What is Organizational Culture?
Organizational culture has to do with the overall workplace environment of a company. The workplace environment not only encompasses the actual physical (or virtual) environment of a company but also how people relate to each other.
For example, some workplaces are very relaxed in look and feel. Companies that emphasize a more relaxed work environment might have larger lounge areas where employees can take breaks, socialize and perhaps even play a short game of foosball. The employees of a company like this might be dressed more casually and can talk in a more casual manner.
This can also be seen within the virtual office environments, where companies that want to emphasize a relaxed work environment will allow their employees to work around their own schedule and from wherever they want to work. That means that employees are allowed to work whatever hours they want and are not expected to report or provide updates at particular times of the day. The power structure of these companies is usually more inclusive, and they value the opinions of all employees and not just people at the managerial level.
Other companies might have much more strict rules around the office environment, allowing employees to take breaks but only at certain times. These types of work environments are much more traditional and might even have a more traditional organizational structure. Places such as banks, for example, would be more formal when it comes to interactions between employees. These types of companies often have a more top-down power structure where executives and managers make the decisions.
How Organizational Culture Affects Business
Company culture can affect a business both internally and externally. Internally, the corporate culture affects the employees and how they behave. Some of the things that get influenced by organizational culture are:
- dress code
- office hours
- behaviour
- values
When we look at the external effects of company culture, we talk about how employees and customers perceive the company. Potential employees care a lot about what the office environment is like when looking for a job. If your company has a culture that they do not feel comfortable in, it can affect how long they might work for you or even if they apply for the job in the first place. For example, some people prefer a more formal work environment while others are motivated by a relaxed atmosphere. In other words, your company’s corporate culture can have a huge impact on what type of employees you have.
Your company’s organizational culture can also affect the type of customer attracted to buying your products or using your services. For example, suppose your company aligns itself with sustainability. In that case, you are more likely to attract customers who also want to live sustainably.
Some customers will be more likely to choose your company if they see you value the same things as them. Customers are often very knowledgeable about how companies treat their workers or what charitable donations the company makes (if any). These can all influence decisions about spending their money on your products and create loyal customers if their values match your organization’s culture.
Seven Types of Organizational Culture
Every company has its own organizational culture. Knowing what type of culture your business has might help you understand what is working and where you might need to improve. Here’s a peek into seven common types of organizational culture, so you can better understand how to define your own:
1. Clan Culture
This type of organizational culture is based on the idea that everyone who works for the company is part of the family. Clan culture is mainly seen in smaller organizations where the business is owned and operated by a family. In this type of company, you see that the work environment is very supportive and everyone gets a chance to say their opinion on changes. This can lead to great innovation as there is a variety of ideas that everyone shares in the company. Another aspect of the clan culture is the use of mentoring programs. In organizations with a clan culture, mentorship is a great way for leaders to help shape new employees and allow employees to feel bonded to one another.
2. Hierarchical Culture
This is a traditional type of organizational structure where all the power is at the top of the organization. In other words, executives and managers make all the decisions, and regular employees simply follow what is expected of them. In a hierarchical culture, everyone has a clear role and purpose, making this type of company very efficient. That said, companies with this type of culture may not have as much innovation as there are not as many people making decisions. Such companies are also very traditional and might have stricter rules around dress codes and working hours.
3. Market Culture
Market culture is one in which the organization values results and is driven by sales. Employees of a market culture organization are very competitive and are always expected to bring their “A-game.” This type of organizational culture might have emplaced reward scenarios, such as bonuses for employees who outperform others. With the high competition, some employees might feel a high level of stress, and burnout is very common among people who work in this type of culture. However, at the same time, a market culture can be highly innovated and often has new products coming out all the time.
4. Adhocracy Culture
This is a less traditional type of workplace where people are valued for their individual opinions. This type of culture is often seen in tech companies as they value new ideas and need people to understand things such as trends. The environment of these types of offices is often more relaxed, as they value employee satisfaction and encourage creative thinking. The main idea is that everyone’s opinions matter as you never know where the next idea will come from.
5. Purpose-Driven Culture
A purpose-driven organizational culture is when a company aligns itself with a particular charity or value. For example, a company that has built its business around the idea of sustainable living would have a purpose-driven culture. There is an emphasis on giving back to the community for these organizations. Having shared ideas with their customers is very important to these companies. It creates brand loyalty and gives their employees the sense that they have a higher purpose for their work. These types of companies often have a very high employee retention rate.
6. Customer-Focused Culture
This type of organizational culture focuses on the customer experience. For this type of company, the most important thing is customer satisfaction and employees are encouraged to make sure that the customer is always happy. A customer-focused organization values customer loyalty and allows its relationships to drive sales. Employees have to be motivated by customer satisfaction in order to be successful in this type of organizational culture.
7. Innovative/ Creative Culture
This type of organizational culture emphasizes new ideas to improve customer processes and services. This type of company is often seen in the technology field and is looking for ways to improve its customers’ lives. This type of environment gives employees a lot of freedom and allows them to work however they want, and they can choose to work independently or as part of a team to emphasize their creative process. An innovative or creative culture is seen as less traditional and often suited for remote offices.
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