The 4 Main Types Of Organizational Culture – With Examples (2023)

Organizational culture is the main personality of a company, it focuses on the values, attitudes and practices which outline and define an organization. The culture can have a direct impact on the wellbeing of the staff, which is why it is crucial that a company considers their culture carefully.

This article will focus on the four main types of organization culture, analyzing the pros and cons of each one. By doing this, it will be easy to compare different cultures and make informed decisions on which one would be the most effective for your organization.

Why Is Organizational Culture Important?

Organizational culture is extremely important as it outlines the values of the company. Having a specific culture can ensure all candidates align to it to decrease any work toxicity and increase productivity of workers.

Before joining a company most candidates will analyze a company’s culture to decide if it is an environment that works for them. This supports successful candidates by increasing the chance of consistency and a unified team.

1. Adhocracy Culture

The first main culture is Adhocracy. This culture’s main focus is innovation and risk taking. They strongly believe in taking large risks to achieve the goal. Employees within an Adhocracy culture are encouraged to think creatively and broadly, suggesting different ideas.

Adhocracy culture also encourages all their staff members to be innovative and question what is currently in place. This is often done by group brainstorming or strategy meetings.

Pros of Adhocracy Culture

There are lots of pros of Adhocracy culture as it can significantly contribute to high profit margins. The more the employees risk, the higher the reward opportunities. Also, employees are extremely motivated as they are always trying to strive higher and improve the company.

There are lots of professional development opportunities within this culture due to the creativity and flexibility and the amount of new ideas which appear.

Cons of Adhocracy Culture

Whenever working with the mindset of taking risks, there are always chances that it won’t pay off. Taking large risks can have huge impacts on a company if an idea doesn’t work out, costing the company both time and money.

Adhocracy culture also increases competition between workers as everyone is aiming to find the next big thing and improve what is already out there. Competition can contribute to a toxic work environment as it lowers trust between workers.

Example of Adhocracy Culture

Organizations would operate in this culture by employees encouraging themselves to always go above and take risks which they believe would benefit the company. This type of culture would work in a company such as Amazon or Wikipedia where there is always a way to improve and adapt the existing product.

2. Clan Culture

The second main culture is Clan culture. This culture focuses on mentorship and teamwork with a generic view that they are a team and support one another.

This culture is specifically people-focused and often has a family-like feel within the teams. The environment is extremely collaborative and communication and teamwork is prioritized.

Employees may have a specific mentor or a group of mentors increasing opportunities to learn off of another worker above them or someone with more experience. There is also a flexible approach to the work to reduce the stress and benefit everyone’s wellbeing.

Pros of Clan Culture

The main pros of Clan culture are that it has the highest rates of employee engagement and wellbeing. The environment is very supportive and positive, making people feel relaxed and able to work to the best of their ability.

There are also a large amount of opportunities to learn from different people due to the overall family feel and the acceptance of asking for help or further explanation in a different field.

Cons of Clan Culture

The main con of Clan Culture are that it is difficult to maintain in a larger company with different teams and large groups of people. When this is implemented in a large company the objectives and individual responsibilities can be confused which increases a lack of leadership and less work being completed.

Example of Clan Culture

An organization with a Clan culture would operate by focusing on the people instead of the outcome and prioritizing personal wellbeing and happiness. By doing this people feel safe and relaxed, often increasing their work ethic. This would work well in a small company such as a restaurant, shop or small office.

3. Hierarchy culture

The third main culture is the Hierarchy culture. This type of culture focuses on the traditional structure with a clear chain of command and direct line leaders. There is usually a set structure and a strict dress code for all employees to follow.

A clear chain of command is outlined when a new employee joins which reduces any complications or confusions within the team. Most teams will have a team leader who reports to their leader and this ranking continues until reaching the CEO.

Pros of Hierarcy Culture

The main pros of the hierarchy culture is that with a clear structure there is clear direction and less employees will be confused about who to report to and who to go to with queries.

This can also increase workload as each person has a clear understanding of what their role is and how to do it.

Cons of Hierarchy Culture

One con of hierarchy culture is that with a rigid structure there are limitations on creativity and flexibility, reducing the speed that a company will keep up with changes outside of the company.

This type of culture also has low employee feedback as it is a system without much freedom.

Example of Hierarchy Culture

An organization would operate within a hierarchy culture by having specific jobs and a hierarchy between each role so it is clear who reports to who. This type of culture works in large offices and organizations such as political institutions and the military.

4. Market Culture

The fourth main culture is market culture. The main focus within this culture is competition and the company continuing to grow. The priority is profit and what the company can do to always increase their profit and finances.

Each role will have specific targets and will focus on reaching those targets. Employees may be encouraged with bonuses or other rewards if they are able to meet them.

Pros of Market Culture

The main pro for market culture is that companies who focus on profits usually increase them regularly. Employees are focused on reaching their targets due to the rewards they receive if they do. There are also additional motives for the top performers, increasing motivation for all workers.

Cons of Market Culture

The drawback of market culture is that each decision is based around a number, making it hard to make decisions based on anything other than data. Often data alone isn’t enough information to make an informed and sensible decision.

There is also a higher chance of burnout due to pushing for personal reward. If employees are risking their mental health to reach a target it increases the toxic environment of the workplace, decreasing the quality and quantity of the work.

Example of Market Culture

An organization would use market culture to increase productivity and encourage employees to work to their highest ability to increase profit margins for the company. This is often rewarded with bonuses. This could be used in a competitive industry where there is constant change and pressure for a company to remain the best and most efficient.

Which One Is The Right Fit For Your Organization?

An organization must decide which culture is the most appropriate for itself by weighing up the pros and cons of each culture. Also addressing the main goals and deciding which aligns with current staff and leadership.

If none of the four main types line up perfectly, there are other organizational cultures. However, a company can merge cultures to find the right mixture for optimal performance. It is important for an organizational culture to be well established and reflect the values of the company to attract the right type of employees.