4 types of successful company culture to learn from

Organisational culture is what shapes the overall functioning and success of an organisation. 

Company culture covers the values, policies, work processes and behaviours that make up a work environment and can have a huge impact on employee satisfaction, engagement and productivity. 

So choosing the right culture style for your business is hugely important but can be challenging with so many types to consider.

We’ve done the hard work for you. Here, we cover the most effective practices for fostering a productive work environment. We also assess the benefits and drawbacks to see which may work best for improving employee engagement and aligning teams with your individual business’s mission and values.

4 common company culture practices

Strategy is important, but it can’t operate without culture. After all, as the famous saying goes – “culture eats strategy for breakfast”.

Creating the right company culture isn’t solely about offering the best benefits or perks. Rather, it’s about deciding on the working structure that effectively supports business objectives, employee productivity, and wellbeing. Here are the most popular culture types, plus examples of successful businesses that utilise these approaches.

1. Adhocracy culture

For adhocracy culture, it’s all about innovation, creativity and risk-taking. 

Adhocracy culture embraces a decentralised approach to decision-making, mostly popular in startup environments. Unlike traditional hierarchical structures, there isn’t a system of authority or procedures. Instead, employees are encouraged to adopt a “fail fast” mindset and take their own initiative and solve problems as they see fit, such as developing new product ideas or improving existing processes, without the need for formal approval. Adhocracy culture is best suited for industries that need adaptability to rapidly changing environments, including technology and creative services.

Pros of adhocracy culture

• No hierarchical structure: The flat organisational structure makes it easier for employees to share their thoughts openly, encouraging employees to explore new ideas without restraints.
• Faster decision-making: Decentralised decision-making enables quicker responses to challenges and opportunities, without needing to go through any time-consuming procedures.
• Quick adaptation: With no rules or regulations to follow, it’s easier to adapt to rapid market changes, allowing organisations to adjust quickly and take advantage of emerging opportunities.

Cons of adhocracy culture

• Lack of stability: This can make it difficult to maintain certain practices. This can also be challenging when onboarding new employees, as they may struggle to understand their roles and responsibilities.
• Risk of inefficiency: The absence of clear procedures poses the risk of duplicated work or misallocated resources, potentially leading to inefficiencies in team management and increased operational costs.
• Uncertainty on decision-making: Employees may become confused about who has the authority to make certain decisions, which could lead to delays in crucial choices and difficulty responding to market changes.

2. Hierarchy culture

The hierarchy culture is the most traditional work practice, characterised by an emphasis on structure, control and stability.

Companies with a hierarchy culture are typically organised in a clear and formalised structure with well-defined roles, responsibilities and reporting lines. Decisions are made at the top level and communicated from the top down with little or no input from lower levels and can be executed quickly and efficiently because everyone knows what they are accountable for and to whom. Companies in the financial, healthcare and oil & gas industries often follow a hierarchy culture to manage risk and achieve more stability.

Pros of hierarchy culture

• Good structure and stability: A clear chain of command and formalised structure lets companies maintain stability and order, ensuring roles and responsibilities are clearly defined and communication is efficient.
• Clear accountability: Roles and responsibilities are easily defined in hierarchy cultures, meaning employees understand their duties and are held responsible for their performance and outcomes.
• Easy decision-making: An organisation with a hierarchy culture can easily decide which team members to include in the decision-making process. This ensures that choices are made by individuals with the appropriate expertise.

Cons of hierarchy culture

• Rigid and bureaucratic: This can make hierarchical structures inflexible, so it can be difficult to adapt to changing markets, industry trends of technological advancements.
• Limited creativity and innovation: Hierarchical structures can hinder creativity and innovation. Lower-level employees may feel restricted in proposing new ideas or solutions, leading to missed opportunities for improvement or growth.
• Communication barriers: Information may not be shared freely across different departments, resulting in misunderstandings, delays in decision-making and missed opportunities for collaboration.

3. Clan Culture

A clan culture promotes a collaborative and family-like environment. Its horizontal structure is built up by teams of close-knit employees who strongly identify with the company’s values and all have equal power in making decisions. For example, clan companies would have regular team meetings where employees openly discuss ideas, challenges and solutions in a supportive atmosphere. Every employee is encouraged to contribute their insights, fostering a sense of ownership and commitment to the company’s goals. As a result, these companies are characterised by collaboration, teamwork and employee participation.

Pros of clan culture

• Adaptable and flexible: Clan cultures embrace feedback, giving them higher adaptability to any changes or new challenges. Employees will feel comfortable sharing ideas and the group unanimity ensures that everyone is involved in decision-making, in turn building a good sense of investment in the business’s success.
• Enjoyable work environment: Staff retention is crucial in business, and happy employees are more likely to stay when there’s a positive work environment. A clan culture builds a strong sense of community and shared values among employees, contributing to mutual trust and respect within an organisation. 
• Open communication: Regular check-ins, 121s, employee surveys and open meetings are a common part of clan culture. Ideas and honest feedback are always welcome, and everyone is kept informed of what’s happening in the company.

Cons of clan culture

• Difficult to scale: As an organisation grows, scaling may require more formalised structures and processes. This can make it challenging to maintain the familial atmosphere of a clan culture.
• A group-think environment: If everyone shares the same values and beliefs, the organisation could miss out on potential opportunities from other perspectives. Employees may also be too afraid to voice different opinions for fear of disturbing the peace.
• Overcollaboration: While collaboration is beneficial for decision-making, too much of it can actually slow down the process. Allowing everyone to add their input can result in too many meetings, prolonged discussions and difficulty in reaching a final consensus.
  

4. Market culture

Market culture is all about performance, results and profitability. There’s a strong focus on winning in the marketplace, surpassing competitors and achieving measurable goals and targets. For example, a company with a market culture will often use an incentive-driven approach to motivate employees to achieve specific objectives, such as receiving a performance-related bonus when hitting Key Performance Indicator (KPI) targets.

Organisations with a market culture are heavily customer-focused and strive to deliver products and services that meet or exceed their expectations. This fosters a fast-paced environment where employees are expected to perform at their best, even under pressure.

Pros of market culture

• High performance: Motivated employees strive to achieve their best, leading to high productivity and efficiency. They’re pushed to “go the extra mile”, so are constantly focused on improving their skills and knowledge.
• Increased profitability: The focus on results and efficiency often leads to increased profitability and financial performance and employees who are consistently motivated to achieve big results are most likely to generate a bigger income.
• Good performance measures: A market culture has clear performance metrics and targets – often SMART – ensuring that employees are accountable for their work. This promotes a sense of responsibility and ownership, where good performance can be rewarded.

Cons of market culture

• High stress and burnout: The pressure to constantly meet targets and outperform competitors can lead to high stress and burnout among employees. The long working hours can also affect their work-life balance.
• Risk to workplace culture: With so much competition, there’s the risk of a toxic work environment. The cut-throat nature can also pose the risk where employees engage in unethical behaviour or sabotage others to achieve their goals.
• Decreased collaboration: As employees are more focused on individual achievements, the level of competitiveness may hinder collaboration and teamwork towards common goals.
  

Tips on choosing the right organisational culture

Choosing the right organisational culture is crucial to sustaining and scaling your business, whether you’re starting from the beginning or changing your current culture. But how do you know which one is best for your company? Here are a few considerations to help in selecting the right culture for your teams.

• Define your long-term vision and mission.

Your mission statement is your business’s core purpose, fundamental goals and values that guide its actions. Your organisational culture should be driven by your mission statement and core values, so this should be the first step in defining your own. If you need some inspiration, you can also look into motivational quotes from top business leaders or further examples of companies with successful workplace cultures.

• Compare your core values

Next is to compare your core values to the different types of workplace cultures. It’s important to align your values with your culture. For example, if competitive advantage is one of your values, then market culture might be the best fit. On the other hand, if you favour decentralised decision-making then adhocracy may support your long-term plans best.

• Consult your teams

After all, open communication is key to creating a positive work environment. Ask your team to share their thoughts on how they’d like your organisational culture to feel and what will motivate them the most. This can be done through regular feedback sessions, anonymous surveys and open forums where employees can express their opinions. You could also consider hiring a culture consultant to help guide the development and implementation of your culture.

Conclusion

Every company culture type has its own set of strengths and challenges, so businesses should carefully consider which one best supports their mission and objectives. This involves not only evaluating how each culture type aligns with strategic goals but also understanding its impact on employee satisfaction, productivity and overall effectiveness. 

By selecting a culture that resonates with the values and aspirations of both the organisation and its employees, businesses can develop an environment where employees thrive and long-term success is nurtured.