Your Organizational Culture Says A Lot About Your Business Value

As human capital, your organizational culture says a lot about the value of your business. Happy, motivated, and appreciated employees will bring a lot more to the table than burnt-out, overworked workers who are just there for a paycheck. 

While many business owners don’t necessarily put explicit thought into their organization’s culture, it significantly impacts employee satisfaction and, in turn, long-term business success.

46% of people say that company culture is very important when choosing where to apply, and 91% of managers say a candidate’s ability to fit in with the culture is more important than practical skills or experience. 

The 4 Types of Organizational Cultures

Understanding the nuances of different types of organizational culture offers actionable insights for businesses to fine-tune their operations and increase their business value.

So, let’s explore the four distinct types of different cultures and the associated core values.

Clan Organizational Culture

Also known as family culture, tribe culture, team culture, or collaborative culture.

The clan culture, often compared to a large family, thrives on collaboration and community in the belief that a happy, engaged workforce drives company success. It focuses on creating a warm, friendly workplace where everyone’s ideas and contributions are valued, often breeding a strong sense of loyalty and tradition.

These company values encourage employees to take pride in their work while nurturing an organizational culture that inspires commitment and teamwork.

Feedback loops are integral to these organizational cultures, with employee feedback as a tool for continual improvement. Clan culture leadership often resembles a mentor or coach, helping individuals grow and achieve their professional goals.

Motto

The clan culture’s motto is “We’re all in this together.”

It underlines the culture’s focus on collaboration and commitment to a positive employee experience, fostering a sense of belonging and mutual respect among the workforce.

Clan Culture Industries

• Tech companies, emphasizing innovation and agility, often foster clan cultures. They encourage a collaborative and supportive environment that sparks creativity and quick problem-solving.
• Advertising and media businesses thrive on creativity, and clan workplace cultures cultivate a dynamic workplace.
• Educational institutions often foster a clan culture, encouraging collaboration, shared knowledge, and mutual growth.
• Non-profits have a specific type of clan culture called a purpose culture. Their shared mission fosters a collaborative, familial feeling among employees driven by a common cause.

Clan Culture in Action

One of the prime examples of a business operating with a clan culture is Google. It is well-regarded for its flat organizational structure that promotes open communication and collaboration.

The company’s renowned “Googleplex” headquarters in Mountain View, California, has been designed to encourage interactions between employees across different teams and roles, thus stimulating idea generation and cross-pollination. 

Pros of Clan Culture

• In a clan culture, employees often feel more involved and committed to their work, leading to high engagement.
• A supportive, familial atmosphere can make employees feel valued and respected, enhancing their work experience.
• The emphasis on collaboration and idea-sharing can foster an innovative environment.
• The sense of belonging and shared goals often leads to strong loyalty towards the company.
• Clan cultures often emphasize employee well-being, promoting a healthier work-life balance.

Cons of Clan Culture

• An emphasis on consensus may slow down the decision-making process.
• Equality and a blurred distinction between roles can lead to confusion about responsibilities.
• Too much collaboration may discourage dissenting opinions, leading to groupthink.
• Maintaining a clan culture across the entire organization can become challenging as companies grow.
• If taken to an extreme, the focus on socializing and fit can overshadow the emphasis on performance and productivity.

Adhocracy Organizational Culture

Also known as innovative culture, entrepreneurial culture, dynamic culture, or creativity-driven culture.

Adhocracy organizational culture thrives on risk and innovation. They favor flexibility and adaptability, encouraging employees to think outside the box and challenge the status quo. Initiative and entrepreneurial spirit are highly valued.

Leaders in such cultures often value bold ideas and an external focus on market trends, encouraging their company leaders and teams to experiment and take calculated risks, contributing to an agile and progressive work environment.

Motto

The adhocracy culture’s motto of “innovate and embrace changes” speaks to the culture’s readiness to pivot, explore new ideas, and disrupt conventional thinking in the quest for excellence.

Adhocracy Culture Industries

• Tech firms, especially those in software development and IT services, often embrace an adhocracy culture to keep pace with rapid technological advancements.
• With their need for innovative solutions and approaches, consulting firms also favor adhocracy.
• Companies in the biotechnology and pharmaceutical industries often promote an adhocracy culture to inspire innovative research and drug development.

Adhocracy Culture in Action

Tesla’s constant push for innovation and disruption in the automotive and energy sectors and its readiness to take risks and challenge industry norms reflect the spirit of an adhocracy culture.

Pros of Adhocracy Cultures

• Adhocracy culture encourages a willingness to experiment, which can lead to breakthrough products and services.
• The emphasis on flexibility allows companies to quickly adapt to changing market trends and customer needs.
• This culture can attract dynamic, forward-thinking job seekers who thrive in fast-paced, innovative environments.
• Employees are often encouraged to think like entrepreneurs, fostering a proactive and creative mindset.
• Focusing on innovation and adaptability can give companies a competitive edge in rapidly evolving industries.

Cons of Adhocracy Cultures

• The culture’s emphasis on risk-taking can sometimes lead to costly mistakes or failures.
• The absence of a transparent chain of command can create confusion and may lead to inefficient decision-making.
• A continuous push for innovation may detract from long-term strategic planning.
• Constant change can create an uncertain work environment, which might not suit all employees.

Market Culture Organizational Culture

Also known as competitive culture, performance culture, result-driven culture, or achievement culture.

In a market culture, the company’s success is directly tied to its performance in the competitive marketplace. This type of company culture strongly emphasizes client satisfaction to increase profitability. 

Competition and a results-oriented mindset characterize market cultures. They prioritize delivering results that enhance the company’s standing in the marketplace by emphasizing a “winning” ethos.

Leaders in such organizations often motivate employees by setting clear goals and ascribing reasonable benchmarks to meet the company’s mission of achieving high-profit margins and capturing market share.

Motto

The motto common in market cultures revolves around achievement and market growth. Phrases like “meet the target” and “beat the competition” exemplify the commitment to excellence and competitiveness.

Market Culture Industries

• The finance industry constantly focuses on achieving high-profit margins and outperforming competitors.
• In sales and retail, the customer is king, and a market culture thrives on meeting and exceeding customer expectations to drive sales.
• Oil and gas companies typically center around a market culture of profitability and efficiency.

Market Culture in Action

Known for its competitive pricing strategy, Walmart primarily provides premium service at a low price to bolster its market value. Its culture is highly oriented towards achieving targets and outperforming competitors in the retail market.

Pros of Market Culture

• A market culture’s focus on targets can drive high performance and efficiency.
• The competitive environment can constantly push employees to improve and strive to be top performers.
• Prioritizing client satisfaction can help a business build a strong reputation and customer loyalty.
• Clear, quantifiable goals can lead to significant achievements.
• A focus on the bottom line often leads to better profit outcomes.

Cons of Market Culture

• The constant competition and pressure to perform can lead to employee stress and burnout.
• A singular focus on results may lead to the neglect of employee satisfaction and well-being.
• An emphasis on immediate results can sometimes overlook long-term strategic planning.
• This culture might stifle innovation as it often avoids risks that could affect immediate results.
• The competition can limit cooperation and collaboration among employees, leading to a less collaborative work environment.

Hierarchy Organizational Culture

Also known as bureaucratic culture, process-oriented culture, corporate culture, or control culture.

A hierarchy culture primarily focuses on implementing strategy via a traditional corporate structure.

The organization’s corporate culture emphasizes the value of reliable delivery, smooth operation, and cost reduction. In such corporate cultures, control and predictability are highly valued. The decision-making process is usually linear, following a chain of command from top to bottom.

Motto

In a hierarchy culture, mottos often revolve around maintaining structure, order, and control. Phrases like “efficiency above all” and “control is key” are commonly heard in hierarchical cultures, reflecting their preference for stability and a well-defined organizational structure.

Hierarchy Culture Industries

1. The manufacturing industry, where the production process is vital, can benefit from the control and efficiency of a hierarchy culture.
2. In healthcare, where clear protocol and consistency can literally save lives, a hierarchy culture sets strict rules and guidelines in place.
3. Due to their necessity for structure, control, and predictability, government agencies often favor a hierarchy culture.

Hierarchy Culture in Action

McDonald’s, the global fast-food chain, is an excellent example of a business with a hierarchy culture. The company is known for its highly standardized procedures across all branches worldwide.

Pros of Hierarchy Culture

• A clearly defined structure and procedures can lead to efficient operations.
• Predictability and straightforward direction provide a sense of stability.
• Standardized procedures ensure a uniform product or service.
• A well-defined chain of command provides clear instructions for employees.
• Strict protocols can mitigate risks and maintain quality control.

Cons of Hierarchy Culture

• Such a rigid structure might limit creativity and innovation.
• The linear decision-making process can lead to slower responses.
• A lack of autonomy and the repetitive nature of work can lead to lower employee engagement.
• A hierarchy culture can be slow to adapt to market changes or adjust its compensation structure.
• Sometimes, the stress of adhering to strict procedures and control can create a toxic work environment.

Final Thoughts

As you transition out of your business, reflect on the organizational culture and core values your company’s foundation rests upon. 

When business leaders recognize the value of their organization’s culture and how it affects every aspect of their operation, they can harness its power to steer their companies toward sustainable success.

Remember, your organization or company’s culture is the DNA of your business—it determines how your company adapts, innovates, collaborates, and competes in the marketplace. The invisible yet potent force can make or break a business.