What is organisational culture, what are the four main types and how does it impact the workplace? Read on to learn more.

What is organisational culture? 

Organisational culture – also known as company or workplace culture – is the values, attitudes and customs an organisation practises. Note the word ‘practises’: it’s not about what the company aspires to be or believes itself to be but the environment it creates through action, which has a direct impact on the lived experience of every person within the organisation. While steps such as offering employee perks and educating staff on core values are a great starting point to creating an enjoyable work culture, it requires deeper thought than that. It takes time and effort to build a winning culture, where values and actions are aligned, and employers and employees alike proudly uphold and promote the company’s culture.

Why does it matter?

Toxic workplace cultures cost companies billions of dollars every year. A strong company culture is key to attracting the right candidates for a job, keeping them engaged and retaining them in the long term. According to a Glassdoor study, 77 per cent of job seekers evaluate a company’s culture before applying for a position – and we can hazard a guess that this evaluation does not come in the form of what the company says about itself, but rather the reviews of people who have worked there and have experienced the culture for themselves. The same study revealed that 56 per cent of people rank an organisation’s culture as more important than compensation, showing just how crucial it is to get it right. A study by Forbes reports that 92 per cent of executives believe that improving their organisation’s culture will increase the value of the company, while 50 per cent think that workplace culture impacts productivity, creativity, profitability and growth rates. Despite this, just 15 per cent of the executives surveyed felt their own company’s culture was where it should be.

Happy work organisational culture

Clan culture

As the name suggests, clan culture occurs when the organisation feels like family (and is often family-owned), with high value placed on teamwork and mentorship. Adhering to the motto ‘we’re all in this together’, clan culture creates a highly collaborative and flexible environment where communication is prioritised and every individual is valued equally. Benefits of clan culture include high rates of employee engagement and great potential for market growth (sparked by an adaptable working environment). The drawback of this type of culture is that, while well suited to start-ups and smaller companies, it is difficult to maintain as an organisation grows. A large organisation attempting to uphold a clan culture may find that the horizontal leadership structure leads to uncertainty in day-to-day operations and a general lack of direction.

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Hierarchical culture

Hierarchical culture abides by the axiom ‘get it done right’, with a focus on structure, stability and control. This type of culture features a clear chain of command, multiple management tiers and a set way of doing things, often following practices such as implementing a dress code for employees. Hierarchical cultures are beneficial in the sense that they are efficient in their processes, stable and offer a clear direction. However, the tiered approach of such cultures can lead to employees feeling undervalued and powerless, like the company takes precedence over the individual. The rigidity of hierarchical culture leaves little room for creativity and circular feedback, meaning companies can become risk-adverse and slow to adapt in a changing marketplace, consequently falling behind their competitors.

Hierarchical work organisational culture CEO Board of Directors

Market culture

This results-oriented culture is all about reaching targets and generating growth. Internal competition is created by design, with financial rewards and promotions for ‘winners.’ Indeed, market culture lives by the adage ‘we’re in it to win it’, with employees expected to bring their ‘A-game’ every day or else fall behind. For those who enjoy the challenge of meeting quotas and competing for rewards, this type of workplace culture can be highly motivating, and organisations that create market cultures are often successful and profitable. However, the drawback of fast-paced and often aggressive market cultures is that employees run the risk of burn-out. It can also be difficult for employees to engage with their work in a meaningful way and develop their professional purpose, as there is always a sense of racing against the clock and prioritising external rewards over internal satisfaction.

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Adhocracy culture

Companies with an adhocracy culture are all about risk-taking and innovation. This organisational culture is often associated with digital companies, with all employees given opportunity to contribute ideas regardless of their position, because ‘you never know where the next big idea will come from’. Often at the cutting edge of their industry, companies with an adhocracy culture understand that to be ahead of the pack, you need to take risks – and that many minds are better than one. Benefits of adhocracy culture include high profit margins and motivated employees. Giving people the opportunity to contribute ideas sparks creativity and produces an exciting environment where everyone has the chance to break the mould and evolve professionally, often in leaps and bounds. On the flip side, such a risk-taking culture can expose companies more easily to decisions which may crash and burn.

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What works for you?

Whether a jobseeker or recruiter, employer or employee, it’s important to be aware of organisational culture and its impact. Does your workplace culture suit your organisation? Does it suit the employees – are they thriving? Does it suit you? No one size fits all. Matching people to a workplace culture that suits them (and vice versa) is a recruiter’s bread and butter – but an awareness of organisational culture serves everyone well. Seeking out a company culture aligned to your natural talents and values will go a long way to ensuring your professional success and satisfaction.

Where to next?

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