As experts in building company culture, we heard about this phenomenon several years ago and have been testing it in real workplace environments. In this article about the role of leadership in company culture<\/a>, we\u2019ll explain how managers shape culture, as well as ways leaders can adapt their approach to improve morale and productivity.<\/p>\n\n\n\n When we say that leaders are important for culture, what do we mean? While strategy and vision are essential for a successful business, leaders must also build teams that they can mobilise for success.<\/p>\n\n\n\n In Gallup\u2019s State of the Global Workplace report,<\/a> their researchers found that a mere 23% of employees strongly agree that their organisation’s leadership communicates effectively. This is a proportion of the workforce that mirrors those who feel highly engaged at work; 21% globally and 10% in the UK.<\/p>\n\n\n\n Let\u2019s take a step back for a moment. Is poor leadership communication<\/a> the sole reason for low engagement in the workplace? Of course not. But there is growing evidence that the way leadership communicates has a significant impact on overall company culture<\/a>. And poor culture is the death knell for employee retention and productivity.<\/p>\n\n\n\n If company culture is key to performance, why focus on leadership? While this is a fair question, it misses a key aspect of how workplaces function: leaders impact all aspects of company culture. They hire and fire. They set the standards for communication, conduct and productivity. <\/p>\n\n\n Expecting cultures to improve from the bottom up, without addressing issues with leadership, will only create partial solutions. <\/p>\n\n\n\n Evidence shows that companies with \u201chighly aligned\u201d leadership and culture report 59% higher employee engagement and 36% better retention (Gallup<\/a>).<\/p>\n\n\n\n Neglecting the vital role of leadership in making employees feel great about their workplace could be costly. Luckily, there are proven ways to improve the connection between leadership and employees. <\/p>\n\n\n\n Skip to the \u201cHow to Align Leadership with Cultural Goals\u201d section to learn more.<\/p>\n\n\t<\/div>\n\n\n\n In the MIT Sloan 2024 Culture 500<\/a>, leadership was cited as the top differentiator between companies with thriving or toxic cultures. This data was based on over 1.4 million Glassdoor reviews. To add weight to this idea, mentions of \u201cpositive leadership\u201d correlated with up to four times lower turnover intent.<\/p>\n\n\n\n Employee attrition is a big problem for companies, costing \u00a330,614 per employee (Oxford Economics<\/a>). This number rises the further up the company hierarchy you go.<\/p>\n\n\n\n Let\u2019s look at an example of how not to behave as a leader. The culture at Twitter transformed for the worse when the company was purchased in 2022. In the aftermath of the acquisition, a large proportion of the staff was fired. Although the platform survived, many have complained that both the working environment and the product has declined in quality and safeguards<\/a>.<\/p>\n\n\n\n Now, let\u2019s consider the alternative. Despite what some leaders claim, it is <\/em>possible to be successful while respecting employees. Rosalind Brewer, the former CEO of Walgreens and former COO of Starbucks, is a great example of a leader who champions diversity and inclusion while navigating market chaos. Her strong leadership was especially evident during the pandemic.<\/p>\n\n\n\n Ultimately, there is no single way to run a company. But the notion that cutthroat practices are the only way to drive profit is a myth. Leaders like Brewer demonstrate that empathy is a valid way forward.<\/p>\n\n\n\n The evidence supporting the connection between leadership and company culture has been mounting, especially since the workplace shifts that occurred after the pandemic.<\/p>\n\n\n\n According to the SHRM 2024 Global Culture Report<\/a>, 72% of HR leaders say leadership behavior is the number one influencer of organisational culture. The same study reports that 1 in 3 employees left a job in the past year due to toxic leadership or misaligned values.<\/p>\n\n\n\n Let\u2019s take a common example of a fork in the road for company leadership: redundancies. During layoffs, employees can feel isolated and anxious. Unfortunately, unhealthy communication isn\u2019t always easy to see during times of acute stress.<\/p>\n\n\n\n Even if leadership is not guilty of these communication sins, allowing any of the behaviours listed above to go unchallenged will create a toxic atmosphere. Put simply, ignoring poor communication is not leadership, and company culture will suffer as a result.<\/p>\n\n\n\n With every instance of bad leadership comes an opportunity to talk about positive examples. Our client, OVO Energy<\/a>, successfully steered their organisation through a high-profile merger in 2021. With the help of our platform, they managed to maintain employee engagement despite redundancies and a remote work environment.<\/p>\n\n\n\n So, what is the lesson? Strong leadership and a people-first culture is the difference between losing great employees or retaining them.<\/p>\n\n\nThe Link Between Leadership and Company Culture<\/h2>\n\n\n\n
Why Leaders Set the Cultural Tone<\/h3>\n\n\n\n
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<\/figure>\n\n\t<\/div>\n\n<\/div>\n\n\n\nThe Ripple Effect of Leadership Behaviour<\/h3>\n\n\n\n
What could Twitter\u2019s new owner have done differently?<\/h4>\n\n\n\n
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How Leadership Impacts Team Morale<\/h3>\n\n\n\n
Here are some examples of poor communication:<\/h4>\n\n\n\n
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