How important is Leadership to build and sustain a healthy corporate culture when executing strategy?

Key factors in leadership to construct a healthy corporate environment that guarantees a successful execution of strategy

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Designing and executing a strategic plan is crucial to an organisation’s success. A leader must not only be able to efficiently lead and execute that strategy to achieve the organisation’s objective and vision, but must also be able to build and sustain a healthy corporate culture while executing strategy.

Leadership behaviour not only helps to accomplish the objectives of the organisation but can also greatly influence employees’ behaviour and motivation. Hence, it is crucial to understand the relationship between corporate culture, leadership, and people’s behaviours.

On one hand, corporate culture can be defined as corporate values, principles and behaviours existing consistently across an organisation for a long time. Ideally, an organisation strives to be healthy and provide a healthy corporate culture in which people also want to work. Hence, the organisation’s culture is usually the most important determiner in successfully executing strategy.

On the other hand, the issues related toleadership, sponsorship, communication, consensus and people’s behaviour have been addressed by many researchers and authors. Some of them have highlighted the successful impact of top management and leadership on strategy implementation. They have also emphasized that executor or people issues are crucial for implementing strategy. In this article, I highlight my key findings by outlining the importance of leadership in building a healthy culture that guarantees a successful strategy execution.

Creating a healthy corporate culture that is open to change starts with a senior leadership team that communicates often and effectively.

I would like to start by noting that an organisation’s management teams or leaders can be categorised into three types: top team or management (e.g., CEO, CFO, COO, and CIO), middle management (e.g., head of departments and directors), lower management (e.g., team leaders, supervisors).

When analysing the Strategic Management Process Model, my research has shown that the development of analytical models such as the Boston Consulting Group Matrix (BCG) and the Personal Information Management System (PIMS) emphasised the fact that the strategy function was exclusive to top managers. However, further research has exhibited that this has consequently caused a misalignment between top and middle management. For example, Floyd & Woolbridge (1992a) identified a gap between the strategy implementation perceived by the top team and the lack of information and communication received at lower managerial levels (e.g., supervisors and team leaders). According to them, top, middle managerial and supervisory levels, and employees should all be involved during the strategy implementation process, and all should agree on and commit to the strategy implementation objectives. They stated that “This gulf between strategy conceived by top management and awareness at lower levels has been called the ‘implementation gap’” (Floyd & Woolbridge, 1992a: p.27).

The distinctive characteristic of an unhealthy corporate culture can be identified in the presence of counterproductive cultural traits, hostility to change that may adversely impact the programme, the work climate and ultimately the outcome of an organisation’s strategy execution (including causing its failure).

Herecleous (2000) stated that if middle senior managers believed that the strategy was not good enough or did not think that they had resources with the right skills to implement the strategy, then there was a strong possibility that the implementation could be sabotaged. He also pointed out that groups could be found within the organisation that may disagree with the strategy, and thus could sabotage the execution of the strategy by either deliberate actions or inactions.

Nutt (1987) referred to the management of the strategy implementation process as a ‘champion’, i.e., a leading role within an organisation which could be performed by a senior manager or leader who could efficiently lead the strategic planning process. He also stated that, if fewer senior managers and staff did not share the same strategic information, then this could cause serious issues when implementing strategy, since consensus regarding that information may never happen. This is why it is important that all employees (managers and non-management personnel) are all well informed of the implementation of the strategy. Noble (1999b) also referred to this problem of shared information. If managers or employees were not delivered the same expertise or information, then they could create problems by impeding the success of strategy implementation.

The roles of middle management and supervisors should not be disregarded, since they are also crucial for the success of strategy execution. One objective of communication is to reach consensus as part of the strategic planning or formulation at the top management level. Even if many studies have concentrated on consensus at top managerial levels, all levels of management and employees need to be considered when looking at consensus. Consequently, this can guarantee a successful connection between strategic consensus and the organisation’s performance.

In order for strategy execution to succeed, it must not only be supported by top managers (C-level executives) but also operational changes must be backed up by different layers of management and/or people. If organisations are not prepared to deal with its impacts, then it will be counterproductive to go through the long and rigorous strategy execution roadmap.

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