The Impact of Authentic Leadership on Organizational Culture

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There is an undeniable connection between the caliber and expertise of leadership in an organization and that organization’s ability to sustain a strong culture and a cohesive and productive workforce.

Interestingly, this is an important link that goes both ways. Businesses and other bodies that appreciate how crucial it is to invest in organizational culture are also more likely to invest in the leadership skills of their top people!

There is another important advantage to this blend of leadership skills and a positive culture, though. It is a combination that substantially impacts the smooth running and financial health of those organizations, including stimulating and supporting strong growth and profitability.

Why are these two things—authentic leadership and culture—so closely interwoven? Also, what leadership qualities are most important to successfully creating and sustaining an organization’s culture?

What’s meant by organizational culture?

It’s common to have some confusion about organizational culture. Let’s break it down: an organization’s brand is a concept aimed at influencing external audiences. It positions that company—or a product or service—using distinct and hopefully compelling values. These values are reflected across sales and marketing.

In comparison, organizational culture is very much an internal concept. It involves a company or some other body developing shared beliefs and values and a common vision that cuts across all departments and branches, for example.

Organizational culture is also about behaviors, particularly from managers. A healthy culture is one in which employees are well-supported in a way that makes them feel recognized, rewarded, and well-motivated. The best culture is one that the whole workforce understands, engages with, and encourages innovation and ‘ownership’ of future development.

You sometimes see it categorized in four ways. Clan culture: this is also known as a collaborative culture, when the emphasis is on teamwork, participation, supporting each other, and mentoring to share collective benefits. 

Adhocracy culture: more suited to creative enterprises, this culture focuses on everyone innovating, using their own initiative, and taking individual responsibility for the growth of their employer.

Market culture: this version is ideal for highly ambitious organizations in competitive sectors. The emphasis is on clear goals (individual and shared) and ‘pumped up’ motivation and rewards. 

Hierarchy culture: in a very process-oriented organization or one closely controlled by legislation or industry guidelines, this culture may be the best fit. It involves managers creating close-knit relationships and making everyone’s roles and responsibilities clear.

Though those are the traditional ‘frameworks,’ generally, every organization develops its own bespoke set of beliefs, behaviors, and staff support mechanisms best suited to achieving its objectives.

It’s all about people

An organization’s culture has been likened to its ‘personality.’ There is one common thread throughout all variations of culture, which is the character and caliber of the people in charge who create and sustain it.

You can also see that one of the core principles of an organization’s culture is how engaged employees are. It includes making sure they have a good level of job satisfaction. That, too, depends heavily on the relationship they have with their line managers and also other supervisors and senior personnel in their organization.

It would be easy at this point to dismiss the concept of job satisfaction as being personal to the individual. Why should an organization—and its leaders—invest in how ‘happy’ its staff are?

It is actually common sense. A happy, engaged, and emotionally supported workforce is a productive one. In fact, in one survey, as many as 82% of employees questioned said that the main influence on their productivity was whether they felt happy and engaged at work. According to a software company, ensuring you have fully engaged employees can result in as much as a 202% increase in your performance.

The effect of not investing in your culture

Turn this on its head, and you can clearly see the repercussions of not investing in a healthy organizational culture. If you have been asking why your workplace has poor efficiency, this could be the overarching answer.

Low productivity could have nothing to do with the technology, equipment, and processes you use as an organization. It can be tied up to low staff morale, a lack of motivation, or badly fragmented teams that lack cohesive aims, for example.

Without investing in your culture, you could well have staff who do only ‘what they are paid to do’ and no more. There is also the potential for work silos throughout your organization, with poor or zero collaboration or clarity. No one will particularly care about whether their performance impacts their employer’s goals, not least as they won’t necessarily know what those goals are.

Disengaged employees are more likely to boost both your absenteeism and your staff churn. Feeling underappreciated is one of the main reasons people leave. Pew Research found that the main drivers for people switching jobs in 2021 were low pay and zero opportunities for advancement, but also feeling ‘disrespected.’ Keep in mind that this also affects your organization’s ability to stay on track financially, beyond a drop in productivity.

Recruitment costs are high. According to the Society for Human Resource Management (SHRM), in 2022, the average cost per new recruit was almost $4,700, a figure that will have increased considerably. You are also more likely to attract the best candidates to your organization if they find your corporate culture appealing. Otherwise, you may lose the top talent to your rivals.

However, one of the biggest drains on company resources and threats to productivity is absenteeism. Absenteeism costs the US economy many billions of dollars a year, and having a better-engaged workforce is considered to be one of the best ways of reducing that amount.

Building a successful organizational culture

A strong and effective organizational culture is not something you can sit down and map out on paper and then present to your workforce as a ‘done deal,’ like you would with a new brand for a company or product.

Some aspects of corporate culture and employee engagement are linked to tangible things, like how much you are investing in the latest technology, skills, and knowledge. It’s natural that people want to work for an ambitious company with a bright future.

However, the real linchpin of having an effective culture in your organization is how you treat employees on a daily basis. Employees want to be managed by people they trust and who show trust in them. They also want leaders who deliver both competence and warmth and who seem genuinely interested in them.

A workforce also needs to know that their organization takes communications seriously, and that is not just a two-way street. Good communications go up, down, across, and in/out of a successful organization. It also involves ensuring staff feel heard.

Crucially, it also means avoiding the ‘blame and shame’ type of culture that can strangle good employee relations. In other words, you can only build and maintain a healthy, nurturing culture in your organization if you also have the right leadership skills in place. Take, for example, the healthcare industry. As you can imagine, over the last few years, it has experienced rapid advancement and transformation. Alongside this, there has been immense stress and strain from the pandemic and the aging population in particular.

One healthcare industry study on the topic noted that evidence shows that strong relationships that exist between authentic leaderships and employee engagement decrease burnout. This sort of consideration is vitally important to patient care in the US. If you have the right leaders in place to support a strong organizational culture, you have a far greater chance of delivering a service that keeps pace with the increasing demands this sector faces.

Leadership qualities that matter most to culture

The level and range of leadership skills within an organization have a direct impact on its ability to build and sustain an effective culture. Let’s look at that in more detail, though, and explore the link between some of the main leadership skills and techniques and organizational culture.

Emotional intelligence

One of the qualities often attached to modern leadership is emotional intelligence. That is also an attribute that is central to creating and sustaining the best organizational culture. It is what can stimulate an environment in which employees feel validated and able to flourish. A successful leader uses their emotional intelligence for themselves as well as their team.

For example, if you are the sort of person who becomes withdrawn, abrupt, or easily angered under pressure, that can all undermine the relationships you have with colleagues and people you manage and fracture their trust. Knowing how to regulate your own responses and stay calm, resilient, and in control can ensure you continue to be a strong communicator and motivator who everyone trusts.

Of course, having emotional intelligence as a leader also enables you to treat others in a holistic and empathetic manner. You can more easily establish what motivates and inspires them, as well as their personal stress points. Investing in getting to know your team as individuals will be especially important when the pressure level ramps up, and you particularly need to get ‘the best’ out of your colleagues and staff.

Organizational acumen

Organizational leadership abilities are also invaluable for creating and supporting strong cultures. To answer the question, “What is organizational leadership?” Marymount University offers an Online Ed.D program in Leadership and Organizational Innovation that teaches students the job role, the necessity, and the improvements that can be made to combat workplace tensions. Marymount University aims to teach students that organizational leadership is a management philosophy that can be used to navigate change successfully and is based on establishing a common mission for an organization. The organizational leadership skills you learn in one of the university’s high-level programs include essential attributes such as being a positive influence, an effective communicator, and an adept problem solver and decision-maker.

All these attributes developed through leadership training are central to being focused, versatile, and adaptable in senior positions. Being adept at organization can also mean being a superb delegator, showing trust in people, and responding intuitively to the training and coaching needs of others. What better way is there to release your employees’ full potential? It also continuously reinforces the vital relationship of trust between senior staff and their teams.

That organizational prowess starts by being clear about each individual’s roles, responsibilities, and aims and then putting in place professional and personal development plans to help them progress.

Also, good organizational leaders commit to talent mapping and succession planning, as they keep one eye on their employer’s skill needs in the short, medium, and long term. That way, organizational leadership prowess drives forward a better-skilled workforce, not just a better-motivated one.

Authentic commitment to equality

The best organizational cultures are those deeply rooted in diversity and inclusivity. The same can be said of the best leaders in commerce, industry, and public service; they, too, recognize that everyone deserves to be given personalized support and recognition.

Strength as an organization comes from leaving no one out and getting the best from everyone.

It is not simply adhering to the generally held principles of equality, such as equity of opportunity, regardless of gender, race, religion, or disability. It can be managers agreeing to parental leave for both partners or when it involves adoption and not just natural birth, for instance. Another example would be responding to staff requests for flexible, remote, or hybrid work patterns to fit around their external commitments.

In effect, true diversity is when business leaders and corporate cultures value the life experiences of employees, not just their value as business assets. So, there is a robust investment in a work-life balance for staff, too.

Communications, honesty, and transparency

There has already been reference to the way in which effective communication underpins a strong culture within any type or size of organization, and that communication must travel in multiple directions.

Being adept at communication is also a central principle of modern leadership and how information is managed. An integral element is active listening and giving employees various ways of opening honest dialogue with their managers. It can all play a big role in ensuring that employees feel engaged and recognized, as well as motivating them.

Being a strong communicator doesn’t mean bombarding everyone in your team with every bit of information, of course. The best leaders know how to give people the knowledge they need and want without causing communication overload or fatigue! Being successful in communication to support a fertile and inspiring organizational culture does involve transparency, however.

There is a temptation to put a firm stranglehold on information at times of change or challenge. Details are on a ‘need to know’ basis, and the decision can be made that this includes a very limited list of people. Yet, nothing undermines organizational culture and staff morale quicker than a combination of rumor and fear. Though hesitant and panicking, managers come a close second.

Look at it this way: if you have a financial crisis and need everyone to make a big push to get you out of it, would hiding the truth help or hinder your chances of increasing productivity, or would being secretive or duplicitous even destroy the trust-based culture you have worked so hard to achieve?

Also, if you have leaders who have invested in a strong corporate culture, then a rallying call to go that extra mile could result in exactly the response you need, including unity and cohesion, which results in teams collaborating and supporting each other to get positive outcomes for their employer.

Strong leaders and cultures create successful organizations

In conclusion, then, it is clear that building a strong culture creates loyal staff. These are employees who are willing to put in more effort when the pressure is on and are productive and present. All of which suggests how invaluable effective leaders and a healthy organizational culture are.

The benefits go beyond that, though, as this combination will also create an environment where staff feel willing and able to flag up problems and concerns. Knowing you have your line manager’s ear and won’t be judged means you can speak out with confidence. In turn, the manager can nip issues in the bud earlier and better.

Also, that powerful combination of good leadership skills and a nurturing culture emboldens staff to submit creative ideas too, which can lead to doing things better, faster, and with less waste.

Lastly, the best leaders establish a clear vision and then empower their employees to reach both their personal aims and corporate goals. It is achieved, not least by treating staff in a holistic and empathetic way and helping them to achieve both work-life balance and job satisfaction.