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422 PART 5: THE LEADER AS SOCIAL ARCHITECT
such as Southwest Airlines and Starbucks have often attributed their success
to the cultures their leaders helped create. Leaders at other companies, includ-
ing Ford Motor Company, Boeing Corporation, and J. C. Penney, are trying to
shift their cultural values to remain competitive in today’s environment. Many
leaders recognize that organizational culture is an important mechanism for
attracting, motivating, and retaining talented employees, a capability that may
2
be the single best predictor of overall organizational excellence. One long-term
study discovered that organizations with strong cultures outperform organiza-
tions with weak cultures two-to-one on several primary measures of fi nancial
performance. 3
This chapter explores ideas about organizational culture and values, and the
role of leaders in shaping them. The fi rst section describes the nature of cor-
porate culture and its importance to organizations. Then we turn
Action Memo
to a consideration of how shared organizational values can help
the organization stay competitive and how leaders infl uence cultural
Complete Leader’s Self-Insight 14.1, “How

values for high performance. Leaders emphasize specific cultural val-
of this chapter.
Spiritual are You,” before reading the rest

ues depending on the organization’s situation. The final section of the
chapter briefly discusses ethical and spiritual values and how values-

based leadership shapes an organization’s cultural atmosphere.
Organizational Culture
As uncertainty and global competition has grown, the concept of culture has
become increasingly important to organizational leaders because the new envi-
ronment often calls for new values and ways of doing things. Most leaders now

understand that when a company’s culture fits the needs of its external environ-
ment and company strategy, employees can create an organization that is tough
to beat. 4

What Is Culture?
Some people think of culture as the character or personality of an organization.
How an organization looks and “feels” when you enter it is a manifestation of
the organizational culture. For example, you might visit one company where
you get a sense of formality the minute you walk in the door. Desks are neat
and orderly, employees wear professional business attire, and there are few per-
sonal items such as family photos or other decorations on walls and desks. At
another company, employees may be wearing jeans and sweaters, have empty
pizza boxes and cola cans on their desks, and bring their dogs to work with
them. Both companies may be highly successful, but the underlying cultures are
very different.

Culture
Culture Culture can be defined as the set of key values, assumptions, understandings,
the set of key values,
the set of key values, and norms that is shared by members of an organization and taught to new
assumptions, understandings,
assumptions, understandings, 5
and norms that is shared by
and norms that is shared by members as correct. Norms are shared standards that defi ne what behaviors are
members of an organization acceptable and desirable within a group of people. At its most basic, culture is a
members of an organization
and taught to new members as
and taught to new members as pattern of shared assumptions about how things are done in an organization. As
correct
correct
organizational members cope with internal and external problems, they develop
shared assumptions and norms of behavior that are taught to new members as the
correct way to think, feel, and act in relation to those problems. 6
Culture can be thought of as consisting of three levels, as illustrated in
Exhibit 14.1, with each level becoming less obvious. At the surface level are
7
visible artifacts, such as manner of dress, patterns of behavior, physical symbols,