Chapter 10 Leadership

1. CHAPTER 10:
SHAPING CULTURE
AND VALUES

2. TABLE OF CONTENTS
 SUMMARY
 ORGANIZATIONAL CULTURE
 CULTURE STRENGHT, RESPONSIVENESS AND
PERFORMANCE
 CULTURAL LEADERSHIP
 THE COMPETING VALUES APPROACH TO
SHAPING CULTURE
 ETHICAL VALUES IN ORGANIZATIONS
 VALUES-BASED LEADERSHIP

3. SUMMARY

4. SUMMARY
 Creating the right culture is one of the most
important jobs of the leader. Culture is the set
of key values, norms, and assumptions that is
shared by members of an organization and
taught to new members as correct.
 Culture serves two critically important
functions—to integrate organizational
members so they know how to relate to one
another and to help the organization adapt to
the environment. Strong, responsive cultures
have a positive impact on organizational
outcomes.

5. SUMMARY
 Creating and influencing a responsive culture
is important because the right culture can
drive high performance. Leaders build high-
performance cultures by emphasizing both
values and solid business operations as the
drivers of organizational success.
 A culture gap exists when an organization’s
culture is not in alignment with the needs of
the external environment or company
strategy.

6. SUMMARY
 Leaders use ceremonies, stories, symbols,
specialized language, selection, and
socialization to instill and strengthen the
needed cultural values. In addition, leaders
influence cultural values most strongly
through their daily actions.
 Leaders consider the external environment
and the company’s vision and strategy in
determining which values are important for
the organization.
 Four types of culture may exist in
organizations: adaptability, achievement,
involvement, and consistency. Each type
emphasizes different values, although
organizations may have values that fall into
more than one category.

7. SUMMARY
 Many types of values make up an
organization’s culture; ethical values are
considered among the most important.
 Ethics is the code of moral principles and
values that governs the behavior of a person
or group with respect to what is right or
wrong.
 Leaders shape cultural values through values-
based leadership. They know their personal
values and beliefs and the values they want
the organization to honor.

8. SUMMARY
 Many good leaders practice spiritual
leadership, which means displaying values,
attitudes, and behaviors that motivate people
toward a sense of spiritual expression through
calling and membership. The principles of
spiritual leadership can improve both
organizational performance and employee
well-being.

9. LEARNING OUTCOME
 After studying this chapter, you should be
able to:
 Understand why shaping culture is a vital
function of leadership.
 Recognize the characteristics of a
responsive, as opposed to a resistant,
culture.
 Know how to establish a high-performance
culture by paying attention to both values
and results.
 Understand and apply how leaders shape
culture and values through ceremonies,
stories, symbols, language, selection and
socialization, and daily actions.

10. LEARNING OUTCOME
 Identify the cultural values associated with
adaptability, achievement, involvement,
and consistency cultures and the
environmental conditions associated with
each.
 Act as a values-based leader and instill
healthy values in the organizational culture.
 Apply the principles of spiritual leadership
to help people find deeper life meaning and
a sense of membership through work.

11. INTRODUCTION

12. INTRODUCTION
 The culture at UPS focuses on
safety and efficiency. A jersey
ceremony rewards drivers who
have driven UPS trucks for 25
years without an “avoidable”
traffic accident.
 Learn more about UPS corporate culture

13. ORGANIZATIONA
L CULTURE

14. ORGANIZATIONAL
CULTURE
 Corporate culture affects a
company’s performance for
better or worse.
 Dysfunctional culture can
cause many of a company’s
problems.

15. ORGANIZATIONAL CULTURE
What is Culture?
 Culture is the set of key values,
assumptions, understandings, and
norms that is shared by members
of an organization and taught to
new members as correct.
 Norms are shared standards that
define what behaviors are
acceptable and desirable within a
group of people.
 At its most basic, culture is a
pattern of shared assumptions
and beliefs about how things are
done in an organization.

16. ORGANIZATIONAL CULTURE
Levels of Corporate Culture
 Each of the three levels of
culture is less obvious:

17. ORGANIZATIONAL CULTURE
Levels of Corporate Culture
 At the surface level are visible
artifacts that can be seen, heard,
and observed by watching
members of the organization.

18. ORGANIZATIONAL CULTURE
Levels of Corporate Culture
 At a deeper level of culture are
the expressed, conscious values
and beliefs, which are not
observable but can be discerned
from how people explain and
justify what they do.

19. ORGANIZATIONAL CULTURE
Levels of Corporate Culture
 Assumptions and deep beliefs
generally start out as expressed
values, but over time they
become more deeply embedded
and less open to question—
organization members take them
for granted and often are not
even aware of the assumptions
that guide their behavior,
language, and patterns of social
interaction.

20. ORGANIZATIONAL CULTURE
Levels of Corporate Culture

21. ORGANIZATIONAL CULTURE
Importance Of Culture
 Culture gives employees a sense of organizational identity and
generates a commitment to particular values and ways of doing
things.

22. ORGANIZATIONAL CULTURE
Importance Of Culture
Culture serves two
important functions in
organizations:

23. ORGANIZATIONAL
CULTURE
Action Plan: What should I do
as a leader in my organization?
 As a leader, you can pay attention to
organizational culture and develop an
awareness of how cultural values, norms, and
beliefs influence people’s behavior in the
organization.

24. ORGANIZATIONAL CULTURE
Internal Integration
 Culture helps employees develop
 a collective identity and
 work together effectively.
 It guides methods of communication, behavior, and allocation of power and
status.

25. ORGANIZATIONAL CULTURE
External Adaptation
 Culture determines how people
communicate in the organization,
what behavior is acceptable and
how power and status are
allocated

26. CULTURE STRENGTH,
RESPONSIVENESS AND
PERFORMANCE

27. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Culture Strength
 Culture strength refers to the degree of agreement among employees
about the importance of specific values and ways of doing things.
 If widespread consensus exists, the culture is strong and cohesive; if little
agreement exists, the culture is weak. Sometimes a strong culture can
encourage the wrong values and cause harm to the organization and its
members.

28. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Responsive Cultures
 Cultures can be thought of
as either responsive or
resistant.

29. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Responsive Cultures
 In responsive cultures,
priorities are customers,
people, processes, and
procedures within the
organization that bring
about useful change. In
resistant cultures, leaders
are concerned with
themselves or their own
special projects, and their
values tend to discourage
risk taking and change.

30. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Responsive Cultures
 In resistant cultures, leaders
are concerned with
themselves or their own
special projects, and their
values tend to discourage
risk taking and change.

31. Responsive Vs Resistant Cultures
Source: Based on John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York: The Free Press, 1992), p. 51.

32. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Culture Gap
 The difference between desired and actual values and behaviors is called
the culture gap.

33. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
Culture Gap
 Leaders should recognize when people are adhering to the wrong
values or when important values are not held strongly enough.
 Immense culture gaps can occur during mergers. Despite the popularity of
mergers and acquisitions, many fail because it is difficult to integrate
cultures.

34. CULTURE STRENGTH
Discussion Question
 As a leader, how might you recognize a
culture gap?
 What techniques might you use to influence
and change cultural values when necessary?

35. CULTURE STRENGTH
Discussion Answer
 A leader should look for the difference
between desired and actual values and
behaviors, which is the definition of a culture
gap.
 To change cultural values, a leader could
listen to employees and build trust by
accepting employee ideas and initiatives.
 Culture could be shaped through ceremonies,
stories, symbols, and careful selection and
socialization of new employees

36. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
High-performance Culture
 Successful companies pay
attention to both cultural
values and business
performance.

37. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
High-performance Culture
Source: Adapted from Jeff Rosenthal and Mary Ann Masarech, ‘‘High-Performance Cultures: How Values Can Drive Business Results,’’ Journal of
Organizational Excellence (Spring 2003), pp. 3–18; and Dave Ulrich, Steve Kerr, and Ron Ashkenas, Figure 11–2, GE Leadership Decision Matrix, The GE
Work-Out: How to Implement GE’s Revolutionary Method for Busting Bureaucracy and Attacking Organizational Problems—Fast! (New York: McGraw-Hill,
2002), p. 230.

38. CULTURE STRENGTH, RESPONSIVENESS AND
PERFORMANCE
High-performance Culture

39. HIGH-PERFORMANCE
CULTURE
Discussion Question
 How difficult would it be for you as a leader
to fire someone who is bringing in big sales
and profits for the company but not living up
to the cultural values?
 Explain.

40. HIGH-PERFORMANCE
CULTURE
Discussion Answer
 It can be difficult for a leader to fire someone
who is bringing in big sales for the company,
if such an employee doesn’t live up to the
cultural values, the right choice would be to
fire them.
 Retaining such employees in the company
could be profitable in the short run, but the
success would be difficult to sustain over the
long term because the “glue” that holds the
organization together—that is, shared
cultural values—would be missing.
 Companies that succeed have leaders who
pay careful attention to both cultural values
and business performance.

41. HIGH-PERFORMANCE CULTURE
Video Time – “How to Create a High-Performance
culture?”
 Business Psychologist Andrew Sillitoe explores why some
people rise to the top 20% in their field starting with
research into why young people stay engaged with sport
throughout their teens. Engaging others to operate at their
full potential may be less of a mystery than we think –
listen to Andrew’s story about what he learnt on the road
playing street hockey and what it takes to create a high
performance culture.
 Andrew Sillitoe is a business psychologist, performance
coach and author from Kent, England. Blending 20 years’
experience as an elite international sportsman and coach
along with three published books and an acclaimed TED
talk, Andrew’s innovative and straight-talking views on
leadership, teamwork and strategy has resulted in his
advice and guidance being highly sought after by key
figures at several FTSE 100 companies. Pfizer, Ericsson,
Nationwide, Virgin Media and the BBC are among the
global corporations who’ve turned to Andrew to empower
its leaders to take full responsibility in their business,
body, relationships and mindset.
How to create a high performanc

42. CULTURAL
LEADERSHIP

43. CULTURAL LEADERSHIP
 A cultural leader defines and
uses signals and symbols to
influence corporate culture.
 Cultural leaders influence culture
in two key areas:

44. CULTURAL LEADERSHIP
 To enact cultural values, leaders
use ceremonies, stories, symbols,
specialized language, selection
and socialization of new
employees, and daily actions to
keep cultures strong.

45. CULTURAL LEADERSHIP
 A ceremony is a planned
activity that makes up a special
event and is generally conducted
for the benefit of an audience.
Ceremonies reinforce specific
values, create a bond among
employees, celebrate employees
who symbolize important
achievements and are often
accompanied by the presentation
of awards

46. CULTURAL LEADERSHIP
 A story is a narrative based on
true events that is repeated
frequently and shared among
employees. Stories are used to
illustrate the company’s primary
values. They may not be
supported by facts, but is
consistent with the values and
beliefs of the organization

47. CULTURAL LEADERSHIP
 A symbol is an object, act, or
event that conveys meaning to
others. Leaders can use physical
artifacts to symbolize important
values.

48. CULTURAL LEADERSHIP
 Slogans and written public
statements, such as corporate
mission statements or other
formal statements that express
the core values of the
organization, reinforce cultural
values.

49. CULTURAL LEADERSHIP
 Socialization is the process by
which a person learns the values,
norms, perspectives, and
expected behaviors that enable
him or her to successfully
participate in the group or
organization. Socialization is a key
leadership tool for transmitting
the culture and enabling it to
survive over time. Formal
socialization programs can be
highly effective.

50. CULTURAL LEADERSHIP
 Leaders and strong performers
model the company’s culture.
Leaders can also change negative
and unproductive cultures by
their actions. Daily actions are
important to maintain the desired
culture

51. CULTURAL LEADERSHIP
Read an Article
 “Cultural Leadership is often confused
as something that only emerging
leaders and those in entry level or mid
career positions undertake. It is
confused with assuming its for
professionals that want to climb up
the career ladder and become
managers and CEOs. It is so much
more than that and I have been lucky
enough to be part of two fantastic
programmes in the UK”
(Huffingtonpost, 2016)
 Read the article “
Cultural Leadership”

52. CULTURAL LEADERSHIP
Discussion Question
 How might leaders use symbolic acts to
strengthen a cultural value of teamwork and
collaboration?
 How about a value of customer care and
responsiveness?

53. CULTURAL LEADERSHIP
Discussion Answer
 A symbol is one of the tools used
by the leaders for conveying
cultural values. A symbol is an
object, act, or event that conveys
meaning to others. In order to
strengthen a cultural value of
teamwork and collaboration:
 Top leaders at Germany’s
TeamBank made the informal Du
the mandatory form of address
rather than the formal Sie
commonly used in German
workplaces. The change
symbolized the top
management’s respect for every
employee.
 At tomato processor Morning
Star, administrative offices are
located near the factory floor to
symbolize that everyone is on the
same team with the same
purpose.

54. COMPETING VALUES
APPROACH TO SHAPING
CULTURE

55. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Shaping Culture
 Organizational values are the
enduring beliefs that have worth,
merit, and importance for the
organization. In considering
values important for the
organization, leaders consider the
external environment and the
company’s vision and strategy.
 Cultures can vary widely across
organizations; however,
organizations within the same
industry often share similar values
because they are operating in
similar environments.

56. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Shaping Culture
 Organizational cultures can be
assessed along many dimensions,
such as the extent of
collaboration versus isolation
among people and departments,
the importance of control and
where control is concentrated, or
whether the organization’s time
orientation is short range or long
range.
 Two specific dimensions are:

57. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Four Types of Culture
 There are four types of
culture

58. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Four Types of Culture
 The adaptability culture is
characterized by strategic leaders
encouraging values that support
the organization’s ability to
interpret and translate signals
from the environment into new
behavior responses.

59. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Four Types of Culture
 The achievement culture is
characterized by a clear vision of
the organization’s goals, and
leaders focus on the achievement
of specific targets such as sales
growth, profitability, or market
share.

60. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Four Types of Culture
 The involvement culture has
an internal focus on the
involvement and participation of
employees to meet changing
expectations from the external
environment. More than any
other, this culture places value on
meeting the needs of
organization members.

61. COMPETING VALUES APPROACH
TO SHAPING CULTURE
Four Types of Culture
 The consistency culture has
an internal focus and a
dependability orientation for a
stable environment. The culture
supports a methodical, rational,
orderly way of doing business.

62. COMPETING VALUES APPROACH TO SHAPING
CULTURE
Four Types of Culture
Source: Based on Paul McDonald and Jeffrey Gandz, ‘‘Getting Value from Shared Values,’’ Organizational Dynamics 21, no. 3 (Winter 1992), pp. 64–76; Deanne
N. Den Hartog, Jaap J. VanMuijen, and Paul L. Koopman, ‘‘Linking Transformational Leadership and Organizational Culture,’’ The Journal of Leadership Studies
3, no. 4 (1996), pp. 68–83; Daniel R. Denison and Aneil K. Mishra, ‘‘Toward a Theory of Organizational Culture and Effectiveness,’’ Organizational Studies 6, no. 2
(March–April 1995), pp. 204–223; Robert Hooijberg and Frank Petrock, ‘‘On Cultural Change: Using the Competing Values Framework to Help Leaders Execute a
Transformational Strategy,’’ Human Resource Management 32, no. 1 (1993), pp. 29–50; and R. E. Quinn, Beyond Rational Management: Mastering the
Paradoxes and Competing Demands of High Performance (San Francisco: Jossey-Bass, 1998).

63. TYPES OF CULTURE
Video Time – “The 8 Types of Company Culture”
 By applying this fundamental
insight about the dimensions of
people interactions and response
to change, we have identified
eight styles that apply to both
organizational cultures and
individual leaders. Researchers at
Spencer Stuart (including two of
this article’s authors) have
interdependently studied and
refined this list of styles across
both levels over the past two
decades. (HBR, 2018)
 Watch the video The 8 Types of Company Culture HBR Video

64. TYPES OF CULTURE
Discussion Question
 Compare and contrast the achievement
culture with the involvement culture.
 What are some possible disadvantages of
having a strong involvement culture?
 A strong achievement culture?

65. TYPES OF CULTURE
Discussion Answer
 An achievement culture shows a
clear vision of the organization’s
goals. Leaders focus on the
achievement by specific targets
such as sales growth. This culture
values competitiveness,
aggressiveness, personal
initiative, and the willingness to
work. Emphasis is placed on
winning.
 An involvement culture has an
internal focus on the
involvement and participation of
employees to meet changing
expectations from the external
environment. More than any
other, this culture places value on
meeting the needs of
organization members.
Companies with involvement
cultures are generally friendly
places to work, and employees
may seem almost like a family.
 The involvement culture might
not be aggressive enough to
outperform the competition, and
an achievement culture might
have high turnover because of
little regard for individual needs.

66. ETHICAL VALUES IN
ORGANIZATIONS

67. ETHICAL VALUES IN ORGANIZATIONS
 Ethics is the code of moral
principles and values that
governs the behavior of a person
or group with respect to what is
right or wrong. Ethics sets
standards as to what is good or
bad conduct and decision
making.
 Most organizations that remain
successful over the long term
have leaders who include ethical
values as part of the formal
policies and informal cultures of
their companies.

68. VALUES-BASED
LEADERSHIP

69. VALUES-BASED LEADERSHIP
 Values-based leadership is
an influence relationship
between leaders and followers
that is based on shared,
strongly internalized values
that emphasize the common
good and are consistently
advocated and acted upon by
the leader.
 Leaders influence
organizational culture by
demonstrating their personal
values and by practicing
spiritual leadership.

70. VALUES-BASED LEADERSHIP
Personal Values
 Employees learn about values
from watching leaders.
Values-based leaders generate
a high level of trust and
respect from employees based
not just on stated values but
on the courage,
determination, and self-
sacrifice they demonstrate in
upholding those values.

71. VALUES-BASED LEADERSHIP
Spiritual Values
 Spiritual leadership is the
display of values, attitudes,
and behaviors necessary to
intrinsically motivate oneself
and others toward a sense of
spiritual expression through
calling and membership.

72. VALUES-BASED LEADERSHIP
Model Of Spiritual Leadership
Source: Based on Louis W. Fry, Sean T. Hannah, Michael Noel, and Fred O. Walumbwa, ‘‘Impact of Spiritual Leadership on Unit Performance,’’
The Leadership Quarterly 22 (2011), pp. 259–270; and Louis W. Fry, ‘‘Toward a Theory of Spiritual Leadership,’’ The Leadership Quarterly 14
(2003), pp. 693–727. Used with permission.

73. VALUES-BASED LEADERSHIP
Model Of Spiritual Leadership
 Spiritual leadership can decrease
or eliminate negative emotions
and conflicts in the workplace
and provide a stronger
foundation for personal well-
being.
 The four main types of
destructive emotions are

74. VALUES-BASED LEADERSHIP
Model Of Spiritual Leadership
 The spiritual leader addresses
followers’ higher-order needs for
membership and self-
actualization.
 Spiritual leadership often provides
substantial autonomy and self-
management.
 The spiritual leader, like the
servant leader, engages people in
work that provides both service
and meaning.

75. VALUES-BASED LEADERSHIP
Action Plan: What should I do
as a leader in my organization?
 As a leader, you can be ethical and act on
high moral principles in your daily behavior.
You can help people find deeper fulfillment
in their jobs.

76. VALUES-BASED
LEADERSHIP
Discussion Question
 If a leader directs her health-care company to
reward hospital managers strictly on hospital
profits, what kind of values is she
encouraging within the company culture?
Discuss.

77. VALUES-BASED
LEADERSHIP
Discussion Answer
 A profit-driven rewards system could
encourage employees to ignore ethical values
such as honesty, fairness, and personal
integrity.

78. SPIRITUAL LEADERSHIP
Discussion Question
 Some mortgage company leaders have said
that providing subprime mortgages (earn a
commission by making loans to people at
high interest rates who may have difficulty
making the payments) was based on the
noble purpose of giving poor people a
chance to participate in the American dream
of home ownership.
 Discuss your opinion of this explanation.

79. SPIRITUAL LEADERSHIP
Discussion Answer
 Banks were pressured to give
poor people mortgages even
when lenders felt that they did
not qualify. Powerful members of
Congress like Barney Frank
encouraged lending to
unqualified buyers through
Fannie May and Freddie Mac.
President Bush made it a goal to
have more Americans become
homeowners. However, this
noble intent went too far, and
unintended consequences
resulted—the mortgage crisis that
led to a deep recession coupled
with massive unemployment.
 On the other hand, it is also true
that many Wall Street firms
invested in mortgage-backed
securities for reasons of corporate
greed. Ethical leaders would hold
that giving loans to people who
most likely cannot afford the
payments in order to increase
your loan volume is unethical.
Commentators on the recent
crisis in the mortgage system
point out that a big part of the
problem was a lack of ethical
values that guided employee
behavior.

80. VALUE-BASED LEADERSHIP
Video Time – “Happiness – Building a Values Led
Organization”
 Ethical motivation is one of the
distinctions between
management and leadership.
Managers who do not embrace a
values-driven purpose do not
establish credibility as leaders.
 Esther McMorris
 Happiness - building a values led organization: Esther McMorris at TEDxBathUniver

81. KEY TERMS AND
CONCEPTS

82. KEY TERMS AND CONCEPTS
 Culture: the set of key values,
assumptions, understandings, and
norms that is shared by members
of an organization and taught to
new members as correct.
 Culture strength: the degree
of agreement among employees
about the importance of specific
values and ways of doing things.
 Culture gap: the difference
between desired and actual
values and behaviors.
 High-performance culture: a
culture that is based on a solid
mission, embodies shared
responsive values that guide
decisions, and encourages
individual ownership of both
bottom-line results and cultural
values.

83. KEY TERMS AND CONCEPTS
 Cultural leader: a leader who
actively uses signals and symbols
to influence corporate culture.
 Ceremony: a planned activity
that makes up a special event and
is generally conducted for the
benefit of an audience.
 Story: a narrative based on true
events that is repeated frequently
and shared among employees.
 Symbol: an object, act, or event
that conveys meaning to others.
 Socialization: the process by
which a person learns the cultural
values, norms, and behaviors that
enable him or her to “fit in” with
a group or organization.
 Organizational values: the
enduring beliefs that have worth,
merit, and importance for the
organization.
 Adaptability culture: culture
characterized by values that
support the organization’s ability
to interpret and translate signals
from the environment into new
behavior responses.

84. KEY TERMS AND CONCEPTS
 Involvement culture: culture
with an internal focus on the
involvement and participation of
employees to meet changing
expectations from the external
environment.
 Consistency culture: culture
with an internal focus and
consistency orientation for a
stable environment.
 Ethics: the code of moral
principles and values that governs
the behavior of a person or group
with respect to what is right and
wrong.
 Values-based leadership: an
influence relationship between
leaders and followers that is
based on shared, strongly
internalized values that
emphasize the common good
and are consistently advocated
and acted upon by the leader.
 Spiritual leadership: the
display of values, attitudes, and
behaviors necessary to
intrinsically motivate oneself and
others toward a sense of spiritual
expression through calling and
membership.