Organizational culture is a strong determinant of whether a company is successful. Culture affects the ways in which employees are recruited, trained, and engaged.
It also determines the types of employees the company will attract, the nature of their relationships with colleagues and superiors, and whether they will commit themselves to company values over the long term.
Four types of organizational culture were identified from extensive research in the 1980s by business professors Kim Cameron and Robert. E Quinn.
The pair noted that no culture should be labeled as either “good” or “bad” and found that 90% of organizations exhibit one or more of the four different types.
With that in mind, let’s describe these types below.
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Clan culture
Clan culture is an organizational structure that can best be described as “one big happy family”.
These companies nurture and mentor their employees in a supportive, team-based environment where the opinions of each individual are valued.
Communication is prioritized in the clan culture and for this reason, is often paired with a horizontal structure to remove barriers between employees and the C-Suite.
This culture is also action-oriented, welcoming of change, and supremely flexible in nature.
Benefits
Unsurprisingly, clan cultures are associated with higher levels of employee engagement, motivation, fulfillment, and performance. Their flexibility also allows for market responsiveness.
Drawbacks
The “family-style” corporate culture can become difficult to maintain in large organizations.
This is exacerbated by the horizontal leadership structure which can cause daily operations to become unfocused and lacking in direction.
Market culture
Organizations with a market culture are primarily concerned with profit margin and staying ahead of the competition.
The culture is best exemplified by companies like Amazon and Tesla that are results-oriented and externally (customer) focused.
Central to the market culture is an ability to consistently develop innovative products and services before competitors.
Internal competition between employees is encouraged with individuals rewarded and celebrated for their accomplishments.
Benefits
Employees who demonstrate high performance are rewarded handsomely with financial bonuses or career advancement. This has obvious benefits for organizational success.
Drawbacks
However, the market culture can create an environment where employees become burned out, stressed, and adversarial. Many toxic workplace cultures arise from this variant.
Adhocracy culture
The adhocracy culture is based on the term ad hoc, a Latin phrase meaning “for this”.
This culture can often be seen in start-ups that embody the “move fast and break things” philosophy. In other words, culture is invented and shaped as the company evolves.
The adhocracy culture creates an entrepreneurial work environment where employees are encouraged to be risk takers and pursue creative ideas.
Benefits
Adhocracies promote innovation, creativity, risk-taking, autonomy, and organizational growth. Employees who are encouraged to explore new avenues also feel safer and more contented within their roles.
Drawbacks
The flipside of increased employee autonomy is that the organization may lose stability and experience a low ROI on many initiatives. Employees who have never been encouraged to work with total freedom may also find this culture intimidating.
Hierarchy culture
The hierarchy culture is one most individuals have worked under at one point or another.
It is characterized by top-down control, structure, and process orientation where the objective is to streamline operations and ensure every employee is on the same page.
This means that employees under a hierarchical structure know where they fit in the chain of command.
This encompasses who they’re accountable for, who they report to, and any rules that govern these interactions.
Benefits
The hierarchy culture promotes clear and consistent communication. It also tends to be consistent and predictable which affords employees greater peace of mind.
Drawbacks
On the flip side, some employees feel suffocated by the structured and reliable nature of a hierarchy. This can result in low motivation and hinder innovative ideas that could potentially help the company grow.
Key takeaways:
- Four types of organizational culture were identified from extensive research in the 1980s by business professors Kim Cameron and Robert. E Quinn. These four types were embodied by 90% of all organizations in one form or another.
- In a clan culture, the company nurtures and mentors its employees in a supportive, team-based environment where all opinions are valued. The opposite of a clan culture is the hierarchy structure, which is characterized by top-down control, predictability, rigidity, and structure.
- Companies such as Amazon and Tesla embody the market culture with a core focus on results and customers. The adhocracy culture, on the other hand, creates an entrepreneurial work environment where employees are risk takers and free to pursue creative ideas.
Organizational Structure Case Studies
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