The Four Most Common Types of Organizational Culture

types-of-organizational-culture

The importance of building a strong company culture can simply not be understated. If you are not able to create a robust culture in the organization that rewards employees and gives them a platform for progress, you will find your company lagging severely behind the competition.

Remember, the culture you foster within the company is going to directly impact the kind of employees you attract – and your ability to hold on to them. All types of organizational culture tend to evolve with the passage of time, and yours will too. However, there are some simple steps that you can take to tweak and alter the organizational culture in your company.

Understanding Organizational Culture

Before we get started, it is important to understand what organizational culture really is, and how it affects employees. For those who don’t know, organizational culture is simply known as the personality of your company. It is the shared attitudes and practices adopted by employees within the organization.

Some often assume that the company culture also relates to the perks and core values of the employees, though that’s absolutely not the case. In essence, the core values that you create in the company are going to influence the culture in your company.

The benefits that you offer and the perks you provide should be a result of the company culture that you have fostered, not the other way around. Now, without further ado, let’s talk about the four most common types of organizational culture in the workplace.

  1. Adhocracy Culture

Adhocracy culture is adopted by many organizations throughout the globe. At its core, adhocracy is all about innovation. These are companies that are looking to adopt the latest trends and technological enhancements to boost performance and productivity.

Companies that follow this form of culture are looking to adopt the newest trends and are often asking the right questions. They value creativity and innovation so much, so there is also a higher threshold for risk-taking. The managers and bosses often promote a risk-taking environment.

New ideas are often tied to the growth of the company and employees are even gauged based on the number of ideas that they bring to the table.

Salient Features

As you can imagine, companies that follow the adhocracy culture often report higher profits. Employees are usually motivated because they want to set themselves, and their company, apart from the rest. These companies value creativity and ideas, so the development opportunities available to employees can be easily justified.

However, there is always an element of risk involved. The potential for loss is also higher because of the increased risk-taking. More importantly, the constant innovation may lead to unhealthy competition between the employees, where one might try to undercut the other. It’s important that organizations take steps to balance this.

What Companies Are Best Suited for Adhocracy?

While adhocracy culture can be adopted by almost any company, tech companies usually benefit the most from this. These companies require lots of creativity and like to do things that haven’t been done in the past. It’s actually quite common in the tech industry, where innovation is essential for the development of new products and services.

  1. Clan Culture

Companies that foster the creation of a clan culture try to create a large family of all employees. The work environment is highly collaborative with little to no barriers between different roles. Companies that follow a clan culture usually have a horizontal structure that offers greater opportunities for employees who need mentoring.

More importantly, these companies are generally quite open to change, which is primarily because of their increasingly agile and flexible nature.

Clan culture is the complete opposite of how work was once done in the corporate environment. By removing barriers and making it easy for employees to easily approach whoever they need to within the company to get work done. It allows for quick and easy decision-making as well.

Salient Features

One of the major benefits that a clan culture offers is that it increases employee engagement by a considerable margin. Employees find it much easier to perform their jobs when they are not bound by barriers and titles. The environment in the company is so flexible and easily adaptable, which often makes these businesses primed for excellent growth.

However, maintaining the culture over the long-term might be difficult, especially as your company continues to grow. More importantly, if your business follows a horizontal leadership structure, it can be difficult to set an appropriate direction and, in some cases, certain processes might seem muddled.

What Companies Are Best Suited for Clan Culture?

The clan culture is most commonly seen in smaller businesses, especially startups. Younger businesses that are just looking to grow will ideally prefer following this structure as it allows for ideas to be shared quickly and employees can get feedback on their proposals.

Similarly, many larger businesses that work remotely with their employees also follow clan culture, allowing employees to “check in” and contact each other with ease. This helps remove barriers and provides a streamlined platform for employees to engage with each other.

  1. Hierarchy Culture

Arguably the most common form of organizational culture around (though that’s changing) is the hierarchy culture. This form of organizational culture focuses primarily on control and stability, with defined roles set for each job.

More importantly, companies have separate departments and a clear hierarchy is set up, with a chain of command that is divided into separate tiers. Employees are often required to adhere to a dress code and companies generally require employees to do things in a specific manner.

This reduces risk and also ensures that all employees are supposed to do things in an expected manner.

Salient Features

Arguably the most salient feature in companies that follow a hierarchy culture is that the roles are very clearly defined. To get a promotion, you will have milestones and targets ahead of you that you must meet. These are extremely well-defined procedures that cater to the main objectives that the company has set for itself.

However, there are downsides to this form of culture, starting with the lack of creativity. Everything is already defined, so employees are not able to showcase their creativity. This also means that newer technologies are not easily adopted by such businesses, and it’s also important to note that employee engagement remains at an all-time low in such businesses.

What Companies Are Best Suited for Hierarchy Culture?

Hierarchy cultures are not just for multinational companies or larger organizations. In fact, many smaller businesses, such as restaurants, often adopt this form of organizational culture. This type of culture is ideal for companies that are well-set in their ways and do not have any plans to make changes to their operations any time soon.

  1. Market Culture

Finally, you have market culture. Market culture focuses primarily on one thing: maximizing profits. Every decision taken within the company is evaluated with a clear focus on profitability. The bottom line reigns supreme in such organizations, with companies looking primarily at how they can make more money.

Companies that follow such a culture are all about reaching their targets and making sure that they are able to attain their minimum quotas. Failure to do that could prevent employees from succeeding in the workplace.

The focus lies heavily on the amount of money that people are bringing in. Companies like this tailor all of their objectives to maximizing revenue as quickly as they can. Every decision is taken with specific numbers in mind.

Salient Features

Companies that follow a market culture are usually quite profitable and also succeed very quickly. The entire focus lies externally on generating money, instead of adapting measures on how employees should behave within the organization. This gives all employees a common focus to rally behind making more money.

However, because every decision within the company has a number attached to it, it’s sometimes difficult for employees to really attach themselves to their work. This is a major drawback that has a dire impact on employee motivation.

What Companies Are Best Suited for Market Culture?

Companies that follow the market culture like to be the best in their respective industries. As a result of that, they are often much larger than competitors in similar industries.

They want to compete and do things that maximize profits, and that is one of the reasons why such companies tend to grow so quickly. Therefore, startups often do not benefit from such a culture. Market culture is usually adopted by larger organizations that are looking to maximize profitability in the long run and generate more revenues across multiple industries.