Does your corporate culture building leaders?

As with any group or collection of peo-
ple, organisations possess, and are influenced by, specific cultural norms. Therefore in any investigation of leadership it is necessary to understand culture as it impacts and influences organisational life.
In continuing our discussion of the findings of the 1999 New Zealand Leadership Survey, I would like to talk about our findings with regard to organisational culture in New Zealand. In continuing our emphasis on the persuasive transformational and transactional explanations of leadership, we used these criteria to measure organisational culture in our country.

Organisational culture
Culture is learned pattern of behaviour that establishes behavioural norms and values that are shared throughout the organisation and persist over time. Bernard Bass believes that an understanding of culture is important because it is the glue that holds an organisation together as source of identity and distinctive competence. Because organisational culture describes learned behaviours and attitudes, different organisations give rise to different cultures due to the varying environments in which they develop. For example, public and private sector organisations are bounded by vastly different responsibilities and constraints and therefore, usually exhibit very different types of culture.

Culture and effectiveness
It’s important to understand organisational culture because there’s clear relationship between organisational culture and performance.
Various researchers, including John Kotter of Harvard University, found that strong organisational cultures were related to increased productivity, enhancement of goal alignment, increased motivation, and clearer organisational structure.
The quality and content of organisational culture also impacts on performance. In cultures emphasising strong leadership and customer importance, it was found that employees and stakeholders had greater economic performance than those that did not have such an emphasis. It was also found that employees joining companies whose culture emphasises interpersonal relationship values, rather than work task values, stay longer in their positions.
Kotter also emphasised adaptiveness as key to effective organisational culture. He defines an adaptive organisational culture as one emphasising commitment to its key constituencies, and one that values innovative ideas and processes creating change. These qualities parallel Avolio & Bass’ (1991) transformational culture (Bass, 1998).

Transformational culture
In transformational culture there’s sense of purpose and feeling of family, according to Bernard Bass and Bruce Avolio.
Transformational cultures are adaptive and they emphasise interpersonal values as well as task values. Leadership is important to such cultures. Leaders within such culture are role models, mentors and coaches. They consistently espouse organisational goals and purpose that all employees take up as important components of the organisation’s vision. Transformational cultures encourage and support innovation and open discussion of issues and ideas so that challenges become opportunities rather than threats. People in transformational cultures go beyond their self-interests and strive towards organisational goals.
On the other hand, purely transactional culture focuses on everything in terms of explicit and implicit contractual relationships. In such culture everything has certain value and there is set price on everything.
In this culture, individualism is very strong and therefore concern for self-interest rather than organisational aims is paramount. Further, because employees working in this type of culture do not identify well with the mission or vision of their organisation, commitment is often short-term, existing to the extent of rewards provided by the organisation. However, successful cultures need base of transactional elements upon which the transformational qualities are built. Neither purely transactional nor transformational cultures are likely to be successful.
In the 1999 New Zealand Leadership Survey, we measured both transformational culture and transactional culture. On each dimension, organisations can be high, moderate or low. This provides nine possible cultural profiles. Organisations should be high in transformational culture. This means that “high contrast”, “moderately transformational” or “predominantly transformational” are the profiles that organisations should strive for. The optimum profile is to be “moderately transformational”. Bass suggests that this culture type is the most adaptive and potentially effective cultural type. High contrast cultures, being high in both transformational and transactional characteristics, may experience problems due to conflict about best practice. Predominantly transformational cultures may experience problems through having inadequate expression of roles and performance expectations.
The average score for all organisations fell into the moderately transformational profile. However, only 43 percent of organisations possessed this profile. Interestingly, nearly one in five organisations is high in transactional culture, and disturbingly this figure was much higher for organisations in “public administration”.
We found consistently positive correlations between transformational culture and perceptions of organisational effectiveness; and consistently negative correlations between transactional culture and perceptions of organisational effectiveness (including ability to improve the bottom line).
What to do?
It is clear from these findings that although there are positive aspects of organisational culture within New Zealand there are also aspects that need enhancing. For example, we found that:
• perceptions of overall organisational effectiveness are only moderate and there is room for improvement, and
• organisational effectiveness can be improved with greater manifestation of transformational leadership and transformational culture.
Moreover, while there is significant percentage of organisations that have moderately transformational culture, over half do not and therefore are unlikely to have adequately adaptive and flexible cultures. The general direction for development is to:
• improve the manifestation of transformational culture, and
• keep transactional culture at moderate levels.
Leadership training undertaken by the Centre for the Study of Leadership in New Zealand shows that as the manifestation of transformational leadership increases, the manifestation of transactional leadership decreases concurrently down to “natural” level that is an optimum complement to the transformational leadership. In so doing, we have found that:
• extra effort from workers is increased, and
• the impact on the bottom line is maximised.
Therefore, the priority for development should be to maximise transformational leadership. Part of this development would entail alteration of organisation systems and procedures that overly emphasise “contracturalism”, self-interest and corrective management. In this way, concentrating on transformational leadership will generate balance between transformational culture and transactional culture.
Dr Ken Parry is the Director of The Centre for the Study of Leadership. Copies of the monograph of the 1999 New Zealand Leadership Survey are available from the Centre for $15: Centre for the Study of Leadership, Victoria University, PO Box 600, Wellington, Email [email protected]

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