CONSISTENT LEADERSHIP BEHAVIOURS
THAT DRIVE ORGANIZATIONAL CULTURE AND
GIVE COMPETITIVE ADVANTAGE
Joe Plante
May 30, 2008
Introduction
An organizational or corporate culture can be defined as “a system of shared
values and norms that define appropriate attitudes and behaviours for
organizational members”. (O’Reilly & Chatman 1996, p.157-200) It comprises the
attitudes, experiences, beliefs and values of its leaders and helps to establish a
level of expectations that creates and drives everything from first impressions to
long-term deliverables. An organization’s culture is a valuable asset, and is
sustained or enhanced by its own leadership behaviours and conversely can be
damaged by its lack of leadership in key positions. An organization’s culture is seen
as a social control mechanism that helps define a sense of order and serves as a
source of consistent behaviors within an organization. This paper will examine how
developing a successful leadership culture through consistent behaviours is not just
the execution of standardized policies and procedures within the organization, but is
about having a galvanized leadership culture that resonates throughout the ranks.
The paper will focus on how an organization creates a consistent leadership culture
and how they measure that effectiveness to achieve a competitive advantage. The
paper will compare two examples of organizations that have created a consistent
leadership culture that have become a source of competitive advantage.
Corporate Culture & Leadership Behaviours
The analysis of leadership and its behaviours has become a popular field of
study these days with much of this driven by personal characteristics and
competencies of the leader. Sometimes though, a simple premise goes overlooked,
the fact that leaders must deliver tangible results and value to an organization. With
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continuing pressures on organizations to remain competitive, successful business
leaders at all levels must be able to align their leadership, vision, core values, and
everyday actions with those of the organization to produce needed and valued
results for their customers, shareholders and employees (Friedman Stewart, 2006)
The importance of developing a strong organizational culture aligned with
consistent leadership behaviours to enhance a firm’s performance is based on the
hypothesis that organizations benefit from having highly motivated employees
dedicated to common goals (Kotter and Heskett, 1992). These performance
benefits of a strong corporate culture are thought to come from three main sources:
enhanced coordination and control within the organization to implement its strategic
goals, improved goal alignment between the organization and its employees to
ensure a sense of clarity in the organization, and increased employee effort
because they may perceive that their actions are freely chosen. There has been
evidence to support this hypothesis that when an organization has a strong culture
built on these three sources these companies outperform ones that have not
focused on achieving these benefits (Kotter and Heskett, 1992; Gordon and
DiTomaso, 1992; Burt et al., 1994). These performance advantages are realized
through a consistent facilitation of employee behaviours driven from consistent
leadership conduct. There have been many studies that show that 50-60 percent of
major organizational change and improvement efforts fail due to inconsistencies in
communication and leadership (Clemmer, 1992). Inconsistent organizations may
achieve a degree of success as well, but usually at the cost of quality of work or
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quality of relationships among the organization as it tends to breed distrust amongst
the employees.
There are some that theorize that organizations that have a strong corporate
culture may excel at incremental changes, but may encounter difficulties in more
volatile environments. This is due to the difficulty in adapting to these changes
because they are guided by their strong culture, and may have greater difficulty
recognizing the need for change. (Sorensen, 2002). That is why it is vital to the long
term success of an organization to do a frequent situational analysis of the
business. These consistent leadership actions help turn external customer and
investor expectations into employee abilities and organizational capabilities. For
example, the Disney theme parks are known for having exceptional service and
guest satisfaction, so its leaders should be competent in identifying and delivering
great service. Leaders at all levels reflect the culture when they think and act in
ways consistent with the desired product or organization and demonstrate an
ongoing reputation for both quality and results. This leadership consistency aligned
with the culture is a true extension of an organization’s identity because it shows up
in behaviors and results (Pine and Gilmore, 2008).
Creating Consistent Leadership Culture
In order for a company to successfully create a consistent leadership culture
it must create a case for the importance of leadership and the value that this will
have in achieving their strategic, financial, and customer goals. The next step is to
define a clear theory or definition of leadership throughout the organization. This
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statement of leadership should reflect external customer expectations into
strategies and plans of action that translate to employee actions. A company’s
mission statement positions the company to win in its chosen market; similarly this
statement of leadership positions its people and forms the bridge between
customer’s expectations and employee behaviors. In creating this statement it is
crucial that senior executives demonstrate the belief in this statement that will help
them reach their strategic, financial and customer goals by “walking the talk” every
day. When these senior executives hold leaders at all levels accountable for these
strategies and begin implementing them into human resource practices such as
hiring, promotion, and compensation, these practices will begin to become a part of
the organization’s culture (Savio F., 2007). This statement need not be complex,
but rather a simple belief or vision in fifteen words or less. An important factor not
to be overlooked is the emotional component of the leadership statement. This
statement should have empathy to not only help connect the consumers to meet
their rational needs, but also by helping to define the emotional context of the need
as well.
Sometimes when an organization attempts to create these statements, it
generates cynicism because they have little grounding in reality or action.
Employees may also see this as the “flavor of the day” if there have been previous
attempts at organizational change. (Trahant B., Burke W., Koonce R., 1997) Every
organization faces some sort of gap that it must overcome in order to engage its
employees and achieve the desired results. This gap can be widened by
perceptions and past experiences, and it is critical at this juncture to have clear
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communication at all levels as to the expectations and desired results of the
strategies that are being developed to help close this gap. This communication
needs to not only be “top down” but “bottom up” as well. (Morgan Marzec., 2007)
Research suggests the potential payback is great when organizations effectively
communicate their business strategy than those organizations that did not (Deloitte
& Touche, 2003). It is estimated that companies that share business plans, goals
and financial information by communicating openly about matters that effect
employees and by linking strategy to individual roles and responsibilities, realize an
average improvement of 4.8 percent in market value (Watson Wyatt, 2004). A total
of 52 percent of employees indicate they are not engaged (‘‘checked out,
sleepwalking through their workday, putting in time – but not putting energy or
passion – into their work’’ (Gallup Management Journal, 2006). A key component in
keeping employees engaged is clear and effective communication about what is
nonnegotiable and when the invitation to contribute is open to certain groups or all
staff (Smythe J., 2008 pg. 20).
Measuring Consistent Leadership
Measuring leadership effectiveness is a complex and challenging process
due to the fact that various organizations may view leadership differently. When
organizations look to measure leadership effectiveness they tend to focus on
generic traits such as vision, direction, enthusiasm, and other qualities that may be
difficult to measure. This method of measurement would look to establish
leadership in that organization as a set of competencies and a shared set of
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characteristics amongst a group of individuals. The challenge with this method of
measurement is that it becomes a cookie cutter approach, and will create a vanilla
leadership trend because it is based on a vanilla competency model (Ulrich D.,
Smallwood N., Jan 2007). When a company decides to invest in shaping
leadership behaviours, they need to include a concrete ROI or a solid vision as to
what the expectations and results are of the training. In 2006 $110 billion was
spent on learning and development by companies in the United States and $21
billion was spent on Leadership Development alone (Zenger, Folkman, Oct 2007
pg.7) In order to measure anything we need a set of parameters and metrics to
utilize in the process. Some gauges could be an actual measurement of the quality
of leadership itself which could reflect in stakeholder’s confidence in the
organization through price to earnings ratio compared to other companies in the
same industry. Another opportunity for measurement is to look at an organization’s
leadership bench strength. To successfully measure an organization’s bench
strength they must be able to answer such questions as “Do we have sufficient
leadership strength and numbers to rapidly seize, shape, and capitalize upon
business growth opportunities? Can we readily expand into new market spaces,
and defend as against sudden competitive threats. Do we have enough seasoned
leaders to wisely guide new acquisitions to realizing the targeted results?”
(Thompsen, J., 2005 pg.1). This is an area where many businesses do not keep an
eye on until it becomes a crisis situation. Another key factor in today’s marketplace
is the retention of good people. Each year, about 25 percent of managers in typical
Fortune 500 companies change jobs, and most spend an average of four years in a
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given position. High potential leaders in mid-senior ranks move more frequently:
every two to three years. These statistics demonstrate why companies must build
solid leadership and not lose sight of succession planning. (Lantz Gayle Apr, 2007)
A firm with a strong leadership culture will not only retain great people but will
attract other people with similar attributes. There are different factors that affect
employee retention, but a common factor in employee dissatisfaction and turnover
is the lack of clear and consistent communication at different levels in an
organization. This is the strength of an organization that has a consistent leadership
culture. It has been said that “great talent attracts great talent “. With this infusion of
great talent, a company will experience better results, both tangible and intangible;
these will include such things as investor confidence, higher customer satisfaction,
as well as employee engagement and retention (Lantz Gayle Apr, 2007). A strong
and consistent leadership culture shows up in higher market value and this can be
determined by some of its intangibles such as its ability to keep promises, design
and deliver on a successful strategy, ensure technical excellence, hire and retain
valuable people, build strong organizational capabilities, and especially to develop
strong leadership. An intangible value will also grow as investors gain greater
confidence about the future fortunes of one firm over others in the same industry.
(Ulrich D., Smallwood N., Jan 2007).
Examples of Organizations with Consistent Leadership
An example of an organization that continues to show consistency in not only
execution of operational systems and procedures but translating it into leadership
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behavior would be Wal-Mart. The statement “Everyday Low Prices” transcends their
marketing initiatives and lends itself to an entire strategy of leadership and
expectations within the organization. Offering products at a reduced price continues
to be quite difficult in today’s marketplace, but the company aggressively followed a
cost controlling strategy that involved not only developing economies of scale and
making consistent efforts to reduce costs, but included these values into its
recruitment and training strategies. From its inception, Wal-Mart has imposed strict
control over their overhead costs helping to maximize profit per square foot. They
have instilled this leadership culture throughout the organization that it will offer the
consumer its “Everyday Low Price” by managing costs. These cost controlling
policies and procedures form a large part of the organization’s culture and ideology,
and has therefore become an integral part of their leadership culture. (Chain Store
Age; Dec 1999).
Another company with very consistent leadership behaviours that have
created a positive business culture is the Disney Corporation, specifically its theme
parks. The Disney philosophy revolves around four simple words: “To Make People
Happy”. This statement may sound very simplistic, but it forms the essence of their
culture and the expectations of the leadership behaviours surrounding it.
Amusement parks had earned a bad reputation for lack of cleanliness, safety
hazards and rude employees. Walt Disney knew that he needed to not only create
a visually attractive theme park, but that the people working in it needed to look and
act in “The Disney Way”. That vision continues today in the stringent expectations
and guidelines that govern the employees or “cast members” as they are called.
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These guiding principles begin in the screening process of their staff as they reject
on average two out of every three applications, and those that are hired are
immersed into a training program called “Traditions” at the Disney University which
dives deeper into the Disney culture and philosophies. Cast members that pass
Traditions must adhere to Disney’s goals or they are given reprimands. Three
reprimands in a year and they are shown the door. Creating the best guest
experience and exceeding expectations is something that started with Walt himself
and is what is expected from all employees of the Disney Corporation. (Kelly K,
Nov. 2007) These leadership behaviours have helped transform the Disney theme
parks into one of the most visited tourist attractions in the world. The Disney
Corporation has learned from experience that staying true to its core beliefs and
culture is paramount in delivering consistent results. Keeping to a set of decisions
and actions that a company can make is what helps the Disney Corporation stay
true to itself and deliver on a consistent basis. (Pine and Gilmore, 2008)
Conclusion
In conclusion, the point of having a consistent leadership culture is not to
downplay the importance of key personal traits and capacities of the individual; but to
help reframe leadership and the way we interpret and think of leadership itself. An
important factor to consider is that an organization should be focusing on the outside
in instead of the inside out; meaning that customer and investor expectations should
help frame, focus, and influence the behaviours of an organization’s leaders. Another
important factor to keep in mind is that consistent leadership behaviours can create
and change cultures, but is equally important in maintaining a company culture.
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When an organization achieves success in developing a core set of consistent
leadership behaviors, it helps to bridge the firm’s identity in the mind of those outside
and will give customers a positive image of the organization. Investors will perceive
the firm as having intangible value as well as employees will feel more committed and
connected to an organization. Building and retaining this connection to employees
and customers through managed and anticipated expectations, in some cases may
mean the difference between an organization succeeding and one that fails. As an
organization ebbs and flows to different customer events, technology changes,
personnel shifts, etc., the things that are consistent will certainly change and evolve.
But in a good organization (company, team, whatever), these changes will be steady,
deliberate, well-communicated, and perceived by most to be for the betterment of the
whole group. With consistency, people expand their footprints of contribution to make
sure things don't fall through the cracks. With a concrete strategic vision coupled with
effective communication and execution across the board, which is at the very core of
consistent leadership, an organization would find that overcoming these obstacles to
change and improvement could be overcome or at the very least limited. The
organization trusts the leadership much more and most importantly, they trust each
other.
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