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Organizational Culture and Leadership, 5th Edition by Peter Schein, Edgar H. Schein

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11THE CULTURE DYNAMICS OF ORGANIZATIONAL GROWTH, MATURITY, AND DECLINE

If an organization is successful in fulfilling its mission, it will mature and grow. The founders and their early followers will age or die and will be replaced by new leaders who have been promoted from within the organization or have been brought in from the outside. Ownership by founders or founding families will evolve into public ownership and governance by boards of directors. The decision whether or not to retain private ownership or “go public” may appear to be primarily a financial decision, but it has enormous cultural consequences.

With private ownership, the leaders can continue to enforce their own values and assumptions through all of the mechanisms cited in the previous chapter. After governance has shifted to a promoted CEO and a board of directors, the leadership role becomes more diffuse and transient, because CEOs and board members usually have limited terms of office and are more accountable to stockholders.

At the same time, the culture that the organization has evolved thus far will be perceived as the source of the organization’s success and will, therefore, limit the choice of new CEOs to individuals who adhere to the basic assumptions of that culture. Whereas leadership created culture in the founding stage, that culture now creates criteria and boundaries within which promoted leaders need to function, unless the board brings in a “turnaround CEO” whose primary job is to change the ...

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