Types of company culture: Where does your organization fit?
Who does your company attract to work there, and who do you hold onto? Especially in times of low unemployment, it pays to explore the answers to these questions. While factors such as salary and work-life balance obviously influence the decisions of prospective and current employees, company culture often tips the scale.
“Company culture” is an umbrella term that includes an organization’s core values, norms, expectations, shared beliefs, and practices. It is the experience people have at work – the answer to “how we do things around here.” It affects what gets prioritized, how decisions get made, how people relate to one another, and much more.
With the advent of the Internet, modern job seekers can learn many things about an organization’s current culture before even stepping foot in the door. (For better, or worse, who hasn’t heard about the work culture at powerhouses such as Amazon, Apple, Zappos, Google, and Tesla?) Finding a company culture in line with individual preferences improves job satisfaction and employee engagement. This suitability, in turn, positively affects employee retention. Thus, both employers and employees benefit from a culture fit.
The four types of organizational culture
Corporate culture is often thought of as the company’s personality or what makes it unique. Figuring out these things is useful to employer branding when striving to attract and keep workers. It may come as somewhat of a surprise, then, that experts frequently break down the types of workplace culture into just four categories.
University of Michigan professors Robert E. Quinn and Kim Cameron were among the first organizational scientists to do research on company culture. Their analysis of data from a large number of organizations identified four distinct categories: clan culture, adhocracy culture, hierarchy culture, and market culture. Cameron has stated that almost 90 percent of organizations worldwide can be categorized as having one or more of these culture types dominate in their organization.
Before we dive into the specifics of each type, it pays to note that designations are meant to be descriptive, not judgmental. What works well for one company may not for another, so the four different workplace cultures presented should not be labeled as inherently good or bad.
Clan Culture (also known as Collaborate Culture)
Employees looking for a supportive, family-like atmosphere find this type of work environment attractive. Collaborative organizations put a premium on teamwork, togetherness, relationships, and morale. People at all levels communicate openly and informally, and management encourages and acts on employee feedback. Company leaders serve as mentors and coaches more than as monitors or enforcers.
Clan cultures sometimes experience decision-making trouble, especially when a quick response is necessary. Hearing everyone out or reaching consensus takes time. Fear of hurting anyone’s feelings further complicates matters. Some clan cultures lack the feeling of anyone being in charge, which may make it difficult for the company to progress in a desired direction. Also, the atmosphere can become too relaxed, leading to productivity issues.
Many family businesses and small companies maintain a clan culture. Sustainability of the close-knit structure can be harder (though certainly not impossible) as the organization expands. Individual departments within larger businesses may retain a clan-like culture.
“As the founder of the niche platform Madhuram’s Eggless Cooking, I am proud to say that our culture is highly collaborative – a classic example of a clan culture,” says Madhuram Prabhakar. “The nature of our business greatly benefits from this clan culture. Everyone’s ideas are equally valued, creating some of our most creative and unique recipes. A collaborative atmosphere fosters harmony and reciprocity among team members, creating seamless operations in what could otherwise be a chaotic kitchen environment. Since we cater to a unique niche in the baking world, our clan culture allows us to deliver consistent, high-quality content and recipes, retaining and growing our dedicated audience. From stirring the dough to building a tight-knit community, every aspect of our work is a collective effort.”
Adhocracy Culture (also known as Create Culture)
Employees who thrive on taking risks and thinking outside of the box enjoy the stimulation of an adhocracy culture. This work environment supports innovation and runs on creative energy. While not every idea pans out, management promotes a “move fast and break things” mentality. Team members feel psychologically safe to try and fail. And for job seekers looking for a place where they can quickly make an impact rather than bide their time, this type of corporate culture fits the bill.
Such a high-octane environment invigorates some people but proves too chaotic for others. The pressure to always be fresh can be exhausting. And while highs from success are truly rewarding, the lows from failures can be devastating.
An adhocracy culture is often found at startups, tech companies, and other organizations that need to stay cutting-edge. Within larger organizations, certain departments may gravitate in this direction. For instance, R&D might be quite agile, but accounting may lean in another direction.
“I believe the adhocracy (create) culture best describes our approach,” says Chris Muller, vice president of Money Under 30. “This culture emphasizes innovation and creativity, which aligns well with the nature of our finance blog. It encourages us to take calculated risks, experiment with new ideas, and remain adaptable in the ever-evolving financial landscape. This culture benefits our organization by fostering a spirit of continuous improvement, allowing us to explore unique angles in our content, test different strategies, and adapt swiftly to changing trends. It ultimately helps us produce engaging and relevant content that resonates with our readers and keeps our blog at the forefront of the industry.”
Hierarchy Culture (also known as Control Culture)
Employees who relish clearly understanding their duties and what their employer expects of them find the structure of a hierarchy culture appealing. Such work environments operate like a well-oiled machine with defined roles and a clear chain of command. Operations are efficient, communication to the point, and advancement mapped out.
Hierarchy cultures aim to prevent mistakes and manage failures. Some people work well in this stable, risk-averse environment. Others feel stifled by lack of flexibility. Little room may exist for innovation, creativity, or change.
Government organizations often employ a hierarchy culture to deal well with the numerous regulations imposed on them. Banks and insurance companies likewise find well-defined ranks and responsibilities helpful to carrying out their day to day operations.
“Sir-Apfelot’s company culture mainly aligns with the hierarchy model,” says CEO Jens Kleinholz. “This culture choice fits perfectly with the industry’s need for precision and compliance. In finance, rules and regulations are critical, and a structured hierarchy ensures that everyone follows these strict guidelines. This hierarchy aids in quick decision-making, resource allocation, and risk management. Moreover, in our industry, clarity and accountability are essential. The hierarchy culture ensures that roles and responsibilities are well-defined, providing stability and reliability crucial in handling clients’ financial matters.”
Market Culture (also known as Compete Culture)
Hard workers who like to be recognized and rewarded as top performers may gravitate towards companies with a market culture. The bottom line rules in this results-oriented work environment. The company and its employees value success metrics and meeting quotas. It is in one’s own interest to further the firm’s interests.
The thrill of besting industry competitors can be exhilarating. It also can be stressful and lead to burnout. Likewise, competition within the company itself can be fierce when peers attempt to outperform each other. Managers may make tough demands as they push team members to continuously up their game. Employee experience, well-being, and job satisfaction can take a back seat.
A market culture often exists at companies known for frequently introducing new products and services. Their rush to beat others to market entails a willingness to put in long hours and outperform competitors. Some are already highly successful enterprises eager to retain their top position and profitability.
“As the founder and CEO of DealA, I can attest to the power of market culture in shaping our business environment. It can foster a strong sense of purpose and direction among the team,” says Oleg Segal. “At DealA, we thrive in a competitive atmosphere, always motivated to be the front-runner in the coupon platform industry. This ‘winning’ mindset allows us to continuously drive innovation and adapt in real-time to the ever-changing retail industry.”
Beyond the basic four types of company culture
Undoubtedly, the cultures identified by Quinn and Cameron appear quite often in workplaces. Organizations may clearly favor one or another, or they may possess a mixture.
Some scholars and business leaders, however, prefer expanding the number of categories. They see additional cultural mindsets worthy of their own label. Let’s look at two popular ones.
As the name implies, this type of organization’s culture revolves around the customer experience. The company’s mission is to provide customer satisfaction above all else. Employers expect their workers to always go the extra mile, and they support these efforts by giving employees the tools and autonomy to act in the customer’s best interests.
Workers in this environment often feel a great sense of pride because of their ability to truly help those they serve. However, this emphasis may at times lead to employees feeling neglected as their own needs play second fiddle.
This last different type of company culture attracts workers eager to discover greater meaning in their job and is often found at non-profit organizations. From the executive level downward, everyone shares a defined reason for being there that matters more than profit margins. The purpose may be to change the industry in a significant way or perhaps to better the community.
Purpose-driven cultures tend to enjoy high retention rates because of fostering worker commitment to a cause. People like to have a sense of purpose and be around similar-minded team members.