Leaders create corporate culture

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Although the concept of culture has been overlooked by financial literature and organisations alike, the concept is steadily gaining much needed exposure.  In the aftermath of the global financial crisis, ACCA took an early lead in writing about culture. Defined as ‘the way we do things around here’ – corporate culture provides an organisation with a distinctive persona.

According to leading culture expert Edgar Schein, culture and leadership are in essence, two sides of the same coin. In general, when an organisation is established, there is always a leader who has a preferred approach of doing things and those preferences by definition are imposed on the organisation’s employees. The leader’s vision and inclinations create the groundwork and primary habits that an organisation will trail. These primary habits and inclinations eventually become the culture of the organisation, in other words, founders and leaders create corporate culture.

ACCA’s research document –Fitting In – states that corporate culture tends to be shared by the senior leader’s vision and behaviour by the industry, the business environment and the national culture. However, Schein believes that the word “culture” is generally misused. He goes on to say that the “there is a general failure of people to see that culture is not just a surface phenomenon, but it is our very core, that we live in culture, we display a culture, and we are always driven by the culture.” Organisations should create a culture where employees are loyal, engaged and committed. One way of attaining this is by permitting and encouraging financial leaders to utilise approaches that will cultivate trust. “Leaders should not focus on changing culture but on problem solving business problems,” said Edgar Schein. Leaders within an organisation should aspire beyond creating a good working place. They should create an environment where employees are values and treated well.

“People are a firm’s greatest asset.” – Karen Smal, Acting Head of ACCA SA.

Organisations should also create a culture where employees are free to use their own judgement and discretion to improve business and where ethical business behaviour is promoted and valued. Leaders and organisations need to realise that culture is not just a word. Behaviour within and organisation is largely driven by cultural values and not personality.

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