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The impact of the CEO’s personality on organizational culture

September 29, 2023

Organizational culture is widely considered to be an essential factor that influences the triumph or downfall of a company. Although the role of leaders in defining and shaping organizational culture is practically consensual, there are few studies that focus on the mechanisms and rationale behind their actions in this area. That’s why Charles O’Reilly, professor of organizational behavior at Stanford University Business School in the United States, decided to investigate the personalities of 460 CEOs in 309 companies.

O’Reilly and a group of scholars compared the data with 1.2 million evaluations made between 2015 and 2019 by employees on Glassdoor, a website where employees comment anonymously on the firms where they work. The results showed strong, interpretable associations between a CEO’s personality and the firm’s culture—and this association is strengthened the longer the CEO is in the role. 

The highlights are:

  • Outgoing or sociable CEOs were associated with agility, collaboration and execution;
  • Pleasant or confident bosses were linked to flexibility and focus;
  • Highly cautious or detail-oriented executives generally lead companies whose cultures place less value on agility and innovation and, curiously, more on execution and project results.

The researchers point out that, although the overall picture suggests that extroversion and friendliness have the most positive effects on organizational culture, there is no perfect combination of qualities that forms the ideal personality of a CEO.

Each of the combinations comes with trade-offs, according to them. Increasing the dosage of one trait can diminish another critical skill. In short, they say, the desired profile of a manager will largely depend on how the company operates.

Source: Sage Journals | Valor Econômico