Understanding organizational culture, and why it’s important

Suppose a neighbor at a block party inquires about the company for which you work. After you provide the basics about the goods and services it offers and your role in operations, she presses further. Her son is in the same industry and thinking about seeking a new job because he dislikes his current employer’s organizational culture. She wants to know what your workplace culture is like.

The question may make you pause. Is she talking about things such as dress code and office celebrations? Or, maybe she wants to learn about commitment to work-life balance or who takes part in decision-making? Perhaps she simply wants an overall opinion on whether or not the company is a good place at which to work.

An umbrella term such as “company culture” gets interpreted in many different ways. Here, we’ll provide some clarity and look at why every organization needs to think about the subject.

What is organizational culture?

One way to look at the concept is to think of it as the answer to “how we do things around here.” Corporate culture affects what gets prioritized, how people interact and relate to one another, how the company goes about setting goals and accomplishing them, and much more.

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Catherine Rymsha, author of The Leadership Decision, and many other experts favor this definition: “Organizational culture is the set of values, beliefs, attitudes, systems, and rules that outline and influence employee behavior within an organization. The culture reflects how employees, customers, vendors, and stakeholders experience the organization and its brand.”

Types of organizational culture

Since the culture of an organization often gets described as its personality or what makes it unique, one might conclude that an endless number of different kinds of work environments exist. It may come as a surprise, then, that research by University of Michigan professors Robert E. Quinn and Kim Cameron finds that almost 90 percent of organizations worldwide fall into four distinct categories: clan culture, adhocracy culture, hierarchy culture, and market culture.

Clan culture

As the name suggests, this type of organizational structure thrives on teamwork, relationships, and supporting one another. Company leaders prefer mentoring and coaching to monitoring and enforcing. Also referred to as “collaborate culture,” people at all levels communicate freely, and management welcomes input before it makes decisions.

Adhocracy culture

An adhocracy or “create culture” often proves a great culture fit for those into risk-taking and the mindset of “move fast and break things.” Adhocracies provide a psychologically safe environment for team members to think outside the box. Creative energy permeates, and innovation gets rewarded.

Hierarchy culture

Also referred to as “control culture,” this work environment operates like a well-oiled machine. Employees hold clearly defined roles with expectations and duties spelled out. A feeling of stability and efficiency exists, and communication gets to the point.

Market culture

The bottom line rules in this results-oriented atmosphere. The company and its employees value success metrics and meeting quotas. Also called a “compete culture,” the organization desires beating competitors to market and prizes hard workers who up their game to meet the employer’s demands.

Why an organization’s culture matters

It is essential to note that the four designations presented are ways to describe, not judge, common workplace cultures. What works well for one company may not for another, so none of the labels should be thought of as better or worse than another. The important thing to note is that people want to work in an environment where they feel comfortable. A poor cultural fit is like trying to put a square peg in a round hole.

Imagine someone who hates uncertainty and chaos employed at a high-octane startup. Its adhocracy culture, which invigorates some colleagues, may cause genuine fear in those who crave more structure and less pressure to produce fresh ideas.

Or, consider a go-getter who longs to quickly climb a corporate ladder. The individual may feel frustrated by the strict chain of command at a hierarchy culture but love the opportunities for rapid advancement in a market culture.

Like the neighbor’s son in the opening, workers unhappy with their company’s culture often look for a different job. They seek places better aligned with their desired culture. Moving to a place with a closer match of shared values and corresponding organizational behaviors can improve well-being and employee engagement level.

In addition to impacting retention levels, a strong sense of what your organizational culture entails helps with recruitment. With the advent of the Internet, applicants nowadays have a variety of ways to learn about what it is like to work for a certain employer. Painting a vivid picture of life at your company draws in applicants seeking that type of environment. Your clan culture, for instance, may highly appeal to a candidate looking for a welcoming place that puts a premium on team building, feeling at home, and seeking staff input to make decisions.

Authenticity is a necessity

Some employers mistake corporate culture for tossing together a list of perks and hoping potential and existing employees will find them suitable. A strong organizational culture involves more than holding monthly staff video game tournaments or allowing people to wear jeans on Friday. It entails figuring out who you are as an organization and what actions best support that identity.

Likewise, companies must avoid touting themselves as one thing and then failing to deliver. Giving lip service to work-life balance because you think that’s what people want to hear quickly leads to irritation if you demand long hours, rarely allow remote work, or question the commitment of those trying to use their PTO. Nobody likes to feel misled.

And while imitation may be the sincerest form of flattery, trying to be something you are not often comes off as sad. The pajama day that fits in with the creative, casual nature of one place can look downright stupid and embarrassing at a buttoned-up establishment where workers interact with clients and want to appear authoritative.

Leaders assume much of the responsibility for crafting company culture and instituting organizational change to make it better. Bringing employees into the mix, however, provides a deeper perspective. Members of an organization offer first-hand knowledge of what makes your workplace special and where improvements could be made. Consider surveying them regularly or hosting a town-hall-style gathering to generate input on defining your company culture and to brainstorm initiatives for supporting that definition.