The Links Between Organizational Culture and Effectiveness

Interview with Dr. Chad Hartnell on organizational leadership and culture.

Posted Jun 28, 2020

Chad Hartnell, used with permission
Source: Chad Hartnell, used with permission

Every group of people has a culture, a way of understanding and expressing the world, their group, and themselves. Organizations are no exception. Research shows that the leadership of an organization can function in key ways to promote a culture that is conducive to organizational effectiveness.

Chad Hartnell, Ph.D. is an assistant professor in the J. Mack Robinson College of Business at Georgia State University. His research examines leadership and organizational culture, how they interrelate, and the intervening mechanisms through which they influence organizational, unit, and individual effectiveness. Over the past 10 years, his research has been cited over 3,300 times according to Google Scholar.

JA: How did you first get interested in this topic?

CH: My interest in organizational culture burgeoned alongside my passion for leadership. I was convinced at an early age that leadership by trial-and-error is not a legitimate leadership strategy. As a leader’s influence expands, his/her behaviors have an increasingly exponential impact on others—for better or worse. Indeed, leadership research is clear that leaders play a central role in motivating followers and influencing their performance. One of leaders’ most important responsibilities is to set the tone for employees. That is, craft the organizational culture.

Like leadership, organizational culture, or shared expectations about “how we do things around here,” can have a pronounced impact on employees’ attitudes and behavior as well as the organization’s bottom line. My initial research published nearly a decade ago documented the consequential impact of different organizational cultures on distinct organizational outcomes. These findings, coupled with the observation that leadership and culture are just two elements of an organization’s social system, led my research team to wonder: (1) how tightly coupled is organizational culture with other organizational influences, and (2) how much organizational culture matters in predicting organizational outcomes after accounting for the effects of other influences. These questions are critical for decision-makers to know what organizational levers to pull to best influence results.

JA: What was the focus of your study?

CH: Our study quantitatively synthesized results from 148 different academic studies (comprising over ½ million informants from over 26,000 organizations). Research indicates that employees’ behavior is influenced by multiple organizational influences: strategy, structure, leadership, culture, and high performance work practices (HPWPs). Each of these organizational influences has a different purpose.

Strategy directs employees’ efforts to specific goals. Structure influences how communication flows throughout an organization. Leadership aligns employees’ interests with those of the organization. Organizational culture conveys shared beliefs about how employees should behave. HPWPs develop human resources by incentivizing employees to develop their knowledge, skills, and abilities.

Our first objective was to determine whether organizational culture interrelated with these other organizational influences in predictable and thematic ways. Our second objective was to take a subset of these influences (culture, leadership, and HPWPs) and evaluate their relative influence on five key organizational outcomes: employee, innovation, operational, customer, and financial effectiveness. Was organizational culture, leadership, or HPWPs the most important driver for each organizational outcome?

JA: What did you discover in your study?

CH: Our study revealed three key findings. First, culture is significantly related to other elements of an organization’s system (strategy, structure, leadership, and HPWPs). Second, culture was related to organizational system elements in predictable ways.

For instance, organizational cultures that focus on people tend to have a strategy that relies upon experimentation, risk-taking, and flexibility. Organizational cultures that focus on processes and performance tend to have a strategy that relies upon maximizing internal efficiencies to execute performance goals. Overall, cultures that set up policies and procedures to achieve consistency and uniformity (in employee behaviors and/or outcomes) are more likely to have a rigid flow of information and focus less on developing employees’ abilities and competencies. Taken together, these two findings highlight the interconnectedness among elements of an organization’s system.

The third key finding is that organizational culture affects all five measures of organizational effectiveness (employee, innovation, operational, customer, and financial) after accounting for the influence of leadership and HPWPs. In fact, organizational culture was the strongest predictor of all organizational outcomes except for financial performance (HPWPs was the strongest predictor). These results reinforce the conclusion that culture is a significant driver of organizational effectiveness.

Photo by nrd on Unsplash
Source: Photo by nrd on Unsplash

JA: Is there anything that surprised you in your findings, or that you weren't fully expecting?

CH: One of the most surprising findings in our research was the lack of alignment between leadership and organizational culture. We expected that task leadership, relational leadership, and change leadership would be more strongly associated with performance-focused, people-oriented, and innovative cultures, respectively. Only one relationship was clearly supported—between relational leadership and people-oriented cultures. This surprising pattern of results suggests that the link between leadership and culture is more complicated than one would expect. Leaders are not simply culture creators or culture conformers. Leaders also have a responsibility to contribute to the organization’s existing culture by nudging the social norms in a direction that supports the leader’s vision and the organization’s future effectiveness. In more drastic steps to incur organizational change, leaders may need to be culture contrarians to confront and change organizational members’ prevailing assumptions. As a result, leadership may or may not be aligned with the organization’s culture. It likely depends on the organization’s circumstances and the leader’s existing imprint on the organization’s culture.  

JA: How might readers apply what you found to their lives?

CH: Our study’s findings suggest that social contextual cues are interrelated, yet culture has a dominant effect on employees’ attitudes and behaviors. Pay attention to the shared social expectations in your workplace and compare them with what your organization says is important as well as what they reward, support, and encourage. If discrepancies exist, point them out and be a positive force for change within your organization.

Extrapolated to a more personal level, consider the alignment among your personally accepted way of doing things (i.e., your habits and routines) with your strategy, self-leadership, and reward system. Are your current habits and routines helping you get to where you want to go in life? Regardless of your espoused goals, your habits and routines are a more reliable indicator of where you are heading. Are you interjecting a sufficient focus on task accomplishment, relational development, and change to learn, grow, and improve as an individual? Are you incorporating rewards to focus, motivate, and encourage you in the process of accomplishing your goals? Set goals. Then, apply self-leadership, build habits and routines, and incorporate rewards to help you get to where you want to go.  

JA: How can readers use what you found to help others?

CH: Organizational leaders can apply our findings to be more effective leading organizational change initiatives and to send more coherent cues to followers. Most organizational change efforts fail due to employees’ resistance to change. Employees’ resistance comes from uncertainty and ambiguity that organizational changes incur. For instance, executives often choose to change organizational structure as a first resort to quickly reap operational efficiencies. However, structural change without a corresponding culture change is likely to create internal turmoil because it disrupts employees’ shared understanding of social expectations within the organization. It also creates miscommunication, misunderstandings, and ambiguous—or even conflicting—expectations about employees’ roles and responsibilities.

At the same time, attempts to change organizational culture should be considered together with broader changes to other elements of an organization’s system to ensure alignment. Consistency among culture and other system components conveys much-needed clarity to employees about what goals they should pursue, how they should interrelate, and what expectations they should have of each other. Simply put, leaders must create and communicate consistent, coherent signals to employees concerning how they can help move the organization from where it is to where it needs to be. Culture’s importance cannot be overstated. It is an integral social signal that has enduring effects.

JA: What are you currently working on that you might like to share about?

CH: I am currently working on different approaches to studying organizational culture and its effects on employee and organizational outcomes. One line of study considers how the pattern, or configuration, of cultural values predicts organizational effectiveness. Research indicates that culture values tend to co-occur. This finding makes sense given that few companies are exclusively people-oriented or production-oriented. Most companies have to value both people and production to be effective. A second line of study investigates whether data derived from departing employees who write online reviews about their company’s culture can be used to document culture change or organizational culture’s effects on organizational effectiveness or the success of mergers and acquisitions.

In addition to my work on organizational culture, I am conducting an exciting program of research on servant leadership. I am investigating questions related to servant leadership’s effects on multiple stakeholders (employees, organizations, customers, and the community) as well as its effects on followers’ values, motivation, and performance. All told, my work continues to focus on understanding the intersection between leadership and culture because of their ability to make people’s lives more meaningful, more enjoyable, and more productive.

References

Hartnell, C. A., Ou, A. Y., Kinicki, A. J., Choi, D., & Karam, E. P. (2019). A meta-analytic test of organizational culture’s association with elements of an organization’s system and its relative predictive validity on organizational outcomes. Journal of Applied Psychology, 104(6), 832-850. https://doi.org/10.1037/apl0000380

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