4 Types of Corporate Culture 2022 (#192)
Corporate Culture Types
One of the building blocks of any exceptional organization is a superb culture. Culture is defined as the beliefs, values, and behaviors that determine how an organization’s people interact and behave both inside and outside the organization. The After Action Review is a great way to build a safe, connected, engaged environment where everyone’s voice is heard. That environment is one of the key components of creating a great culture.
It is useful to understand what type of corporate culture is dominant in your organization. The University of Michigan business professors Robert E. Quinn and Kim S. Cameron developed the Organizational Culture Assessment Instrument (OCAI) as a way to assess organizational culture. Working with over 12,000 companies, their research determined that there were four predominant company cultures: clan, adhocracy, market, and hierarchy. While each organization has a dominant culture, every organization exhibits its own unique combination of the four types.
Clan Culture
Clan cultures are friendly, collaborative cultures that are like a large family, or clan, where people have a lot in common. This type of culture likes to “do things together.” The clan culture favors flexibility with an internal focus. People in these organizations form strong bonds of loyalty, tradition, and congruence. Examples of companies that may have a clan culture include Ben and Jerry’s, Pixar, and Love’s Travel Stops.
Creating a Clan Culture
To cultivate a clan culture within your team, your first step is to turn to your team. Ask them how to create a better culture and what they want out of the group. Communication is critical to a successful clan culture. Make sure your team knows you are open to new ideas and feedback. Once the team starts contributing, then it is critical that some of the ideas and feedback are put into action.
Adhocracy Culture
The base of this culture is the concept of “ad hoc.” An adhocracy culture is a dynamic and innovative environment where employees are willing to take chances and leaders are typically seen as inspirational innovators willing to challenge assumptions and take risks. An adhocracy favors flexibility while staying externally focused. This type of culture likes to “do it first.” The core values of the culture are change and agility. Examples of companies that may have an adhocracy culture are Tesla and DoorDash.
Creating an Adhocracy Culture
Depending on your business, it may be difficult to implement a true adhocracy culture. However, every team can use brainstorming and strategy sessions that include a wider audience. These sessions should help bring new ideas out that will help grow and expand the business. Rewarding individuals or teams that develop successful new ideas that grow the business can also help further develop the adhocracy culture.
Market Culture
A market culture is a culture in which the goal is to get down to business, get work done, and achieve results. This is often a competitive environment, even among coworkers. The market culture emphasizes stability while staying externally focused. This type of culture likes to “get the job done.” These companies’ goal is to make as much profit and capture as much market share as possible. Companies that may have a market culture include Amazon and historically, Ford Motor Company under Henry Ford.
Creating a Market Culture
A market culture is tied to the company’s bottom line. First, evaluate every position in the organization. Understand the Return on Investment for every role. Then develop benchmarks for each position. Finally, implement a reward system for the top performers.
Hierarchy Culture
Hierarchy cultures emphasize process and procedure. Leaders ensure that the employees follow the “company way” — the tried and true ways of doing business. This type of culture likes to “do things right.” The companies focus on following the rules and guidelines to reduce costs and make few mistakes. Many of the military units I were part of had a strong hierarchy culture. Other organizations that may have a hierarchy culture are NASA, ExxonMobil, and General Electric.
Creating a Hierarchy Culture
To grow a hierarchy culture, first, evaluate your standing operating procedures and processes. When was the last time they were updated? Do we still do it this way? If there are gaps, develop new processes and procedures. Then supervise their implementation. Also, make sure every team, department, and manager understands their short- and long-term goals.
Other Thoughts
The battalion I commanded in Afghanistan had six companies each with its unique combination of cultures. Angel Company was more of an adhocracy and wanted to lead the way. Battlehard Company was more of a clan, tackling problems together. Choppin’ Company was more of a market, get the job done, culture. And finally, the Forward Support Company was a hierarchy — they needed to follow the rules to provide logistical support to all the other organizations.
There’s no correct organizational culture for a small or medium-sized business, non-profit organization, or sports team. Each culture type promotes some forms of behavior while inhibiting others. Some are well suited to rapid change and growth, while others work better to slowly, and incrementally develop the organization. As your organization evolves it may begin as an adhocracy as a start-up and then transition to a market or hierarchy when it is larger.
What’s Your Corporate Culture?
As part of this blog post, I ran a poll on LinkedIn. Over three days, 29 people voted on what type of corporate culture that they are working in. When the votes were tallied:
Hierarchy — 41%
Clan — 34%
Market — 21%
Adhocracy — 3% (I think this low percentage is due to me not having a large number of followers on LinkedIn in start-ups)
It’s important to know and understand what your predominant corporate culture is.
Conclusion
Knowing what type of culture your organization has is an important step in growing and developing it. Two questions to ask yourself and your team — what type of culture predominates in your organization? And is it the type of culture that will help you grow and develop your organization going forward?
Go on the offensive in 2022 and start building your clan, adhocracy, market, or hierarchy culture today.