Four Types of Organizational Culture: Explained

Organizational culture was defined by Deal & Kennedy in 1982 as to how things are done in an organization. They then proceeded to create a model of organizational culture that is based on 4 different types of organizations.

This means understanding what the beliefs behind the organization are, its values, the way an organization interacts with its employees, partners, customers, and other stakeholders. Once you've understood this, you can begin to make the organizational culture start moving towards what you believe is best for the company.

Read through the four different types of organizations and choose the one that fits with your company's ethos. Then create a plan that eventually helps your organization fit into one of these models.

Here are the 4 Types of Organizational Culture

1. Clan Culture

This type of organizational culture refers to a culture that is people-oriented, friendly, and promotes collaboration. This type of organizational culture is often compared to the culture you may find in a large family.

It has been observed that employees in these types of organizations are knit closer together. They work towards everything together. Generally speaking, there is a consensus of what has to be done and how it should be done, rather than a leader assigning tasks and barking orders.

These types of organizations bring employees in on major decisions. There is also more of a "do it together," attitude to everything, including meeting targets, sorting out work and personal issues, and even eating together.

Advantages:

• Higher productivity
• Consistent organization growth
• Clear and transparent communication

Disadvantages:

• There may be a lack of diversity
• Lack of ultimate authority
• Misuse of freedom given

2. Market Culture

This type of organizational culture is all about results. It is all about maximizing market share, optimizing profits, cutting out the competition, and getting things done. You can expect to see this type of organizational culture in humungous organizations. These organizations typically have demanding leaders that are relentless and strong and hold their employees to the same standard.

Goals are laid out, and employees are pushed to achieve those goals at any cost. This also means that management keeps a keen eye on how the employee is doing, and they can expect to be rewarded if they do great and punished if they fail to meet expectations.

Advantages:

• Organization goals and objectives are met.
• Employees are inspired, motivated, and pushed to go as far as they can to help the organization achieve its goals.
• This type of organization is always ahead of the competition by making sure it adjusts to changes in the market quickly.

Disadvantages:

• Overworked employees may affect the quality of work, morale, and attrition.
• A highly driven, result-oriented workplace can become unpleasant over time.

3. Hierarchy Culture

This type of organizational culture is all about ensuring that each function does what it is supposed to and that together the system is efficient, coordinated, and runs smoothly. This culture is governed by formal rules and policies that are meant to make sure that each level of the hierarchy is working towards the organizational goal.

There is a clear structure that indicates who the leader is and who their subordinates are. It is expected that subordinates will follow a leader's directions. Another thing that has been observed in these organizations is that everyone is trying to outdo each other and reach the top of the hierarchy.

Organizations with this type of organizational culture aim at being stable in the long run.

Advantages:

• A clear and established chain of authority and command is present.
• Offer employees job security and timely compensation.
• Employees are motivated to move up the hierarchy due to status as they climb the ladder and the rewards that are reaped.
• Employees become experts in their areas since they focus on being as efficient as possible in one specific area or function.

Disadvantages:

• Collaboration is not a very high priority.
• Reduced innovation
• Higher-ups may abuse their power.
• Excessive time is allocated to managing bureaucracy.
• Communication is not as transparent as it could be.

4. Adhocracy Culture

This type of organizational culture revolves around taking risks. You can expect leaders to be innovative and creative in everything they do. The type of organizational culture encourages thinking and acting outside the box, breaking boundaries and traditions, as well as taking on challenges and risks.

Employees aren't generally chided for making a mistake in organizations with this type of organizational culture. Instead, they are given another chance to get it right and maybe even do better.

Advantages:

• Continuous innovation from every level and department.
• The company will hold a competitive advantage through innovation and risk-taking.
• Ideas are welcome and challenged
• A major focus is given to differentiation and flexibility.
• Pushing the envelope becomes second nature.
• More likely to rake in the money.
• Flexible

Disadvantages:

• Taking a risk means failing some of the time. These failures can be expensive.
• May lack instability owing to being too flexible
• Need to rely on experienced professionals as freshers will find it difficult to adapt

Conclusion

The type of organizational culture that works for a company is determined by many things. Generally speaking, if a business is nurtured and grown the right way, it paves out its form of organizational culture.