For years, “organizational culture” was considered a trendy, transient buzzword in the corporate world, but it has become much more than a passing phase. Culture is now an employee recruitment and retention tool because HR directors know the right culture fosters productivity, engagement, and innovation.
Culture refers to the working environment created by an organization’s values, strategic vision, and mission. It also sets the tone for relationships between people in an organization. And what is one of the biggest influencers of organizational culture? Leadership.
The best leaders strive to influence culture through their leadership. But it’s how they do this—their leadership style—that ultimately shapes the culture of an organization.
Leaders can direct culture using traditional “command-and-control” traits like top-down leadership, class systems, and profit-driven values. Or, they can choose to lead using components of the New Leadership Paradigm, including egalitarian structures, transparency, and purpose-driven values. Here are five different leadership styles that can define your organizational culture.
1. Directive Leadership: A Culture of Consistency
Directive leadership utilizes a pyramid structure, with power flowing from the top down. Those at the top give those at the bottom specific instructions and tasks. This style doesn’t encourage an organizational culture of collaboration in which leadership is characterized by dialogue, openness, or collaboration. Instead, directive leadership creates class distinctions based on each person’s position in the organizational hierarchy. Rewards and punishments are used to control workers—and the overall organizational culture. That’s why this leadership style is sometimes called “coercive management.”
Culture of consistency. Directive leadership is known for consistency. Leaders establish specific values and behavioral patterns, and others are expected to follow. The result is predictable, consistent employee performance and overall organizational culture. However, that organizational consistency comes at the expense of organizational agility. Research shows that team members need flexibility and dynamism to meet changing market forces or circumstances with innovation and creativity. Additionally, team members are more likely to “buy in” to whole-system change when their voices have been heard in the planning process. Unfortunately, this is not a characteristic of directive leadership, which emphasizes top-down organizational change.
2. Transformational Leadership: A Culture of Inspiration
Transformational leadership is all about exploring what defines your organization’s culture—and making changes to improve it. Transformational leaders begin by bringing team members together to provide honest feedback. Employees identify challenges and opportunities, as well as personal goals and aspirations. Then, leaders align the organization's goals and values with those of its team members while also charting a course for positive organizational change. Why? Aligning organizational and individual values improves morale, which has been shown to improve productivity. The overall goal is to inspire transformational tendencies in employees by reflecting their personal goals and values.
Culture of inspiration. Everyone is motivated to collect a paycheck. But great employees are inspired by something more. In Why Motivating People Doesn’t Work...and What Does, Susan Fowler writes, “Motivation generated from values, purpose, love, joy, or compassion is different from motivation generated from ego, power, status, or a desire for external rewards.” Things like status and money are short-term motivators. Transformational leadership motivates team members by ensuring them that they are working for a purpose bigger than themselves.
3. Servant Leadership: Culture of Inclusion
Servant leadership flips the organizational pyramid, creating an atmosphere where everyone serves as a leader. The leader’s task is to establish an organization’s visionary goals and strategic direction. Then, the manager serves in a support role as employees work to achieve these objectives. Servant leaders focus on serving organizational stakeholders—and the larger community. This service component is what distinguishes servant leadership from other leadership styles. Participative leadership, for example, empowers employees by including them in the decision-making process. Servant leaders, meanwhile, empower employees by assuming a support role that helps employees accomplish organizational goals.
Culture of inclusion. Michael Bush, author of A Great Place To Work for All, writes in his contribution to the essay collection Servant Leadership in Action that there are three common pillars of great organizational cultures: trust, pride, and enjoyment. Bush adds, “These emerging organizations develop and support leaders toward a servant mindset and approach—that is, they cultivate servant leaders who create cultures where all people feel trusted, empowered, supported, and treated fairly.” The overall goal, Bush adds, is for leaders to relinquish their “autocratic, command-and-control” ways and leverage every ounce of employee potential to achieve whole-system change.
4. Participative Leadership: Culture of Innovation
Relying on a democratic approach, participative leadership works to build consensus among team members. As with transformational leadership and servant leadership, participative leadership earns trust and commitment to achieve whole-system change. Leaders make the final decision, but they do so through a process of compromise, collaboration, and consensus building that engages all team members. As with any democracy, participative leadership requires a culture of information sharing and egalitarian structures that give a voice to all team members. Unlike the concept of “perspective taking,” where you make an effort to understand another’s point of view, MIT researchers have found that the process of “perspective giving”—sharing one’s own story with others—has been found to better promote trust and empathy among groups with differing views.
Culture of innovation. The Yale School of Management’s Yale Insights reports that an innovative organizational culture requires shared values, engagement, and enthusiasm. Most importantly, it requires an environment in which team members feel safe to take risks and engage in independent thinking. Through open dialogue and communication and shared values, participative leadership fosters a culture of empathy that’s required for innovation to flourish. As University of Michigan Ross School of Business Professor Jeffrey Sanchez-Burks explains, “Empathy means taking in the perspectives of others and paying attention to what they say and don’t say. When you learn how to do this in a systematic way, you become much more effective at knowing how to develop the ideas you have.”
5. Authoritative Leadership: Culture of Compliance
Authoritative leaders set the visionary direction of organizations and clearly explain the roles that individual employees will play in that long-term vision. Authoritative leaders lead by example and inspire employees to follow—but they can also create a rank-and-file culture that stifles collaboration, innovation, and professional development. Employees know their place in the organizational hierarchy and aren’t encouraged to deviate. This reflects traditional command-and-control virtues like top-down leadership and the traditional pyramid-shaped hierarchical structure.
Authoritative leadership and directive leadership share a number of traits. The biggest difference, however, is that power can be more distributed under directive leadership. A handful of leaders might set goals and deliver specific instructions and tasks to subordinates under directive leadership, for example. But power is even more centralized under authoritarian leadership. One individual establishes policies, goals, and direction without input from anyone else in the organization.
Culture of compliance. Authoritative leaders can struggle to foster an organizational culture of empowerment or professional development. Employees might not feel valued as individuals, and they might not see a clear connection between their individual success and overall organizational success. Ultimately, this type of organizational culture signals to millennials that they’ll need to look for a job elsewhere to gain professional advancement. Millennials now hold the largest share of the U.S. labor market—and they prefer working in a holacracy rather than a hierarchy. They believe that good ideas should be heard, regardless of where they come from. This idea is at odds with the rank-and-file culture that authoritative leadership fosters. Additionally, research indicates that baby boomers are—surprisingly—slightly less likely than millennials to view workplace hierarchies as effective. Baby boomers were also found to value leaders who are “team oriented” and “participative” slightly more than millennials. So, a culture of compliance could face resistance from workers of all ages.
Setting the Tone for Your Organization’s Culture
Your leadership style sets the tone for your organization’s culture. It’s up to leaders not only to establish goals, policies, and the overall direction of organizations but also to decide who gets a voice in the process and how goals and policies are implemented. When assessing how to refine your company’s culture, it’s important to consider which leadership style you want to define that culture.
Servant leadership, participative leadership, and transformational leadership encourage collaboration and an open exchange of ideas in varying ways. Organizations are rewarded with cultures of innovation, inclusion, and inspiration. Possible drawbacks include internal misalignment, confusion, and resistance to non hierarchical power structures—or a failure to address underlying problems.
Directive leadership and authoritative leadership provide clear direction, goals, and purpose. Organizations are rewarded with consistency and predictability. But they can also be hampered by a lack of collaboration, lack of innovation, and lack of a leadership development pipeline. This can leave employees feeling disengaged, undervalued, and tempted to look outside the organization for professional advancement. Ultimately, company cultures that help individuals thrive help organizations thrive.