Tone at the Top

Leaders have a profound impact on shaping the culture of their organizations. Every action and attitude creates ripples throughout the company and serves as the foundation upon which a company’s mission, purpose, and vision are built.

Actively managing culture, one of many tools in a leader’s arsenal, is one way to ensure that the right attitudes and values are driving a company and make it more likely to deliver on strategic objectives over the long run.

However, attempts to manage culture aren’t always successful, especially when the biggest driver of culture, the attitudes and behaviors of leaders themselves, are ignored. This gets us to a concept called ‘tone at the top’.

What is Tone at the Top?

At its core, tone at the top refers to the actions and attitudes of a company’s board, CEO, and other top leaders, and how this leadership shapes culture and sets the standard for everyone else in the organization.

Essentially, leaders are the cultural architects; their behaviors and the standards they enforce establish a common framework of values that permeates every level of an organization.

Interestingly, the phrase tone at the top originated in the world of auditing, where it initially referred to management's stance on internal controls and ethics. However, it gained broader recognition in the wake of major accounting scandals like Enron and WorldCom, which underscored the catastrophic consequences of a poor tone at the top.

The Sarbanes-Oxley Act of 2002 further cemented the term in corporate governance lexicon, and today, it's widely used beyond auditing circles to emphasize the critical role of leadership in fostering an ethical and aligned organizational culture.

Why Tone at the Top Matters

When CEOs, boards, and corporate leaders exemplify integrity, they lay the groundwork for ethical behavior. The opposite is also true. Unethical actions by employees can result from unethical behavior at the top.

Leaders’ actions, directives, and even their everyday interactions signal to employees what is valued within the organization, making it clear what behaviors are encouraged or discouraged.

Simply put, leaders must not only talk the talk but also walk the walk. If they preach certain values but consistently act in opposition to them, they not only undermine their own credibility but also give implicit permission for others to act contrary to those values.

A strong tone at the top is about doing the right thing—treating people with dignity and respect, upholding ethical standards, and demonstrating accountability. It goes beyond setting expectations—to actually embodying values in a way that inspires everyone to contribute to a cohesive, ethical culture.

How Does Tone at the Top Work?

Leaders at every level must play their part in embedding the organization’s values into daily practices. Here’s a best-case scenario of how tone at the top cascades throughout an organization:

Board of Directors: Sets the foundational tone by hiring executives who embody the desired culture and advising on strategic direction, reinforcing the importance of values from the top.
CEO: Drives the tone through their behaviors, communications, and directives. Align their actions with company values, serving as the primary role model.
Management Team: Communicates the tone consistently in meetings and interactions with staff. Discusses and models ethics, values, and expected behaviors to keep the cultural message front and center.
Employee Recognition: Implements rewards programs to acknowledge and celebrate employees who exemplify the company’s values. Recognizing “walking the walk” helps reinforce the desired culture and keeps everyone aligned with the tone from the top.

What’s the Difference Between Tone at the Top and Leading by Example?

Both tone at the top and leading by example shape behavior, but they differ in scale and influence.

Tone at the top sets the standard across the entire organization and involves leading by example, whether intentional or not.
Leading by example can be practiced by anyone in the organization but may only impact the group directly around the individual, rather than the entire organization.

Setting the right tone at the top is more than just a leadership tactic—it's the heartbeat of an organization’s culture. When leaders authentically embody the values they want to see, they don't just guide behavior; they inspire it, creating a shared sense of purpose that resonates across every level.