We’ve all seen the memes joking about organizational culture. A sales team meets its goals, so they’re rewarded with a pizza party. While it’s good for a laugh, this kind of social media conversation raises important points about how we think about organizational culture as a society. A positive organizational culture isn’t just a way to avoid becoming a meme; it’s an important element in creating a successful, productive team. An Oxford University study found that happy employees are 13% more productive.
A company’s organizational culture is the standard of values, beliefs, and behaviors that all employees are held to. Sometimes called company or corporate culture, there isn’t a one-size-fits-all approach to culture. There are four major types of organizational culture, plus some lesser-used ones. Here, we break down the different cultures to help business leaders and HR teams implement the right strategies to create a happy, safe, and productive workforce.
4 major types of organizational culture
There are several different types of organizational culture. If you’re wondering how to create company culture, the first step is understanding these archetypes.
Clan culture
In a clan culture, employees have a strong sense of community and shared values. They’re encouraged to feel like part of a family unit, with high levels of collaboration, loyalty, and mutual support.
Many peoples throughout history have formed clans, united by shared ancestry or kinship, and the idea in this type of organizational culture is that everyone feels accountable to one another — like a clan would. There’s a focus on employee well-being and a high level of trust promoted throughout the organization.
Clan culture is common in small businesses, especially retail ones where people feel pride in the product and invested in its future.
Adhocracy culture
Adhocracy culture is an organizational culture that emphasizes innovation, flexibility, and adaptation. In this kind of company, employees are empowered to make their own decisions and take initiative. They’re encouraged to think outside the box, explore unconventional solutions to problems, and work outside a rigid hierarchy.
Adhocracy culture is common in tech startups and other innovation industries.
Market culture
Unlike clan culture, market culture prioritizes competition, performance, and profit. Rather than focus on unity, this organizational structure incentivizes individual or team performance. By putting pressure and high demands on employees, market culture seeks to drive profit and separate the highest performers for promotion.
Wall Street and Hollywood are classic industry examples of market cultures.
Hierarchy culture
The most traditional type of organizational structure, hierarchy culture prioritizes a top-down management style. There are clear levels of authority and a fixed structure with assigned levels of power and responsibility throughout the organization. There are strict rules, policies, and expectations for each employee depending on their level and decisions and delegations come from the top down. When you hear about “climbing the corporate ladder,” it’s usually referring to hierarchy culture.
Hierarchy culture is common in legacy companies like banks, advertising firms, and big-box companies.
Additional types of organizational culture
While the above four types of organizational culture in business are the most common, they’re far from the only ones. Below, we break down four additional types of organizational culture with examples.
Purpose-driven culture
Companies with strong core values may strive for a purpose-driven culture. In this environment, work is centered around a company’s purpose and values, and employees are expected to reflect those values. Similar to clan culture, employees feel a sense of kinship with one another and connection to their work. From the company’s leaders to its employees, everyone is motivated by the mission and embodies its values in day-to-day interactions, both internally and externally.
This culture is common at non-profits or reform-focused companies in healthcare or finance.
Customer-first culture
A customer-first culture is closely tied to a company’s business model. In it, the customer’s needs and experience are prioritized above all else. The customer is at the center of every decision, and all employees are motivated to consider the customer’s perspective. There’s a focus on quality over quantity and an ethos to build customer trust and goodwill.
The most ethical e-commerce companies build with a customer-first culture.
Learning culture
A learning culture encourages employees at all levels of the organization to continuously learn and develop skills. Like an adhocracy culture, employees must have a growth mindset and always think of ways to innovate and improve the organization’s performance. And like a clan culture, collaboration and community are essential.
Many learning cultures enable independent learning and support integrating that learning into an individual’s and the company’s strategy. Unsurprisingly, you’ll find learning cultures at companies in the education industry.
Innovative culture
A type of organizational culture that draws from ideas from many of the types we’ve already touched on, innovative culture is one in which employees are encouraged to share and implement creative ideas. In an innovative culture, the organizational mindset is to always experiment, adapt, and never be afraid to fail.
In these organizations, all voices are valued, and employees are evaluated based on metrics like value creation for customers rather than traditional metrics like sales. You’re more likely to find this type of culture at growth-minded tech startups.
Strategies for developing a positive organizational culture
The right organizational culture for your business depends on a range of factors. There are many considerations, from leadership styles and industry to the size of the company and more. That said, some top-line strategies to develop a strong culture include:
- Defining your corporate values: The first step is to identify the company’s core values and mission. Then, make sure they guide your decision-making and that they’re transparently communicated to employees.
- Develop leaders: Rewarding employees who demonstrate organizational culture with bonuses, perks, or professional development opportunities shows your willingness to invest in your values.
- Recognize employees: Take time to recognize outstanding performances by teams or individuals at all-team meetings.
- Build culture into your compensation packages: Total rewards packages, including flexible working hours, remote work options, and parental leave, show that you care about your employees’ lives outside the office.
Start aligning culture with organizational goals
A great company culture reflects the business’s goals and is evident in all organizational decision-making. HR basics for SME owners can be challenging, but it’s crucial to prioritize creating a positive company culture in today’s competitive business landscape. Happy employees who believe in their companies are more willing to do their best work and tend to be more productive than unsatisfied ones.
Whether you’re a small business owner or an HR leader at a mid-sized company, you need tools to support your organizational culture. After all, employees who aren’t getting paid on time or who can’t take advantage of paid time off and other benefits because of clunky software aren’t going to be very happy. Use OnPay’s HR tools to support your company culture and keep your organization humming like a well-oiled machine.
