Types of Organizational Cultures

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Allie Blackham

Marketing Content Manager

Updated February 20, 2024

In today’s world, the culture of an organization is more important than ever before. Jobseekers often look at the culture and expectations before even applying for a position, let alone accepting it. If a company’s values and culture don’t align with an individual’s personal desires for growth and support, it can become much more difficult to fill open positions and retain existing employees. Explore the importance of organizational culture and types of cultures to consider when creating your own.

What is Organizational Culture?

A company’s culture encompasses the consistent and observable behaviors and patterns among its leaders and employees. Those elements may be influenced by the habits of the leadership team. On the other hand, culture may come to exist out of the shared experiences of the members of a workforce. If a business fails to establish and cultivate a meaningful and positive culture, the result could be an atmosphere of confusion and discontent.

Why Organizational Culture Matters

If you ask 10 different people why company culture matters, you might get 10 answers. But what’s important to realize is that every answer is accurate, as each organization has its own unique needs to fill in establishing a shared culture and set of values. Some recognize company culture as the glue that binds employees together and encourages them to work collaboratively toward a common goal. Others view the culture as the sum of the incentives offered to employees, creating a more engaged workforce.

But what matters is how the culture influences your company’s ability to reach its goals while maintaining a positive atmosphere for employees. The values, assumptions, methods of interaction, and beliefs of each team member will contribute to the overall organizational culture. It’s ultimately on the leaders to create a purpose and shape the company structure, as well as ensure that team members adhere to it to maintain the desired culture.

A strong culture is also tied to employee retention and overall satisfaction. Investing in the needs and desires of your workforce can help your business become a place where people want to remain.

7 Types of Organizational Cultures

Understanding the seven most common types of organizational cultures can help you in your efforts to establish or refine your company’s overall culture.

Adhocracy culture

Adhocracy culture is all about innovation and taking risks while encouraging employees to be highly adaptable to change. Companies that embrace this type of culture tend to sit on the cutting-edge of their respective industries. The goal of a business that adheres to a risk-taking culture is to develop the next big thing and release it before any of its competitors. Individual employees are encouraged to bring their ideas to the table and apply creative thinking to their tasks.

When employees feel motivated to think outside the box and come up with the next great idea, they tend to stay motivated. Creativity is also highly encouraged in adhocracy culture, which can foster unique thinking. Companies that are known for this type of culture include Apple and Google.

Clan culture

Clan culture, also referred to as mentor-focused or collaborative culture, focuses on creating a family-like structure within a workplace. Every member of the team is highly valued in this type of culture, which often includes a horizontal organizational structure that allows for regular communication at all levels. Mentorship is generally a key aspect of clan culture. This concept encourages higher-level employees to support newcomers to the organization and those who are newer to their positions.

One of the key benefits to a collaborative culture is improved engagement. When employees feel valued and heard, they tend to be happier and more loyal. These attributes translate to more engagement at work. Additionally, the support from company leadership can lead to individual growth and development, furthering employee satisfaction. You’ll often see startups and smaller businesses adhering to this type of culture, particularly at the beginning stages.

Hierarchy culture

Hierarchy culture is a more traditional approach to building company culture, focusing on stability and structure. Businesses that opt for this type of organizational culture generally have a clear org chart with various tiers of managers that separate the leadership team from the other members of the workforce. This type of culture might also include:

  • A strict dress code for employees
  • Defined processes and paths for career progression
  • Other more traditional rules and regulations

Some of the advantages of this type of company culture include security and stability in roles and opportunities for progression. There is less flexibility for creativity and innovation. As a result, some members of the workforce might feel stifled by a hierarchy culture.

Market culture

Companies that focus most on profitability may opt for market culture, which involves careful evaluation of all processes and situations with the bottom line as the key priority. All business goals align with the higher objective of growth and profitability. Rather than being concerned with internal satisfaction, leaders of businesses with market-driven cultures look for external success. All positions are typically held to high standards, including:

  • Meeting quotas
  • Achieving results
  • Getting to specific targets

Employees who are motivated by success may thrive in this type of culture. Those who like knowing what they’re working toward can also benefit from a culture built on results and returns on investments.

Innovation culture

Innovation culture is often in place when company leaders strive to nurture “out of the box” ideas and applications. Those who build this typ of culture generally believe that innovation can come from anywhere within the organization, not just the top leadership members. Businesses competing in markets that are defined by significant and quick changes often do best with innovation culture, as maintaining the status quo simply doesn’t align with the ability to compete effectively.

Some of the key differentiators of innovation culture include:

  • Measurement of metrics like value creation and competitive differentiation
  • Encouragement of creative thinking and discovery
  • Sharing of ideas across departments and levels

Google is an example of innovation culture, where employees are encouraged to spend 20 percent of their working hours on what they want to work on, expecting that such discretionary tasks will deliver innovative ideas.

Growth culture

In a world where company leaders are focused on performance and productivity, growth culture is an outlier. This type of company culture focuses on the value of development and growth among employees of all levels, offering opportunities to improve skills and gain new knowledge. It emphasizes the holistic development of team members, valuing long-term growth and overall success over performance metrics.

A survey conducted by Gallup showed that organizations prioritizing improved engagement and valuing the people have 81 percent lower absenteeism rates. Growth culture aligns with these concepts, as it values each employee and what they contribute, as well as their potential. This organizational culture type also:

  • Encourages continuous learning
  • Builds trust and safety
  • Values transparency

Startup culture

When a company starts from zero, it is known as a startup. These types of businesses are found across all industries, although they’re particularly prevalent in tech. Startup culture is an atmosphere that values open communication and problem-solving, as well as innovative thinking. Since new businesses are often led by people who don’t bring as much experience, these leaders may rely on others to achieve success. Startup culture is also categorized by:

  • A collaborative work enviroment
  • Openness to taking risks
  • The ability to adapt to change, often in a fast-paced atmosphere

Which Organizational Culture is Right for Your Business?

Of these seven main organizational culture types, you may wonder which is the right fit for your company. Since the business is made up of many parts, working together to achieve shared goals, it’s vital to consider everyone in this process. Here are some questions to consider:

  • How does your company assign responsibilities?
  • What does the org structure look like?
  • How do company leaders want to communicate with other members of the team?
  • Who is responsible for making key decisions?
  • What metrics do you plan to track to determine success?

As you answer these questions, you can determine which culture best aligns with the goals of the business and how it’s run.

How to Create Your Organizational Culture

With a better idea of the different organization culture types, the next step is establishing the atmosphere you want in the workplace, whether you have in-person team members, remote employees, or a combination of both. It’s also essential to consider what changes need to be made to create the desired culture when compared to the current way things are done.

In your company mission and vision statements, make sure to emphasize the importance of the culture and what it entails. The mission statement should outline the core purpose and values of the business, while the vision statement should describe what the organization aspires to achieve long term. When your company brings on new hires, look for people who align with the culture and support the overall goals.

It’s also worthwhile to ask for input from existing team members. People who are already part of the workforce have a better sense of the culture and changes that could be implemented for improvement.

As you consider how you want to establish or change your company culture, it’s helpful to understand the main types of organizational culture and how they can impact business growth and employee satisfaction. Ultimately, the right culture for your workplace will depend on factors like the number of employees, business goals and objectives, and the makeup of the workforce. But what’s most important is to establish a culture that fosters a supportive and beneficial atmosphere.

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