The Four Types of Organizational Culture (With Examples)
When it comes to business success, implementing the right organizational culture is vital. There are different types of organizational culture that you can choose, and each one will help shape your company as it grows over time. The financial success and customer and employee happiness are heavily influenced by an organization’s culture, regardless of the one you choose to create.
Whether you’re a new business looking to build a positive workplace culture or your current culture isn’t leading your team in the right direction, let’s explore the four types of organizational culture and the pros and cons of each.
What is an Organizational Culture?
Organizational culture, or company culture, is the consistent organizational behaviors of a company’s employees and leadership team. The whole concept behind organizational cultures is that they can help lead the company in the direction they want to go. This includes attracting the right employees, having higher employee retention, and marketing to the right stakeholders and customers.
An organization’s culture is vital in making all business decisions, as well as in how employees express their thoughts and feelings. When there’s a positive culture, people working within the company will feel more confident in expressing their opinions to others, confiding in leadership, and are more likely to stick around for the long haul.
Depending on the goals of the entire organization, the organization culture that you’ll use will vary. There are several types of organizational culture, all can lead to financial success in different ways. You’ll need to think about you company’s mission before you choose the organization culture type because it will better help you with an implementing strategy.
Throughout a company’s lifetime, altering or changing its organizational culture is vital to its success. Taking employee feedback into consideration is an excellent step to helping assess which organizational culture will suit your business best and how to proceed in the right direction.
Adhocracy Culture
Adhocracy culture, in a nutshell, is known as the dynamic, entrepreneurial culture. Companies that implement this type of organizational culture are considered to be more flexible and not inhibited by business politics. The focus of an adhocracy culture is consistent improvement and innovation. Adhocracy culture is often seen in smaller businesses, but it can be seen in large companies, specifically within the tech industry. Many tech start-ups use this or clan culture to help their business succeed. Authentic adhocracy culture allows other employees, not just the higher-ups, to share new ideas without feeling uncomfortable. The sharing of new ideas is critical to a company’s values when you have this type of organizational culture.
Examples of Businesses With an Adhocracy Culture
Any company can implement an adhocracy culture, but there are certain types of companies that will suit this culture better suit. Apple, Facebook, and Google are perfect examples of companies with this type of organizational culture. Adhocracy culture is vital to the entire brand since it is always trying to improve its products to stay competitive within the market.
Pros of Adhocracy Culture
- Enables a company to easily adapt to change
- This culture fosters innovation and growth, which is ideal for start-up companies
- It emphasizes creativity among employees, which can lead to better employee engagement and problem-solving
- It’s one of the few workplace cultures that encourages risk taking so innovation can take place
Cons of Adhocracy Culture
- This culture might not be the most beneficial as the company grows into a larger business
- The lack of clear managerial processes can make it hard to maintain accountability
- Some employees might be resistant to change
Tips for Creating This Type of Organizational Culture
- Host strategy sessions
- Consider employee feedback
- Host brainstorming meetings
- Encourage innovation and unconventional problem-solving
Clan Culture
The word “clan” implies a group of people who are close-knit. When referring to this in the context of business cultures, it essentially means a company culture where everyone feels comfortable with one another and isn’t hierarchical. No one is treated better or worse depending on what their title or job duties are. This organizational culture is the most common in small businesses because it can be challenging to implement across a large company. But, large companies can use this culture within smaller departments. Core values that companies with this workplace culture tend to value are mentor-mentee relationships and employee contributions at all levels.
Examples of Businesses With a Clan Culture
Clan culture is everywhere, and more and more businesses are choosing to use this workplace culture. It tends to have the happiest employees and is great at employee retention. A major company that exudes clan culture is The Walt Disney Company. While this is a massive company, they have a friendly company where employees don’t have specific titles and refer to each other as “cast members.” Other examples include Chobani and Tom’s of Maine.
Pros of Clan Culture
- It encourages teamwork and collaboration or a learning culture
- Mentorship and apprenticeship offer better growth opportunities
- There’s honest employee feedback
Cons of Clan Culture
- This culture is difficult for large-scale organizations
- With a more informal structure, it can make accountability harder for some
Tips for Creating This Type of Organizational Culture
- Encourage honest communication between employees
- Find out what employees value and any ideas they have
- Implement changes that reflect what employees need
- Guide employees to work together as a team
Market Culture
Market culture is an organizational culture that places an emphasis on profit margins and beating the competition. Marketing cultures and clan cultures are competing values framework. Companies with this type of organizational culture are results-driven and focus on customer satisfaction. At it’s core, market culture focuses on the longevity of the business. Many large corporations implement cultural values that align with market culture to help grow the business, improve products or services, and increase customer satisfaction.
Examples of Businesses With a Market Culture
A lot of sales companies will have market cultures. Based on the description of market culture, many people assume all businesses use this culture, but that’s not entirely true. You’ll often see a lot of corporate companies with this workplace culture, particularly those heavily based in sales of some sort. You’ll see many employees striving to hit their goals thanks to the competitive atmosphere and the top performers being rewarded in some shape or form. Some of the most popular businesses that have a market culture are Amazon, McDonald’s, Microsoft, and Tesla.
Pros of Market Culture
- This culture allows for substantial business and market growth
- It helps create a sense of competitiveness which can increase results and beat competitors
- Many leaders within this organizational culture are inspiring to employees
Cons of Market Culture
- Many employees at a company with market cultures often burnout quickly due to high demands and expectations
- There’s usually left focus on a positive employee experience and their satisfaction
Tips for Creating This Type of Organizational Culture
- Evaluate your company’s market position
- Evaluate every position within your company
- Determine the return on investment (ROI) of every single role
- State reasonable benchmarks for production that will increase profit margins
- Think about rewarding employees who reach or exceed their personal goals to encourage similar behavior and motivate employees
Hierarchy Culture
Similar to market culture, hierarchy culture is incredibly common in the corporate culture throughout the United States. The main thing to know about hierarchy culture is that it requires well established procedures and clearly defined levels of authority throughout the company. Every employee there understands the chain of command and who to report to based on what their job is at the company. Hierarchy culture clearly has defined duties and operations so day to day operations run as smoothly as possible. This detailed hierarchy allows companies to better manage risk, operate efficiently, and remain stable.
Examples of Businesses With a Hierarchy Culture
There are certain businesses that benefit from a hierarchy culture over others. Many corporate companies like gas companies, healthcare institutions, banks, and health insurance companies use this type of organizational culture. IBM and General Motors (GM) are great examples of a business that uses a hierarchy culture. Even though this type of culture is commonly used in large, corporate businesses, small to medium-sized businesses might benefit from this culture as well.
Pros of Hierarchy Culture
- There are well-defined chains of command and policies
- Businesses with this culture run efficiently and tend to be more stable than those without a strict hierarchy
- Everyone within the company knows what the company values are, how their operations work and what their goals and duties are
Cons of Hierarchy Culture
- This organizational culture tends to lack the flexibility needed to remain relevant within an agile market
- It cannot respond to sudden changes as fast as other companies
Tips for Creating This Type of Organizational Culture
- Tighten up all business processes
- Ensure there are no gaps in the chain of command
- Establish all long and short-term goals with everyone in the company for company success
Final Thoughts
An organization’s culture is one of the most important things when it comes to the success of a business. Every business has different goals and a company’s culture can drastically affect how a business reaches those goals. Your company’s culture can change the course of your business in the best way, or the worst. It’s important to remember that as your company grows or changes, you might need to reevaluate what type or organization culture you have.
Staying flexible and open to making changes within your work environment is just as important to succeeding in whatever industry you work in as choosing the right organizational culture. Implementing a strong organizational culture will allow your company to better reach goals and succeed in the way that you want your business to succeed. To learn more about how to establish and reach your business goals, contact Lori at Catalyst Group ECR today.
