Organizational culture has emerged as a critical factor that determines the success of an organization. It plays a more significant role in achieving better organizational outcomes, more than the established policies and strategies. The quote “Culture eats strategy for breakfast” coined by Peter Drucker, one of the leading management consultants of all times. Drucker realized the importance of culture to an organization compared to the strategy. With the rapidly changing organizational landscape, organizations require leaders with the ability to adapt to the changing demands. Let’s add what the Niskanen Center states as culture eating policy for breakfast, especially in public sector settings. This can be related to any policy being made, even with the best intentions, are written to take entirely different meanings, and have different effects as they are implemented throughout the hierarchy, as Jennifer Pahlka states. Therefore, leaders need to adjust their leadership styles, with inclusive leadership taking centre stage.
Transformational leadership has long been a popular leadership style in all types of organizations. (I will admit that during graduate school, I was a big fan of this leadership style.)
Leading transformational change involves helping the organization transcend its current positioning, performance, and capabilities. This requires visionary thinking, the ability to tackle complex problems (like overcoming organizational inertia), and the courage to make difficult choices (like when to shut down or sell off assets that were once considered “core”). Leaders must think deeply and manage their emotions in intense situations, all while stakeholders expect to see results. (Via Lancefield and Rangen, HBR 2021)
Transformational leaders focus on inspiring and motivating their employees towards working together towards a shared vision. However, with this type of leadership, conformity is enhanced, with little to no diversity of opinion being welcomed. The leader dominates the decision-making process, leading to missed opportunities for business growth and a deficiency in diversity within leadership positions, leading to stagnation and no innovation.
On the other hand, inclusive leadership prioritizes creating an inclusive environment that allows every employee to feel valued, and providing opportunities in the organization to flourish regardless of race, ethnicity, gender identity, or sexual orientation. Inclusive leaders recognize the significance of diverse opinions, experiences, and uniqueness of ideas which enable customers, shareholders, and employees to contribute to the organization’s overall success.
Fostering a culture of trust, openness, and appreciation for differences is the foundation for inclusion, leading to diverse teams, better equipped to develop innovative solutions and aligning with the ever-changing demands of customers and other stakeholders.
Six traits, or the 6 C’s of an inclusive leader include cognizance, courage, commitment, collaboration, cultural intelligence and curiosity. These traits represent the diverse new world of markets, customers/citizens/users, ideas and talent. These shifts influence priorities and reshaping the capabilities required of leaders to succeed in the future.
Inclusive leadership’s impact on organizational culture links directly to employee engagement, retention, and productivity. It creates a culture of psychological safety , where employees feel safe to bring their true selves to work, which fosters creativity and innovation(watch my Global Conversations interview with Lisa Ferrol)
When an employee feels valued and appreciated, they are more likely to be engaged in their work hence leading to increased productivity, loyalty, and reduced employee turnover rates ultimately leading to better business outcomes. Moreover, inclusive leadership aligns with the values of younger generations, such as millennials, and the Generation Z, which prioritizes inclusion and diversity when looking for job opportunities. The right inclusive leadership style has an excellent chance to attract and retain high-quality talent.
The importance of culture in organizations cannot be overemphasized, especially with the changing business environment’s demands. Culture should be a top priority for leaders, intentionally making moves towards building and maintaining a positive one. Transformational leadership is not to be disregarded altogether, but if culture is eating strategy and policy, organizations cannot afford to ignore diversity, and inclusivity in leadership which can lead to poor organizational outcomes.
Organizational culture is crucial to the success of a company and is created and maintained by effective leadership. While transformational leadership has its benefits, it can often lead to a lack of diversity within leadership positions, missed opportunities for innovation, and a focus on conformity rather than diversity of opinion. Inclusive leadership, on the other hand, creates a culture of belonging and trust, which leads to diversity of opinion, increased innovation, better business outcomes, and aligns with the values of younger generations. Therefore, with the rapidly changing environment, especially with the rise of diversity and inclusion, inclusive leadership prevails over transformational leadership.