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ROLE OF LEADERSHIP IN

BUILDING CULTURE

The role of leadership in creating and


embedding culture in an organization.

How leaders of a young and


successful organization can
systematically embed their own
assumptions in the daily workings of the
organization, creating a stable culture.
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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES

A. Culture Beginnings and the Impact


of Founders as Leaders
B. The Jones Food Company
C. Smithfield Enterprises
D. The Action Company

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Socialization from a Leadership Perspective

A. Primary Embedding Mechanisms

1.   What Leaders Pay Attention to, Measure, and Control


2. Leader Reactions to Critical Incidents and Organizational Crises
3. Observed Criteria for Resource Allocation
4. Deliberate Role Modeling, Teaching, and Coaching
5 Observed Criteria for Allocation of Rewards and Status
6. Observed Criteria for Recruitment, Selection, Promotion,
Retirement, and Excommunication

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Socialization from a Leadership Perspective

B. Secondary Articulation and Reinforcement


Mechanisms

1. Organization Design and Structure


2.  Organizational Systems and Procedures
3. Rites and Rituals of the Organization
4. Designs of Physical Space, Facades, and Buildings
5. Stories About Important Events and People
6. Formal Statements of Organizational Philosophy,
Creeds, and Charters

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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES

Culture Beginnings and the Impact of Founders as Leaders

Three sources of basic culture:

1. Beliefs, values, assumptions of founder of organizations.


2. Learning experiences of group members as their
organizations evolves.
3. New beliefs, values, and assumptions brought in by new
members and leaders.

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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES

Culture Beginnings and the Impact of Founders as Leaders

The process of culture formations is, in each case, first a process of creating a small
group. In the business organization, this process will usually involve some
version of the following steps:
1. A single person (founder) has 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, is workable, is worth running some risks for, and is worth
the investment of time, money, and energy that will be 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.

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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES
The Jones Food Company

The culture of Jones Food Company did not survive


because the main culture carrier departed and the bulk of
the members of the organization experience some degree
of conflict because of mixed messages that emanates from
the leaders during the growth period. The Jones Food
Company had a strong culture, but Jones’s own conflicts
became embedded in that culture, creating conflict and
ultimately lack of stability.

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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES
Smithfield Enterprises

For Smithfield the ultimate personal validation lay in having


each of his enterprises become financially successful and in
his ability to continue to form creative new ones. His creative
needs were such that after a decade or so of founding
financial service organizations, he turned his attention to real
estate ventures, then became a lobbyist on behalf of an
environmental organization, tried his hand at politics for a
while, then went back into business, first with an oil company
and later with a diamond mining company. Eventually, he
became interested in teaching, ending up in a midwestern
business school developing a curriculum on entrepreneurship.
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HOW LEADERS CREATE
ORGANIZATIONAL CULTURES
The Action Company

Action’s founder, Murphy, is a very dominant, strong personality who began with a
clear theory of how things should be. He and four others founded the company
believing they could build a particular new high-tech product which there would
eventually be a very large market. After some years they found that they did not
share a vision of how to build an organization, and all except Murphy left the
organization.

Murphy’s role in this process has been to reassert his basic beliefs in giving people
freedom to propose and sell ideas, and once approved, to hold them accountable.
He has steadfastly resisted formulating centralized top-down strategies, even though
the organization has increasingly needed them to maintain coordination among the
many business units it now has.

One of the things that frustrates him most is that he sees managers to whom he has
given the freedom to propose and be accountable taking that freedom away from
their own subordinates. However, according to his own logic, he cannot simply fire
them but must rely instead on persuasion and the clear articulation of his philosophy
in the hope that they will learn form their own experience that giving freedom works
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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

What Leaders Pay Attention to, Measure, and Control

One of the most powerful mechanisms that founder, leaders, managers, or


even colleagues have available for communicating what they believe in or
care about is what they systematically pay attention to. This can mean
anything from what they notice and comment on to what they measure,
control, reward, and in other ways systematically deal with. Even casual
remarks and questions that are consistently geared to a certain area can be
as potent as formal control mechanisms and measurement.

What leaders consistently pay attention to communicates most clearly what


their own priorities, goals, and assumptions are. If they pay attention to too
many things or if their pattern of attention is inconsistent, subordinates will
use other signals or their own experience to decide what is really important,
leading to a much more diverse set of assumptions and many more
subcultures.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

Leader Reactions to Critical Incidents and


Organizational Crises
When an organization faces a crisis, the manner in which
leaders and others deal with it creates new norms, values,
and working procedures and reveals important underlying
assumptions. Crises are especially significant in culture
creation and transmission because the heightened
emotional involvement during such periods increases the
intensity of learning. Crises heighten anxiety, and anxiety
reduction is a powerful motivator of new learning. If people
share intense emotional experiences and collectively learn
how to reduce anxiety, they are more likely to remember
what they have learned.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

Observed Criteria for Resource Allocation


How budgets are created in an organization is another process that
reveals leader assumptions and beliefs. In a study of top-
management decision making, leader beliefs about the distinctive
competence of their organization, acceptable levels of financial risks,
and the degree to which the organization must be financially self-
sufficient strongly influence their choices of goals, the means to
accomplish them, and the management processes to be used. Such
beliefs not only function as criteria by which decisions are made but
are constraints on decision making in that they limit the perception of
alternatives.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

Deliberate Role Modeling, Teaching, and


Coaching
Founders and new leaders of organizations generally
seem to know that their own visible behavior has great
value for communicating assumptions and values to other
members, especially newcomers. However, there is a
difference between the messages delivered from the
staged settings, such as when a leader gives a welcoming
speech to newcomers, and the messages received when
that leaders is observed informally. The informal
messages are the more powerful teaching and coaching
mechanism.
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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

Observed Criteria for Allocation of Rewards and


Status
Members of any organization learn from their own experience with promotions,
performance appraisals, and discussions with the boss what the organization values
and what the organization punishes. Both the nature of the behavior rewarded and
punished and the nature of the rewards and punishments themselves carry the
messages. Leaders can quickly get across their own priorities, values, and
assumptions by consistently linking rewards and punishments to the behavior they
are concerned with.

If the founders or leaders are trying to ensure that their values and assumptions will
be learned, they must create a reward, promotion, and status system that is
consistent with those assumptions. Whereas the message initially gets across in the
daily behavior of the leader, it is judged in the long run by whether the important
rewards are allocated consistently with that daily behavior. If these levels of
message transmission are inconsistent, one will find a highly conflicted organization
without a clear culture or any culture at all at a total organization level.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Primary Embedding Mechanisms

Observed Criteria for Recruitment, Selection, Promotion, Retirement, and


Excommunication

One of the most subtle yet most potent ways through which cultural
assumptions get embedded and perpetuated is the process of selecting
new members. If a founder assumes that the best way to build an
organization is to hire the very tough, independent people and then leave
them alone and he is successful in continuing to hire tough and
independent people, he will create the kind of culture he assumes will
work best. He may never realize that the success of the culture lies in
the success of the recruitment effort and that his beliefs about how to
organize might become disconfirmed if he could no longer hire the right
kinds of people to fit his assumptions.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Organization Design and Structure

Founders often have strong theories about how to


organize for maximum effectiveness. Some assume that
only they can ultimately determine what is correct;
therefore, they build a tight hierarchy and highly
centralized controls. Others assume that the strength of
their organization is in their people and therefore build a
highly decentralized organization that pushes authority
down as low a possible.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Organizational Systems and Procedures


The most visible parts of life in any organization are the daily, weekly,
monthly, quarterly, and annual cycles of routines, procedures, reports, forms,
and other recurrent tasks that have to be performed. The origin of such
routines is often not known to participants or sometimes even to senior
management, but their existence lends structure and predictability to an
otherwise vague and ambiguous organizational world. The systems and
procedures thus serve a function quite similar to the formal structure in that
they make life predictable and thereby reduce ambiguity and anxiety. Though
employees often complain of stifling bureaucracy, they need some recurrent
processes to avoid the anxiety of an uncertain and unpredictable world.

Given that group members seek this kind of stability and anxiety reduction.
Founders and leaders have the opportunity to reinforce their assumptions by
building systems and routines around them. If founders or leaders do not
design systems and procedures as reinforcement mechanisms, they open the
door to historically evolved inconsistencies in the culture or weaken their own
message from the outset. 17
HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Rites and Rituals of the Organization

When the only salient data we have are the rites and rituals that have
survived over a period of time, we must, of course, use them as best
we can; as with structure and processes, however, if we have only
these data, it is difficult to decipher just what assumptions leaders have
held that have led to the creation of particular rites and rituals. On the
other hand, from the point of view of the leader, if one can ritualize
certain behaviors that one considers important, that becomes a
powerful reinforcer.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Designs of Physical Space, Facades, and Buildings

The physical design category is intended to encompass all the visible


features of the organization that clients, customers, vendors, new
employees, and visitors would encounter. The messages that can be
inferred from the physical environment, as in the case of structure and
procedures, potentially reinforce the leader’s messages, but only if they
are managed to do so. If they are not explicitly managed, they may
reflect the assumptions of architects, the planning and facilities
managers in the organization, local norms in the community, or other
sub-cultural assumptions.

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HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Stories About Important Events and People

As a group develops and accumulates a history, some of this history


becomes embodied in stories about events and leadership behavior.
Thus, the story - whether it is in the form of a parable, legend, or even
myth – reinforces assumptions and teaches assumptions to new
comers. However, since the message to be found in the story is often
highly distilled or even ambiguous, this form of communication is
somewhat unreliable. Leaders cannot always control what will be said
about them in stories, though thy can certainly reinforce stories that they
feel good about and perhaps can even launch stories that carry desired
messages. Leaders can make themselves highly visible to increase the
likelihood that stories will be told about them, but sometimes attempts to
manage the message in this manner backfire; that is, the story may
focus more on the inconsistencies and conflicts that observers detect in
the leader. 20
HOW LEADERS EMBED AND
TRANSMIT CULTURE
Secondary Articulation and Reinforcement Mechanisms

Formal Statements of Organizational Philosophy,


Creeds, and Charters
The final mechanism of articulation and reinforcement to be mentioned
is the formal statement, the attempt by the founders or leaders to state
explicitly what their values or assumptions are. These statements
typically highlight only a small portion of the assumption set that
operates in the group and, most likely, will highlight only those aspects
of the leader’s philosophy or ideology that lend themselves to public
articulation. Such public statements may have a value for the leader as
a way of emphasizing special things to be attended to in the
organization, as values around which to rally the troops, and as
reminders of fundamental assumptions not to be forgotten. However
formal statements cannot be viewed as a way of defining the
organization’s culture. At best they cover a small, publicly relevant
segment of the culture, those aspects that leaders find useful to publish
as an ideology or focus for the organization.
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