Culture by Example:
How Leaders Shape Organizational Culture Through Social Learning
Organizations frequently attempt to shape culture through formal declarations such as mission statements, codes of conduct, organizational policies, and lists of core values. Yet why is it so common for employees to experience a very different culture from that painted on the walls of headquarters? A company may publicly promote integrity while rewarding results achieved through questionable methods, endorse collaboration while encouraging internal competition, or claim to support employee voice while marginalizing those who challenge senior leaders. Employees may be formally trained with what the organization says it values, but they’re also observing what its leaders repeatedly model, reward, punish, tolerate, and ignore.
Schein (1990) described culture at three levels: visible artifacts, espoused values, and basic underlying assumptions. Policies and values statements are artifacts that express what an organization claims to be its espoused values, but that does not mean that those values guide everyday behavior. Underlying assumptions develop from repeated shared experience and ultimately shape how employees interpret and respond to organizational life.
Wood and Bandura’s (1989) social learning theory explains how leadership behavior can become part of that shared experience that eventually becomes culture. Through observation and vicarious learning, employees infer general rules about which behaviors are safe, accepted, rewarded, and likely to help them succeed (Wood & Bandura, 1989). When employees exposed to the same leaders develop similar interpretations and repeatedly enact those rules, individual learning can become shared norms and, over time, underlying cultural assumptions. This same process can transmit and shape constructive norms such as integrity, collaboration, accountability, and care or destructive norms such as egotism, favoritism, humiliation, and unethical conduct.
This paper argues that leaders create an informal cultural curriculum for employees through what they prioritize, model, reward, punish, tolerate, and protect. Leaders are not the only teachers in the organization, but they are the most closely watched. Drawing on social learning theory (Wood & Bandura, 1989), the paper interprets the primary embedding mechanisms identified by Schein (1990) as social-learning inputs through which employees discover how the organization actually works. Formal values and statements can reinforce that curriculum when they match what leaders actually do. However, when the two conflict, employees are more likely to learn from the behaviors that reliably predict rewards and consequences within the organization.
Leadership as an Informal Cultural Curriculum
The Four Subfunctions of Observational Learning
Wood and Bandura (1989) described human functioning through reciprocal causation, in which personal factors, behavior, and environmental conditions influence one another. Employees are not passive recipients of culture, and leaders do not shape culture independently of the environments in which they operate. Leadership behavior affects employee interpretations and conduct, while employee responses, established norms, and organizational systems can reinforce or constrain leaders in return.
Within this framework, observational learning depends on four subfunctions: attention, retention, behavioral production, and motivation (Wood & Bandura, 1989). Employees must notice a behavior, remember it, possess the ability and opportunity to reproduce it, and perceive a reason to do so. Modeling is therefore most influential when conduct is salient, understandable, feasible, and associated with consequences employees value.
Because people do not immediately repeat or do everything they learn, an employee may acquire a behavioral rule without immediately performing it (Wood & Bandura, 1989). An employee may observe situations where withholding undesirable information protects careers, yet continue behaving candidly until pressure increases. Cultural lessons can remain latent until the right motivation and circumstance triggers the learned behavior.
Leaders as Salient Models
Employees encounter many possible models, including coworkers, customers, and informal leaders, but formal leaders are especially salient. Brown et al. (2005) explained that leaders attract attention because of their assigned roles, status, visibility, perceived success, and power to influence other people’s outcomes. Employees have practical reasons to observe those who affect assignments, recognition, performance evaluations, promotions, discipline, and continued employment. A leader’s behavior may therefore carry more weight, and have a greater likelihood of being modeled, than the same behavior from an employee with less power and status.
Leaders also influence what receives collective attention across the organization; what leaders consistently attend to and measure is among the principal means by which cultural priorities are signaled (Schein, 1990). Because leaders set priorities, what they deem important becomes the organization's operative metric — regardless of what the mission statement declares. A leader who consistently asks how a decision will affect customers makes customer impact prominent. A leader who focuses almost exclusively on quarterly numbers directs attention toward monetary performance — perhaps even over quality, employee well-being, or responsible conduct.
Within the informal cultural curriculum, leaders often inadvertently identify the subject being taught. They may personally demonstrate how employees are expected to behave — but ultimately, it's how they reward, punish, and promote, that reveals how behaviors are being graded. For example, a leader may personally follow every safety protocol, but if an employee who halts production over an identified hazard is quietly dismissed, the consequences teach that raising safety concerns could be career-limiting.
Brown et al. (2005) described ethical leadership as both the demonstration of appropriate conduct and its active promotion through communication, reinforcement, and decision-making. Although their framework concerns ethics specifically, the underlying process extends to other dimensions of organizational culture. Leaders model attitudes toward risk, status, conflict, inclusion, customer treatment, information sharing, and work boundaries. Social learning does not determine whether the transmitted content will be constructive or destructive — it simply explains how either can be learned.
Learning Is Vicarious
Vicarious learning allows leadership lessons to reach people who were not directly involved in an interaction. Employees do not need to experience every reward or punishment personally because the consequences experienced by others provide information about what may happen to them (Wood & Bandura, 1989). When one employee is promoted after taking credit for collective work, coworkers receive information about the type of conduct associated with advancing one’s career. When another employee discloses a mistake and receives a fair response, observers learn that candor may be safe. A leadership decision affecting one person can therefore teach an entire group.
Observational learning involves abstraction rather than mimicry. Employees extract general rules and strategies from modeled behavior and apply them to situations they have not previously encountered (Wood & Bandura, 1989). Repeated leadership patterns may teach that results matter more than methods, disagreement is unsafe, status provides immunity, or collaboration is genuinely rewarded.
Leaders can strengthen this learning by explaining the reasoning behind their decisions. Wood and Bandura (1989) observed that people learn thinking strategies more effectively when models verbalize the thought processes accompanying their actions. A leader who explains why a profitable opportunity was rejected on ethical grounds reveals the governing rule, enabling employees to transfer it to situations the leader may never personally observe. Communication is therefore most culturally powerful when it narrates consistent behavior, and least powerful when used to compensate for contradictory behavior.
To tie it all together, Wood and Bandura (1989) show that people extract general rules from the behavior they observe. Brown et al. (2005) demonstrate that leaders are the people employees watch most. Schein (1990) highlights what happens when those rules are shared and taken for granted — and that becomes, culture. Therefore, the informal cultural curriculum is not necessarily the specific actions employees mimic, but the rules they infer from repeated behaviors, rewards, and consequences.
Individualized Learnings Form Shared Assumptions
How do behaviors learned by individual employees become a culture that a whole organization shares? Individual interpretations begin moving toward culture when employees exposed to the same leader reach similar conclusions. Brown et al. (2005) found strong within-group agreement among employees rating a shared leader, with a mean rwg of .88 and a median of .97 (p. 128). Employees with a shared perception do not entirely define an organization’s culture, but it’s getting there. And now this leader’s behaviors become a collectively shared experience as opposed to a series of unrelated individual experiences. Shared behaviors that are repeatedly enacted are more inclined to become behavioral norms.
Leadership’s behavior trickles down vertically through organizational levels. Mayer et al. (2009) proposed a trickle-down model in which supervisors observe senior leaders, interpret their behavior, and subsequently become models for their own employees. Mayer et al. tested this model with 904 employees and 195 managers across 195 departments and found that supervisory ethical leadership carried the effect of top-management ethical leadership down to group-level behavior. Executives teach supervisors through their conduct and decisions, while supervisors translate those lessons through daily assignments, feedback, rewards, and interpersonal behavior. This multi-level game of interpretation and observation helps explain why employees within one organization can experience different sub-cultures. Senior leaders may distribute the same values statement throughout the organization, while local supervisors translate it into different behavioral environments. One supervisor may respond constructively to mistakes, while another punishes them. One team may experience consistent accountability, while another watches high performers receive protection from consequences. The organization may articulate one culture, but its lived meaning is often experienced and learned within teams and subgroups.
Cultural learning can also spread horizontally. Cross-departmental employees discuss decisions, compare treatment, observe coworkers’ responses, and assess whether others interpret events similarly. A behavior originating with one leader can therefore spread through both authority relationships and peer interaction. For example, if a leader reacts aggressively whenever an employee questions a decision, employees may initially remain silent to avoid a negative interaction. As the pattern continues, silence becomes expected. Eventually, employees may develop the underlying assumption that questioning authority is disloyal or dangerous. New members can then learn that assumption from coworkers even if they never witnessed the original behavior itself.
The Cultural Credibility Gap
If employees learn organizational culture from behavior, what good does a culture statement or company-wide core values do? Schein's (1990) taxonomy speaks to this. His five primary embedding mechanisms — (a) what leaders pay attention to and measure, (b) how they react to crises, (c) what leaders role model, (d) what they reward, and (e) whom they hire, promote, or remove — are all things leaders do (p. 115). “Formal statements of organizational philosophy, creeds, and charters” appear last, among the secondary mechanisms that articulate and reinforce a culture rather than create one (p. 115). Formal statements are meant to reinforce, clarify, preserve, and extend cultural expectations, and they only appear to be credible when the stated espoused values match leadership behavior.
A cultural credibility gap develops when an organization’s formal values communicate one thing while the repeated actions of the leadership team communicate something different. A cultural credibility gap is the fate of organizations whose core values adorning their walls state “we support the ideas and voices of our employees” — yet leaders continue to punish employees who disagree with them, and dismiss all views outside of their own. The same goes for a workplace that promises a culture that values family and work-life balance, yet allows 24/7 availability to become an unspoken symbol of dedication and loyalty.
Simons (2002) described behavioral integrity as the perceived alignment between a leader’s words and deeds. This perception is formed through an accumulation of observations rather than through a single instance. And the natural scorekeeping on misalignments versus aligned behaviors is not weighed evenly. According to Simons (2002), misalignments are “tallied aggressively, but alignments are accorded substantially less weight” (p. 25). Therefore, every published value holds a magnifying glass to leadership behavior rather than substituting for it. Behavioral integrity can also make a culture clearer without making it ethical. Simons (2002) illustrated the distinction with a colleague who openly advocates self-interest over the common good: observers may reject his values entirely and still credit him with high behavioral integrity, because “at least one knows that he means what he says” (p. 19). The cultural problem is not only whether leaders consistently embody organizational values, but which values they embody.
What leaders tolerate can also be just as culturally instructive as what they directly reward. A single unaddressed incident may go unnoticed, but repeated instances that are intentionally left unaddressed provides pretty clear information. When leaders excuse misconduct from a high-performing employee or protect senior employees from standards applied to others — employees may conclude that formal rules exist, but they’re open to interpretation and favoritism.
Times of crisis put the alignment/misalignment magnifying glass on at full power. Consider two organizations facing the same severe downturn, each with formal values stating that employees come first. One reduces its workforce, without hesitation, to protect investor payouts while leadership compensation goes untouched. The other asks all of its members, executives included, to absorb unpaid furlough weeks — or perhaps reinvents roles entirely and helps upskill employees into roles that open new business opportunities — so that no positions are lost. Both organizations claimed they espoused the same value, yet only one defended it when times got hard. Employees in each organization will extract the lesson from their experience and will carry it well beyond the downturn. Culture is shaped not only by the values leaders endorse when they are easy to keep, but by the values they defend when the pressure is on.
When culture statements repeatedly conflict with lived experience, employees learn that formal statements are unreliable guides to how the organization actually works. They become more inclined to discard the official rulebook and “play by the true rules of the game” (Simons, 2002, p. 29). Employees may grow cynical toward official value statements precisely when leaders are not credible models (Brown et al., 2005). Misaligned policies teach that policies are ignorable and values are lip service, and the organization ends up with two cultures — one that is publicized and another that is used.
Potential Limitations to the Cultural Curriculum Argument
The argument that leaders primarily create the cultural curriculum has three potential limits. First, influence runs both ways — leaders shape culture, but existing culture also predicts the type of leaders who get hired, promoted, and allowed to succeed (Bass & Avolio, 1993). After all, reciprocal influence is the founding premise of social learning theory (Wood & Bandura, 1989). Second, not every employee gets the same curriculum. Leader–member exchange theory states that leaders build closer relationships with some employees than others, and those employees see more of the leader's behavior and reasoning (Levy et al., 2025). Third, the studies cited here from Brown et al. (2005) and Mayer et al. (2009) focused on how employees learn ethical behavior by modeling their leaders. This paper applies that same learning process to organizational culture as a whole, and it's worth noting that the studies only tested the ethical piece — the rest of the cultural curriculum has not been formally tested.
Conclusion
Organizational culture is learned through everyday applied actions. Employees infer rules about what is safe, rewarded, and required through the actions and decisions their leaders repeatedly take. These repeated actions in turn translate into shared norms and eventually basic underlying assumptions. The informal cultural curriculum is always in session, teaching integrity, accountability, and candor just as readily as it teaches marginalization, favoritism, and misconduct. Employees learn not only from what leaders intentionally communicate but also from the type of conduct they excuse, the people they protect, and the priorities they preserve while under pressure.
Schein (1990) asked how culture is created and answered that culture is learned — social learning theory explains how that learning happens. Employees watch their most prominent models, and extract the rules hidden behind repeated behaviors and consequences. Employees then share those rules until they solidify into underlying assumptions that new hires absorb without ever needing to meet the leaders who taught them. Formal value statements can, and should, support the cultural curriculum, but polished declarations do not and cannot replace the lived culture within the organization. And when these formal declarations and leader behaviors conflict, employees trust the behavior, and the statements themselves become the poster of shared cynicism. Leaders are not the only influence on an organization’s culture, and not every employee receives the same amount of time observing leaders and their implied curriculum. But leaders remain the organization's most closely watched teachers of it.
In the end, culture is not what an organization paints on its walls or posts on its values page — it is what employees learn from watching and mirroring the values their leaders actually live.