Developing organisational culture: The role of leadership

Leadership and culture: making a conscious effort

Research by Hartnell et al. (2011) shows that organisational culture has a big impact on how well a company performs. The culture influences how employees think and act, which affects how smoothly the organisation runs and whether it meets its goals.

Also, the way leaders behave directly and indirectly affects the organisation’s culture through a series of connected stages. We call this the leadership impact chain. When leaders deliberately create organisational culture, they foster an environment where values are not just stated but lived. This intentional effort promotes a cohesive and resilient culture that drives shared success.

I realised that you don’t transform mindsets through tasks, but you transform them through people – this is the power you have as a leader. – LIW TRANSFORM participant, Senior Leadership Team

Organisations that consciously maintain and shape their culture, rather than leaving it to chance or relying on spontaneous outcomes, have clear direction, purpose, and coherence.

Why does this matter?

Firstly, the speed of change in every industry is unprecedented. Organisations must constantly adjust to challenges such as economic conditions and changes in workforce dynamics, including remote and hybrid work setups and evolving skill demands. Considering 88% of leaders anticipate an even faster pace of change in 2024 and over half (52%) acknowledge they need more time to be fully ready to address the upcoming challenges of 2024 and beyond, intentional efforts help organisations Transform and thrive.

Secondly, only two out of every ten employees feel connected to their organisation’s culture. The implications of this statistic are unmistakable, ranging from decreased morale and productivity to higher turnover rates, increased conflict among team members, and challenges in achieving goals. By consciously involving employees in shaping company culture, listening to their views, and actively seeking their input, organisations can build stronger connections and promote a sense of ownership among employees.

Thirdly, managers account for 70% of the variance in team employee engagement. Considering just 9% of UK workers report feeling enthused by their work and workplace, a strong, aligned culture enhances employee engagement and satisfaction. When leaders deliberately help employees understand and embrace the organisation’s values and mission, they are more motivated and committed to their work, resulting in higher performance and innovation.

Next, a well-established culture attracts and retains top talent. Since 84% of people are looking for a new job opportunity in the next six months (the largest number of people voluntarily leaving their jobs since tracking began decades ago), being intentional about culture can significantly reduce turnover and help attract high-quality candidates.

So, what can you do differently?

Make a conscious choice to define your desired culture  by being clear about your intentions and the results you want for everyone, with honesty and transparency. Face the reality of your current culture and make the shift to improve it.

When creating a “culture by design,” identify your organisation’s future goals. Determine the culture needed to support these goals, recognise existing strengths, and identify areas for improvement.

For continued success, organisations need a culture that embraces change, develops new traits, and lets go of obstacles holding a business back.

Our 3 ws framework is a simple tool to enable that. Consider these three questions:

1. What do we want to achieve and why?
2. Where are we now?
3. What’s next?

We know it can be tempting to jump in and start making cultural changes. But, before you roll out another initiative with your teams, pause and take a deliberate approach. Consider whether your organisational goals need a more stable and structured culture or one that is flexible and evolves to adapt and grow.

Both of these approaches are valid and can be successful. Each has different implications for leaders and their teams in creating the right conditions for success. Everyone must be aware and understand the context to support the effort effectively.

Top tip: For the best chance of success, think carefully about the type of culture you want to create and understand the four different culture types before you start taking action. This will be crucial when sharing your vision with others.

For example, in a ‘clan culture’ organisation, the focus should be on internal factors like flexibility, collaboration, open communication, and teamwork. On the other hand, in a hierarchical culture, the emphasis should be on clearly defined roles, strict policies, and procedures to improve efficiency, with behaviours such as conformity and predictability being important. This matters because each culture influences different behaviours and outcomes–appealing to different individuals.

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Leadership roles and cultural development

In shaping organisational culture, all levels of leadership play a crucial role. To enable the culture we advocate, there’s a top-down and bottom-up leadership approach to build on.

Top-down leadership

Enterprise leaders, like the CEO, set the tone, similar to a DJ at a party choosing the playlist! If they opt for upbeat, positive music, the whole organisation dances with enthusiasm. However, if they play dreary ballads, the mood can quickly drop.

When top-level leaders have the courage to provide clarity, grant permission, and create space for their people to embody the culture, it is amplified through reflection and embedded through experimentation and practice.

Leaders of leaders set the tone from the top, articulating values and priorities that guide the organisational culture.  They recognise and celebrate progress, support experiments and risks aligned with the new culture, and facilitate learning from these experiences (more on recognising and celebrating success later).

While leaders at every level must actively support culture development daily, their actions inevitably demonstrate what the organisation values most. They influence what is measured, discussed, ignored, and rewarded, how feedback is handled, and the acceptance of risks and experimentation through their behaviours and decisions. Their daily actions influence how employees think and embrace the organisation’s values.

Bottom-up leadership

Team leaders influence culture from the ground up, adjusting and evolving operational practices to align with the culture, not working in isolation but collaborating with their teams. With everyone in the same boat, open discussions naturally take place about challenges, recognising current strengths, and finding new ways to enhance teamwork and achieve shared goals.

Let’s go back to our analogy of the CEO being the DJ. Team leaders are typically the party starters, bringing energy and showing team members how to thread the organisational culture into their daily work. If these folks aren’t feeling the beat, neither will their teams. Let’s face it: nobody wants to follow someone who isn’t engaged and uninspiring.

Middle leaders act as the bridge builders, interpreting the CEO’s vision and ensuring everyone understands and embraces it. So, these leaders are the dance instructors—if they don’t know the moves or aren’t enthusiastic, the whole dance floor looks awkward and disjointed. Sometimes, this means joining in with everyone else, and other times, it means being on the balcony and getting a broader perspective (seeing the bigger picture).

"Are we sometimes guilty of sabotaging our chances of success because we’re too busy doing things that won’t move us forward because we haven’t taken the time to get aligned?" – Andy Chevis, Head of Design and Research at LIW

These leaders need continuous efforts to reinforce, communicate, and role model the desired culture. By that, we mean that what they do isn’t a one-off action.

"Culture change cannot be achieved in a one-off project, but is more of a transformation journey which requires commitment and ownership from all parts of the organisation." – LSE

Finally, employees (aka the partygoers) live the culture daily.  When engaged and working together, they drive the organisation’s success with positivity and creativity.

Ultimately, the Leader of Leaders is the glue that sticks everything together. These essential members of the leadership ecosystem need to ensure the organisation holds together as it transforms, escalating issues that need to be escalated to scale, celebrating success, and maintaining momentum.

Let’s look at Telstra, Australia’s largest telecommunications and media company. It aimed to become a leading technology firm under CEO Andy Penn’s vision of “making Telstra a world-class technology company that empowers people to connect.”  

Following a strategic review, Telstra updated its purpose and values to better suit the changing market landscape. At the core of this review was connection: linking people and technology by 1) redefining leadership to achieve the world-class performance necessary for executing the strategy and 2) developing an agile workforce capable of thriving in a volatile and complex environment.

Partnering with LIW and engaging in our Business Leader Programme, Telstra achieved some impressive outcomes:

• NPS scores average +84
• Post-90 days performance improvement 9% (reported by both participants and their managers)
• ROI averages 150%, which is three times the benchmark level

“The Business Leader Programme not only enriched the participants in their own leadership journey, but provided them an opportunity to widen their network and connect with peers in other lines of business, across different locations,” says Anto Moreno, General Manager, HR Country Head at Telstra. “With this new connection, they can embark on their journey together, and concretely see how the work they do actually impacts Telstra’s growth strategies, globally.”

How to develop your organisational culture

Take intentional steps to engage in meaningful conversations with your team, regardless of your position in the leadership hierarchy. Encourage ownership and commitment from your people by having open and honest discussions about values, goals, and behaviours.

We offer a solution to help you plan and structure meaningful conversations. The Conditions for Success, or 3Cs, are a simple and pragmatic way to create high performance. This set of conditions gives leaders and teams a common language to assess, discuss, and work together to accelerate the team’s performance.

Our 3C’s framework can help develop and shape your organisational culture:

1. Clarity: Ensure organisational values, goals, and expectations are clearly communicated and understood by all. For example, ensure everyone knows what they are doing, why it matters, and how their work aligns with the overarching goals or mission.
2. Climate: Foster a positive team environment where trust, respect, and collaboration are actively encouraged. This includes understanding your team’s emotional and behavioural norms and ensuring adequate resources and tools are available for the job.
3. Competence: Enhance the skills and capabilities of everyone, including leaders, to enable them to excel in their roles and contribute effectively to the organisation’s culture, values, and purpose.

Our 3C’s framework prioritises actions that create the conditions for integrating your desired culture into daily operations. It also gives you a complete assessment of your performance, team dynamics, and system alignment, fostering a common understanding and shared purpose.

LSE shares a similar perspective, identifying four essential components of organisational culture:

1. Communication. An organisation that values open and transparent communication encourages collaboration, reduces misunderstandings, and promotes a sense of belonging among employees.
2. Project management. When projects are well-managed, they demonstrate the organisation’s culture of efficiency, accountability, and achievement of results.
3. Participation. Cultivating a culture of participation involves empowering employees to contribute their ideas, perspectives, talents, creativity, and sense of ownership in achieving shared goals. This participative culture promotes engagement and loyalty among employees.
4. Rewards. Recognition and reward systems reinforce desired behaviours and values. Fair and transparent reward systems also promote equity and fairness within the organisation.

Develop an organisational culture for success with LIW

Intentional actions from leadership at all levels influence organisational culture and build a cohesive and thriving environment.

Instead of ‘getting things done’ through transactional operations, shift your attention to maintaining and shaping a culture that consciously supports, listens to everyone’s input, and shares decision-making and accountability.

Final thoughts: Even in a busy organisation, finding time to make a conscious effort to try new things and think deeply always pays off.

Contact us today to find out how we can help shape or maintain your organisation’s culture for long-term success. We’d love to chat.

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