Corporate culture refers to the values, beliefs and standards that are shared across an organisation. It can be described as the ‘how and why’ things get done. There are many different types of corporate culture, but what is clear is that in high performing organisations, culture brings a positive impact. Increased productivity, engagement, and staff retention are all outcomes of a high-performance working environment.
But corporate culture remains an abstract concept, based on intangible characteristics that are difficult in practice to identify, quantify and measure. So while employers may understand the benefits and importance of nurturing a positive culture, it can be challenging to come to a consensus on what an organisation’s culture actually is and how it may need to change or develop for organisational benefit.
A helpful first step is to understand the most common types of culture, and identify which apply to your organisation.
Type 1: Clan Culture
Clan cultures typically offer extremely friendly working environments, where things such as morale, relationships, participation, and unanimity are pivotal. There also tends to be an emphasis placed on togetherness and teamwork. Managers are looked upon as mentors, as opposed to autocratic leaders who are seen as quick to turn to reprimands and orders.
Pros of Clan Culture
- A happy, contended team who genuinely enjoy working together
- Improved communication between employees
- Productivity and company growth
- Ideas and feedback
Cons of Clan Culture
- There may be excessive unnecessary chatter and collaboration, which can adversely affect productivity
- Personality clashes
- The mistaken belief that the boss is the employee’s best friend
- Because other people’s feeling are such high priority, it may result in an inability to take tough decisions.
The online shoe and clothing retailer, Zappos, is an example of clan culture and they are often praised for having a culture of happiness. One of their ten core values is to ‘build a positive team and family spirit.’
Type 2: Adhocracy Culture
This type of culture moves fast and responds to market forces. Originating from the word ‘ad hoc’, employees are encouraged to take risks and pursue ‘off-the-wall’ ideas. A direct result of this type of culture is significant innovation, learning, and consequently growth — for both employees and the organisation.
Pros of Adhocracy Culture
- Creates a tremendous amount of innovation and growth in a versatile environment
- Because employees feel secure in trying new things, there is an increased sense of psychological safety
Cons of Adhocracy Culture
- Because so much is invested in new initiatives, there can be a seeming lack of stability
- Newbies to the organisation may feel a sense of intimidation who do not have the expertise to work quickly and/or aggressively.
- Issues with recruitment
Google is all about innovation, which means their culture is best described as an adhocracy. Another excellent example of adhocracy is Facebook, although their ‘move fast and break things’ ethos has recently been forced to change because of an increase in negative consumer attention.
Type 3: Market Culture
The emphasis within a market culture is placed on results. Put simply, people want to win and accomplish what they set out to do. Employees are highly goal-focused, and leaders within such an organisation are demanding and tough in order to achieve the success targets the organisation has defined. Such cultures can be high-pressured, but reward hard work with measurable results.
Pros of a Market Culture:
- Employees are highly motivated and driven to achieve their goals
- Maximised profit
- Because every employee is committed to success, it leads to improved performance for the organisation.
Cons of a Market Culture:
- Constant competition can lead to a toxic working environment
- High costs arising from market research to stay in tune with changing markets
- As a result of the constant pressure, employees can experience stress and sometimes even burn out.
Amazon is a good example of a market culture. Employees have spoken openly about the pressure they are under to deliver results, no matter what the personal cost. While Amazon refutes such claims, their overt emphasis on success means they still fit into the market culture mould.
Type 4: Hierarchy Culture
A hierarchy culture is also known as a ‘control culture’ and applies to more structured and process-oriented work environments. Most decisions and activities are mandated by existing procedures, rather than free-thinking and innovation.
Leaders make sure their organisations run like well-oiled machines and are focused on results, stability, and reliable delivery.
Pros of a Hierarchy Culture
- Communication and expectations are clear because almost everything is prescribed
- Employees generally experience a greater sense of predictability and security
- Specialists in their field
Cons of a Hierarchy Culture
- By prioritising procedures and policies over employees, it can make the working environment feel unsupportive and inflexible
- Arguably, too much rigidity can have the effect of stifling growth and innovation because employees are afraid to think outside the box.
- Higher organisational costs because of the multiple layers of upper management.
Many government organisations subscribe to a hierarchy culture. This is because they naturally face huge regulation and are often under intense scrutiny. Additionally, paths to career advancement or promotion are clearly outlined for employees.
Avoiding a toxic workplace culture
Low staff morale, widespread gossip, and high employee turnover rates are all symptoms of a toxic workplace culture. Every organisation’s goal is to boost productivity amongst their employees, but there is a fine line between a driven workplace and one that is competitive to the point of toxicity.
Implementing punitive policies in the belief that an autocratic approach will force employees to work at a better level is likely to result in working relationships becoming strained and eventually reaching a breaking point.
However, there are some common strategies that may resolve team issues in a healthy way.
Where credit is due, give it!
Do employees take credit for their colleagues’ work? Do they belittle one another’s efforts to make themselves look good? If this sounds like your organisation, you should ensure that every member of staff who contributes to a project receives the credit they deserve. This can be achieved by regularly observing your staff and asking for progress updates.
Encourage team sharing
It is normal for there to be some friendly competition within teams, but how you deal with the competition matters. If your organisation subjects the ‘losers’ to humiliation or ridicule, it could lead to the loss of morale and resentment. Ideally, you want your staff to be driven, not demoralised. Consider arranging for top performers to mentor those who are having trouble hitting targets. This will foster a more positive working environment and create a more cohesive team, particularly if the top performer is personally invested in their mentee’s progress.
Avoid playing favourites
If an organisation plays favourites and blames scapegoats for mistakes, it is likely to be a massive contributing factor to a toxic workplace culture. This type of behaviour can incite bullying and the formation of cliques, causing the eventual breakdown of the team. Ultimately leading to a decrease in productivity and an increase in staff leaving the company.
Lead by example
A good organisation or business leader admits to their mistakes and lives by their own code of conduct, whereas a poor boss enforces it on others.
Provides adequate an outlet for mutual feedback
It is essential to provide employees with a way to communicate with the management. They should be reassured that negative feedback will be considered appropriately and addressed without fear of reprisals or punishment. Think about offering incentives for sharing ideas that can improve the working environment.
Provide positive feedback if they are doing well in their role. People love to know their work has been noticed, and they are valued as an employee.
Encourage an open office culture
While boundaries between employees and management can be important, it also pays dividends to encourage employees to approach you with their concerns or if they need help. You will probably find they have good ideas to share but were lacking in confidence or afraid of being criticised.
Keeping the lines of communication open and encouraging collaborative working can turn a toxic working environment into a more dynamic workplace, where employees are motivated, happy, and engaged in their roles.
The role of corporate culture in a high performing organisation
A high-performance culture is a group of behaviours that lead an organisation to achieve superior results, both financial and non-financial, such as employee retention and customer satisfaction, for example. And when those behaviours are aligned with organisational goals, it is poised to achieve the best results.
What often separates the highest-performing companies from the rest is their culture. If culture is so vital to an organisation, how can you make it perform as high as possible? No one-size-fits-all formula exists, but there are ten qualities that have been identified that are common to high-performance organisations which provides guidance for those companies seeking to assess their own cultures.
- Collaboration: employees share, cooperate, and work well together
- Innovation: encourages new ideas, giving individuals the ability to move ideas through the organisation
- Agility: responding and adapting to opportunities as they arise
- Communication: employees send, receive, and understand the necessary information
- Support: providing each other with the guidance and resources they need to be successful within their role and the organisation as a whole.
- Wellness: policies put in place and resources provided to help employees maintain their physical and mental health.
- Work environment: ensuring employees are accountable for their actions and have the independence to make decisions regarding their work.
- Performance focus: employees are made aware of what determines success within their role, and they are recognised and rewarded for their achievements.
- Mission and value alignment: employees are made aware of, understand, and believe in the organisation’s mission and values.
Benefits of a strong corporate culture
There are obvious benefits to fostering a strong, unified company culture which contributes to the identity and values of an organisation. When people feel they belong to an organisation, they are more likely to stay put for the long term. This helps retain talent, and leads to lower turnover of staff, fewer new hires, and improved collaboration within teams.
A strong corporate culture adds value to an organisation’s brand identity. By treating employees well and promoting a fun-loving, generous brand, organisations will reap the benefits. Depending on target demographics, this could lead to a major sales boom and increased customer loyalty.
Corporate culture is becoming increasingly important, with more companies shifting their attention to creating strong cultures and preserving them through ongoing evolution and development. Once you understand the importance of culture within your organisation, you may decide to perform a ‘culture audit’. This is a way to evaluate where the culture within your organisation currently stands and establish a plan to make corrections if necessary.
Whilst there is no single formula for ‘correct’ corporate culture because every business is different, it is important to devise a strong and consistent set of values if you want your organisation to remain competitive in the future.
DavidsonMorris’ specialist HR consultants provide expert guidance to employers on all aspects of workplace culture and engagement, providing support and practical guidance to help assess, enhance and develop workplace culture for organisational benefit. For help and support, contact us.
Corporate culture FAQs
What are the 4 types of corporate culture?
Although there is not a finite list of definitions of corporate culture, the four main types include clan culture, adhocracy culture, market culture and hierarchy culture. It is common for most organisations to have their own particular combination.
What is corporate culture and why is it important?
Corporate culture determines how the employees within an organisation feel, act, and think. It symbolises the uniqueness of a company, expresses its core values, ethics, behaviours, and beliefs. A company with a strong corporate culture attracts talent and keeps it.
What is an example of corporate culture?
Government organisations are a good example of hierarchy culture because they face immense regulation and tend to be under a lot of scrutiny. They prioritise procedures and policies over nearly everything else.
What is the role of corporate culture?
Corporate culture conveys how an organisation sets expectations, rewards desired behaviours and supports important business objectives. Cultural norms define how employees interact within their workplace, encouraging them to remain motivated and loyal to the organisation.
Last updated: 24 August 2021