Your Organizational Culture Says A Lot About Your Business Value

As human capital, your organizational culture says a lot about the value of your business. Employees who are happy, motivated, and appreciated are going to bring a lot more to the table than burnt-out, overworked workers who are just there for a paycheck. 

While many business owners don’t necessarily put explicit thought into what kind of culture they’re trying to create, it makes a major impact on employee satisfaction. In fact, 46% of people say that company culture is very important when choosing where to apply and 91% of managers say a candidate’s ability to fit in with the culture is more important than practical skills or experience. 

The Four Types of Business Culture

The Organizational Culture Assessment Instrument is based on research one by University of Michigan business professors Robert E. Quinn and Kim S. Cameron. The survey evaluates businesses in 4 key areas: internal focus and integration vs. external focus and differentiation, and stability and control vs. flexibility and discretion

While most businesses are some mix of two or more types of organizational culture, most fall more profoundly in one of the four quadrants. Let’s look more in-depth at these main archetypes:

Clan Culture

Qualities: Flexible, creative, nurturing

Description: A workplace that embodies the clan culture is friendly, open, and collaborative. Every individual person is valued for their distinct role in the business and the talents they bring to the table. These talents are nurtured and supported by others, including those in leadership positions. Often, managers and supervisors take on the role of mentoring, teaming up with someone less experienced and helping them grow. 

Pros: The benefits of a clan culture can be seen in the high levels of engagement, creative thinking, and general happy dispositions. Employees feel validated and supported, which helps foster out-of-the-box thinking. 

Cons: While this works well with small businesses, or those in industries that can support a flexible schedule, it’s not a great fit for companies that depend on organization to get things done. As companies grow, it becomes more difficult to cultivate close relationships as the workload increases. 

Adhocracy

Qualities: Innovative, focused, risk-taking

Description: If clan culture is like a loving parent, adhocracy is like a competitive sibling. While creativity and flexibility can still be found in this organizational culture, it’s all about the bottom line. The innovation has to be well-organized and purposeful, but a high level of risk-taking is expected. Those who thrive in an adhocracy are independent and energetic, perfect for the fast-paced, organized chaos that defines this culture. 

Pros: Companies that exist as an adhocracy are normally the ones you see on the news. They are always coming up with the “next big thing” before other companies in their industry have figured out the last big thing. Google is a great example. While they do take a more laid-back approach to technology and innovation, the expectation is that everyone is working in their own way towards a common goal. 

Cons: Remember Google Glass? Probably not. In an adhocracy organizational culture, it’s not unusual to jump the gun before all the bugs are worked out. Competitiveness is the name of the game, which can lead to unpolished products being pushed out before they’re ready.

Market

Qualities: Controlled, organized, methodical

Description: In a market culture, the driver is results. Profits, marketability, and margins rule the roost and serve as the main motivators. Those who prove themselves able to increase the bottom line are rewarded, while those that can’t are often left behind. Independence is highly valued, and a supervisor’s role is often limited to ensuring that things are done well and in a timely manner. 

Pros: Market cultures get things done. They are highly motivated by results and are constantly striving to improve. This is in part because of the analytical, data-driven personalities of those that work in this environment. 

Cons: While never being satisfied leads to growth, it can also quickly turn into burnout. Those who work in market cultures deal with high levels of stress and pressure. Additionally, numbers-based work doesn’t allow a lot of room for creativity, which can lead to employees disengaging with their work as the burden of constant improvement bears down on them. 

Hierarchy

Qualities: Rigid, traditional, controlled

Description: In a business with a hierarchy organizational structure, everything has a place and process. Those in leadership roles are there to ensure that those processes are being fulfilled, while employees are expected to stick to the guidelines for the sake of maximum efficiency. While this might sound miserable at face value, it serves a purpose in industries that focus on safety. Medicine, government, and even food service are expected to follow the rules because the rules ensure that people get what they need without getting hurt. The goal is to minimize risk as much as possible. 

Pros: In a hierarchy culture, there are no questions or ambiguity about what the purpose of each person’s role is. Clear expectations leave little room for mistakes, which can be an ideal environment for those who appreciate boundaries and rules. 

Cons: Creativity is discouraged, as any deviance from guidelines could cause major issues. If a surgeon decided to try out a new method of handwashing or a chef ignored food safety guidelines, people could get hurt. In this environment, there is little acknowledgement of individual merit, which can be demotivating for many. 

As you prepare to transition out of your business, be prepared to explain the organizational culture that your company’s foundation rests upon. 

In preparing to sell your business, it pays to analyze the culture you’ve cultivated. Buyers who thrive in fast-paced, creative environments are going to see more business value in an adhocracy than they are in a hierarchy, which means more money in your pocket, along with a reassurance that the employees remaining with the business will be able to continue working in the environment they’re comfortable in. 

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