Organizational culture not only shapes your organizational structure but also helps the team members stay together.
While running a company, it is essential to have a shared organizational culture that can influence the attitude and behavior of every employee. Without having an established and strong organizational culture, it is impossible to ensure job satisfaction among the workforce.
For this reason, entrepreneurs and HRs should be clearly aware of the concepts and types of organizational culture. Read on as I will discuss these, along with how you can choose the right culture for your organization.
What Is Organizational Culture?
Simply put, organizational culture is the culture practiced in an organization or company. It includes the set of beliefs, behaviors, and norms that an organization follows. Organizational culture is also referred to as workplace culture. Usually, it is the organizational leadership and administrators who set up this culture. Then, it is followed by other members and employees of the organization.
Organizational culture determines how things are done within a company. This includes how teams achieve their major strategic goal or how employees communicate with each other every day. Moreover, it influences the behavior of employees with internal team members and external stakeholders. This is how someone can decide whether they are fit for an organization or whether they want to join a company.
As a result, you can say that organizational culture manages the functioning of a company. By having a lasting impact on every aspect of a business, it plays a role in employee retention, work-life balance, productivity, and communication.
Characteristics of Organizational Culture
Needless to say, the characteristics vary from culture to culture. Here, I have compiled some common traits of organizational culture:
For any organizational culture, the most obvious characteristic is shared values. It stays at the heart of the culture by offering direction and identity to its employees. Organizations that have strong shared values are capable of making faster decisions. Their workforce also tends to stay unified and work for the benefit of the organization.
For this reason, employees should be involved during the process of developing the core cultural values of an organization. Thus, they can be aligned with the mission and vision of the company from the beginning.
Adaptability should also be a part of the culture of an organization. These companies can quickly respond to industrial or market changes. This ability ensures that the organization stays put in the competitive world. Such characteristics encourage an experimental and open environment where teammates can comfortably share new ideas and face challenges.
Another strong trait of organizational culture is communication. It makes sure that the employees understand the goals and values of the organization. There should also be transparency among the employees so that no miscommunication can take place among them. These cultures also encourage dialogue and collaboration among colleagues.
Organizations that foster cultures always encourage their employees to get involved in the decision-making processes. When employees find themselves actively becoming a part of the big decisions, they become more committed to the company’s success and get higher job satisfaction. Organizations with strong cultures empower employees with opportunities such as training, sharing feedback, and being the owners of their work.
It is only possible for strong and capable leaders to shape an organizational culture in the right way. These are the people who embody the core values of an organization and provide employees with the right direction to achieve the goals. Hence, a strong leadership team aligned with the company values is essential for the culture.
Organizations with a standard culture value teamwork instead of individuals. They make sure that employees work together as a team and on a common goal of the company’s prosperity.
Recognition and Rewards
Every team member must have recognition and appreciation for their contributions to the company. For this reason, these are important traits of organizational culture. Organizations that promote recognition and reward programs reinforce a positive culture among their employees.
Diversity and Inclusion
Companies with a good culture also have traits like diversity and inclusion. With diversity, they have a multilayered and multicultural workforce, while an inclusive environment ensures that everyone feels valued and respected.
Stability should also be a part of the organizational culture if the company values rules and bureaucracy. When employees see that the organization is stable, they trust it and become more interested in joining the company due to its predictable nature.
Types of Organizational Culture
There are different types of cultures found practiced in organizations. In most cases, the cultures practiced are a combination of multiple cultures. Here, let’s have a look at the most common organizational cultures.
The word “Adhocracy” is formed by the combination of “ad hoc” and “bureaucracy”. So, you can understand that organizations practicing this culture are flexible. It is not restrained by bureaucratic policies and restrictions. Such cultures stress constant innovation and improvements, that too at a fast pace.
You will see that start-ups practice this kind of culture as it offers them the necessary scope to be innovative in a constantly changing and highly competitive market. However, when they become large companies, this culture becomes less feasible to be implemented throughout the entire organization.
It emphasizes more on individual initiative compared to official authority.
It has an informal environment where flexibility is practiced.
This culture focuses on risk-taking and innovation.
It ensures a highly organic structure in the company for proactive decisions.
#2. Hierarchy Culture
The hierarchy culture is a commonly seen organizational culture in the US. Traits that signify this culture include structure, authority, and established procedures. Companies that follow this culture follow a strict chain of command. The moment someone joins such companies, know who is responsible for which task.
Here, duties are clearly defined, and everyone has to perform the right thing. Some common examples of companies with hierarchical cultures are financial institutions, energy companies, and health insurance companies. This type of culture allows companies to operate efficiently and manage risks in a better way.
It comes with predefined rules and policies for the employees about their responsibilities and accountabilities.
It has an established hierarchical process for coordinated functioning.
To ensure control and stability, this culture has clear directions and expectations from the administration.
It has a formal structure with clear top-down authority.
#3. Clan Culture
The term “clan” means a group of interrelated people with a common interest. This culture is also practiced in small or family-owned organizations where employees are valued irrespective of their level. Hence, the collaborative nature of this culture makes sure that all employees feel like equals.
Besides teamwork, mentorship and apprenticeship are also stressed enough to pass on the values and qualities from one generation to another. In clan culture, employees can provide honest feedback. Unfortunately, as the companies grow, it becomes difficult to maintain this culture.
It focuses on teamwork, and everyone actively participates in it.
It is found in organizations with flat or horizontal structures.
Colleagues who are part of this culture have a tight connection among themselves.
It ensures a sense of belonging to its employees.
Organizations with this culture always encourage their employees to do their best.
#4. Market Culture
Market culture is suitable for organizations that revolve around the market economy based on loss/profit and competition. Usually, companies that are result-oriented and need to make customers happy to become successful have this culture.
These companies need to have top-notch products or services to become successful, as it will allow them to have a constant demand in the market. They also constantly need to bring better products to the market than their competitors. While focusing on the customers, it might not emphasize enough on employee satisfaction.
It emphasizes the competitiveness between the organization and its competitors.
It also encourages a competitive environment among the teammates.
For this culture, it is essential to get the job done to achieve the business goals.
This culture is also result-oriented as it focuses on performance and achievements.
Customers are often at the heart of this culture as they enable the companies to make decisions.
How To Choose the Right Organizational Culture for Your Business
Now that you know about different types of organizational cultures, it is time to pick the ideal one for you. But how do you do that? Just follow the steps mentioned below:
#1. If you want to select one culture for your organization, first, you need to define your values. The reason is that every organizational culture is defined by core values.
#2. After identification, you need to compare it with different types of organizational cultures. In this stage, your objective should be to find out the alignment between the value of your company and the culture. Thus, you should be able to find out the cultures with which your values match the most.
#3. Before making any culture a part of your organization, you also need to watch out for its pros and cons. Make sure to choose a culture that has more pros than cons for your team.
#4. As organizational culture is practiced by the employees, you need to ask them which culture they are most comfortable with. Get their opinion and create an organizational culture that matches their requests.
The Importance of Organizational Culture on Employee Behavior and Leadership
Organizational culture plays a significant role in creating a collaborative work environment. As employees feel more valued and supported, they feel motivated to become more productive. They also feel that their contributions are being valued by the organization, so they become more committed and innovative.
Similarly, culture provides behavioral rules within organizations. A strong organizational culture emerges only when strong, unified values and beliefs are developed. The organizational culture determines the leadership style of an organization. Hence, leaders need to align their approach to the prevailing culture of the company.
Leaders should also adapt to the decision-making style based on the current culture. The modes of communication, employee engagement and appreciation, performance management, and overall management are controlled by the organizational culture.
There could be challenges an organization has to face while implementing a certain culture in the company. One challenge could be resistance to the changes.
For example, employees are usually accustomed to prevailing practices and tend to resist new cultural values. So, when some organizations want to apply a new culture, they might not feel comfortable with that.
Another challenge could be maintaining consistency. Often, the cultures of different teams and departments of a company are different. Making sure that everyone embraces the same culture can become difficult. Managing the conflict between individual values and organizational values is another challenge companies often face.
Apart from these, cultural development depends on the leadership of the organization. If leaders fail to successfully embody the organizational culture, employees won’t be able to adopt it. So, companies need to find leaders who can align with the culture.
Above all, companies need to assess the effectiveness of the organizational culture they are about to implement. Since the culture’s impact is intangible, it is difficult to measure it.
Every organization should have a culture based on its visions and working process. However, many tend to follow their competitors or tech giants while choosing the culture, which is a big mistake and could be detrimental to themselves.
What an organization has to do is to assess their needs and choose a culture accordingly. They should also respect the opinions of their employees while selecting organizational culture. Instead of forcing the teammates to follow a culture, an organization should ask them which culture they want to follow and why.
The best decision would be if a company can develop a unique culture combining the traits of multiple predefined cultures. Once you decide to choose a new culture, you need to identify the gaps in your existing one by evaluation. Then, you must choose one and gradually implement it throughout the organization.