Businesses use many types of organizational culture. The key to success is determining the one that suits your business and employees.
Organizational culture defines your company’s shared beliefs and core values. There is no one-size-fits-all when it comes to the types of corporate culture.
Traditional corporate structure was based upon creating clearly defined roles and relationships between management and workers. It aims for a hierarchical structure with a clear chain of command. Employees generally can’t express disagreement, nor is there room for deviation from leadership’s ideas.
However, contemporary values have emerged in companies where new corporate cultures, such as adhocracy culture, create an agile model. Some of these new organizational structures focus on the ability to rapidly adapt in a fast-paced environment. They emphasize the instinctual initiatives of individuals, rather than directing them to follow the status quo.
Let’s consider the different organizational culture types and how your company might use them as part of its corporate culture framework. You might just identify and define one as your own.
What are the 4 primary types of organizational cultures?
Among the several company culture types, there are 4 primary models. Let’s take a closer look at these culture examples and examine each model’s pros and cons.
This culture comes with risk taking, but also high rewards, thanks to the innovative ideas that emerge.
Adhocracy cultures aim to help team members actively participate and always look for ways to improve, innovate, and develop. They often look to institute a “flat organization.”
Companies implementing an adhocracy culture are agile and typically high-energy. According to the Competing Values Framework, this would be considered a “dynamic, entrepreneurial Create Culture.” This culture comes with risk taking, but also high rewards, thanks to the innovative ideas that emerge. Drawbacks include it being difficult for some to adapt while others reach burnout. Both of these can lead to high employee turnover.
A prominent characteristic of clan cultures is that members function like a family. This organization culture encourages close-knit relationships and ongoing support of one another. Communication is a key component and the organizational hierarchy is minimal if present at all. This “people-oriented, friendly Collaborate Culture” tends to treat business leaders and team members as “flat.”
Due to the high priority placed on employees, clan culture facilitates strong collaboration and open communication. Employees tend to be happy and view employers as fostering a caring organization culture. However, like any other company’s culture, there are some cons. For instance, team members may become too relaxed, making a company’s risk-taking tendencies go stagnant — limiting market growth.
Hierarchy cultures have a “don’t rock the boat” philosophy. The values framework calls this a “process-oriented, structured Control Culture.” Teams heavily rely on several layers of bosses, including upper managers and supervisors. Of the organizational culture types, this one is the most rigid.
In this type of authority organizational culture, hierarchies are highly organized and efficient. However, this also is a safety organizational culture, which means innovation may stagnate. Team members tend to follow the status quo, making them hesitant to challenge anyone. This leads to group-think, which can be detrimental.
In this type of authority organizational culture, hierarchies are highly organized and efficient. However, this also is a safety organizational culture, which means innovation may stagnate.
As the name implies, a market culture is hyper-focused on market growth. Environments tend to be demanding. It’s also a “competitive Compete Culture” that is results-oriented when implementing strategy.
This “make or break ” mentality in company values can result, for example, in products quickly reaching market to outpace the competition. The high profits that result can cycle down to financial incentives for employees. People may also thrive with success and seek to create more. The downsides include employees feeling underappreciated or burned out. That leads them to seek greener pastures with employers that offer a different organizational culture.
Additional organizational culture types
The above aren’t the only types of organizational cultures, newer ones have grown to become more commonplace. Let’s take a look at the following types of organizational culture, along with pros and cons.
Purpose-driven cultures prioritize giving back to the community; profits are secondary. They usually carefully select charities or other initiatives that don’t have a competing values framework, regularly supporting those efforts.
The benefit of this culture is it’s a great team building environment. People working for purpose-driven companies usually share similar values and want to contribute. This leads to happier employees and low turnover. Drawbacks include making less money because organizations don’t focus on a high risk business strategy.
Members associated with an innovative employer are challenged to consistently come up with the latest and greatest ideas. They leverage technology to create new solutions, pushing aside conventional ideas and approaches for new ways to do things.
Pros include allowing teams to explore ideas, satisfying their need to innovate and experiment. However, the constant push to be innovative can lead to employee burnout and higher turnover.
Creative cultures work a lot as they sound. They focus on creating new ideas and bringing them to life. In this highly team-oriented atmosphere, people consistently bring new things to the market. Team members typically enjoy their jobs and colleagues, but the high demand for new ideas may leave people feeling pressured.
This culture puts customer experiences first, always ready to kick things up a notch to satisfy them. Employees are often given a ton of autonomy to help generate ideas for customer loyalty. People often are proud of their jobs and may stay for the long-term. However, they may also feel neglected with the high emphasis being placed mostly on customers.
Tips to build or redefine organizational culture
If your current organizational team culture isn’t working, this doesn’t mean you can’t change it. Upper management can use strategies to help redefine culture and create one that works. This usually involves encouragement of frequent communication, hiring the right people, simplifying workflows, soliciting feedback, improving benefit packages, recognizing employees, and offering continuing education and/or other reward programs.
Benefits of a well-defined organizational culture
Cultivating the right culture structure can improve trust in company leaders, create a better employee experience, and strengthen a business. When done right, it can contribute to:
- Higher levels of productivity
- Stronger employee engagement
- Better employee experiences
- Boost profitability