4 Types Of Organisational Culture You Need To Know

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Organisational culture really is the heart and glue of a business. It helps to shape the way your employees work, interact and thrive. But do you understand your company’s organisational culture and what steps you need to take to change yours if it’s no longer benefiting you?

We’ve covered everything you need to understand what organisational culture is, the different types, and how to change yours if it is negative. Just keep reading!

The Definition Of Organisational Culture

What is organisational culture?

The term organisational culture can be described as the personality of a company or organisation.

Elliott Jaques, a Canadian psychologist and management consultant, is often credited with introducing the idea of organisational culture when he published the 1951 book “The Changing Culture of a Factory.” Since then, discussions of corporate
culture has become popular among managers, professors, and others in leadership roles.

Why Organisational Culture Is Important

Organisational culture plays a critical role in improving a business’s recruitment and employee retention efforts.

If a company is known for providing a positive and supportive organisational culture, job seekers will be more likely to apply for and accept positions there. The existing employees will be more likely to stick around long-term, too.

When leaders strive to improve the culture of their organisations, they can also improve productivity, employee engagement, and morale. Put simply, people want to work harder at companies that prioritise organisational culture. When culture improves, employees can get more done and improve the quality of their work.

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Four Types of Organisational Culture

Kim Cameron and Robert Quinn from the University of Michigan in the United States have been credited with labeling the four most well-known types of organisational culture. Let’s take a look at them in more detail.

Clan Culture

Clan culture is people-focused. In companies with a clan-type culture, the business’s employees feel like a family.

These work environments are often highly collaborative. Every individual is valued, and communication is a top priority among all employees.

Clan culture often shows up in startups and small businesses. When companies are just getting started, leaders must focus more heavily on collaboration and communication as they seek feedback from employees to set the business up for long-term success.

Benefits Of A Clan Culture

Companies that offer a clan culture often have high employee engagement rates. Their employees are happy about working together to achieve their goals, and that happiness leads to more pleased, more satisfied customers.

A clan culture also tends to be highly adaptable. Employees at these companies find it easy to pivot and adjust based on changes in the market, making the business more resilient.

Drawbacks Of A Clan Culture

As the business grows, it can be challenging to maintain a family-style environment. When the company has hundreds or thousands of employees, it’s hard for everyone to feel connected the same way they can when it consists of just a dozen people.

Companies with a clan culture can also, in some cases, feel disorganised or lacking in a clear leadership hierarchy. These issues may interfere with productivity, especially as the company gets bigger.

Creating A Clan Culture

Leaders can cultivate a clan culture by prioritising communication. They must be open to feedback from employees (and the employees should feel safe to share all opinions, not just positive ones).

Employers must also act on employee feedback to build trust and show employees that they’re genuinely valued.

Adhocracy Culture

Adhocracy culture focuses on innovation, risk-taking, and adaptability. Companies with an adhocracy culture are known for being on the cutting edge of their industry. They’re always ahead of the curve and working on starting the next trend.

To be an innovative business, employers and employees must be willing to take risks. They must also be willing to share their ideas without fear of being shamed or criticised.

Benefits Of A Adhocracy Culture

Companies with an adhocracy culture – when they have a good idea and execute it well – are well-known and respected throughout their industry. If they successfully execute their plan, they can also experience high profit margins and significant growth.

Adhocracy culture can also boost employee motivation and encourage them to try new things, leading to increased engagement and job satisfaction.

Drawbacks Of A Adhocracy Culture

In some cases, taking big risks brings big rewards. In other cases, big risks lead to big losses. A company with an adhocracy nature runs the risk of a new venture not working out – and potentially doing serious harm to the business.

Adhocracy culture can also create excessive competition among employees. Friendly competition encourages creativity. However, too much competition can lead to a high-pressure, cutthroat environment.

Creating A Adhocracy Culture

It can be challenging for organisations that have been around for a long time to create a true adhocracy culture. However, employers can still take steps to encourage innovation and risk-taking – for example, by giving employees opportunities to share their ideas and think creatively without fear of judgment.

Market Culture

The market culture is all about profitability. Every decision is made with the goal of increasing the business’s bottom line. In this type of organisational culture, every position is aligned with one of the company’s larger goals. There is also a great deal of separation between leaders and employees.

In a company with a market culture, everyone focuses on results and external results more than internal satisfaction — the priority centres around meeting quotas and producing tangible outcomes.

Benefits Of A Market Culture

In many cases, companies that value and strive to create a market culture can be highly successful and profitable. Employees understand what’s expected of them, and they know what goals they’re supposed to be working toward.

Drawbacks Of A Market Culture

Although companies with market cultures can be highly successful, they can also be highly stressful for the employees. When everything centres around meeting quotas and boosting the bottom line, it’s easy for employees to become burnt out and exhausted by the aggressive work environment.

Creating A Market Culture

In a market culture, everything is connected to the bottom line.

Leaders who want to create a market culture should evaluate every position, consider the ROI of the role, and establish clear and specific benchmarks for employees to achieve. They should also offer rewards to top performers to encourage others to follow suit.

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Hierarchy Culture

In a hierarchical culture, the leaders and employees are committed to structure and stability. This culture values the traditional corporate structure, with an obvious chain of command and multiple tiers separating employees and leaders.

These companies tend to have strict rules and guidelines that all employees are expected to follow, as well as dress codes. They’re highly risk-averse, which contributes to their stability and strength.

Benefits Of A Hierarchy Culture

At companies with a hierarchical culture, everyone – from the highest executive to the newest intern – has a clear idea of how the company is organised, what their role is within the company, and what objectives they’re trying to achieve.

This clarity helps to mitigate confusion and ensures everyone stays on the same page, regardless of their position or the department in which they work.

Drawbacks Of A Hierarchy Culture

Hierarchy cultures can be highly rigid, and this rigidity can lead to a lack of creativity and innovation.

In these companies, feedback often isn’t appreciated the same way it is in other organisational cultures, either. This type of corporate culture focuses on following the status quo and upholding norms, so leaders often aren’t interested in shaking things up based on employee feedback.

Creating A Hierarchy Culture

To create a hierarchical culture, leaders must clarify business processes and roles for every area of the company. Specific labels and goals help to organise employees and ensure everyone understands what’s expected of them.

Understand the Other Types of Organisational Culture

The four organisational culture types discussed above (clan culture, adhocracy culture, market culture, and hierarchy culture) are some of the most popular. However, your company may reflect a different culture that doesn’t fall neatly into one of those categories.

If that’s the case, one of the following organisational culture examples might be more relevant:

Purpose Culture

In a company with a purpose culture, leaders and employees share the same philanthropic values. They’re united in their purpose to change the world and make other, less-fortunate people’s lives better.

Learning Organisational Culture

As the name suggests, a learning organisational culture values learning and growth for leaders and employees. Employees at this company focus on research, creativity, innovation, and ongoing learning and development.

Enjoyment Organisational Culture

In an employment organisational culture, enjoyment and fun are naturally core values to employers and employees. Those who like to have fun and have a good sense of humour typically thrive in this type of culture.

Results Organisational Culture

The resulting organisational culture is similar to a market organisational culture. Employers and employees are committed to meeting targets and achieving specific goals.

Authority Organisational Culture

An authority organisational culture is characterised by strong leaders and confident, competent employees. This work environment is often quite competitive, and employees all work hard to do their best day after day.

Safety Organisational Culture

Safety organisational cultures are highly risk-averse and committed to making the safest choices. Leaders and employees plan carefully and take calculated risks based on what has worked well previously.

Order organisational culture

An order organisational culture is similar to a hierarchy culture. This type of culture includes strict rules and procedures, and employees have clear, strictly defined roles.

Caring organisation culture

In a caring organisational culture, the workplace environment is caring and supportive toward its employees. These companies typically have high levels of engagement and employee loyalty.

Handy’s Model Of Organisational Culture

Handy’s model of organisational culture was developed by Charles Handy, an Irish philosopher. Handy’s model divides culture into four categories:

Power Culture

In organisations with a power culture, only a few people have the authority to make decisions. These people enjoy special privileges and delegate responsibilities to other employees, who strictly follow their instructions. Employees do not have opportunities to express their views or provide feedback.

Task Culture

In organisations with a task culture, employees form teams to achieve specific targets or solve critical problems. Teams are usually composed of employees who share common interests and specialisations.

Person Culture

In a Person Culture, the employees matter more than the company itself.

This might seem like a good structure initially, but it can lead to the company’s demise because the employees care more about their own needs than the company’s success. They lack loyalty and make choices based on what’s best for them.

Role Culture

In a role culture, employees are assigned tasks based on their specialisations, qualifications, and interests. Employees decide what they do well and in which areas they want to be challenged. Everyone takes ownership of their own work and is responsible for achieving specific outcomes.

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Advantages of Organisational Culture

All of these organisational culture theories offer unique benefits to employers and employees. When you understand and are committed to improving your company’s corporate culture, everyone involved enjoys significant benefits, including the following:

Create A Better Work Environment

When leaders strive to make changes to the company’s organisational culture, they have the potential to create a better, more supportive work environment for everyone involved.

Of course, these outcomes are predicated on the leaders taking employees’ needs and goals into account when deciding how they’ll change the organisation’s culture. However, if they exercise care and strategically plan their adjustments, they can produce significant results.

Improve Productivity And Performance

Two of the most noteworthy results that can come from changes to a company’s organisational culture are improvements in productivity and performance.

A more supportive organisational culture sets employees up to be more productive and engaged in their work. It can also encourage them to put their best foot forward and produce better results.

Increase Efficiency

When organisational culture improves, business processes become more efficient and effective. Organisational culture fuels all elements of the company, including the ways in which employees carry out their responsibilities and execute tasks.

Improve Organisational Agility

Making improvements to the organisational culture can potentially lead to a more agile and adaptable company.

If employees (especially those in leadership positions) are willing to alter their approach and contribute to a better company culture, the entire business will be better equipped to handle other changes that come its way.

Disadvantages of Organisational Culture

Prioritising organisational culture can also have adverse effects. The following are some potential disadvantages to keep in mind:

Potential Employee Resistance

Some employees may be resistant to the idea of an organisational culture shift. They might not understand what’s wrong with the current culture or may worry that they won’t be able to keep up with the new changes.

Employers can help to combat employee resistance by offering clear explanations of what they’re doing and why they’re doing it. They can also accept employee feedback throughout the process.

Risk Of Failure

Of course, there’s no guarantee that changes to organisational culture will produce significant results.

Even if everyone is on board with the changes, they might not yield impressive improvements for the entire company. There’s always a risk involved in making changes.

Performance Takes A Backseat

Sometimes, when everyone is focused primarily on changing the company culture, employee performance and productivity can take a backseat and become less of a focus.

If the focus moves off these things for a short time, the end results may outweigh the temporary shift of attention. If employees don’t soon get back on track, though, the entire company may suffer.

How To Change Organisational Culture If It’s Negative

If you’re not satisfied with your company’s organisational culture, the good news is that you can change it. Here are some tips that can help you make positive changes and better support your employees:

Assess The Benefits And Drawbacks Of Change

The adage, “if it’s not broken, don’t fix it”, definitely applies in this situation. Evaluate your company’s organisational culture thoroughly and decide if it’s worthwhile to make sweeping changes.

What kinds of results are you hoping to get from these changes? What are the potential obstacles you might run into along the way? Use the answers to these questions to guide your decisions.

Gain Buy-In From Higher-Ups

Company culture typically changes from the top down.

New hires and low-level employees often have a more challenging time bringing about change and convincing leaders that improvements are needed.

Conversely, if they can get buy-in from higher-ups and get them excited about changing the organisational culture of the company, improvements become easier and more likely.

Create A Detailed Change Management Plan

Those who are spearheading changes to the company’s organisational culture should create a clear, detailed plan explaining what they want to do and why they want to do it. This plan should also include information about the outcomes they hope to achieve by changing the organisational culture.

Having a clear plan can also assist with getting buy-in from higher-ups. If executives and other leaders can see what kinds of changes employees are vying for (and the possible positive results those changes can produce), they may be more supportive.

Seek Employee Feedback

Not all types of organisational culture thrive on employee feedback. However, many of the most successful ones do.

In many cases, it is also easier to overcome objections and resistance to change if employees get a say in the changes that are made.

There are many ways that employees can provide feedback. They can submit surveys or comment cards (either anonymously or with their names attached), for example, or offer input during team or company meetings.

However feedback is given, it’s crucial for leaders to take those messages seriously and implement them when possible.

Measure, Analyse, and Improve

Finally, you must continuously measure employee engagement, productivity, and the other metrics that you’re hoping to improve by changing the company’s organisational culture.

Gather data and analyse it to see where positive change is taking place and where more improvement is needed. Then, use that information to set the company up for long-term growth and progress.


A strong organisational culture can significantly improve the work environment you provide your employees – and the outcomes they provide for your business.

From a clan culture to a hierarchical culture, there are many different personalities an organisation can take on. Use the information discussed above to choose a culture that works best for your organisation and begin producing positive changes.

Do you need help changing the organisational culture at your company?

If so, we offer Management Training, assessments, and other tools to help you make these changes, like our Leadership Development Training, Management Development Programmes and Project Management Training.

Get in touch today to find out more.

Thanks again


Sean McPheat

Managing Director

MTD Training

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Updated on: 18 May, 2023

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