Types of Company Culture

You know what a company is, and you understand the concept of culture, but what exactly is company culture? It’s not easy to define, but it’s often easy to tell when a company has a strong positive culture. 

What you may not realize is that there are more than a dozen types of company culture, so the one that best fits your business might be totally unfamiliar. There are several ways to improve and shift your company culture, and you’ve come to the right place to learn more.

This guide details all the different types of cultures, their advantages and disadvantages, as well as how your company might embrace them. 

What is Company Culture? 

Every workplace has its own set of interpersonal dynamics that make it unique. Differences in management style, employee hierarchy, and motivational strategy mean no two companies have the same culture. 

Yet, there are several key characteristics that signify specific types of company culture, and most businesses fit into a number of general profiles. 

A quarter-century ago, two business professors at the University of Michigan concluded that there’s no clear division between “good” and “bad” company culture. Rather, there are simply different categories into which most cultures can be classified. 

Nearly 9 out of 10 businesses fall into one of the main four categories. At the same time, most businesses combine several cultural profiles. 

Main Types of Company Culture

1. Clan Culture

Clan culture embraces the concept of co-workers as family. Family-run businesses tend to fall into this category, as do smaller businesses that aim to be tight-knit, loyal, and collaborative. These companies tend to stress values like equality, unity, and togetherness. 

Sometimes called a “collaborative culture,” this type of workplace environment is characterized by teamwork, relationships, and consensus. Often, managers act more like mentors than bosses and work alongside employees to provide support rather than discipline. 

Clan culture can be very effective in creating a positive environment and cooperative teams that communicate well. The drawback is that clan culture can encourage a lax work environment. “My manager is like my big brother, he’d never fire me,” a lazy employee might think. 

In addition, new hires and outsiders are likely to feel marginalized and excluded. Making decisions can be difficult, as the lack of a clear hierarchy complicates dispute resolution. 

An example of a business with a clan culture is Tom’s of Maine. Founded in 1970 by a married couple hoping to boost their children’s health, Tom’s of Maine has stressed its family-run ethos for more than fifty years. 

2. Adhocracy Culture

In an adhocracy culture (a combination of “ad hoc” and bureaucracy), structures are flexible and open to innovation. Companies with an adhocracy culture are open to rapid change and care little about maintaining the status quo. 

Many startups and tech firms fit this profile, as they seek to stay on the cutting edge and constantly outdo their competitors. In this setting, change, or disruption, is often seen as a good thing. 

Traditional corporate structures can hinder out-of-the-box thinking, so adhocracies discard them.  Firms like Tesla and Uber, for instance, encourage risk and innovation and urge their employees to challenge assumptions. 

The irony is that when companies with an adhocracy culture grow into larger businesses, the push-for-change approach that had long been an asset often becomes a liability. 

When Google was operating from a garage, rule-breaking allowed its creators to achieve incredible innovations. But if Google-parent Alphabet’s present-day employees threw caution to the wind, they could end up facing a major lawsuit. 

As companies grow, more structure and a slower pace are often necessary, allowing products to be vetted to ensure safety and compliance. If you want to maintain the fresh thinking of an adhocracy, there are ways to encourage employees to be creative while minimizing risk. 

One is to value creativity and facilitate new ideas while keeping execution at a reasonable pace. This could look like encouraging employees to pitch new ideas and strategies but maintaining a systematic process to vet them before they are set into action. 

Slowing down the process will give your team a chance to think things through, troubleshoot any problems, and ensure the idea is actionable and will benefit the organization.  

3. Hierarchy Culture

A hierarchy culture is exactly what it sounds like— a workplace governed by clear rules, procedures, and levels of authority. In a hierarchy culture, all employees know where they fit in the workplace, who ranks above them, and what’s expected of them. 

These businesses tend to be well organized and extremely efficient, though they may sacrifice the personal touch. Strict procedures also make these companies less exposed to risk, though sometimes at the cost of innovation and adaptability. 

In light of this, it makes sense that banks, insurance firms, and energy companies tend to have a hierarchy culture. Firms in these industries could cause serious economic damage if their operations were to become more unpredictable or experimental. 

If you think a hierarchy culture could benefit your business, examine your policies, practices, and chain of command for gaps and pitfalls. In a hierarchy culture, each employee understands their role and expectations and procedures are tightly enforced. 

4. Market Culture

Companies with a market culture choose to focus on profits and beating the competition. Unlike other models defined in reference to employees, market cultures are largely outward-facing. 

As a result, these companies need to remain in or near the pole position in their industry, which tends to require constant innovation and advancement. Forever striving to improve may boost profits and reputation, but also causes considerable employee burnout. 

In these cases, the good of the company is given priority over the good of staff, which can lead to high turnover. Amazon is a good example of a market culture, as employees are often overworked, turnover is high, and the company is the market leader in several industries. 

If you’d like your business to focus more on the bottom line and less on interpersonal dynamics, you may want to initiate a market culture. You can begin doing this by determining what each employee contributes to the company and setting clear goals to improve. 

Rewarding top performers can motivate staff to work harder and take your business to the next level.

Additional Organizational Cultures

In recent years, we have gained significant insights into company culture. Scholars have identified two cultural factors, people interactions and response to change, that allow for much more specific and detailed categorization.  

Both are scored on a scale, with the first gauging whether a company values independence or collaboration and the latter stretching from flexibility on one end to strict adherence to rules on the other. Plotting where the two intersect, researchers found eight new types of culture. 

1. Purpose Culture

As the name suggests, purpose cultures place a high value on a company’s mission or purpose. These workplaces are likely to support new ways of thinking, compassionate action, and collective impact. 

Employees in a purpose culture are encouraged to look at the bigger picture, united by their shared beliefs and the sense that their work aligns with their ideals. 

If you’d like to shift your workplace toward this kind of culture, you might begin by rewarding group achievements to foster interpersonal collaboration. With the right team, this will provide employees with a sense of collective purpose and higher job satisfaction.

Other common goals in a purpose culture include expanding operations to reach more people, prioritizing sustainability over profit, and ensuring your team shares your values. 

Social enterprises like Toms Shoes and non-profits like the Red Cross are among the types of organizations that often embrace a purpose culture. 

2. Learning Organizational Culture 

In learning organizational cultures, curiosity is prized and constant learning is sewn into the fabric of the company. High value is placed on creativity, and new ideas are welcomed and freely shared in the hopes of driving innovation. 

For example, Microsoft extended its decades of success by pivoting from desktop computers to Internet services. The company’s open-minded commitment to learning enabled its management to evolve with the industry and the market. 

Though curiosity can lead to breakthroughs, it can also distract from profit-oriented concerns. 

Unlike in an adhocracy culture, where creativity produces ways to boost profit or clout, organizational cultures value learning for learning’s sake. And in today’s fast-paced market, businesses that are not constantly reevaluating and learning tend to fall behind. 

3. Enjoyment Organizational Culture

Enjoyment organizational cultures believe happy employees yield the best results. Employees are largely free to do as they please — as long as they do their work, no questions are asked! 

These workplaces might provide games and free food, and many have a relaxed dress code. A sense of equality is maintained by having all employees go through the same onboarding in an effort to establish a horizontal rather than hierarchical structure. 

Enjoyment organizational cultures are typically willing to spend a lot on hiring to ensure they bring in capable people who will find ways to have fun while performing well, connecting with their colleagues, and caring about the company.  

Leading online shoe retailer Zappos is known for its lively workplace. Employees are free to do their work on their own time, while strict hiring procedures ensure employees are committed to the company and will work hard to further its values.   

4. Results Organizational Culture

Results cultures value, you guessed it, results – often in the form of meeting key deadlines and targets. While leaders remain focused on the company’s long-term mission and vision, employees are motivated to impress them by delivering again and again on short-term goals. 

Rather than focusing on the process, these businesses prize delivering above all. Employees are pushed by individual and team incentives in the hope of fostering creativity and teamwork. 

A possible downside is believing the ends justify the means, which may lead to compromised values and behaviors among management and staff under pressure to perform. 

5. Authority Organizational Culture

If your business depends on authority, with staff who respect the chain of command and find order and purpose in respecting it, you may have an authority organizational culture. 

Employees who thrive on recognition will work hard to impress leaders, sometimes stabbing each other in the back to get ahead. Because of the strong focus on individuality, the good of the organization may become secondary to individual career advancement. 

These businesses are characterized by intense discipline and perfect adherence to standards, with promotions earned by grueling work and long hours. 

Employees are motivated to serve their time in lower-ranking roles with the prospect of promotion. These conditions are common in law firms, where staff expect to spend years of hard work and overtime seeking advancement. 

Authority organizational cultures thrive on strict authoritarianism and recruit employees who are extremely motivated to succeed, no matter the cost. 

6. Safety Organizational Culture

Safety organizational culture is constantly concerned about “what-if” scenarios and aims to prepare for any eventuality. This emphasis on vigilant preparation is achieved through an abundance of caution and leaders who are always thinking ahead. 

The fast-paced ingenuity of other companies has no place in these businesses. Rather, decisions tend to be made methodically, with great care paid to all hypotheticals. Lloyd’s of London, a top global insurer, is a great example of a safety organizational culture. Note that its business model is largely about assessing risk. 

Preparedness for change lends the workplace a sense of security, though often at the expense of unexpected opportunities that don’t allow time for careful consideration.

If you want your organization to be more focused on safety, you might invest in more analytics and research to learn what has worked in the past, what will work in the future, and how best to deal with complications and obstacles. 

7. Order Organizational Culture

An order organizational culture calls to mind the idea of a “culture of compliance.” These firms prioritize order, respect, and discipline. 

This kind of culture begins with hiring decisions, as choosing candidates with rule-following tendencies encourages that sort of workplace. Employees who strain against order may be unhappy with this shift toward a more rigid environment. 

Though it can improve productivity (and morale for some), an order organizational culture may be perceived as cold and unfeeling. Still, they tend to get results and provide the necessary structure for high-stakes, rule-based bodies like the SEC. 

8. Caring Organization Culture 

A caring organization culture places great value on supporting employees, building loyalty, and maintaining positive interpersonal relationships and the right conditions for teamwork. 

These organizations take pains to ensure a welcoming and supportive work environment and are likely to stress diversity, equity, and inclusion (DEI) efforts. 

Patagonia is a good example of a caring organizational culture, as employees are treated exceptionally well and given unlimited time off to pursue their passions.  

The thinking behind this is that fiercely loyal employees will invest their passion into the company and continue to make it even better. Rather than financial motivation, employees are motivated by the love of their workplace, camaraderie, and positivity. 

You can initiate this type of environment by giving generous benefit packages, along with considerable time off and significant discounts. 

Conclusion

Now that you have a good idea of the possibilities of company culture, you should be able to make an informed decision about which is the best for you and your business – assuming you don’t already have your ideal culture. 

Whether you’re looking to shift your culture in a new direction or simply better understand how to motivate employees, spending time analyzing workplace dynamics and considering how you might improve your company culture is surely a worthwhile endeavor.