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The Profound Effect Leadership Has on Company Culture

Jason Diamond Arnold

June 20, 2019

Few would argue the importance of strong company culture. In fact, 94% of executives believe a distinct workplace culture is vital to a business’ success. Yet, only 12% of executives believe their companies have the right culture. Why the disconnect?

Leadership’s Impact on Organizational Culture

An organization’s culture is largely dependent on its leadership. Sure—every employee has an impact on a company’s culture, but ultimately, leadership is responsible for establishing the vision, values, and expectations of an organization.

Engagement and retention surveys have long asserted that employees leave managers, not companies. A 2018 study of more than 25,000 employees confirms the reality that poor management is the main cause of an employee leaving an organization.

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While a poor relationship between a manager and their direct report is a common source of collateral damage in the war for talent, the larger reality is that poor management exists because an organization’s culture tolerates less-than-great leaders. To better understand the underlying issues that can cause turnover or impact engagement in an organization, is to better understand the profound effect leadership has on an organization’s culture.

8 Ways Leaders Impact Culture

Leaders have a responsibility to not only develop the people they work with, but also shape and enhance the culture they work within. Research reveals insights into ways leaders can coach and engage their employees, and thus, improve overall culture.

  • Make Learning a Priority

Organizations that invest in their employees’ development have higher employee engagement, increased profitability, and decreased turnover. Creating a Culture of Learning is one of the best ways to engage and retain employees is to give them opportunities to learn, grow, or develop new skills. Whether it is through a common learning portal like LinkedIn Learning or a career development path in your organization, one of the best ways to engage and retain employees is by giving them opportunities to learn and grow in their current role or expand into new roles within the company.


  • Make it Safe to Learn through Failure

Mistakes are inevitable, and good leaders see failure as an opportunity for development and growth. Great leaders inspire employees to develop new skills or improve by learning from their mistakes. Cultivating a culture without the fear to fail is often more innovative and productive when it comes to solving critical business issues. Great leaders create strategies to learn from their failures actively.


  • Help Others Find Their Own Motivation

While it’s important for leaders to achieve business results, it’s also equally important for them to help their team members explore their own motivation toward achieving individual and team goals. More than 78% of leaders were rated higher on their ability to effectively influence performance results than on their ability to inspire and motivate others. Results without trust in leadership may experience some success in the short run, but without optimally motivated team members with high levels of trust, sustaining key business results will be impossible and cause significant damage to corporate culture.


  • Keep Alignment Top of Mind

Good leaders pay attention to the subcultures within the organization and make sure there are no divisions within units or duplicated activities across units that cause confusion and frustration between teams. They know it is important to keep the entire team aligned and focused on common objectives, so they promote collaboration across teams and units to ensure there are no silos when it comes to performing toward business objectives. Great leaders collaborate across the organization by aligning key strategic objectives that enhance culture and produce long term business success.


  • Don’t Get Hung Up on Job Titles

Good leaders aren’t hung up on their titles or the location of their office within the building. Company structure is valuable, but important business problems aren’t solved by just those who have position power but being collectively engaged with those who are closest to the client and have the skills to solve the issue at hand. Good leaders solicit feedback from their people and take suggestions from all levels in the company creating a culture that isn’t hung up on hierarchy, but focused on authentic collaboration.


  • Help Employees Understand Their Roles

Good leaders know that helping team members understand their roles and responsibilities, not only sets them up for success, it builds a culture that is fluid and efficient in the pursuit of common objectives. They work to help others expand their knowledge and broaden their skill sets within that role. They also show employees how their role fits into the rest of the company operations. 58% of businesses with an articulated, understood sense of purpose, experience over 10% in company growth. Great leaders help their people continually clarify and evolve their roles before they begin pursuing their goals and corporate objectives.

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  • Hold Themselves Accountable

Good leaders know the value of being held accountable to the cultural norms and expectations for performance. They are keenly aware of performance expectations as a leader and willing to monitor and measure it. They are dedicated to making sure they are productive and transparent while reinforcing their accountability to the mission, vision, and values of the organization—not just the bottom line profits. Healthy corporate cultures have leaders that “walk their talk” in the pursuit of organizational success.


  • Look Beyond Productivity

Good leaders know that a great organization is more than just financially successful, but also is dedicated to the integrity of the brand and how everyone operates within that brand. They know that it is important to not only focus on an employee’s performance, but also to continually assess their energy toward their roles, their goals, and their feelings toward the organization.

Leadership development initiatives are a proven way to help develop a better company culture at your organization through advanced leadership practices. Making leadership development a priority in your company helps create great leaders who impact the culture in a positive way.

Start empowering employees and leaders to be passionate about their work with our Employee Engagement guide! Download your copy here.