Company Culture: Types, Examples, and Tips for Improvement

What is Company Culture?

In the business world, company culture forms the essence of an organization. It's the amalgamation of shared values, beliefs, and practices that guide how a company operates and how its employees interact. Beyond just words on a company mission statement, it’s the heartbeat of an organization, shaping the work environment and the overall employee experience.

Why Company Culture is Important

A strong company culture is no longer a luxury but a necessity in today's corporate world. It's what attracts top talent, makes employees feel valued, and cultivates a positive work environment. A study by Deloitte reveals that 94% of executives and 88% of employees believe a distinct workplace culture is vital to business success. Hence, to understand why corporate culture is so important, let's delve into the different types of company culture.

Types of Company Culture

There are typically four recognized types of company culture: hierarchy culture, market culture, clan culture, and adhocracy culture.

Hierarchy Culture

A hierarchy culture is characterized by well-defined structures and procedures. Organizations with this type of culture emphasize stability and control, often resulting in a more formal work environment.

Market Culture

In a market culture, the primary focus is on results and achieving set targets. It's competitive, and it often pushes employees to meet the organization's goals, fostering a strong customer service orientation.

Clan Culture

Clan culture fosters a friendly work environment, resembling a large family. It emphasizes collaboration and consensus. Employees in such environments usually feel a strong sense of belonging and commitment.

Adhocracy Culture

Adhocracy culture thrives on innovation and risk-taking. Companies with this culture type promote flexibility and adaptability, encouraging employees to be creative and entrepreneurial.

Our TL;DR Run-through of Company Culture

10 Facts about Company Culture

• Influence on Performance: According to Gallup, companies with a strong culture saw a 4x increase in revenue growth.

• Attraction of Top Talent: A LinkedIn survey showed that 70% of professionals would decline a job offer from a leading company with an unhealthy culture (LinkedIn).

• Employee Retention: Employees who feel they fit well with their organization, its culture, and their team are 59% less likely to look for a job in the next 12 months.

• Work-life Balance: A study revealed that 88% of employees believe a distinct workplace culture is important for business success.

• Influence on Engagement: Gallup reported that highly engaged teams show 21% greater profitability.

• Customer Satisfaction: Happy employees equal happy customers. Companies with a strong corporate culture have a customer satisfaction rate 30% higher than other companies.

• Diversity and Inclusion: Companies with diverse management teams have 19% higher revenue due to innovation.

• Employee Health: A Columbia University study revealed that the likelihood of job turnover at an organization with a poor culture is 48.4%, compared to 13.9% at a company with a robust culture.

• Influence on Innovation: Companies that report above-average diversity on their management teams also report innovation revenue that is 19% higher than that of companies with below-average leadership diversity.

• Impact on Company Reputation: 69% of job seekers would not take a job with a company that had a bad reputation, even if they were unemployed.

Examples of Every Type of Company Culture

Hierarchy Culture Example: IBM

IBM is a perfect example of a company with a strong hierarchy culture. Its well-defined structures and standardized procedures have kept it at the forefront of the tech industry for over a century.

Market Culture Example: Amazon

Amazon's company culture is intensely customer-centric and performance-driven, embodying a market culture. CEO Jeff Bezos' philosophy of "Customer Obsession" is at the heart of their culture.

Clan Culture Example: Zappos

Zappos exemplifies a clan culture. Its "family" ethos, emphasis on employee happiness, and commitment to delivering exceptional customer service have become legendary.

Adhocracy Culture Example: Google

Google, known for its innovative and flexible culture, epitomizes an adhocracy culture. Its constant drive for innovation, combined with its commitment to employee freedom, has kept it at the forefront of technology. Read more about Google's culture here.

10 Steps to Improve Company Culture

• Define Your Mission Statement: Your mission statement should reflect your company's core values and purpose.

• Promote Open Communication: Foster a culture where team members feel comfortable sharing their ideas and feedback.

• Invest in Employee Development: Regular training and development opportunities can help employees feel valued and engaged.

• Encourage Work-life Balance: Healthy work-life balance policies can reduce employee stress and increase job satisfaction.

• Recognize and Reward Employees: Acknowledging employees' hard work and achievements can boost morale and motivation.

• Promote Diversity and Inclusion: An inclusive workplace can lead to increased creativity, productivity, and employee satisfaction.

• Foster Team Building: Regular team-building activities can improve communication and collaboration among team members.

• Provide Competitive Benefits: Offering comprehensive benefits can help attract and retain top talent.

• Encourage Innovation: Create an environment where employees are encouraged to take risks and come up with innovative solutions.

• Lead by Example: Leaders should embody the company's values and set the tone for the company culture.

Improving your company culture is a continuous process, but implementing these steps can help create a work environment where employees feel engaged, valued, and satisfied.

In Conclusion

Company culture is the unseen force that drives an organization. It shapes the work environment, influences employees' engagement, and impacts the company's overall success. Understanding the types of company culture - hierarchy, market, clan, and adhocracy - can help companies identify their current culture. and guide their efforts in creating a great company culture that aligns with their mission statement and values.

Whether you're a small business owner or a CEO of a multinational corporation, fostering a strong company culture should be a top priority. It not only creates a positive work environment but also attracts top talent, improves customer service, and ultimately drives business growth.

Remember, a great company culture is not about having fancy perks or a trendy office space. It's about creating a supportive work environment where employees feel respected, valued, and part of a team that's working towards a common goal. The key to achieving this lies in continuous improvement, open communication, diversity and inclusion, and strong leadership. A robust company culture is truly the foundation of a successful business.