The 4 types of corporate culture, explained - Work Life by Atlassian (2024)

What makes your company unique? If you’re thinking, “Our corporate culture, of course!” you’d probably be right.

But, what does that actually mean? Even though company culture has become a hot topic in recent years, it’s still sort of intangible and difficult to wrap our arms around.

Here’s one way to think about it, a definition from our friends at HubSpot: company culture is the promise you make to your employees and candidates about what it’s really like to work for you. What sort of environment can people expect to work in? What are your core values? What are your norms?

Think of your culture as the personality of your organization. It captures the shared beliefs and behaviors that determine how your team members interact and make decisions.

Needless to say, a company’s culture carries a lot of importance. A Deloitte survey found that 94 percent of executives and 88 percent of employees believe a distinct workplace culture is important to business success. SHRM also identifies that the types of workplace cultures companies build are more important than the workplace location itself, adding that remote work has posed a number of challenges in maintaining organizational culture.

In order to foster a culture that adequately supports your team and your business goals, you first need to understand where you’re starting from. Yet, pinpointing your current organizational culture can be tough. Let’s take a look at four different types of corporate culture so that you can figure out where you currently are, and where you want to end up.

Finding where you fit: The 4 types of corporate culture

Before you start thinking about the good, the bad, and the ugly of company cultures, consider the work of business professors Robert E. Quinn and Kim Cameron. Nearly 40 years ago, they did some foundational research on company culture and came to the conclusion that no culture is as straightforward as being “good” or “bad”, just distinct. They identified 4 types of culture.

“These are not made-up culture types,” explains Kim Cameron, Professor at the University of Michigan Ross School of Business. “Rather, they emerged from empirical analyses of data from a large number of organizations. The result has been that almost 90 percent of organizations worldwide can be categorized as having one or more of these culture types dominate in their organization.”

Although these culture types are different, one is not inherently better than another. They all have their pros and cons. Additionally, an organization could have a blend of these different types of cultures. Organizational culture can shift depending on the specific team or project, it’s just about knowing where your specific culture fits in.

Type 1: Clan culture

Have you heard people refer to their coworkers as their family? That’s an indication that they’re working in a clan culture (also called a “collaborate culture”), where there’s a lot of emphasis placed on teamwork and togetherness.

Clan cultures offer a very friendly working environment where things like relationships, morale, participation, and consensus take center stage. In terms of leadership, managers are looked to as mentors, rather than figureheads who dish out instructions and reprimands.

Pros of this culture type:

• A happy team who genuinely enjoys working together.
• Improved communication between employees.

Cons of this culture type:

• Too much collaboration or unnecessary chatter, which can send productivity into a nosedive.
• Inability to make tough decisions because other people’s feelings are of such high priority.

Example of this culture type:

Online shoe and clothing retailer, Zappos, is often praised for having a positive culture – so much so that the company’s CEO literally wrote a book on their culture of happiness. With “build a positive team and family spirit” as one of their ten core values, they best fit the clan culture model.

Type 2: Adhocracy culture

Rooted in the word ad hoc, this type of culture lives by that “move fast and break things” philosophy that’s been popular among a lot of startups. You might also hear it referred to as the “create culture.”

Quinn and Cameron explain that this type of culture fosters a very entrepreneurial type of work environment, where employees are encouraged to take risks and aggressively pursue off-the-wall ideas. As a result, a lot of innovation, learning, and growth takes place – for employees and the organization as a whole.

Pros of this culture type:

• An enormous amount of innovation and growth.
• Increased psychological safety, which means employees feel secure trying new things.

Cons of this culture type:

• A seeming lack of stability because so much is invested in new initiatives.
• Sense of intimidation for newbies who don’t have the expertise to work quickly and aggressively.

Example of this culture type:

Google didn’t become one of the most well-known tech companies in the world by resting on its laurels. The company is all about innovating to improve search and launch new offerings, which means their culture is best described as an adhocracy culture. Another good example of adhocracy culture is Facebook, although their “move fast and break things” mentality has had to shift recently due to increased consumer vigilance.

Type 3: Market culture

A market culture is also called a “compete culture,” because the emphasis is placed on results. To put it simply, people want to win and accomplish what they set out to do.

Employees are highly goal-focused and leaders are tough and demanding in order to achieve the success metrics the company has defined. It can be a high-pressure environment, but simultaneously rewarding when that hard work pays off with real, measurable results.

Pros of this culture type:

• Employees are driven and highly motivated to achieve their goals.
• Improved performance for the company, because everybody is committed to success.

Cons of this culture type:

• Encouraging constant competition can lead to a toxic work environment.
• Employees can experience stress and even burnout as a result of the constant pressure.

Example of this culture type:

Amazon often made headlines for a company culture that can only be described as, well… relentless. Employees have spoken openly about the fact that they’re expected to deliver results and climb the ladder, no matter the personal cost. While Amazon would likely refute these claims, the company’s obvious emphasis on success means they still fit the market culture mold. One of Amazon’s leadership principles is to “deliver results.” “Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion,” the company says of their values. “Despite setbacks, they rise to the occasion and never settle.”

Type 4: Hierarchy culture

A hierarchy culture (also known as a “control culture”) applies to work environments that are more structured and process-oriented. Most activities and decisions are dictated by existing procedures, rather than a lot of innovation and freethinking.

Leaders are in place to ensure that their teams run like well-oiled machines, and they place the bulk of their focus on stability, results, and reliable delivery.

Pros of this culture type:

• There’s a lot of clarity in communication and expectations because nearly everything is prescribed.
• Employees experience a greater sense of security and predictability.

Cons of this culture type:

• Prioritizing procedures over people can make the environment feel inflexible and even unsupportive.
• Too much rigidity can stifle innovation and growth because people are afraid to think outside of the box.

Example of this culture type:

A good chunk of government organizations will subscribe to a hierarchy culture. Because they face a lot of regulations and are often under their fair share of scrutiny, they prioritize policies and procedures above nearly anything else. They have to do things by the book, so to speak. Additionally, paths to advancement are clearly outlined for employees. There’s no guesswork.

What type of culture does your company have?

Maybe you reviewed one of the above types of organizational culture and immediately thought, “Yep, that’s where we fit.” Or maybe things aren’t quite so clear-cut and you’re not sure where you land.

Getting a firm grasp on your company’s current culture is important. “The key is to know where they are now and where they desire to be,” explains Robert E. Quinn, Professor at University of Michigan’s Ross School of Business.

You can’t make changes or improvements to your organizational culture without knowing where you’re starting. But, how can you figure this out? Are you left to throw a dart at a board or take your best guess?

Not quite. As a complement to their research, Quinn and Cameron developed the Organizational Culture Assessment Instrument (OCAI). “It has been used by thousands of organizations to reliably assess their organizational cultures,” Cameron explains.

It’s simple: You’ll answer a survey that should take about 15 minutes to complete (there’s a free version that you can start with), and the tool will identify which organizational culture best fits your company, as well as which one is preferred.

You’ll walk away with in-depth, validated information about your organization. With those details, you can make strategic changes to foster an environment that helps your team flourish – rather than a culture that breeds frustration.