Highlights - August 2016

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In order to improve a firm’s performance, Chief executive officers (CEOs) should have a different leadership style from the norm in the organization’s culture.  The findings, published recently in The Journal of Applied Psychology, are based on data collected from 119 CEOs and 337 top management team members in 119 organizations in the U.S. software and hardware industries.

The researchers found CEOs who adopt a leadership style similar to that of the organization’s cultural norms have a negative impact on firm performance.  Instead, firms are most effective when CEO leadership style and organizational culture are different, a discovery that contradicts widely accepted beliefs.

According to the researchers, “Consistencies between CEO leadership and company culture create redundancies.  Leaders who are culture conformists are thus ineffective.  CEOs who lead in a manner different from the culture benefit companies because they provide resources to the organization that the culture does not.”

Organizational or company culture refers to the shared values and norms, usually either task-oriented or relationship-oriented, that inform employee behavior.  In a task-oriented culture, employees are asked to focus externally on problems such as anticipating customers’ needs and preferences and monitoring competitors’ behaviors.  In a relationship-oriented culture, employees are encouraged to focus internally on issues such as coordination, participation and communication.

Similarities between leadership and culture can produce a myopic focus on things that have worked in the past while precluding employees from acquiring other resources or processes that could enhance success.  CEOs should be mindful about focusing employees on important outcomes and processes that cultural signals may overlook.”

The researchers pointed to former Delta Airlines CEO Richard Anderson as an example of leadership style differing from company culture.  “His task leadership complemented Delta’s relationship-focused culture.  Under Anderson’s leadership, Delta was able to capitalize on opportunities to adapt to rapidly changing market conditions. Delta’s relationship-focused culture enabled employees...

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