Dallas Business Consultant Elijah ClarkDallas Business Consultant Elijah Clark
    by Dr. Elijah Clark

In this blog, I investigated how the role of leadership effects organizational health, culture, and follower perception. I further evaluated how the style of leadership can influence employee attitude and productivity. It has been found that leaders can be developed from within organizations and if leaders can learn to use their leadership powers for positive growth, it could produce a healthy organizational culture. Stress within organizations can lead to low productivity and lack of work efficiency. In addition, leaders without ethics tend to create stressful, unhealthy work environments. In order to maintain a healthy organization, businesses should select leaders that can motive followers, create positive change, and build organizational trust and commitment.

The Role of Leadership in Shaping Organizational Culture

The study of leadership spans more than 100 years and has recently begun gaining attention worldwide by researchers (McCleskey, 2014; Northouse, 2013, p. 1). The style of leadership plays a role in followers’ perceptions of an organization. The style approach can be used as a way in determining how leaders approach and manage their followers and subordinates (Northouse, 2013, p. 75). An effective leader will create an environment in which followers trust their leader to make the best decisions (Maner, & Mead, 2010). To create a healthy organization, leaders can use their leadership style and power as ways to improve stability and create productively functioning followers (Maner, & Mead, 2010).

To maintain and improve morale within organizations, leaders can place importance on communication and stress prevention programs that provide solutions to ethical dilemmas (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Leadership is paramount in exhibiting organizational values that generate ethical orientation (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Research has discovered that leaders can create healthy organizational cultures by discovering and supporting organizational members (Avolio, Walumbwa, & Weber, 2009; Cubero, 2007; Liden, Wayne, Liao, & Meuser, 2014).

Unlike management, leadership is centered on having the ability to cope with change (Kotter, 2001). Leaders are considered visionary individuals who influence and motivate others to ensure that proper decisions are being made (Kotter, 2001; Lopez, 2014; Vroom & Jago, 2007). Moreover, a leader has the responsibility of making sure that the organization is able to attain its goals (Vroom & Jago, 2007). In an article by Church (2014), it is stated that leaders can be developed from within organizations. Through careful selection, encouragement, and nurturing, current employees with leadership potential can be developed into future leaders (Kotter, 2001: Vroom & Jago, 2007). Every leader has their own function and characteristics and all styles of leaders can be effective in creating a healthy organizational culture (Kotter, 2001; Vroom & Jago, 2007).

Leadership Styles

In comparing leadership styles, transactional, transformational, and situational leaders can be very effective in creating a healthy organizational environment. Transformational leaders are based on social exchange, transactional is focused on economic exchange, and situational leaders are dependent upon the situation (Ismail, Mohamad, Mohamed, Rafiuddin, & Zhen, 2010; McCleskey, 2014). Transactional leaders maintain day-to-day workflow by using rewards and incentives to motivate employees to perform their best (Northouse, 2013). Transformational leaders go beyond the day-to-day and can be seen as better leaders for groups and team building. Transformational leaders motivate followers by setting goals, using incentives, and promoting personal growth (Northouse, 2013). Situational leaders can be considered rational leaders, in the sense that they are most appropriate in situations that require a unique and rational understanding (McCleskey, 2014).

Implementing proper leadership is paramount for organizational success, considering leaders have a considerable impact on members’ attitudes toward their job and performance (Ishikawa, 2012; Kovjanic, Schuh, Jonas, Quaquebeke, & Dick, 2012). While there is no one leadership style that works for every situation (Cubero, 2007), in organizational teams, transformational leaders can be considered best suited for creating positive outcomes (Hallinger, 2003). Transformational leaders focus on the status quo, needs, and desires of the organization. In addition, transformational leaders desire to fully use the potential of their followers by going beyond social exchange (Hallinger, 2003). A transformational leader understands how to encourage and intellectually stimulate individual team members’ self-concept by promoting unique thinking (Kovjanic, Schuh, Jonas, Quaquebeke, & Dick, 2012; Whittington, Coker, Goodwin, Ickes, & Murray, 2009). With nearly 80 percent of companies using some form of team-based structures, creating a healthy team environment can be helpful in organizing work performance (Magni, & Maruping, 2013). Considering transformational leaders excel in elevating member confidence (Ishikawa, 2012; Magni, & Maruping, 2013), this style of leader could be just as affective in a team setting by managing team conflicts, building relationships, and engaging members (Barnwell, Nedrick, Rudolph, Sesay, & Wellen, 2014).

Transformational, transactional, and situational leadership styles are generally centralized around building trust between leaders and followers (Northouse, 2013). In building trust, all styles of leaderships are important predictors (Ismail, Mohamad, Mohamed, Rafiuddin, & Zhen, 2010). Leadership style has been linked to employee mood, performance, attitude, and organizational commitment (Ismail, Mohamad, Mohamed, Rafiuddin, & Zhen, 2010; Strang, Kuhnert, 2009). If effective, a healthy environment will flourish and foster positive growth within the organization by producing a quality bond between leader and follower (Ismail, Mohamad, Mohamed, Rafiuddin, & Zhen, 2010).

Leadership Power

In recent years, the study of analyzing leadership power has increased, and styles of leadership have been closely linked to leadership power (Schriesheim, Podsakoff, & Hinkin, 1991). The basis of power include; reward, coercion, legitimate, expert, referent, and informational (Northouse, 2013; Raven, 1993). The definition of leadership power according to Raven (1993) is, “the possibility of inducing forces’ of a certain magnitude on another person.” Leaders are considered an influencing agent of power over their followers (Raven, 1993).

Leaders who are endowed with power can typically become corruptive (Maner, & Mead, 2010). Instead of using their power for positive member growth, they may be tempted to use their power to self-serve personal desires (Maner, & Mead, 2010). In this sense, they are using their power to dominate rather than lead (Maner, & Mead, 2010). By providing leaders with power, followers can be susceptible to exploitation by leaders who prioritize their power over the goals of the group (Maner, & Mead, 2010). In a healthy organization, a leader will use their power of influence to encourage members and promote positive change (Raven, 1993). It is the responsibility of the leader to influence and provide reasoning to followers as to why change may lead to greater productivity (Raven, 1993).

An effective leader would spend time getting to know their followers (Raven, 1993). Considering followers have many different motivational factors to be productive, by understanding followers’ needs and motivations, leaders can accomplish better results, and energize their followers with proper and affective rewards and incentives (Raven, 1993). Leaders are responsible for making certain that their followers achieve results and complete task as required (Raven, 1993). In order to produce the best possible results, leaders should exercise their leadership power, and aim at making certain that followers are confident and comfortable. This involves making certain that there is trust and respect between both leader and follower (Raven, 1993). The relationship between leaders and followers should be one in which followers trust their leaders to make the best decision (Raven, 1993. Healthy leadership provides stability and effective functioning for individuals and teams (Raven, 1993).

Organizational Stress

In creating a healthy organization, leaders should consider the stress levels of their followers. Stress in organizations can generate a lack of productivity and affect employees’ overall ability to work efficiently (Mitut, 2010). Organizational stress can be triggered by factors including communication, competition, and disruptive technology (Mitut, 2010). In addition, work overload, punishment, lack of feedback, and powerlessness can cause stress (Mitut, 2010). Organizational stress can lead to relationship imbalances between leader and follower (Mitut, 2010; Selart, & Johansen, 2011). Data conducted from a 2003 study by the European Foundation for the Improvement of Living and Working Conditions entitled “Working Conditions in the Acceding and Candidate Countries (Report),” analyzed stress as being the second largest organizational health problem.

The negative impacts of stress can generate absenteeism, decreased productivity, accidents, legal cost, medical expenses, and other financial losses for organizations (Mitut, 2010). A healthy organization requires not disturbing occupational stressors that create personal conflicts, frustrations, dissatisfaction, and low productivity (Mitut, 2010). It is the responsibility of the leader to create an efficient and stress-free environment that focuses on building the organizations performance (Mitut, 2010). To assess and prevent organizational stress, leaders should promote the implementation of stress management programs, which will help employees cope with stressful situations (Mitut, 2010). Moreover, leaders can minimize stress by communicating with followers, clearly defining roles, discussing concerns, and encouraging communication (Mitut, 2010). By implementing stress management programs, leaders could influence followers’ esteem and create a less stressful environment (Mitut, 2010).

Leadership Ethics

Organizational stress can have negative impacts in many situations, mainly those that involve punishment and lack of rewards (Selart, & Johansen, 2011). In stressful situations, there are increases in followers cutting corners, being more prone to incidents, and being deceptive (Selart, & Johansen, 2011). In addition, research and studies have connected stress to memory loss, negativity, and unethical decision-making (Selart, & Johansen, 2011).

According to research, 75 percent of employees choose not to work for employers with poor organizational ethics (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). In recent years, to avoid financial and reputation negativity, many businesses have created new positions within their organization that focus on ethical matters (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). An ethical leader is driven by morals and an ethically principle-governed mindset (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). In an organization, ethical decision-making is considered the study and evaluation of decision-making by leaders according to moral concepts and judgment (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). An unethical leader would violate accepted moral norms of behavior (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

Organizational ethics is still a growing business need. In order to help promote a healthy organization, organizational leaders should implement a code of ethics policy (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). As leaders, it is their responsibility to educate and inform followers of the codes of ethics (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). Within the business community, there are many leaders who consider ethics to be unimportant (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). These individuals believe that their only responsibility to the organization is to maximize profits (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014).

As the Chief Executive Officer of American Express (Margolis, Walsh, & Krehmeyer, 2006), Kenneth Chenault explains that ethics are paramount during difficult times (Wharton, 2005). Organizational crisis have the potential to damage brand equity, generate revenue loss, and tarnish a company’s reputation (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014; Maner, & Mead, 2010). It is the responsibility of the leader to determine what is done during difficult situations (Abrhiem, 2012). An ethical leader would be effective at making sure justice and equality are achieved (Abrhiem, 2012). Leaders with ethics are likely to have an impact on followers’ self-concepts and attitudes (Hartog, & Belschak, 2012).


In developing healthy organizations, organizations can implement processes, programs, and interventions that will help produce effective leadership potential (Church, 2014). Transformational, transactional, and situational leadership styles may help lead employee’s to trust their leaders, which can generate and increase productivity (Whittington, Coker, Goodwin, Ickes & Murray, 2009). If leaders have an understanding of their leadership style, they can be mindful of their actions toward their followers. In understanding leadership styles, assessments can be helpful at improving leader and follower relationships (Northouse, 2013). Being informed of leadership style can help leaders gain insight and produce solutions for challenges and certain situations (Northouse, 2013).

An effective leader should understand their leadership style, communicate with followers, and use their leadership power to influence and encourage members to create positive change (Raven, 1993). An organization’s health depends on not disturbing stressors that can generate frustrations, low motivation, personal conflict, dissatisfaction, and a drop in productivity (Mitut, 2010). The leader takes on the responsibility of reducing the effects of stress and encouraging a healthy and efficient organization that focuses on maintaining and building performance (Mitut, 2010).

To avoid risking reputation and potential financial loss, leaders should remain with a moral and ethically principle-governed mindset (Chekwa, Ouhirra, Thomas, & Chukwuanu, 2014). In developing a positive leader mindset, leaders should listen to their followers’ needs, adapt to situations, create positive exchange, and build trust (Hassanzadeh, 2014). If effective, leaders will have the tools needed to promote an innovative and healthy organizational culture (Hassanzadeh, 2014).



Abrhiem, T. H. (2012). Ethical leadership: Keeping values in business cultures. Business and Management Review, 2(7), 11–19. Retrieved from http://www.businessjournalz.org

Avolio, B. J., Walumbwa, F. O., & Weber, T. J. (2009). Leadership: current theories , research, and future directions. Annual Review of Psychology, 60, 421–449.  doi:10.1177/0149206310393520

Barnwell, D., Nedrick, S., Rudolph, E., Sesay, M., & Wellen, W. (2014). Leadership of International and Virtual Project Teams. International Journal Of Global Business, 7(2), 1-8.

Chekwa, C., Ouhirra, L., Thomas, E., & Chukwuanu, M. (2014). An examination of the effects of leadership on business ethics: Empirical study. International Journal Of Business & Public Administration, 11(1), 48-65.

Church, A. H. (2014). What Do We Know About Developing Leadership Potential?. OD Practitioner, 46(3), 52-61.

Cubero, C. G.(2007). Situational leadership and persons with disabilities. Work: A Journal of Prevention, Assessment, and Rehabilitation, Special Issue: Workplace Issues and Placement, 29(4), 351-156.

Hallinger, P. (2003). Leading Educational Change: Reflections On The Practice Of Instructional And Transformational Leadership. Cambridge Journal of Education, 33(3), 329-352. doi: 10.1080/0305764032000122005

Hartog, D., & Belschak, F. (2012). Work Engagement and Machiavellianism in the Ethical Leadership Process. Journal Of Business Ethics, 107(1), 35-47. doi:10.1007/s10551-012-1296-4

Hassanzadeh, J. F. (2014). Leader-member Exchange and Creative Work Involvement: The Importance of Knowledge Sharing. Iranian Journal Of Management Studies, 7(2), 391-412.

Ishikawa, J. (2012). Transformational leadership and gatekeeping leadership: The roles of norm for maintaining consensus and shared leadership in team performance. Asia Pacific Journal Of Management, 29(2), 265-283. doi:10.1007/s10490-012-9282-z

Ismail, A., Mohamad, M.H., Mohamed, H.A., Rafiuddin, N.M., &  Zhen, K.W.P. (2010). Transformational and transactional leadership styles as a predictor of individual outcomes. Theoretical and Applied Economics, 17(6), 89-104.

Kotter, J. P. (2001). What leaders really do. Harvard Business Review, 79(11), 85–96.

Kovjanic, S., Schuh, S., Jonas, K., Quaquebeke, N., & Dick, R. (2012). How do transformational leaders foster positive employee outcomes? A self-determination-based analysis of employees’ needs as mediating links. Journal of Organizational Behavior. doi: 10.1002/job.1771

Liden, R.C., Wayne, S.J., Liao, C., & Meuser, J.D. (2014). Servant leadership and serving culture: Influence on individual and unit performance. Academy of Management Journal, 57, 1434-1452.  doi:10.5465/amj.2013.0034

Lopez, R. (2014). The Relationship between Leadership and Management: Instructional Approaches and its Connections to Organizational Growth. Journal Of Business Studies Quarterly, 6(1), 98-112.

Magni, M., & Maruping, L. M. (2013). Sink or Swim: Empowering Leadership and Overload in Teams’ Ability to Deal with the Unexpected. Human Resource Management, 52(5), 715-739. doi:10.1002/hrm.21561

Maner , J. K., & Mead, N. L. (2010). The essential tension between leadership and power- When leaders sacrifice group goals for the sake of self-interest. Journal of Personality and Social Psychology, 99(3), 482–497. doi:10.1037/a0018559

Margolis, J., Walsh, J., & Krehmeyer, D. (2006, January 1). Building the business case for ethics. Retrieved December 1, 2014, from http://www.corporate-ethics.org/pdf/business_case.pdf

McCleskey, J. A. (2014). Situational, Transformational, and Transactional Leadership and Leadership Development. Journal Of Business Studies Quarterly, 5(4), 117-130.

Mitut, I. (2010). Managerial investment on organizational stress. Romanian Economic and Business Review, 5(3), 89–99.

Northouse, P.G. (2013). Leadership: Theory and practice (6th ed.). Thousand Oaks, CA: Sage Publications

Raven, B. H. (1993). The bases of power: Origins and recent developments. Journal of Social Issues, 49(4), 227-251. doi:10.1111/j.1540-4560.1993.tb01191.x

Schriesheim, C. A., Podsakoff, P. M., & Hinkin, T. R. (1991). Can ipsative and single-item measures produce erroneous results in field studies of French and Raven’s (1959) five bases of power? An empirical investigation. Journal of Applied Psychology, 76(1), 106–114. doi:10.1037/0021-9010.76.1.106

Selart, M., & Johansen, S. (2011). Ethical Decision Making in Organizations: The Role of Leadership Stress. Journal Of Business Ethics, 99(2), 129-143. doi:10.1007/s10551-010-0649-0

Strang, S. E., & Kuhnert, K. W. (2009). Personality and leadership developmental levels as predictors of leader performance. Leadership Quarterly, 20(3), 421–433. doi:10.1016/j.leaqua.2009.03.009

Vroom, V. H., & Jago, A. G. (2007). The role of the situation in leadership. American Psychologist, 62(1), 17–24. doi:10.1037/0003-066X.62.1.17

Wharton. (2005, April 20). AmEx’s Ken Chenault Talks about Leadership, Integrity and the Credit Card Business. Retrieved December 1, 2014, from http://knowledge.wharton.upenn.edu/article/amexs-ken-chenault-talks-about-leadership-integrity-and-the-credit-card-business/

Whittington, J. L., Coker, R. H., Goodwin, V. L., Ickes, W., & Murray, B. (2009). Transactional leadership revisited: Self-other agreement and its consequences. Journal of Applied Social Psychology, 39(8), 1860–1886. doi:10.1111/j.1559-1816.2009.00507.x

Dr. Elijah Clark

Dr. Elijah Clark

Elijah is a business management consultant. He writes about business marketing, development, branding, technology, and how to develop and use marketing strategies and techniques effectively.
Dr. Elijah Clark

Latest posts by Dr. Elijah Clark (see all)

Cite this article:
Dr. Elijah Clark (March 12, 2015). The Role of Leadership in Shaping Organizational Culture [Web log post]. Retrieved from http://elijahclark.com/role-leadership-shaping-organizational-culture/