How Do Good Leaders Impact Culture?

Companies with higher culture alignment have better business performance, lower turnover rates, and more employees who will recommend the organisation to others seeking employment. What role do leaders play in ensuring this?

How Do Good Leaders Impact Culture?

2 Dec 2016 by  Manasi Vartak

When employees speak of what attracts them to work in a company or stay there, they often pin it on one word: “Culture”. But what exactly does this mean?

Culture refers to an organisation’s operating environment (or how work gets done), which is made up of three parts—beliefs, or what’s important to business; behaviours, or how people behave and interact; and decisions, or how choices are made. Aon Hewitt’s research shows that companies with higher culture alignment have better business performance, lower turnover rates, and higher levels of Net Promoters—which refers to the percentage of employees who will recommend the organisation to someone seeking employment versus employees who won’t.

How big a role do leaders play?

Leaders have a great deal of influence in building an organisation’s culture, ensuring alignment between required and actual beliefs, behaviours, and decisions of the people in the organisation, and ultimately, on an organisation’s ability to attract and retain the best talent. In Aon Hewitt’s Culture Alignment Survey 2016, we discovered:

1. Senior leaders have the greatest relative impact on creating and sustaining organisational culture, as they have control to design, keep or change other culture drivers relating to leadership, people programmes, and infrastructure in the organisation. 

2. James Haskett, Emeritus from Harvard University, said that “Achieving and maintaining a high-performance culture is one of the most important responsibilities of leadership.” Employees in organisations with high perception of their leaders also experienced the organisation to be more innovative, decisive, transparent, people-oriented, accountable, candid, risk-taking and long-term oriented—all traits of a high performance culture. This shows that leaders set the tone for high performance behaviours of employees.

3. When employee perception about their leaders improved from low to high, the culture alignment for employees improved by 15%.


How can leaders drive culture alignment?

It’s critical for leaders to realise that 2 out of the top 4 challenges of culture alignment are directly related to leadership. The Aon Hewitt Culture Alignment Survey 2016 shows that: 

  • 50% of employees find it difficult to change their current behaviours to align with the required culture
  • 40% of employees said their leaders lack the skills to build and sustain culture
  • 40% of employees lack clarity on the skills their leaders require to build and sustain culture
  • 33% of employees said the organisation’s required culture is not well-defined

Like the fingerprints of an organisation, no two cultures will ever be the same. Still, we can learn from the practices that have worked well in organisations with high performance cultures:

1. Leaders focus on the needs of their people—from caring for their employees’ well-being, to treating them like the organisation’s most valued assets, and being visible and accessible to them; the prerequisite to creating a people-oriented, candid, and open & transparent culture. 

2. Leaders clearly communicate both the behaviours that are expected and those that are not tolerated in the organisation. 

3. The organisation develops a leadership competency model based on articulated culture traits, and makes this the basis for leadership assessment, selection, and development plans across the organisation. This will institutionalise the organisational culture, so that it doesn’t diminish or change when leadership transitions take place.

As our research shows, 46% organisations have identified culture alignment as a key priority area for their organisation. It becomes more essential than ever for leaders to focus on building a strong and inspiring organisational culture supported by enabling infrastructure and people programmes, and ensuring its alignment with business strategy—as well as with employee understanding and expectations.

Start a conversation with us

Need advice on how to equip yourself and your leaders to drive culture alignment in your organisation? Get in touch with us today. 

Manasi Vartak

Manasi is a Principal Consultant with Aon Hewitt and leads the Culture Practices for Asia Pacific and the Middle East. She has more than 14 years’ experience in all Human Resource Disciplines, specialising in Organisation Development and Talent Management. Manasi is committed to helping her clients achieve transformation through tailored, sustainable talent management solutions that address strategic, operational and people-related issues and deliver stronger business results.

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