Leadership and Organizational Culture: Lessons Learned from Arthur Andersen

ABSTRACT: Leader actions are considered by many to be one of the major influences on an organization's culture. This paper examines actions taken by leaders at Arthur Andersen, driven by the emphasis on profit growth over audit proficiency beginning in the 1980s, that were not consistent with certain cultural features fundamental to the firm's value system in its early years. We examine the actions of Andersen's leaders in the context of Schein's (2004) theories of organizational culture, and conclude actions of the firm's leaders appear to have adversely affected the organizational culture and contributed to Andersen's eventual demise. The lessons learned from Arthur Andersen can benefit others in the profession, along with students who will be entering the profession and educators who are preparing them for future challenges.