Company culture is defined as the collective attitudes, behaviors, values, and characteristics held by a specific organization. Alternative phrases that business professionals commonly use in place of company culture include-
Case studies have shown that 77% of adults closely consider corporate cultures when applying for employment opportunities. An additional 56% of participants rank company culture as more important than compensation.
Corporate culture influences all aspects of an enterprise ranging from employee engagement to bottom line profitability. As such, businesses are realizing the importance of organizational cultures and the value of optimizing them.
Professor Robert Quinn and Kim Cameron of the University of Michigan are two company culture researchers who conducted extensive case studies and analysis. In 1983, Kim Cameron and Robert Quinn developed and coined the Organizational Culture Assessment Instrument, commonly abbreviated as OCAI.
Kim Cameron and Robert Quinn analyzed 39 attributes of business effectiveness and concluded that there are two noteworthy polarities. The first polarity is internal focus and integration versus external focus and differentiation. The second polarity is stability and control versus flexibility and discretion.
The conclusions of Robert Quinn and Kim Cameron are visually represented by the Competing Values Framework. OCAI focuses on 4 different types of company culture including-
1. Adhocracy Culture
On the Competing Values Framework, adhocracy cultures are classified as flexibility and discretion and external focus and differentiation. Adhocracy culture is great for businesses in the tech industry and for work environments that cultivate creativity.
Adhocracy culture is preferable for enterprises with core values focused on the formulation of new ideas and risk taking initiatives. The adhocracy culture is one culture where employees feel encouraged to explore novel and innovative concepts.
Adhocracy culture is ideal for developing new products or new ideas to improve existing products. Adhocracy culture fosters both the innovation and agility necessary to remain competitive in an ever evolving global market.
2. Clan Culture
On the Competing Values Framework, clan cultures are classified as flexibility and discretion and internal focus and integration. Clan culture is heavily reliant on a within organization camaraderie between team members.
Clan cultures are an excellent workplace culture option for firms that consider their employees as a type of extended family unit. Clan cultures consider team building and collaboration efforts a top priority in order to facilitate these very close workplace relationships.
For a culture based on loyalty and trust, clan culture is an appropriate fit that can provide extensive benefits to both businesses and their employees. Case studies have shown that employee engagement is positively influenced when employees feel that they are a valuable part of a team.
When employee engagement rates are heightened productivity is also boosted which results in increased bottom line profitability. Additionally, when employees feel happy they are likely better customer service representatives, which significantly benefits a business's brand and reputation.
3. Hierarchy Culture
On the Competing Values Framework, hierarchy cultures are classified as stability and control and internal focus and integration. Hierarchy culture is perhaps the most traditional of the different types of company culture.
Hierarchy cultures consider established procedures and processes as a top priority in all business operations. Within the hierarchy type culture, decision making is primarily designated to company leaders and executives. Core values of a hierarchy culture are control and efficiency.
While the adhocracy culture type embraces the formulation of new ideas and encourages risk taking initiatives, hierarchy cultures are much less tolerant. Hierarchy culture is opportune for businesses that consider safety and security as top priority issues.
Industries that benefit from the hierarchy culture type include government agencies and healthcare organizations. However, many customer service focused businesses also use hierarchical culture, including fast food establishments.
A significant advantage offered by the hierarchy culture type is the likely stability of both bottom line profitability and employee engagement levels. A consequence of hierarchy culture is a failure to adapt as quickly to market changes and customer demands.
4. Market Culture
On the Competing Values Framework, market cultures are classified as stability and control and discretion and external focus and differentiation. The market culture type considers bottom line profitability as its top priority.
A downside of market culture is its relative indifference to employee engagement and satisfaction levels. Due to a focus on performance and productivity, many employees feel this culture type is not invested in their personal development.
Alternatively, a significant benefit of market culture is due to the same focus on performance and productivity. Top talent employees feel validated in this culture type when appropriately and abundantly financially compensated for their hard work.
This company culture type is preferred by enterprises that seek to control as much of the market share as possible. Within organization individualistic competitiveness is very high in market cultures as opposed to other culture types that possess a strong focus on team building and collaborations.
The main 4 types of organizational culture are adhocracy culture, hierarchy culture, clan culture, and market culture.
There are significant benefits and consequences to different culture types.