By Elle Holder
11 min read
Organizational culture directly impacts employee satisfaction. When employees feel valued, supported, and part of the team, they’re more engaged and motivated, which typically translates into increased productivity since happy employees are more likely to go the extra mile.
But if you’re asking what makes up organizational culture, there is no one-size-fits-all answer. In fact, there are several distinct types, each with its own set of characteristics, benefits, and challenges.
This article will discuss the four most prominent types: clan culture, adhocracy culture, market culture, and hierarchy culture. We’ll explore what defines each one, what types of advantages and disadvantages come with each, and how they can impact your organization.
As the name suggests, the clan culture promotes a collaborative, family-like environment where everyone feels a strong sense of belonging and commitment to each other and to the organization’s mission. Similar to a close clan, this culture emphasizes teamwork, shared values, and mutual support.
Collaboration: Clan cultures prioritize working together towards shared goals. Open communication, information sharing, and teamwork are central to their success.
Family-like atmosphere: Loyalty, trust, and mutual respect are key elements of this culture. The workplace feels like an extended family where employees feel valued as individuals and are supported by their colleagues.
Mentorship and nurturing: Instead of being authoritative figures, senior employees are encouraged to guide and support their junior colleagues. In this culture, it’s the norm to invest in mentorship programs and opportunities for professional development — support is always provided, helping employees grow and succeed.
High employee engagement: Employees feel valued and like they’re part of the team, which leads to an engaged workforce. Employees are also more likely to go the extra mile and take ownership of their work.
Loyalty: The strong sense of community that comes with this culture fosters loyalty and commitment to the organization, reducing employee turnover.
Strong team spirit: Collaboration and shared goals lead to a strong team spirit, where employees feel motivated to support one another and work towards collective success.
Fast-paced decision-making: Because of a strong emphasis on collaboration and consensus, decision-making often moves at a slower pace, making it a challenge for times when quick decision-making is imperative.
Competition: Since there’s a strong focus on internal support and teamwork, this might lead to a less competitive edge in industries that are highly competitive.
Zappos is known for its exceptional customer service and strong company culture. They place a high value on employee happiness and teamwork, which makes it a prime example of the clan culture.
Google finds strength in fostering a collaborative and innovative work environment where employees are encouraged to share ideas and work together. This is supported by a culture of mentorship and continuous learning.
An adhocracy culture thrives on innovation, a dynamic entrepreneurial spirit, and a willingness to take risks. Flexibility and adaptability are prioritized over rigid structures and hierarchies.
Innovative and dynamic: Adhocracy cultures are constantly looking for new ideas and approaches. Experimentation, thinking outside the box, and pushing boundaries are encouraged.
Risk-taking: Employees are empowered to take calculated risks and explore new possibilities. And instead of being looked down on, failures are seen as a learning opportunity.
Entrepreneurial: This is an environment that encourages a sense of ownership and initiative. Employees are expected to act independently and think creatively to solve problems.
Fosters creativity and innovation: This culture puts an emphasis on new ideas and risk-taking, which creates a breeding ground for creative solutions and groundbreaking innovation.
Adaptability: Adhocracies are well-suited for fast-paced, ever-changing environments. Their innate flexibility allows them to quickly adapt to new market trends and challenges.
Can be chaotic: The very lack of structure and clear hierarchy that this culture is built upon can lead to a sense of chaos and confusion, especially for employees who thrive on clear direction and processes.
Lack of structure: Without any formal structures in place, it can make it difficult to track progress, measure success, and ensure accountability.
Potential for high failure rates: The willingness to take risks can also lead to a higher rate of failures.
Apple is known for its groundbreaking products and innovative approach, thriving on a culture that encourages creativity and thinking. They continually push the boundaries of technology and design.
Tesla is a perfect example of adhocracy culture with its relentless pursuit of innovation in both the automotive and energy sectors. Their willingness to take risks and challenge conventional practices has led to significant advancements in electric vehicles and renewable energy solutions.
Find out why orgs are moving beyond engagement and embracing a new approach
In market culture, the priority is results and achieving goals. It’s highly competitive and thrives on exceeding targets, outperforming competitors, and maximizing profitability.
Results-oriented: In a market culture, every action and decision is evaluated based on its contribution to the bottom line. Efficiency and meeting measurable goals are more important than anything else.
Competitive: Competitive environments are the norm in a market culture. Employees are encouraged to push themselves and outperform their colleagues.
Focus on achieving goals and targets: Clear performance metrics and ambitious goals drive employee focus and accountability.
High efficiency: Thanks to the relentless focus on results, the market culture can drive high levels of efficiency and productivity. Employees are motivated to streamline their processes and find the most effective way to achieve their objectives.
Strong customer focus: Understanding that customer satisfaction is the key to their success, market cultures often emphasize meeting customer needs and exceeding expectations.
Profitability: The emphasis on results and efficiency typically translates into a strong financial performance for the organization.
Stress and burnout: Since there’s relentless pressure to perform, this culture can lead to high levels of stress and employee burnout.
Cutthroat environment: The focus on competition can create a cutthroat work environment where collaboration and teamwork can suffer.
Focus on short-term wins: Since the emphasis is on immediate results, this can lead to neglecting long-term planning and investment in employee development.
When under the leadership of Jack Welch, General Electric was known for its market culture. It had a strong emphasis on performance, competitiveness, and a goal of always achieving business targets. His management style emphasized efficiency, profitability, and market leadership.
The corporate culture at Amazon is highly results driven and customer focused. Their pursuit of customer satisfaction and market dominance is a perfect example of the market culture. Amazon demands high performance, operational efficiency, and innovation, helping the company to maintain its competitive edge.
The hierarchy culture thrives on structure, order, and clear lines of authority. Decision-making flows from the top down, with well-defined roles, procedures, and a strong chain of command.
Structured and formalized: Employee actions are always guided by clear rules, procedures, and well-defined job descriptions.
Controlled: An emphasis on following established protocols and always following the chain of command ensures consistency and minimizes risk.
Clear lines of authority: Employees always know exactly who to report to and who holds the decision-making power.
Stability: Since there’s a well-defined structure, this culture provides a sense of stability and predictability for employees. Everybody understands their roles and expectations.
Efficiency: Because procedures and roles are clearly defined, this can help streamline processes and lead to an efficient execution of tasks.
Predictability: Since the hierarchy culture is so structured, this can allow for easy forecasting and planning.
Stifles creativity and flexibility: With an emphasis on following rules and procedures, creativity can be stifled. It can also hinder the ability to adapt to changing circumstances.
Slow to change: With decision-making always flowing from the top down, it can make it difficult for organizations to quickly adapt to any new market trends or competitive threats.
Limited employee engagement: Employees can often feel disengaged or powerless — since they have little opportunity to contribute ideas or influence decision-making.
McDonald’s is known for its highly standardized procedures and operations. Every aspect of their business, from how food is prepared to customer service, is carried out under strict guidelines, ensuring uniform quality and efficiency worldwide.
The military has always operated under a clear chain of command with well-defined roles and responsibilities. Discipline and effectiveness are maintained with strict protocols and procedures.
Now that you have a clear understanding of the four most common organizational cultures, the next step is to understand how to choose the right environment for your organization. There are several factors that come into play when first selecting the appropriate culture and then cultivating it:
Leadership style: First, if you’re a company leader, what are your values and management style? These will play an important role in shaping the organizational culture you choose, since you’ll need to promote and personify the right attributes.
Industry and business goals: Consider the specific demands of your industry. Are you an industry that thrives on innovation or one that requires strict adherence to protocols? Then you would consider adhocracy or hierarchy cultures. Also, think about your company and align your culture with its goals. Do you prioritize employee well-being or are you aggressive when it comes to market share growth? Respectively, you should consider the clan or market culture.
If your current organizational culture is already in place, it may be time for some assessment:
Surveys: Employee surveys are a great tool for gathering anonymous feedback on various aspects of work life within your organization, such as communication, collaboration, and decision-making processes.
Interviews: Consider conducting in-depth interviews with employees across all levels. This provides you with a more nuanced understanding of their experiences and perceptions of your culture.
Observation: Make it a practice to take note of daily interactions and behaviors. Does the work environment within your organization feel collaborative or competitive — clan or market? Do employees readily share new ideas, or do they strictly follow established procedures — adhocracy or hierarchy?
Once you’ve gathered enough data using the three tools mentioned above, you’ll need to analyze the results:
Identify strengths and weaknesses: You need to evaluate your current culture. What aspects of it are helping to create employee engagement and drive results? Are there any areas that are hindering collaboration or innovation?
Align the strategic goals: Once you’ve identified the strengths and weaknesses , compare them with your strategic business goals. Is your culture supporting where you want to take your organization?
Develop an action plan: If you find that there is a gap between your current culture and your future vision of your organization, create an action plan. This could involve implementing new communication channels, encouraging teamwork through workshops, or revising current performance management systems to help better align with your vision of the perfect organizational culture.
We’ve discussed the four distinct organizational cultures: clan, adhocracy, market, and hierarchy, and how each culture comes with its own unique advantages and disadvantages. And how they shape employee behavior, decision-making, and ultimately, organizational performance. With a clear understanding of the different cultures, you’re in a better position to make informed decisions about the right choice for your business needs and employee preferences.
Recap of the four cultures:
Clan: Fosters a family-like atmosphere where there’s a strong emphasis on collaboration, loyalty, and employee well-being. This is a culture that thrives on teamwork and shared values, but it can struggle when it comes to fast-paced decision-making.
Adhocracy: This embraces innovation and risk-taking. The culture thrives on constant change and new ideas, but it can be chaotic and lack structure.
Market: Prioritizes results, competition, and achieving goals. The culture will drive efficiency and profitability, but it can also lead to stress and a cutthroat work environment.
Hierarchy: Values structure, order, and clear lines of authority. The hierarchy culture ensures stability and predictability, but it can stifle creativity and hinder adaptation and change.
Choosing the right organizational culture means laying the groundwork for your success. The right culture equals employee engagement, innovation, and a sense of purpose — the key ingredients of success. With that in mind, if necessary, assess your current environment. Identify your strengths and weaknesses, and then take action to bridge any gaps you find between your current state and where you want your organization to be.
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Elle Holder
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