The Role of CEO in Creating Company Culture

Much has changed during the last few years. COVID has accelerated the pace of change, and it has transformed the way businesses are operated. Companies have realized that they need to invest more in their employees. One of the major realizations is that the culture of the company is one of the most important factors in maintaining, retaining, and attracting talent. The success of the company heavily relies on its culture of the company.

Why Culture is important?

Having a strong company culture is crucial for companies to thrive and grow in today’s competitive business environment. It drives employee satisfaction, productivity, and morale and helps reduce employee turnover. Company culture helps attract top talent and aligns with business goals. It also increases the productivity of employees (Gallup, 2018).

Values and beliefs are vital in shaping human personality and behaviors (Ninivaggi, 2016). These are the set of attitudes that govern the way an individual perceives the world (Ninivaggi, 2016). Schwartz's theory explains that there are ten basic values that are universal in nature (Schwartz, 2012). These values are almost similar across cultures and have a profound influence on our actions and decisions (Quttainah, 2015). Values are defined as an individual's belief that serves as a moral compass to guide their behavior and actions. These are the basic principles that influence their decisions and choices (Freeman & Auster, 2011).

How is Company Culture Created?

Organizations are formed by a group of people running the same business or pursuing the same objective. The social interaction of the people in an organization forms an organizational culture, which is the result of their shared beliefs, values, mutual understandings, and expectations (Schneider 1987; Rousseau 1990; Trice & Beyer 1993; cited in Giberson et al., 2009). According to "Upper Echelon Theory", personal traits and characteristics affect the corporate strategic decision (Hoffman and Meusburger, 2017). The company's values characterize its employees' goals and attitudes (Kaplan & Norton, 2014). The employees' shared values create an organization's culture (Groysberg et al., 2018).

Who Drives Culture of the Company?

Leadership is reflected through culture. Company culture is not created in an instant. It is created through a process. If it is not driven intentionally, then people create the culture, which may or may not be desirable. Culture is generally driven from the Top level. The CEO is the main person responsible for leading an organization. The values possessed by a CEO have a direct effect on an organization’s values (Berson, Oreg, and Dvir, 2008, as cited in Vitale, 2018). CEOs’ values are reflected through corporate values, and the organization’s actions are influenced by them (Blanchard & O’Connor 2003). Values of the CEO work as a filter that mold’s the organizational culture (Lencioni. 2002). The education, past experience, and set of values of a leader or CEO play a vital role in establishing corporate values (Quttainah, 2015). However, it has been highlighted that it is essential for the success of an organization to have congruence in the CEO’s values (practices) and organizational values, as it increases the team’s loyalty and satisfaction from work (Kaplan & Norton, 2014). Culture and corporate values channel the thoughts and actions of the team members (Guiso et al., 2015).

The latest example of Twitter and Elon Musk

Recently Twitter went through a major change in workplace culture when Elon Musk took over Twitter on 27th October. Mattathias Schwartz made a comparison of Twitter culture before and after Elon’s take over in a Business Insider article (Schwartz, 2022). He pointed out that before Elon’s takeover, Twitter had transparent communications. All calendars were accessible to everyone, and everyone knew where the head of their department was having lunch today. Flexible hours were replaced by longer working hours when Musk introduced the “Woke” Culture. He is creating a culture where people are driven to work and deliver results. Despite the fact that Elon Musk is seen as a toxic boss, he still manages to create a high achieving team and deliver extraordinary results ("Elon Musk attempts 'hardcore' culture reset at Twitter. Will employees buy in?," 2022).

Robin Tatu (2015) describes Musk as a pushy boss setting challenging goals and gives attention to minute details. Elon Musk is a workaholic as he used to work 120 hours a week and sleep in the Tesla factory during the production of Model 3 in 2018 (Evannex 2021). The same values of Elon Musk prevail in Tesla, as employees are required to work hard and think creatively (Forbes, 2016). For instance, when transferring the world’s largest stamping presses, the vendors gave them a quote to disassemble and deliver in one year. Musk rejected it and assembled it with his internal team within three to four months (Forbes, 2016).

A robust and purposeful culture is a competitive advantage. Some of the most iconic CEOs in recent times, such as Jack Welch, Steve Jobs, Richard Branson, and Satya Nadella, one trait they share a strong belief in organizational culture. Great leaders are more than just charismatic and motivational. They are strategic, communicative, and visionary ("CEO culture study," 2021). When a culture-centric CEO is at the helm, they prioritize organizational culture to drive business outcomes, align workforces, create inclusion, and constantly look to the future. In today's highly competitive environment, maintaining good talent is a challenge. Developing a great company culture is one of the best ways to retain top talent. A company's culture is always more effective when trickled down from Top to bottom.

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References

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Blanchard,?K.?H., O'Connor,?M.?J., & Ballard,?J. (2003).?Managing by values. Berrett-Koehler Publishers.

CEO culture study. (2021, April 14). Gapingvoid. https://www.gapingvoid.com/ceo-culture-study/

Dyer, J & Gregersen, H., (2016, August 24). Tesla's innovations are transforming the auto industry. Forbes, https://www.forbes.com/sites/innovatorsdna/2016/08/24/teslas-innovations-are-transforming-the-auto-industry/?sh=2162e0ae19f7

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Elon Musk attempts 'hardcore' culture reset at Twitter. Will employees buy in? (2022, November 16). Los Angeles Times. https://www.latimes.com/business/story/2022-11-16/elon-musk-is-laying-down-the-law-at-twitter

EVANNEX. (2021, January 18).?Tesla CEO Elon Musk: The risk taker and money maker. InsideEVs.?https://insideevs.com/features/466886/tesla-elon-musk-risk-taker-money-maker/

Gallup. (2018, June 28).?Culture wins by attracting the top 20% of candidates. Gallup.com.?https://www.gallup.com/workplace/237368/culture-wins-attracting-top-candidates.aspx

Hoffmann,?W.?H., & Meusburger,?L. (2017). How CEO values and TMT diversity jointly influence the corporate strategy making process.?Schmalenbach Business Review,?70(2), 149-187.?https://doi.org/10.1007/s41464-017-0042-y

Kaplan, R. S., & Norton, D. P. (2014, August 01). Mastering the Management System. Harvard Business Review, https://hbr.org/2008/01/mastering-the-management-system#:~:text=Often%20this%20is%20described%20as,to%20its%20industry%20and%20competitors

Lencioni,?P. (2002, July 1).?Make your values mean something. Harvard Business Review.?https://hbr.org/2002/07/make-your-values-mean-something

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Schwartz,?S.?H. (2012). An overview of the Schwartz theory of basic values.?Online Readings in Psychology and Culture,?2(1).?https://doi.org/10.9707/2307-0919.1116

Schwartz,?M. (2022, November 4).?'I don't want to work with these clowns.' inside the culture war that Elon Musk has unleashed at Twitter. Business Insider.?https://www.businessinsider.com/anonymous-twitter-employee-elon-musk-twitter-culture-war-2022-11

Tatu, R. (2015, September). Reach for the stars, ASSEE prism, 25(1), 42. https://search-proquest-com.nmit.idm.oclc.org/docview/1732766288/18C066A035CB40D1PQ/5?accountid=40261?

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Ambreen Nadeem is the bestselling author, Keynote speaker, psychologist, and founder of Psychology Talks. Her book The Algorithm of Life became the #1 Amazon Bestseller in 8 categories within 24 hours of its release. She is passionate about helping people understand the importance of psychology in their daily lives. She is actively spreading awareness and helping people to deal with mental health issues through counseling, blogs, Podcasts, and live shows. She is one of the Top 50 Most impactful people on LinkedIn.

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