What about your organization attracts new talent and keeps existing team members engaged? Spoiler alert: it’s not just about how much you pay them. Money is, of course, a huge priority for all employees, but top talent is going to look for more than a competitive salary, like wellbeing benefits and flexible working practices. Ultimately, all employees need to feel seen, valued, and supported in order to thrive in their workplace, which takes a great deal of trust in their employers and requires a culture of wellbeing. 

So now the question becomes, how do you gain the trust of your employees and offer them a fulfilling workplace? There are a lot of components at play, but it essentially comes down to the type of organizational culture you create at your company. This culture is the accumulation of the strengths, values and behaviors that not only exist in your workplace but are actually put into practice, which affects how your employees perform and feel about their job.

Overwhelmed? Don’t stress! Creating a solid organizational culture takes work and intentionality, but it’s completely doable, especially when you have a shared set of beliefs to help shape the type of culture you want. While there are an infinite number of characteristics that make your company culture unique, there are four types of cultures that HR professionals and leaders commonly use to classify their organizations. This classification structure is known as the Competing Values Framework and was created by Kim Cameron and Robert Quinn at the University of Michigan. 

By understanding which of these main archetypes your organization falls into (or where you hope to be), you’ll be better equipped to start developing strategic plans to foster a culture that helps your organization thrive.  

What Is Organizational Culture?

Organizational culture is the set of shared beliefs, values, norms and other characteristics that make up a business. Culture is the combination of written values and the actual behaviors of an organization; a well-meaning motto only goes so far if the actions of the company don’t match. Mission statements, goals and values serve as the guiding cultural pillars of a company and are a critical piece of the puzzle, but leadership needs to put those values into action for the culture to be reflected in the behaviors of your team.

 

Why Is Organizational Culture So Important?

Globally, 90% of workers who rate their work culture as “average” have thought about quitting. Comparatively, of workers who rate their work culture as “good,” only 32% have thought about quitting—that’s quite the gap! These statistics show how incredibly important organizational culture is to employee retention and overall job satisfaction of your employees.

Similarly, practicing a strong culture plays a critical role in the success of the organization. In organizations with poor workplace cultures, 81% of employees indicated that their manager allows employees to get away with bad behavior that is detrimental to the success of the company. In comparison, organizations with good culture saw that only 32% of employees indicated managers allowed bad behavior. An influential and uplifting organizational culture helps organizations achieve their objectives, both in terms of employee outcomes and discipline; on the other hand, a negative culture has damaging consequences that poorly impact the members of your team.

 

Types Of Organizational Culture

Here’s the truth: it’s impossible to perfectly categorize your company culture into a single class—your organization is made up of a myriad of individuals, values, and subgroups that all affect one another. Still, to simplify and better understand your workplace, these four main types of organizational cultures are a great start to defining your company’s environment, habits, and behaviors. Typically, organizations will have a unique blend of the four main types of culture, plus a blend of subcultures throughout different departments.

Once you’ve classified your culture, carefully read through the pros and cons to get an idea of what characteristics you and leadership support, and how it reflects the  core values of your company. 

Type 1: Clan Culture

Clan culture is characterized by a high degree of loyalty, a strong sense of responsibility and the expectation that the team’s interests are taken into account. Employees feel accepted, valued and included. Team members prioritize team-building activities, social interactions, wellness and connecting with each other outside the workplace. In this type of culture, leaders praise effective behavior and collaboration. 

Clan cultures are often formed organically in organizations with small teams and tight-knit groups. Startups and small companies frequently display this type of culture and excel at  creating that company harmony from the ground up. Organizational structures are usually horizontal, meaning the company only has a few levels of hierarchy, like the CEO and two other levels of management. This places more focus on cross-functional teams and collaboration instead of a disproportionate focus on authority; plus, with a shorter chain of command, communicating with leadership is quicker and more effective.

Pros:

Clan cultures often have high employee engagement and team members feel like their work-life wellness is prioritized. Team dynamics lend themselves well to brainstorming and innovative solutions since every member feels comfortable sharing their ideas. Clan cultures encourage loyalty and dependability, which results in each individual doing their part to accomplish a common goal. With less emphasis on authority, leaders tend to take on a mentorship role, which can inspire feelings of security and creativity in team members.

Cons:

Since teams are so invested in each other as individuals, organizations with clan culture should be aware of excessive chatter. Teams also may turn tasks that are best for a single individual to take on into collaborative projects that take longer than they need to.

 

Since everyone’s ideas are highly valued, it may also be difficult for clan cultures to make decisions effectively. Along with the useful transparency and support of clan culture, team members may hesitate to make difficult decisions that could hurt individuals on their team. This culture type needs to remember the importance of authority and still offer a chain of command so that, when it comes time to making decisions and getting tasks accomplished efficiently, there is someone directing traffic, ensuring everything is on track, and offering a sense of leadership and surety.

Perhaps the most notable limitation of clan culture is its scalability. As organizations grow, it becomes increasingly difficult to maintain clan cultures. Bigger organizations often have more levels of hierarchy and stricter processes may not allow for fluid collaboration.

Type 2: Adhocracy Culture

Adhocracy culture, also sometimes called “create culture,” encourages employees to take initiative, innovate and make quick decisions on their own. In this culture, team members are encouraged to take ownership of projects and make decisions without needing to run everything through with a manager. Project owners are given the freedom to execute on ideas in the way they deem most suitable for the organization. Teams aren’t limited by strict processes and procedures and risk-takers are often rewarded when their efforts are successful. Adhocracy is often found in start-up companies and ventures that require a lot of flexibility and adaptability from their employees.

Adhocracy cultures often prize the John C. Maxwell quote, “Fail early, fail often, but always fail forward.” By focusing on advancement, creativity, and growth, adhocracy tends to take an entrepreneurial approach to business, which can be exciting and lucrative, but also challenging and risky at times.

Pros:

Companies with an adhocracy culture are often extremely innovative, allowing them to see rapid growth, high-profit margins, and even a level of notoriety among competitors. This type of organization is also able to adapt quickly to market changes and customer needs since they thrive on flexibility and creativity.

From an employee standpoint, all members are invested in their work and are inspired by the challenge to break the mold. They feel safe to explore new ideas and push the boundaries of existing processes. Plus, individuals have a lot of freedom to nurture their own careers, with frequent opportunities for team members to learn new skills and participate in professional development activities.

Cons:

Adhocracy culture can be intimidating for employees with less experience in the field. The fast-paced work and frequently changing priorities can overwhelm and stress out team members who haven’t worked in this type of environment before and instead crave a sense of stability. This type of culture also has the potential to develop competition between employees as the pressure to innovate grows, which can stifle collaboration and paradoxically make your teams less productive or creative.

Type 3: Market Culture

If your company falls into this culture, you’re emphasizing one primary goal: results, results, results. Market culture is also known as “the competitive culture” because it focuses on the bottom line and puts a high value on beating competitors. Market cultures are typically found in large global organizations with vertical hierarchical structures. Employees are rewarded for producing measurable results that track back to the organization’s main priorities.

Pros:

Team members are highly motivated and work very hard to succeed. Employees are typically very good at identifying problems and finding solutions, making them an excellent asset for companies in a competitive environment. Organizations with market cultures often see high profitability due to the consistent efforts of each individual toward a common goal. Being so in sync can be good for camaraderie and ensures your teams are working like a well-oiled machine.

Cons:

Since team members feel pressure to produce results, burnout is a common side effect. Since every outcome needs to be tied to a KPI, team members may find it difficult to find a greater purpose behind their work that motivates them as an individual. The need for constant production can also create less space for professional development activities. There may be more fulfillment from a business perspective, but there may not be a lot of personal fulfillment at an individual level.

Type 4: Hierarchy Culture

Hierarchy culture is often found in large organizations with clear chains of command. There is a high value placed on structure and processes that creates consistency and repeatability. Every decision is made based on existing procedures and teams are expected to follow procedural guidelines exactly. This type of organization may have a more formal dress code than other organizations, looking for uniformity and professionalism in the workplace. Leadership rewards top performers with promotions and team members work with the goal of securing this type of recognition.

Hierarchy cultures also place a strong emphasis on training. New employees understand very clearly what they are expected to do and have a reliable source of authority and support. During onboarding, you likely review your organizational chart and let employees know who they should contact for various questions.

Pros:

The focus on procedures often results in a very stable working environment with a lot of clarity, which can be especially helpful for people new to the workforce. The overarching goals of the organization don’t change frequently, so employees know exactly what is expected of them and what they need to do to meet those expectations. This level of security and predictability allows team members to focus on producing quality work rather than worrying about competing with other individuals or trying to keep up with changing priorities. Employees tend to be very efficient and reliable with their work.

Cons:

Hierarchy cultures can be extremely structured, making it difficult for employees to break out of the mold or take the initiative. The rigid structure of hierarchy culture also makes it difficult for employees to collaborate across teams since there are very distinct boundaries between departments. You’ll see a lot of consistency, but you’ll also see lower levels of innovation, creativity, and even excitement in individuals.

What Does Your Culture Look Like?

What type of culture does your organization fall into? These different types of organizational cultures have distinct features that may blend with one another, but did you notice if one stood out from the rest? If you put your company under a microscope, you’ll likely see some patterns. How does management measure productivity? What do you prioritize, consistency or creativity? Do you emphasize procedures over innovations? How do your team members collaborate, if at all?

One type of culture isn’t strictly better than the other, but wherever yours falls, it’s essential to be aware of your strengths and your blind spots so you can better protect your business and employees from falling into an unhealthy work environment. Remember: company culture is foundational to the success of your business and the happiness of your employees.

Is employee wellness a strength or a weakness under the culture classification you identified? No matter what type of culture you have, your employee benefits are a huge influence on creating a healthy and productive environment. Luckily, you don’t have to figure it out all on your own. Talk to a wellbeing specialist today to discover new ways to take care of and engage with your employees.

 

References:

  • Boogaard, Kat. (May 23, 2022). The 4 Types of Company Culture, Explained. Atlassian. Retrieved October 24, 2022 from https://www.atlassian.com/blog/teamwork/types-of-corporate-culture.
  • Cameron, K. S., & Quinn, R. E. (2011). Diagnosing and changing organizational culture (3rd ed.). Jossey Bass Wiley.
  • Gardner, Rhonda. (July 19, 2021). 12 Types of Organizational Culture and HR’s Role in Shaping It. Academy to Innovate HR. Retrieved October 24, 2022 from https://www.aihr.com/blog/types-of-organizational-culture/.
  • Heinz, Kate. (September 22, 2022). The 4 Types of Organizational Culture. Builtin. Retrieved October 24, 2022 from https://builtin.com/company-culture/types-of-organizational-culture.
  • Mahmutovic, Jasko. (February 8, 2021). 4 Types of Organizational Cultures. SurveyLegend. Retrieved October 24, 2022 from https://www.surveylegend.com/research/types-of-organizational-culture/.
  • Strengthening Workplace Culture: A Tool for Retaining and Empowering Employees Globally. (2022) SHRM. Retrieved November 7, 2022 from https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/SHRM%202022%20Global%20Culture%20Report.pdf.