Types of Company Culture
- Pan Thwin
- Jan 2, 2023
- 3 min read
Why is culture important?
Every business has a mission and vision that aligns with their values. In order to achieve these, founders and executives of companies have to develop a set of goals that will be needed. Employees then bring in their own ideas and expertise, making up what we call culture. This corporate culture then sets out the grounds of how the business operates, and how everyone in the organization work together to reach the goals.
Corporate culture plays several roles such as bringing employees together, which then reduces turnover rates, and can also help attract higher-quality candidates.
Now let's get into the different types of culture:
Clan Culture
This is a rather collaborative culture that mainly focuses on team works. Managers are perceived as advisors and guides to the employees, who instruct and help them. They also discipline those who make mistakes, but they do not act in an authorian way. There is less of a differentiation between the executive level and employees, and the culture is more flexible and focused on change and action. In this type of culture, participation and company morale are greatly valued, and relationships are encouraged.
The advantages of the clan culture is that teams enjoy working together and thus communication between the members are more open and effective. Since the employees are more engaged and motivated in their work, this makes way for a higher possibility of market growth for the company too!
However, it can become difficult to manage as the business grows since more people will be brought in and the leadership structure may be undefined. While collaboration is important among teams, too much colloboration can effect productivity. Since this style of culture relies heavily on the emotions of employees, empathy may get in the way of making decisions.
Adhocracy Culture
A culture of adhocracy is one which focuses on innovation and risk-taking. This style is commonly seen in many successful startups, as it creates an entrepreneurial environment. Ideas that would otherwise be considered too unconventional in a more conservative workplace are encouraged in an adhocracy culture.
Companies that have adopted this culture tend to chase the 'next big thing' and constantly encourage employees to take risks.
Of course, taking higher risks means getting higher rewards; meaning that the company has a greater potential for growth and breakthroughs. In this type of culture, employees are allowed to be creatice and bring new ideas to the table, while feeling supported in doing so. Companies are also more likely to invest in professional development opportunities.
However, when the number of new initiatives taken begins to rise, instability is very likely. Not all risks taken will be successful and that can potentially hurt the company instead. Since employees have to be decisive and work more aggressively, junior employees may feel pressured or intimidated. With the pressure of having to be innovative, this could lead to competitions among employees which can then turn into an unhealthy work culture.
Market Culture
A market culture is also known as a 'compete culture' because of its emphasis on the results. Employees are highly focused on goals and the leaders are often tough and demanding. This leads to a more competitive and high pressure environment, but rewarding when there are real, measurable results.
Due to the rewards and the competitive nature of this type of culture, employees are highly motivated and enthusiastic to achieve their goals, which of course contributes to the company's performance and overall success. The competitive atmosphere encourages hard work and it seems that companies with market cultures are often successful and profitable.
However, too much competition can turn into a toxic work environment which is not ideal for employees as it may lead them to experience stress and even burnout as a result of the constant pressure they have to face.
Hierarchy Culture
A hierarchy culture, also known as a 'control culture', is one in which work environments are more structured and process-oriented. Most decisions are made by existing procedures and there is not much room for innovation and creativity. Leaders focus more on the stability, results and reliable delivery of their team.
On one hand, expectations in these types of situations are often made clear from the beginning so there is often clarity in the communication and misunderstands are less likely to occur. Furthermore, there may be more stability in the company due to its conservative nature.
On the other hand, focusing only on following fixed procedures creates a rather inflexible environment that can even be unsupportive. Employees may then feel unsupported and unacknowledged which can effect their motivation and performance. It does not open opportunities for growth and innovation because people are afraid to think differently or come up with new ideas due to the rigid structure and procedures. Due to this, the company may have a hard time keeping up with and responding to constant changes in the market.
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