Company culture is the way of life in an organization. The term encompasses core values, norms, and behaviors. It’s part of what makes your company unique and distinguishes you from others.
Company culture is a key factor in an organization’s success as it determines how strategy gets implemented. Culture also affects how an organization interacts with its customers, suppliers, government, and society.
No two organizations are the same, but they do share common characteristics and this includes cultural elements too.
Types of company culture
If you can define your organization’s culture, you can adapt and strengthen it.
The Competing Values Framework is a cultural assessment tool designed to help organizations understand and adapt their culture.
It breaks down culture into four types that we’ll delve into now.
The traditional bureaucratic type of company culture and—many startups would argue—an outmoded one. Hierarchical cultures are built on structure and control from the top down with a lot of respect for position and power.
Often, there are several layers of management between upper management and employees so this type of culture is common in large corporates and and the military.
The emphasis is very much on “doing things right” and the smooth running of operations.
Pros: Well-defined processes, policies, and procedures; no issues with authority; clear role and responsibilities; clear paths for advancement.
Cons: Power is centralized at the top meaning potentially slower decision-making. Departments are siloed which may result in less collaboration between departments and flexibility overall.
The Clan or “Family” culture eschews the rigidity of Hierarchy cultures for a more flexible approach based on strong working relationships between team members.
Common amongst SMEs, Clan culture denotes a flat organizational structure and less onus on hierarchy. Employees tend to be loyal to the organization’s mission and values and to each other, with a high degree of trust awarded to individuals and teams to complete tasks their way.
Pros: Flexiblity; employees are driven and engaged to work for the organization and each other; a lot of investment in people’s development and mentoring.
Cons: Easier for employees and teams to go off-track; over concern for group harmony and cohesion leading to group-think; potential lack of response to customer needs over organizational; cliquiness.
Adhocracy cultures, as you may have guessed, emphasize adaptability (the name comes from the latin phrase “ad hoc”).
These cultures provide even greater flexibility than Clan cultures, with teams rapidly forming to face new challenges based on market demands. The organizational structure may quickly change as projects are completed and new ones spring up.
As you’d imagine, these are fast-paced, some would say frenetic, places to work. Initiative and risk-taking are encouraged with limited managerial oversight.
Pros: Flexibility and innovation.
Cons: Without clearly defined responsibilities important tasks may be overlooked; lack of structure means it can be difficult for some people to adapt.
Lastly, we have Market culture. A reflection of the market itself, these are results driven and performance orientated. Goals are deliberately difficult to stretch employees and teams.
Focus is on maximizing profits with as little transaction cost between individuals and teams a possible (meaning unnecessary activity). As you can imagine, these kinds of organizations are often highly competitive internally and aggressive externally.
Pros: Efficient; focus on customers, beating the market, and staying ahead; drive and ambition from employees.
Cons: Employee burn-out; too much competition leading to dishonesty and conflict; lack of investment in employees.
The below diagram will help you get a feel for each culture type’s characteristics and how they overlap.
Assessing your culture
Now you’re aware of the company culture types laid out in the Competing Values Framework, you can use the Organization Culture Assessment Instrument (OCAI) to determines yours (although you probably have a strong gut feeling already!)
As you can see, the questionnaire has six categories. In each category:
Type A style indicates a Clan culture
Type B style indicates an Adhocracy culture
Type C style indicates a Market culture
Type D style indicates a Hierarchy culture
Work down the questions and distribute 100 points between the four sub-items. Add them up at the end to give you a dominant cultural archetype which you can plot on a graph.
This is often done twice: once for ‘now’ and once for ‘preferred’.
1. Dominant organizational characteristics
A: Personal, like a family B: Entrepreneurial, risk-taking C: Competitive, achievement-oriented D: Controlled and structured