Types of Company Culture and How You Can Improve Yours
What is Company Culture?
Simply put, company culture is the way that a business or organization operates. It includes the values, beliefs, and behaviors that make up the organization’s identity. Company culture can be a powerful tool for attracting and retaining employees, motivating them to do their best work, and helping the business achieve its goals.
There are many different types of company culture. Startups, for example, often have a very different culture than more established businesses. They may be more informal, with a focus on teamwork and initiatives rather than hierarchy and formal processes.
Workplaces that are results-oriented may have a different culture than those that prioritize employee engagement or new product development. And companies with different core values will naturally have different cultures as well.
But regardless of the type of company culture, there are some common elements that can help make it more effective:
When company culture is strong, it can lead to many positive outcomes for the business, including increased productivity and profitability, better customer satisfaction, and an all around improved employee experience. In other words, culture matters – and it can have a real impact on the bottom line.
What Are Some Common Types of Corporate Culture?
Organizational cultures can be split into several categories depending on the size and purpose of the business. In 1999, researchers Kim Cameron and Robert Quinn, from the University of Michigan, created a Competing Values Framework that aimed to display the four main types of corporate culture that they had previously identified.
The chart shows these types of organizational cultures in terms of the focus ( internal or external) and rigidity (flexible culture or stable culture). And, whilst this is an incredibly useful diagram for visualizing where the priorities of each culture lie, we are also able to see that there’s a great deal of opportunity for overlap. A company doesn’t have to exactly fit into one area: it can contain elements of several all at once.
Without further ado, let’s go into more detail about these types of workplace culture, and see which businesses have adopted them.
Clan cultures typically arise in smaller or family-owned businesses, where the company works on creating family-like values and close relationships between employees. These types of cultures often have a strong focus on employee engagement and satisfaction.
A clan culture is excellent at building a strong sense of togetherness and loyalty amongst employees, as everyone feels valued at an individual level. The lines between roles can become quite murky, as everyone has a say, and the traditional hierarchical structure breaks down somewhat.
In larger companies, clan culture emerges when employees are given ample opportunity to have their say and give feedback to their managers and employers. A sense of trust and cooperation is built between them, creating an all-round more supportive work environment. However, this doesn’t always last, and the initial values of a clan culture can become lost as the company grows.
Clan Culture Examples:
- Tom’s of Maine is frequently called an example of a clan culture workplace due to the strong connection between employees. This extends to everyone they work with – from suppliers, to their customers, to the very environment that they derive all their products from, keeping sustainability at the heart of what they do.
- Zappos, a clothing and shoe retailer and subsidiary of Amazon (purchased 2009) has always prided itself on being a champion of a supportive, enjoyable work culture. Their former CEO, Tony Hsieh, even wrote a bestselling book, Delivering Happiness: A Path to Profits, Passion, and Purpose, in 2010.
Hierarchy cultures are what you would expect to find in many larger companies, where the lines of authority and chain-of-command are both well established and clear. Everyone knows who they are reporting to and where their responsibilities lie.
These organizations often prioritize results over employee satisfaction, but there is a strong sense of ‘doing the right thing’, making sure everything is done according to the rules, and generally being risk-averse. Also, because of its streamlined nature, there is usually a clear line of promotion available.
Hierarchy Culture Examples:
Because of this focus on rules and regulations, hierarchy cultures are commonly found in physically demanding or technical jobs such as healthcare, construction, or government organizations like the military.
- Amazon has developed a hierarchical culture simply because of its sheer size. Everyone has someone to report to, and there’s little room for creativity as a worker.
- The financial mogul Goldman Sachs employs over 40,000 people worldwide, meaning they also need a strict line of command when it comes to operating.
Market cultures are very competitive, with a strong focus on winning, achieving results, and turning a good profit. A key aspect is the company’s external appearance: their relationships, their stakeholders, their profitability, etc. How do their consumers and peers in the market perceive them?
These workplaces can be high-pressure environments where employees are constantly striving to outdo both each other and their competitors. Whilst this is good for business and driving success, it can often lead to high cases of burnout and an unhealthy work life.
Market Culture Examples:
- Amazon fits this bill as well, as the company is extremely competitive, performance-driven, and has a high turnover of employees (a leaked document by Engadget estimated Amazon’s turnover to be 150% annually, but Amazon were quick to respond and state that none of these results “had been fully vetted or approved”). You could say that Amazon has a market culture, but operates with a hierarchical structure.
‘Ad hoc’ is a Latin phrase which has come to mean ‘as necessary’, or ‘as needed’. In this sense, an adhocracy culture refers to a more flexible and adaptable culture, with a focus on innovation and creativity. These organizations often encourage risk-taking and allow employees to take initiative in their work.
Companies that thrive from an ad-hoc point of view tend to have a great deal of adaptability, constantly changing with the times to suit the ever-changing needs of their consumers. Products are treated as disposable. Newer models can always be found. A constant sense of expansion. High risk, high reward.
Adhocracy Culture Examples:
- Internet and tech conglomerates such as Meta (Facebook, Instagram, Whatsapp), Apple, Google, Samsung etc. all operate with an ad hoc culture. The products they create are never usually around for long as they constantly strive to one-up themselves and their competition.
- Car companies such as Tesla may also be considered as ad-hoc cultures, but, as with Amazon, there is often overlap. Tesla specifically has a strong marketing drive, as well as being heavily involved in updating their car models (pushing for hybrid, electric, and self-driving cars).
What Are the Benefits of Having a Strong Company Culture?
It is strongly advised that you put time and effort into building a healthy company culture that suits both the needs of your business and your employees.
Frequently observed benefits include:
- Increased productivity
- Higher employee retention rates
- Better customer satisfaction
- Improved financial performance
- More attractive to more qualified and talented job-seekers
- Better employee satisfaction and experience
You also need to make sure that your work environment is as defined as your culture. If employees are operating within a degrading or toxic environment with their colleagues, they will feel less motivated and therefore won’t perform well. It’s important to take their wants and needs into consideration, and balance their satisfaction and engagement to deliver best results.
How Can You Create a Strong Company Culture?
There is no one-size-fits-all answer to this question, as the best way to create a strong company culture will vary depending on the type of business you have and the workforce you’re trying to attract. However, there are some general tips that can help.
Define Your Core Values:
Clarifying your core values is an important first step in creating a strong company culture. They are what the entirety of your business is built upon. They are your principles, your morals, the things you stand for.
Make sure everyone knows what these are. If your employees either do not know your values, or do not believe in them, then there are bound to be issues. Company leaders should make sure that the people they are hiring are willing to take part in fostering these ideals and uphold them in everything they do at work.
Communicate Your Culture:
Once you’ve defined your company’s values, it’s important to communicate them to all employees and team members, from the very top of the chain to the bottom. No matter the overlying shape of your organization’s culture (i.e. market or clan), do your best to also incorporate a collaborative culture – one that promotes everyone working together in tandem.
Communicate that your values need to be reflected in everything you as a company does, from the way you operate to how you treat your customers.
Reinforce Your Culture:
Your company’s values should be more than just words on a piece of paper – they should be reflected in everything you do as an organization. That means living up to them in your day-to-day operations and rewarding employees who exemplify them in their work.
It’s important to recognise and reward employees who do well, as this helps to boost morale. If you notice people falling behind, be there for them. Perhaps you need to introduce a mentoring scheme to help train and elevate new workers. Take initiative when it comes to your employees’ wellbeing and reinforce your culture by leading by example.
Company culture is something that should be built slowly over time. It won’t happen overnight. But if you’re consistent in your efforts, you can create a strong culture that will benefit your business for years to come.
At times it may feel like no progress is being made. At times like these, it’s important to conduct internal reviews and surveys. Speak to people, get their opinions. Make sure your employees feel satisfied with their work, and that your customers feel satisfied with your business and branding.
There are certainly more types of company culture than the four listed here. In 2018, Yo-Jud Cheng, Boris Groysberg, Jeremiah Lee and Jesse Price published a report in the Harvard Business Review which examined eight more culture characteristics. These were plotted against a graph similar to Cameron and Quinn’s Competing Values Framework, but with different axis names: how people interact plotted against how people respond to change.
Perhaps if your organization doesn’t fit neatly into one of the culture types proposed by Cameron and Quinn, these additional characteristics may suit you better.
You need to understand your current culture before you can work on changing or improving it. It’s not an easy process, especially for larger businesses, but it is possible to make actionable, realistic changes that will benefit both your employees and your profit margins. As ever, communication is key. Make your ideas known so then they are easier to bring to life.
Even the largest businesses can feel like a family when everyone gets involved.
Louis Carter is the founder and CEO of Best Practice Institute, Most Loved Workplace, and Results-Based Culture. Author of In Great Company, Change Champions Field Guide, and Best Practices in Talent Management, as well as a series of Leadership Development books. He is a trusted strategic advisor and coach to CEOs, CHROs, and leaders of mid-sized to F500 companies – enabling change and steering employer brand development together with highly effective teams, leaders, and organizations as a whole.