Embedding Leader Traits 1 Running Head: EMBEDDING LEADER TRAITS Embedding Leader Traits: Leadership’s Role in the Creation of Organizational Culture

Many organizational scholars and theorists have speculated that leaders play a prominent role in the creation of their organization’s culture. Through a variety of mechanisms, leaders are thought to transfer or embed their personality and values into their organizations. This study addresses the relationship between the personality and values of leaders and the personality and values of individuals whose selection they influenced, their organization’s structural characteristics, and their organization’s culture. The top executive leader from each of 32 organizations, along with 467 employee participants from these organizations completed personality, values and culture inventories. Results provide empirical support for assumptions by Schein (1992) and Schneider (1987). Leader personality and values profiles were related to profiles of personality and values shared by organizational members. Additionally, specific leaders personality and values scores were predictive of organizational culture values. Implications for leadership, organization change and effectiveness are discussed. Embedding Leader Traits 3 Embedding Leader Traits: Leadership’s Role in the Creation of Organizational Culture Organizational leadership and culture are highly related aspects of organizational life; both provide an organizing mechanism to guide behavior, reduce ambiguity, and bring order out of potential chaos. Organizational culture is a system-level construct rising from members’ beliefs and interactions (James, James, & Ashe, 1990) that contains notions of shared values, mutual understandings, and patterns of beliefs and behaviors (Rousseau, 1990). Culture impacts nearly every aspect of organizational life by ensuring social order and creating commitment among the workforce (Trice & Beyer, 1993), as well as affecting outcomes such as productivity (Kopelman, Brief, & Guzzo, 1990), return on investment, return on sales and other financial performance indicators (Denison, 1990). Leaders are believed to be the primary influence on the creation and development of organizational culture (e.g., Bennis & Nanus, 1985; Kotter & Heskitt, 1992; Schein, 1992; Selznick, 1957; Schneider, 1987). The decisions that leaders make, particularly founders and leaders in the early stages of the organization’s lifecycle, have a profound effect on the direction of the organization, types of people who become members of the organization, and the culture that emerges. Schein (1992) even suggests that the most important function of organizational leaders may be the creation and management of organizational culture. Several theories of the relationship between leaders’ personal characteristics and organizational culture exist (e.g., Hambrick & Mason, 1984; Kets De Vries & Miller, 1986; and Kotter & Heskitt, 1992). However two such theories, Schein’s (1992) theory of culture and leadership, and Schneider and colleagues (Schneider, 1987; Schneider, Goldstein, & Smith, 1995) Attraction-Selection-Attrition (ASA) model provide concise and complementary perspectives on culture creation. According to Schein (1992) the culture formation process begins with the decisions of organizational founders who embed their assumptions in the organization through several primary embedding mechanisms, such as the things they pay attention to and criteria used to make decisions, and then further articulate and reinforce their assumptions through the use of several secondary mechanisms, such as the structures, systems, and processes they establish. Founders begin to embed their values and assumptions into the organization Embedding Leader Traits 4 through the goals they establish. Schneider’s (1987) ASA model proposes that an organization’s goals are an “operationalization of the personality of the organization’s founders” (Schneider et al., 1995, p. 752), and these goals attract people who have similar personal characteristics as the founder. Founders then select an initial group of members that have similar personality traits, values, and assumptions (Schein, 1992; Schneider, et al., 1995). Leaders further reinforce the values and assumptions that are important for the organization through the structures, infrastructure, processes, and procedures they establish to guide behavior (Schein, 1992). These decisions result in the development of an organizational climate pertaining to “the way things are” in that particular organization. As assumptions and values become widely shared among members, a unique organizational culture emerges. While there is much theoretical speculation about the link between leadership and organizational culture, there has been little empirical research in this area. This study seeks to address this gap by investigating the relationship between the personal characteristics of organizational leaders and their organization’s culture. Specifically, this study investigates the similarity among leaders and the people whose selection they influence, the relationship between leader personal characteristics and organizational features (e.g., use of teams, types of rewards), and ultimately the link between leaders and organizational culture. These aspects of organizational life are part of the leadership process: selecting the right people, implementing the tools, processes and structures to get work done, and creating and fostering a culture consistent with the leader’s values and beliefs. Hypothesis 1a: The selection of similar others creates a representative organizational personality profile, such that the variance of personality characteristics within organizations is less than the variance of personality characteristics between organizations. Hypothesis 1b: The selection of similar others creates a representative organizational values profile, such that the variance of individual values within organizations is less than the variance of values between organizations. Hypothesis 1c: Organization’s personality and values are similar to leader’s personality and values profiles. Embedding Leader Traits 5 Hypothesis 2: Organizations’ structures and systems are related to leaders’ personality and values. Hypothesis 3: There is a direct relationship between the leaders’ values, and the values underlying an organization’s culture. Method Participants Leaders and their organizations were recruited for the study through three mechanisms, a) contacting clients from previous consulting engagements, b) personal referrals, or c) one of two 15-minute presentations regarding culture and leadership delivered by the author at a monthly meeting of business leaders in a large Midwestern city specifically prepared to solicit participation in the project. A total of fifty-three organizations expressed interest in and were subsequently invited to participate in this study, of which 33 (62%) organizations consented to participate and 32 organizations (60%) followed through with the process completely. In all cases, the organization’s leader (president, CEO and/or owner) was contacted and personally invited to participate. Leaders were provided a brief description of the project, and those who volunteered their organization’s participation completed a form letter indicating their understanding of the study and its requirements for participation. In exchange for their participation, leaders received a report summarizing the overall results of the study, and their organization’s specific results. These reports were constructed to be shared with the employee participants in the organization as feedback for their participation. Beyond this report, neither leaders nor non-leader participants received any other remuneration. The participating organizations consisted of small to mid-sized organizations, ranging in size from 8 to 1,000 employees (Mdn = 27), and with annual revenues of $400,000 to $310,000,000 (Mdn = $13,250,000). Located in four states throughout the Midwestern U.S., the participating organizations, represented ten different industries, and had been in existence from 1 to 131 years (Mdn = 22). Thus, participants comprised a relatively heterogeneous sample, as organizations are included from a diverse range of industries and sizes. Embedding Leader Traits 6 Individual participants included the 32 organization leaders and 467 employees (255 male and 212 female) representing all organizational levels. Excluding the organization’s leader, the number of participants from each organization ranged from 8 to 30 (M = 14.5). Leaders ranged in age categories from 25-30 to 51 years and over, with the majority in the 41-50 and 51 years and over categories, while nonleader participants ranged in age categories from 18-24 to 51 years and over, with the majority of participants in the 31-40 years age range. Leaders had been with their organization from 0-. 5 to 11 or more years, with the majority of participants in the 11 or more years range. Moreover, 18 leaders were the actual founder of their organization. Non-leaders participants had been with their organization from 0-. 5 to 11 or more years, with the majority of participants in the 5-10 range. Measures Personality. Personality was measured using Goldberg’ (2000) 50-item Big-Five personality inventory, which contains five 10-item subscales: extraversion, agreeableness, conscientiousness, emotional stability and intellect or openness to experience. This publicly and freely available inventory was derived from the International Personality Item Pool (IPIP), a pool of 1,252 English terms, and provides a short scale that addresses the Big-Five makers (Goldberg, 1992, 1997). These markers provide measures of the Big-Five domains and are considered criterion indicators of the FFM (Hogan & Hogan, 1995). Acceptable internal consistency reliabilities were reported for each of the scales, with mean alpha across scales of . 84. Responses were anchored along a 5-point response scale, 1 = strongly disagree to 5 = strongly agree. Values. Individual value