Corporate culture makes more of a difference than you might think. It plays a significant role in how successful your company is. Organizational culture, also known as company culture, shapes how employees behave and work together. It also influences how likely they are to stick around for the long haul.
There are different types of organizational culture to consider. This can make things a bit complicated, but it will benefit your business to find one that best suits your company’s needs. The question is: How do you not only select but create this type of company culture?
Furthermore, what does a successful company culture even look like? By understanding the qualities and benefits of each type of organizational culture, you’ll be able to figure out which culture suits your organization’s needs best. In this article, we’ll be discussing the different types of organizational culture, so stick around!
What is Organizational Culture?
The term “culture” originates from the Latin word “colere,” meaning to nurture or develop. In essence, organizational culture is how leaders nurture and manage their business, external stakeholders, and employees. It refers to the consistent behaviors exhibited by employees and leaders within an organization (i.e. “norms”).
Organizational culture plays a major role when it comes to achieving strategic goals and attracting suitable employees. Usually, business leaders will promote their current culture to customers and important stakeholders. In a way, you’re “pitching” reasons why people should consider buying from or investing in your company.
Culture is evident in decision-making processes, whether they’re hierarchical or inclusive, and in the extent to which employees feel comfortable expressing their ideas without fear of rejection. It’s also reflected in the benefits that are offered to employees and the recognition they’re given for doing exceptional work.
It’s also worth mentioning that organizational culture is not fixed. It evolves through deliberate organizational development efforts and cultural transformation processes, as well as through natural progression. This fluidity should be considered when shaping and refining your organizational culture.
The Many Different Types of Organizational Culture
Every organization has its blend of organizational culture types, usually with one type being the most prevalent. In bigger organizations, there’s a greater chance of having multiple cultures.
While this diversity can be good, it can also be difficult to maintain a unified culture, especially in organizations spread across different regions or globally. Now, let’s explore the different types of company culture below:
Adhocracy culture
Adhocracy culture blends “Ad hoc” with bureaucracy, and emphasizes flexibility over rigid rules. In organizations with this culture, innovation, and improvement are highly valued. The environment is usually fairly fast-paced, and it’s common for employees to challenge the status quo when it comes to decision-making and problem-solving.
Many startups and tech giants (like Apple and Google) thrive in an adhocracy culture because it allows them to innovate quickly (this is critical for success in competitive markets). However, as these startups grow into large companies, maintaining a pure adhocratic culture across the entire organization becomes challenging.
Some parts of the organization may require more structure, especially in areas like ethics and compliance. In such cases, adhocracy may be limited to specific units. This is often the best way to make sure that innovation and competitiveness remain consistent over time.
Clan culture
As you may already know, a “clan” refers to a close-knit group of people with shared interests. In business, a clan culture is often found in small or family-owned businesses where hierarchy isn’t as important. Here, all employees are valued equally, and the atmosphere is supportive.
This culture emphasizes teamwork, and making sure that everyone feels like they’re on the same level. Employees are encouraged to give honest feedback, and there’s a focus on mentorship and passing down skills and values.
Clan cultures usually lead to high employee engagement. For this reason, they’re often able to boast excellent customer service. However, as the organization expands, it can be challenging to maintain this type of culture. Operations may become less focused and efficient as the company grows.
Hierarchy culture
The hierarchy culture is relatively widespread in US corporations. It’s characterized by a clear structure, established rules, and different levels of authority. Employees know exactly where they stand in the chain of command — who they answer to, who answers to them, and what the rules are. Doing things by the book is super important in this culture.
Roles and responsibilities are well-defined, and processes are usually quite straightforward. Many financial institutions, health insurance companies, and oil and gas firms follow this type of culture. It helps business leaders manage risks effectively, maintain stability, and run things as efficiently as possible.
However, the hierarchy culture can sometimes make managers and employees less adaptable and innovative, especially when facing sudden changes in their industries. They may struggle to keep up with the fast-paced demands of today’s markets, which is a serious concern.
Market culture
The market culture revolves around profits and staying competitive. It’s laser-focused on delivering results and meeting customer needs. These organizations prioritize top-notch products or services — basically, they’re always aiming to outshine their rivals by being especially innovative and getting new offerings to market quickly.
While this culture can ensure business success, it often leads to employee burnout due to the relentless pressure to perform. Employee well-being might take a back seat to the company’s financial goals. To thrive in this environment, you’ll want to evaluate each job’s contribution to the organization and set realistic production goals. Rewarding top performers can motivate others to work harder, too.
Which Organizational Culture is Best for Your Business?
For most people, figuring out which type of organizational culture will best fit their company’s needs is the hardest part of this process. For this reason, a lot of business leaders choose to use a combination of the four different organizational cultures outlined above. Most of the time, this works quite well!
Consider your organization’s goals, how your team works together, and any changes happening in your business to figure out the best culture fit. Regardless of which culture you pick, it’s important for success in today’s job market to create a positive experience for your employees and to be flexible and adaptable.
HR’s role in shaping organizational culture
As we mentioned earlier, leaders play a huge role in shaping culture. The HR department also plays an important part in this process. HR representatives work to align managers and employees with the desired culture. Their job is basically to make sure everyone feels a sense of ownership and responsibility for it.
As you can see, organizational culture significantly impacts how your company operates, its reputation, and whether or not it will be able to achieve its goals. By understanding different types of organizational culture, you can figure out which type or types will work best for your organization, as well as what changes are needed to achieve that.
Other Types of Organizational Culture
There are some other, less obvious types of organizational culture that are worth mentioning. As you’re piecing together your company culture, keep these types of organizational culture in mind. Feel free to experiment, too! That’s what building a company culture is all about.
Strong leadership culture
For strong cultures to work well, leaders in corporate positions need to do more than just talk about it. They have to show how it’s effective through their actions and set a good example for everyone else. This culture focuses a lot on helping employees grow. That means that there are plenty of training opportunities available, especially for those in entry-level positions.
Customer-first culture
In the past, companies typically made products and services and then worked to sell them through marketing. Today, however, many companies are changing their approach. They’re doing more market research before making products. This means they’re asking customers what they want and need, and then making products to meet those wants and needs. For companies with a customer-first culture, the main goal is to make customers as happy as possible.
Role-based culture
In a role-based culture, hierarchy isn’t a big deal. Instead, employees’ roles depend entirely on their skills and expertise. The goal, of this type of culture, is to put employees in roles where they can do their best work and be most effective. Interestingly, this type of organizational culture clashes with most hierarchical cultures.
In Summary
Organizational culture, encompassing the core values and beliefs shared by members of a company, plays a pivotal role in shaping a positive workplace environment. There are various types of organizational culture, each fostering a unique atmosphere and influencing the employee experience.
A positive culture is one that actively supports employee feedback, integrates it into daily operations, and aligns it with organizational goals. This type of culture not only promotes a positive employee experience but also drives the organization toward success.
Common types of workplace culture include innovative cultures that encourage creativity and risk-taking, hierarchical cultures that emphasize structure and authority, and people-oriented cultures that prioritize employee welfare and development. Each type offers distinct advantages and aligns differently with the overarching values and objectives of the organization.
Let’s Shape Your Organizational Culture
Whether you’re a company leader who’s interested in mixing and matching different types of organizational cultures to create a culture that works exceptionally well for your company, or an up-and-coming entrepreneur who’s looking to learn a bit more about what organizational culture is, we’ve got you covered.
With Culture Partners, building and shaping your organizational culture is easy. Feel free to set up a consultation with one of our experienced senior partners, and see for yourself! When it comes to discussing goals, finding new ways to motivate employees, and shaping company culture, we should be your number one resource!