The founder who writes a values document, holds an all-hands about culture, and then consistently rewards political performance over honest reporting has installed a culture of strategic information management — regardless of the document, regardless of the all-hands. Understanding why this is so, and what actually determines the culture that forms, is the starting point for any genuine attempt to build one deliberately.

Schein’s foundational embedding mechanism: culture forms through founder responses

Schein’s (1985) organisational culture framework established the most important distinction in the culture formation literature: the difference between espoused values — what the organisation officially declares it believes — and basic assumptions — the patterns of behaviour that are actually learned, reinforced, and transmitted as the correct way to operate. The espoused values are genuine; the basic assumptions are operative. The culture is the assumptions.

The founder’s role in establishing those assumptions is not through declaration but through response. What the founder pays attention to in meetings — which numbers, which behaviours, which relationships — signals what matters. What the founder rewards, publicly and privately, signals what success looks like. What the founder tolerates without consequence signals the actual floor of acceptable behaviour. What the founder punishes signals where the genuine boundaries are. These signals are read continuously by everyone in the organisation, processed through the social inference mechanism, and converted into working assumptions about what the place is actually like and what it actually requires.

Schein’s specific caution about formal charters is commercially significant: the founding assumptions that the entrepreneur brings to the organisation will be tested by the actual experiences of the group before they are accepted as valid. A founder who genuinely believes in transparency but reacts to honest bad news with anxiety and blame will have their stated transparency value tested by that reaction — and the reaction, not the statement, will determine what is learned. The team learns: telling the truth about problems here produces a bad outcome. The assumption installed is not transparency but managed presentation.

The social inference process: how people read culture from observable behaviour

Berger and Luckmann’s (1991) social construction of reality account predicts the mechanism through which the founder’s responses become shared cultural assumptions. Individuals in organisations externalise their interpretations of reality through observable behaviour; over time, these shared interpretations become stabilised as common beliefs and expectations; as the patterns are reinforced, they are internalised and come to be experienced as the normal and self-evident way things are done here.

The process is bottom-up from experience and top-down from authority simultaneously. The founder’s responses carry the highest weight in the inference process because they come from the highest-authority source — which is the social learning mechanism that Bandura’s (1977) research predicts. Team members do not observe the founder’s behaviour casually; they observe it with the heightened attention that authority figures receive, read it for signals about what the organisation values, and update their own working model of the culture accordingly.

Cialdini, Reno and Kallgren’s (1990) descriptive versus injunctive norms distinction clarifies what the inference process is actually reading. The injunctive norm is what is officially supposed to happen: the values statement, the HR policy, the leadership principle. The descriptive norm is what actually happens: what people actually do, what actually gets rewarded, what actually gets overlooked. Culture is the descriptive norm. The injunctive norm is communication about aspiration; the descriptive norm is the culture that actually shapes behaviour. The founder who focuses exclusively on injunctive norm communication — values workshops, culture decks, leadership principles — while allowing the descriptive norm to drift is building a culture of the descriptive norm regardless of the injunctive investment.

Accountability and clarity as the primary culture regulators

The thematic analysis of organisational culture formation research confirms a finding that the values-based culture literature frequently obscures: organisational behaviour is primarily system-driven. Accountability and clarity function as the foundational regulators of what culture actually produces in practice — with strong interdependencies between accountability, clarity, and leadership.

The accountability mechanism is the most direct. The culture learns what is acceptable by observing what is consistently held to account and what is consistently not. A founder who says “we hold high standards” and then avoids difficult conversations about underperformance is installing a culture of informal accommodation around underperformance — regardless of the stated standard. The standard is communicated; the accountability gap is the culture.

The clarity mechanism operates alongside accountability. When behavioural expectations are specific, observable, and consistently referenced — when people know precisely what “transparency” or “quality” means in operational terms, not just in principle — the inference process has concrete material to work with. When expectations are abstract and high-level, the inference process defaults to reading reward and punishment patterns to infer what the abstract principle actually means in practice.

Bandura’s social learning: why the founder is the cultural curriculum

Bandura’s (1977) social learning theory predicts why the founder is disproportionately influential as a cultural input regardless of their intentions. Social learning occurs primarily through the observation of high-authority models — and the founder is the highest-authority model in the organisation’s environment during its formative period. The founder does not choose to be the cultural curriculum; they are the cultural curriculum by virtue of their position and the attention that position commands.

The emotional contagion research that Sy, Côté and Saavedra (2005) documented adds the speed dimension: leader emotional states are transmitted to team members through unconscious mimicry within hours. The founder who is anxious about a product launch transmits that anxiety into the team’s emotional environment automatically, without deliberate communication. The founder who models confident, grounded engagement with uncertainty transmits that too. The cultural installation is not limited to deliberate communication — it is happening continuously through the emotional and behavioural signals the founder produces in every interaction.

Schneider’s ASA model: the self-reinforcing cycle

Schneider’s (1987) Attraction-Selection-Attrition framework predicts how the initial culture becomes progressively more stable over time. Organisations naturally attract people whose values and working styles fit the existing culture, select among applicants in ways that preferentially admit cultural fits, and see cultural misfits atrit — leave voluntarily or be managed out. The culture the founder installs through their behaviour is amplified through the people it attracts and retains, producing a self-reinforcing cycle that makes early culture formation disproportionately consequential.

The Zappos.com case illustrates this at the level of deliberate design: the underlying assumptions — that customer service is the product, that culture is a competitive advantage — drove hiring and attrition decisions that amplified those assumptions until they became the settled cultural reality. The values statements documented the culture after it had formed through the assumption-behaviour-hiring cycle, not before.

Books worth reading on this

Corporate Culture and Performance by John Kotter and James Heskett is the most research-grounded available account of the relationship between culture formation and commercial outcomes — covering the specific mechanisms through which founder-installed assumptions translate into sustained organisational performance differences, and the conditions under which culture change is and is not possible. Kotter and Heskett’s longitudinal research on the performance consequences of different culture types provides the most empirically substantial available complement to the Schein formation mechanism this article describes.

If the dynamics described here are significantly affecting your wellbeing, speaking with a psychologist is the right next step. UK: Samaritans (116 123, free, 24/7). Mind (0300 123 3393). BACP: bacp.co.uk/search/Therapists. Crisis Text Line — text HOME to 741741 (US, UK, Canada, Ireland). International: internationaltherapistdirectory.com.

This article is for educational and informational purposes only. Sources: Schein, E.H. (1985/2017), Organizational Culture and Leadership, Jossey-Bass. Berger, P.L. & Luckmann, T. (1991), The Social Construction of Reality, Penguin. Cialdini, R.B., Reno, R.R. & Kallgren, C.A. (1990), A Focus Theory of Normative Conduct, Journal of Personality and Social Psychology, 58(6), 1015–1026. Bandura, A. (1977), Social Learning Theory, Prentice Hall. Sy, T., Côté, S. & Saavedra, R. (2005), The Contagious Leader, Journal of Applied Psychology, 90(2), 295–305. Schneider, B. (1987), The People Make the Place, Personnel Psychology, 40(3), 437–453. Kotter, J.P. & Heskett, J.L. (1992), Corporate Culture and Performance, Free Press. Bridges, W. (1992), The Character of Organizations, Davies-Black.