Gerhart & Fang, 2015).
Thus leaders may have to make sure that all workers’ lower-level needs are met first. This is where servant leadership can be highly effective, since it allows the leader to focus on assisting the worker to reach his potential by supporting him with all his issues and making sure he has everything he requires to grow and develop as a person and as a professional. Not every leader can engage at the person-to-person level required for servant leadership, however; so transformational leadership can be applied as well because this is where the leader makes sure that those needs which he can address are addressed with the assistance of others in the workplace who are there to support the vision and mission that the leader has communicated. Leaders must be able to rely on others to give support, which is why getting workers to become team leaders is so important. A leader should be able to motivate by developing other workers into leaders and giving them a chance to show forth their abilities. The overall goal is to put the needs of the workers first and that means looking at what they need and can do at every level. The more engaged and accountable a leader is, the more likely the worker is to feel motivated to achieve the goals put forward.

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