4 Types of Company Culture: Where Does Your Company Fit In?

4 Types of Company Culture: Where Does Your Company Fit In?
Nowadays talent often looks for a place to belong

Company culture is essential for any company looking to grow and prosper in today’s market. Especially in the technology industries, skilled people are looking for a place to belong and feel comfortable.

We talked more about company culture in our other blog posts, How To Nurture a Positive Company Culture and The Importance of Building a Great Company Culture.

Here, we are looking to go into more detail about specific types of company culture and their traits and tackle the critical question of choosing which company culture is the best one for your company. The choice is not easy, but it’s a choice you have to make. Don’t worry, we’ll help you choose the right one.

Clan Type -  Collaborate Culture

A company with a clan type of company culture is friendly and full of people who share a lot in common. It’s also known as “family culture”. The main focus of such companies is the wellbeing of their talent and maintaining a consistent and robust community.

Zappos, an online shoe and clothing retailer, best fit the clan culture model. Their company’s CEO actually wrote a book in which he states “build a positive team and family spirit” as one of their core values.

People in such companies usually share the same values as the company, resulting in a universal vision. It goes without saying that the talent in clan companies is highly invested in the company’s future and mission, as they are given the trust and freedom they need to thrive.

Leaders of clan cultures are seen as mentors and father figures and are often highly respected. They are focused on team building and community within the company. And they are always trying to increase the involvement of the talent with the company as a whole.

The advantages of such a company setup are apparent. A more relaxed and harmonious company environment increases the satisfaction of your talent, which leads to higher productivity and talent retention. It will also promote collaboration and the flow of ideas from every part of the company.

However, clan culture can have its drawbacks as well. With the more family-like attitude, the leaders might come across as lacking authority, which can negatively affect the balance of the workplace. Additionally, the productivity of a company with so much freedom depends heavily on just how much the talent can be relied upon not to slack. And as the company grows, it becomes more challenging to maintain, leading to unclear hierarchy and the inability to make vital decisions.

Adhocracy Type - Create Culture

Adhocracy culture revolves around innovation, success, and flexibility. The name is derived from the Latin ‘ad hoc’, meaning ‘for this’, combined with the word bureaucracy. Together, the words represent a system of flexible and informal management instead of rigid bureaucracy. Characterized by fast-paced risk taking, and 'in the moment' action. Adhocracy companies are constantly developing new products and taking on new challenges. A good example of this culture would be Meta (formerly Facebook). Their CEO Mark Zuckerberg famously said, “Move fast and break things”, and “unless you are breaking stuff, you are not moving fast enough”.

The fast-paced work environment requires energetic and creative people. People who can adapt quickly and are prone to risk-taking will usually fare well in these companies. In addition, as the company tries to follow the latest trends, it is vital to be capable of switching the focus at a moment’s notice.

Leaders in an adhocracy company need to be true entrepreneurs and risk-takers. They need to constantly push new ideas and experiments and inspire such behavior in their talent. People need to feel supported and motivated for such organizations to function.

It goes without saying that such a fast-paced environment is a perfect breeding ground for growth and innovation. A higher likelihood of significant breakthroughs leads to high-risk, high-reward situations that create many opportunities.

But, the potential risks are plentiful as well. Not every such endeavor will be successful, so you always have to consider possible repercussions. The work environment might feel chaotic and intimidating, especially for newer people in the company. They might additionally feel stressed by the fast-paced work environments. The company should always keep an eye out for situations that might negatively impact company stability, such as problems with the hierarchical structure or too many risks.

Five people looking at a computer

Hierarchy Type - Control Culture

The most traditionally organized type of company culture is the hierarchy culture. It revolves around structure and order. The working environment is highly organized, and the procedures are precise and clearly defined. This kind of company is focused on the smooth running of its operations.

Of course, the people most attracted to such a work environment crave order and structure. Everyone knows their position in the company, and there is no confusion regarding the chain of command. With that, leaders are more authoritative and need to be highly respected.

There will also usually be far more management levels than in other culture types to better organize everything. These companies are also the most likely to have a dress code and inflexible work hours. Plenty of organizations fall into this category as it is the traditional way of running a business. Most banks fall under this category, as companies with very well defined management structure and efficient bureaucracy.

Stability is the “name of the game” for hierarchy companies. Clear responsibilities and boundaries are the norms, while the company structure is orderly. It’s evident that this type of organization is focused on the long-term planning and is content to slowly move forward in a deliberate and confident stride. This tends to lead to steady growth and longevity for the company from a planned and well-thought-out strategy.

However, innovation can suffer due to a rigid structure. And since these companies do things ‘the right way’, which is usually strictly designed, they can be slow to react to market changes and upheavals. Inflexibility can be considered the greatest weakness of hierarchy companies, as they focus more on procedures than on people. As such, some people might find it very impersonal. Therefore, slow and steady might not always be the best choice.

Market Type - Compete Culture

In a market culture, market share and profit are the most crucial things. Driven and competitive, they work hard to achieve their usually ambitious goals. Much like the hierarchy culture type, market culture is usually deliberately implemented to make the company highly competitive and profit-oriented. Financial growth is more important than community or teamwork. Probably the best example would be Amazon, with its result-focused business plan, and their reputation for being relentless in their pursuit of profit.

Leaders in such work environments are especially demanding, constantly striving for optimization out of everyone. They expect the talent to be capable of not only managing high-pressure situations but thriving in them.

So, what kind of talent do these companies attract? Well, the most competitive ones, of course. People focused on success and maximizing their potential. The people who want to win, well, everything.

And the company is like that as well. It will encourage everyone to work hard and reach the company goals. Because of that single-minded focus, market-type companies are usually successful and very profitable. Healthy business, crushing competitors, and optimized return rates are staples of these companies.

However, such a culture can be a double-edged sword. First, such a drive towards optimization and performance can quickly lead to talent burnout. Not to mention that the highly competitive environment can lead to conflicts among the people within the company. Leadership might be constantly forced to deal with interpersonal situations. And if they don't, the issues will only escalate and lead to the worst possible outcome for a market company: loss of productivity. If not handled properly, such companies might breed a toxic work environment.

So, Which One Sounds Most Like Your Business?

If you want to move your business forward, having a solid company culture is necessary. However, you might wonder in which direction you should go.

First of all, you should determine your company's core values, meaning what you want people to think about when your company is mentioned. For example, are you focused on stability, profitability, trust, or innovation? Try to express this in as few words as possible.

Secondly, think about your company goals. What do you want to achieve, both short-term and long-term? Maybe reaching a specific company size, profit margin, or anything else for that matter. Again, you know best why you are in this business.
And don't forget to include your talent. The people in your company already have a specific view of the company in mind. Perform anonymous surveys to find out what they think.

Roango is here to help you with your company culture as well. Filling out our company culture test can help you figure out your company identity. And after filling it out, you might notice that there is no right or wrong answer. You might even fit with more than one culture type.

And that's okay; you don't need to fit in the mold perfectly. This is only here to help you choose what you want to focus on and what issues you need to look out for to make the best out of your company.