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The success of your company is largely shaped by its organizational culture. It also impacts the people you attract and retain. Given that there are various types of organizational cultures, it’s essential to identify and adopt the one that aligns best with your objectives.
Organizational Culture: An Overview
Organizational culture encompasses the shared values, attitudes, and practices that define an organization’s character. It defines employee culture and fosters overall employee satisfaction.
A study by Glassdoor shows that as many as 77% of candidates assess a company’s culture before applying for a position, with over half ranking organizational culture as more crucial than compensation. A 2021 SHRM study highlights that 94% of people managers believe a positive organizational culture contributes to employee retention.
Developing a successful workplace culture requires substantial time and effort. Your culture should authentically reflect your values and align with your mission. Although the evolution of organizational culture is inevitable, you can take proactive steps to customize it to suit your organization.
Understanding your current type of organizational culture is the first step in this process.
Four Major Types of Organizational Cultures
The University of Michigan’s Robert E. Quinn and Kim S. Cameron identified the following four primary types of organizational culture based on their research into qualities that contribute to business effectiveness.
A clan culture emphasizes a people-centric approach, creating a company atmosphere akin to a close-knit family. Within this collaborative work environment where effective communication takes priority, each individual is highly esteemed.
Typically associated with a horizontal structure, clan culture actively removes barriers between top-level executives and employees, creating mentorship opportunities. Organizations with this kind of employee culture exhibit an action-oriented ethos, demonstrating high flexibility and willingness for change.
Pros: Clan cultures works well for higher levels of employee engagement and better employee experience. The adaptability inherent in this workplace culture offers great potential for market growth.
Cons: Sustaining a family-oriented workplace culture becomes challenging as the company experiences growth. Additionally, with a horizontal leadership structure, day-to-day operations may appear disorganized and lack proper direction.
Companies with this employee culture: Clan cultures are frequently observed in startups and smaller companies. Emerging organizations place a strong emphasis on collaboration and communication, with leadership actively seeking feedback and ideas from employees. Team-building is a key priority for such companies.
To foster a clan culture, you will have to start by engaging with your employees. Given the central role of communication in a successful clan culture, you need to convey to your team that you welcome their feedback. Ask about their ideas for improvement and for ways to take the company forward. Then, incorporate them into actionable strategies.
2. Adhocracy Culture
Adhocracy cultures are firmly grounded in innovation and adaptability. These are companies that operate at the forefront of their industry, constantly looking to pioneer ground-breaking concepts.
To achieve this, they embrace risks. Here, individuality is highly prized, with employees actively encouraged to think creatively and contribute their ideas. As this organizational culture aligns with external focus, new concepts are expected to be linked to market expansion and overall company success.
Pros: An adhocracy workplace culture creates high-profit margins as employees are motivated to challenge conventional norms. With a focus on creativity and novel ideas, professional development opportunities become easily available.
Cons: Inherent in risk-taking, there is always the possibility that a new venture may not succeed, potentially impacting the business negatively. Adhocracy cultures may also breed competition among employees. This could lead to more pressure to generate innovative ideas.
Companies with this employee culture: Iconic brands like Google and Apple exemplify adhocracy culture. Their operations and employee culture thrive on creative energy and the pursuit of uncharted territories. Adhocracy cultures are prevalent in dynamic industries like technology, where regularly developing new products is the norm.
While establishing adhocracy culture may pose challenges, regular brainstorming sessions offer employees with opportunities to contribute ideas. Rewarding successful ideas encourages thinking outside-the-box, leading to a positive employee experience.
3. Market Culture
Market culture mainly focusses on profitability. Every aspect is assessed with an emphasis on the bottom line. Each role is assigned objectives aligned with company goals, often accompanied by multiple hierarchical layers separating employees from leadership roles.
These organizations are outcome-driven, prioritising external success over internal satisfaction. In a market culture, achieving quotas, targets and results is highly emphasised.
Pros: Companies embracing this type of employee culture are not only profitable but also highly successful. The organization’s external focus provides a clear objective that employees can rally behind and actively pursue.
Cons: Associating numbers with every decision, project, and position can make it challenging for employees to engage meaningfully with their work and fulfill their professional purpose. This aggressive and fast-paced workplace culture also poses a risk of burnout.
Companies with this employee culture: Market culture companies aspire to lead their industry. This means they are mostly larger organizations that have already established themselves as industry leaders. These companies are driven to compete and outperform any potential rivals.
Given that every facet of a market culture is linked to the company’s bottom line, you can begin by scrutinizing each position within your organization. Evaluate the return on investment for roles and establish reasonable benchmarks for production. Consider implementing a rewards system for top performers to inspire high-quality work.
4. Hierarchy Culture
Companies embodying hierarchy cultures adhere to a conventional corporate structure. These organizations have a distinct chain of command and multiple management tiers that establish clear demarcation between employees and leadership.
Alongside a structured hierarchy, there is typically a prescribed dress code for employees. The stability and risk-averse nature of hierarchy cultures stem from their preference for established and regimented procedures.
Pros: Prioritizing internal organization, hierarchy cultures offer clear direction, with well-defined processes designed to align with the company’s primary objectives.
Cons: The inherent rigidity of hierarchy cultures limits creativity, making these companies less agile in the dynamic marketplace. The organizational structure prioritizes company over individual contributions, potentially ruining employee experience.
Companies with this employee culture: Hierarchy cultures exist across the corporate spectrum, from traditional organizations to those in the customer service industry. These companies are intensely focused on maintaining established day-to-day operations and are resistant to significant changes.
Initiating a hierarchy culture involves refining and streamlining processes. You will need to address any gaps in the chain of command and evaluate each team to ensure they have well-defined long- and short-term goals.
Other Types of Organizational Culture
Beyond the primary four categories of employee culture, there are other noteworthy types.
1. Learning Culture
Companies fostering a learning culture prioritize learning and development opportunities. Such organizations conduct company-wide workshops and actively encourage employees to acquire skills beyond their immediate job requirements.
2. Purpose Culture
A purpose culture centres around a company’s mission and core values. Companies with this culture often have a mission aimed at positively impacting an industry or community.
3. Accountability Culture
Accountability culture dictates that everyone in the organization, from the CEO to senior leadership, is accountable for their actions and performance. This involves employees taking ownership of their mistakes, openly addressing how they can learn from them, and acknowledging colleagues for exceptional performance.
4. Coaching Culture
In organizations with a coaching culture, senior leadership takes responsibility for mentoring employees and ensuring their career progression. This culture is often driven by various coaching techniques, such as project assessments or 1:1 meetings where expectations and personal goals are discussed.
What’s Your Organizational Culture?
Your organizational culture reflects your team’s values, and potential hires quickly pick up on these cues.
If you believe a different organizational culture would better suit your company, take proactive steps for change. A general approach involves evaluating the existing employee culture, then aligning it with financial goals and company mission. Continuously assess your culture and track progress towards achieving a workplace culture that truly benefits your overall employee experience.