The 4 Types of Organizational Culture
The culture of an organization has a direct impact on its success in recruiting new hires, retaining talent, and engaging employees.
WHAT IS ORGANIZATIONAL CULTURE?
Organizational culture encompasses the shared values, attitudes, and behaviors that characterize an organization. It is an important factor in employee satisfaction.
To create a culture that better fits your organization, you first need to understand what type of culture already exists within the company.
The culture of an organization is the shared values, attitudes, and practices that characterize the organization. It is the personality of the company and plays a large role in employee satisfaction.
A common misunderstanding is that core values, employee benefits, etc. are the foundation of a strong organizational culture. However, in reality, your core values should guide your organizational culture, but they are not meant to be exhaustive, and benefit packages should be a result of your hard work to create a fun office environment.
Why Is Organizational Culture Important?
According to a study done by Glassdoor, 77 percent of adults would check a company's culture before applying to an open position. It takes a lot of time and effort to create a winning organizational culture — your culture must accurately reflect your values and align with your overall mission. Don't get discouraged though, your efforts will pay off in the long run.
There are four primary types of organizational culture:
Robert E. Quinn and Kim S. Cameron of the University of Michigan researched the qualities that make businesses effective. They identified two key polarities from a list of 39 attributes: (1) internal focus and integration vs. external focus and differentiation, and (2) flexibility and discretion vs. stability and control.
The Competing Values Framework is a validated and widely-used Organizational Cultural Assessment Instrument that uses visual representations to identify an organization's key qualities. A quick Google search might pull up articles that mention anywhere from five to eight types of corporate cultures. However, the four types mentioned by Quinn and Cameron are generally accepted and appear to influence any variations.
1. Clan culture
Primary focus: Mentorship and teamwork. A clan culture is one that focuses on the individual, valuing every person and making communication a top priority. Clan culture is often associated with a horizontal structure, which can help break down barriers between upper management and employees, and it can encourage mentorship opportunities. These companies are action-oriented and embrace change, demonstrating their highly flexible nature.
Benefits: Clan cultures have high rates of employee engagement, which leads to happy customers. The adaptable environment of a clan culture leaves room for market growth.
Drawbacks: A corporate culture that is family-style is more difficult to maintain as the company expands. Also, with a horizontal leadership structure, it can seem that daily operations are cluttered and lack direction.
Where it's found: It is not a surprise that clan cultures are often found in startups and smaller companies. When young organizations just starting out, they put a heavy emphasis on collaboration and communication, leadership looks to employees for feedback and ideas, and companies prioritize team-building.
Creating an organizational culture of empathy and communication is key to success for companies like HR tech provider Hireology, where a large percentage of employees work remotely. “Having a blended team can help your local staff bridge gaps and build empathy,” said Joel Schlundt, vice president of engineering at Hireology. The team coordinated job swaps to help employees better understand and appreciate their peers’ roles.
How to create it: In order to establish a clan culture within your company, you must first communicate with your employees. This means that you should be open to receiving feedback. Find out what is important to your employees, what changes they would like to see, and what ideas they have that could help improve the company. The second step is to take their suggestions into account and put them into action.
2. Adhocracy culture
Primary focus: Risk-taking and innovation.
Companies with an adhocracy culture are always looking for the next big thing. To accomplish this, they will need to take risks. Adhocracy cultures encourage individuality, where employees are motivated to think creatively and present their ideas. Ideas must be linked to market growth and company success in order to be successful in this type of organizational culture.
Benefits: An adhocracy culture contributes to high profit margins and notoriety. Employees' motivation comes from the goal of breaking the mold. Plus, with a focus on creativity and new ideas, professional development opportunities are easy to justify.
Drawbacks: There is always a chance that a new venture will not work out as planned and may even harm your business. Adhocracy cultures can also promote competition between employees as the pressure to come up with new ideas increases.
Where it's found: These companies have an adhocracy culture, which means they focus on the outside world and are willing to take risks. They function on creative energy and novel ideas; adhocracy cultures are typical within the technology industry where change is constant and new products are released frequently.
How to create it: An adhocracy culture that includes a high-risk business strategy may not be easy to develop depending on the industry. By implementing strategy and brainstorming sessions, employees are given the opportunity to share big ideas that could potentially help propel the company forward. Rewarding successful ideas also encourages teams to think outside of the box.
3. Market culture
Primary focus: Competition and growth
Companies who operate with a market culture are concerned primarily with external success rather than internal satisfaction. A culture that emphasizes markets stresses the importance of meeting quotas, reaching targets, and getting results.
Benefits: This is because the entire organization is externally focused and there is a key objective that employees can work towards.
Drawbacks: On the other hand, because there is a number that corresponds to every decision, project and position within the company, it can be difficult for employees to meaningfully engage with their work and carry out their professional purpose. In this aggressive and fast-paced environment, there is also a risk for burnout.
Where it's found: A market culture company's goal is to be the best in its industry, which often means being larger and better than any competitor.
"Our team is clear on its goals, and we are incentivized through compensation structure and recognition," said Kim Surko, vice president of customer success for Bluecore. "With that foundation, we can apply our personality and values to define how we will accomplish those goals."
How to create it: To improve your company's bottom line, you must first understand how every aspect of a market culture affects it. Start by evaluating each position within your organization and calculate the ROI for every role.
4. Hierarchy Culture
Primary focus: Structure and stability
Organizations with a hierarchical culture may follow traditional corporate structures. The focus of these companies is internal organization, often characterized by a clear chain of command and multiple management levels that keep employees and leadership separate. There is often a dress code for employees to follow in addition to the rigid structure. Hierarchy cultures have a set way of doing things, making them stable and risk-averse.
Benefits: Internal organization is a priority for hierarchy cultures, which have clear direction. There are well-defined processes that cater to the company’s main objectives.
Drawbacks: The inflexibility of hierarchical cultures retards creativity, making these companies tardy to adapt to the changing marketplace. The company takes precedence over the individual, which precludes employee feedback.
Where it's found: Various organizational cultures can be found within the corporate world, from old-school organizations to those of the customer service industry, such as fast food restaurants. These companies are resistant to change and are content with their current day-to-day operations.
How to create it: To establish a hierarchy culture, ensure that your processes are buttoned up and that there are no gaps in the chain of command.
Your organization's culture tells potential employees a lot about your team and what you value, and they can pick up on that very quickly. It is important to assess your organization's culture and identify areas that need improvement. It is important to try to control the culture of your organization, but remember that the office dynamic will change as you add new team members.
