Your company culture, sometimes known as organizational culture, is what defines your business. Researchers and academia define organizational culture as the values, beliefs, symbols and behavior of people who work in an organization. An easy way to think about your organizational culture is to imagine it as your organization’s personality.
Think about the company culture of your business. What values guide your culture and your employees? Once you have a better understanding of the aspects of your culture, you can determine what type of culture you have.
The main types of company culture were defined by Robert E. Quinn and Kim S. Cameron at the University of Michigan to understand typical business structures better. In the study, Quinn and Cameron named the four types of culture that most businesses follow. The following are the outlined cultures: clan, adhocracy, market and hierarchy culture.
Each of these types of organizational culture comes with unique benefits and drawbacks. Additionally, the type of organizational culture that best fits one company may not benefit another company. To find a culture that best describes where you thrive, examine each of the four types of organizational culture below.
Types of Organizational Culture
Type 1: Clan Culture
The first type of culture to consider is clan culture. Clan company culture tends to be family-like, focusing on mentoring, nurturing, and “doing things together.” In other words, clan culture can be one of the more collaborative types of organizational culture you’ll find.
One component often found together with clan culture is horizontal leadership structures. These leadership structures create fewer barriers between employees and executives in leadership. As a result, clan culture and horizontal leadership structures tend to exist in smaller businesses and startup companies.
Some benefits to be found with clan culture is employee engagement and collaboration. Clan culture can also provide a flexible work environment thanks to the culture’s openness to change. Conversely, this type of family-like culture can be difficult to maintain as the company grows outside its startup origins. Overall, this might be the culture your company starts with, but it will likely evolve into another type as your company expands.
Type 2: Adhocracy Culture
Adhocracy culture is known for being innovative and “doing things first.” In addition, companies with an adhocracy culture tend to define themselves as dynamic and entrepreneurial. This culture can be found at companies who don’t mind taking risks to be on the cutting edge of their industry. Another characteristic of adhocracy culture to keep in mind is focus. While clan cultures tend to focus internally, adhocracy cultures tend to focus externally.
An adhocracy culture works well for creative employees. Within an adhocracy culture, employees are encouraged to think outside of the box to find new ways to help the company stand out. One way to create this kind of culture is by creating a work environment where innovative employee ideas are welcome.
The benefits of an adhocracy culture are the creative ideas it can help generate. Plus, this type of environment aids in differentiating what a company does. Naturally, the downside of an adhocracy culture tends to come from a risk that doesn’t work out. While taking a risk can benefit your company, some risks may not go as planned and can hurt a company instead of benefit it.
Type 3: Market Culture
A company’s market culture is similar to an adhocracy culture in that it is focused on external operations. However, a market culture tends to rely more on stability rather than the flexibility found in adhocracy. That’s why companies with market culture are known as being results oriented, with a focus on competition, achievement, and “getting the job done.”
A market culture works well with employees who can see the bigger picture. Within a market culture, each smaller objective an employee achieves aligns with larger company goals somehow.
Thanks to the clear cut objectives and goals within this culture, employees understand the goals they need to achieve and why. The objective-based approach in market culture can benefit a company by making it more profitable by providing employees with an objective to work towards. When taken to the extreme, however, a market culture can distance an employee from properly engaging with the work they do.
Type 4: Hierarchy Culture
Like the name implies, the environment within a hierarchy culture tends to be structured and controlled. Generally, companies that employ hierarchy cultures focus internally on company efficiency, stability and “doing things right.”
Unlike clan cultures, companies with a hierarchy culture tend to prefer traditional corporate structures over horizontal leadership structures. When done right, this creates a company with an easy to identify leadership hierarchy.
A hierarchy culture is beneficial for employees that thrive within a well-defined work environment. Additionally, hierarchy culture allows each employee to understand the overall direction a company is headed. The drawback to this type of culture can be found when a company’s structure becomes too rigid. While every company may not benefit from the risks taken in an adhocracy culture, a company that takes no risks can stagnate. This stagnation can result in a company becoming outdated in the minds of their employees and customers.