Exploring the 4 Types of Organizational Culture: Which One Is Right for Your Business?

Do you know what type of organizational culture your business has? The culture of a business plays a critical role in its success. An organization’s values, norms, and policies shape its culture. Understanding your organization’s culture enables you to identify areas of improvement necessary to achieve your business goals. Here’s what you need to know when exploring the four different types of organizational culture that exists:

1. Clan Culture

A clan culture is often described as a family-type culture. When this culture is present, employees feel a sense of membership, involvement, and commitment. This culture is focused on collaboration where employees are viewed as a collective family. Rewards and recognition are often based on personal connections. A clan culture is prevalent in family-owned businesses, small business and startups.

It is crucial to maintain a clan culture to ensure a positive working environment and long-term business success. However, it can hinder innovation, flexibility, and expansion.

2. Adhocracy Culture

An adhocracy culture is where employees are highly encouraged to take risks and try new things. This culture aims to foster creativity, innovation, and rapid growth. While it can be dynamic, employees are expected to be self-starters, adaptable, and able to respond quickly to change.

However, this culture can sometimes lead to excessive risk-taking, which can be harmful to the organization. Still, businesses that require loads of flexibility and innovation will benefit from an Adhocracy Culture.

3. Market Culture

A market culture is results-driven. It focuses on achieving measurable goals and attaining a competitive advantage. This culture puts a great emphasis on the bottom line or financial performance. Leaders in a market culture are often strategic and highly competitive.

The market culture provides a clear focus on goals and accountability measures. However, this culture can sometimes lead to unhealthy competition between team members or departments that can result in cutting corners to achieve the end goals.

4. Hierarchy Culture

A hierarchy culture is similar to a military-style structure where there is a clear chain of command. Employees have clear expectations of their roles, responsibilities and there are policies that guide their work. Rules and procedures are also highly valued in this type of culture.

A hierarchy culture can lead to employees being overly reliant on procedures and not open to try new things. However, this culture is often necessary in businesses that operate in highly regulated industries such as healthcare or finance.

Conclusion

Your organization’s culture is at the heart of your operations. Each company will have its unique cultural mix. Giving employees the freedom and autonomy to create the type of culture they want, also allows them to commit to and contribute to the business’s success. However, it’s essential to be aware of the potential downsides that result in each culture so that you can make informed decisions on the best culture for your business.

Understanding and identifying the culture that aligns with your company’s vision and values is vital in its long-term success. Determine the culture that will bring in the most benefit to the organization. Be open to change and always maintain an open dialogue with employees to build a culture that will support and sustain your business.