A Leader’s Influence on Culture: How Culture Impacts Business Performance
What do effective leaders do?
Any savvy businessperson might describe the role of leaders as setting and communicating vision and strategy, and motivating and rewarding employees. However, the true bottom-line imperative for any business is that the work environment be conducive to employee productivity. In fact, the atmosphere of the workplace (generally referred to as “organizational culture”) has been found to be the single greatest internal factor that drives employee performance. Hundreds of studies have demonstrated the link between organizational climate and key performance measures such as sales growth, product cycles, productivity, and customer perceptions of service quality. Typically, climate has accounted for 10-25% of the variance in such key business indicators.
How is that climate created? Studies have shown that it is shaped primarily by the behaviors of leaders and managers. The behaviors leaders and managers tend to employ most frequently are often referred to as their leadership “styles.”
Leadership Styles That Get Results
Emotional Intelligence expert, Daniel Goleman, author of Working with Emotional Intelligence and Primal Leadership together with the Hay Group (now part of Korn Ferry), has identified six distinct leadership styles, the most effective of which are rooted in emotional intelligence.
Most importantly, this research demonstrates that the most effective leaders do not rely on only one style, but have learned to employ most of them according to the needs of different situations. It also shows that over the long term, four of these six styles tend to create the most positive organizational climate.
The Leadership Styles Defined
Visionary: Moves people toward shared dreams; most positively impacts climate; appropriate style when changes require a new vision, or when a clear direction is needed.
Coaching: Connects what a person wants with the organization’s goals; highly positive impact on climate; used to help an employee improve performance by building long-term capabilities
Affiliative: Creates harmony by connecting people to each other; positive impact on climate; appropriate to heal rifts in a team, motivate during stressful times, or strengthen connections
Democratic: Values people’s input and gets commitment through participation; positive impact on climate, especially when buy-in is needed or to get valuable input from employees
Pacesetting: Meets challenging and exciting goals; can have highly negative impact on climate if used too frequently or poorly executed; best used to get high quality results from an already motivated and competent team
Commanding: Soothes fears by giving clear direction in an emergency; often this style is misused and has a highly negative impact on the climate; appropriate in a crisis, to kick-start a turnaround, or with problem employees
The Impact of Leadership Styles on Organizational Culture
There are six key dimensions or indicators of the quality of Organizational culture. They are:
Clarity: giving employees a clear understanding of the organizational mission and their expected contributions to its fulfillment
Flexibility: fostering risk-taking behavior; being free of unnecessary rules or bureaucracy
Responsibility: giving employees an appropriate level of authority to perform their jobs effectively
Standards: consistently applying to the highest quality standards in all aspects of the business
Rewards: tangible and intangible rewards for performance; includes recognition and awards
Team Commitment: fostering pride in the organization; motivating employees to “go the extra mile
Research investigating how each leadership style affected the six drivers of climate shows the Visionary leadership style has a positive impact on almost ALL dimensions of climate. Three others, Affiliative, Democratic, and Coaching, follow close behind. That said, these findings indicate that no style should be relied on exclusively, and all have at least some appropriate short-term uses.
Selecting leadership styles can be compared to playing a game of golf. Over the course of a game, a golf pro picks and chooses clubs based on the demands of the shot. Sometimes the pro thinks it over, and sometimes he or she instinctively reaches for the right tool. Today’s business environment is challenging, to say the least, and successful leaders must play their leadership styles like a pro—using the right one at the right time.