The Four Types of Organizational Cultures Explained

The four types of organizational cultures are clan, adhocracy, market, and hierarchy. Read about each of them in depth in this blog.

Blog Post

7 minute read

Mar 14, 2024

I’ll never forget what it was like to go into work every day feeling like I couldn’t be myself, or worse than that, couldn’t even have a non-work-related conversation because I didn’t click with the company culture. Understanding the culture within your business will help you create a healthy and productive work environment, attract and retain talent with a positive employee experience, and, ultimately, bolster the bottom line.  

While every organization, and its accompanying culture, is unique there are four general culture categories that most businesses fall into. Those four categories are: 

  1. Clan Culture
  2. Adhocracy Culture
  3. Market Culture
  4. Hierarchy Culture

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What Is Organizational Culture?

Organizational culture refers to the shared values, beliefs, norms, and behaviors that characterize a company, its staff, and the atmosphere of the workplace.  

It encompasses the unique personality and identity of an organization, shaping the way employees perceive their work environment, interact with each other, and approach their tasks. As such, organizational culture influences everything from communication to leadership strategy to employee motivation and even productivity and performance.

Because organizational culture influences nearly every aspect of your business, and plays a huge role in recruiting, it’s helpful to know how to distinguish between different organizational types, identify your current culture, and make adjustments if you so desire.  

Talking About the Four Types of Workplace Culture

As mentioned above, there are four types of organizational cultures in general and each comes with its own set of advantages. It’s also worth noting that different employees thrive in different types of workplace culture, so it’s beneficial for leaders to pay attention to and be intentional with the culture that they create.  

The following sections take a closer look at the four types of organizational cultures and the attributes that make up each. 

1. Clan Culture

Clan culture is characterized by a familial atmosphere within the organization where employees feel a strong sense of belonging and camaraderie.  

In this culture, teamwork and collaboration are highly valued, with an emphasis on mutual support and trust among members. Employees often perceive their organization as an extended family, where leaders are seen as mentors who prioritize both well-being and professional development.

Communication in clan cultures is open, informal, and frequent, fostering transparency and the exchange of ideas. This approach encourages feedback and participation from all levels of the organization, contributing to a culture of inclusivity and shared ownership.  

Decision-making processes in clan cultures are often decentralized, allowing for input from employees at various levels. This participatory approach not only empowers employees but also fosters a sense of accountability and commitment to the organization's goals. 

2. Adhocracy Culture

Adhocracy culture is dynamic, entrepreneurial, and characterized by a willingness to take risks and embrace change.  

In such cultures, innovation and creativity are encouraged, and employees are empowered to challenge the status quo and pursue bold ideas. Leadership and management structures in adhocracy cultures are often flexible, with authority and decision-making distributed based on expertise rather than formal positions.  

This effectively fosters open communication and collaboration, enabling the free flow of ideas and knowledge across the organization.  

Employees in adhocracy cultures are given the autonomy to experiment and explore new opportunities, with failure seen as a natural part of the learning process, while leaders in adhocracy cultures are visionary and supportive, providing resources and guidance to fuel innovation and drive growth.  

This culture is prevalent in start-ups and fast-paced industries where rapid adaptation and innovation are critical for success. 

3. Market Culture

Market culture is results-oriented, competitive, and as the name suggests, is focused on achieving success in the marketplace. Organizations with this culture prioritize delivering value to customers and outperforming competitors.  

In such a culture, employees are driven by a shared commitment to excellence and continuous improvement, with a strong emphasis on accountability and performance. Additionally, decision-making processes are often data-driven and strategic, with a focus on maximizing efficiency and delivering superior customer experiences.  

In a market culture, it’s common to use performance metrics as a measure of both individual and team success, which in turn, fosters a culture of accountability and results.  

Leaders in market cultures are results-oriented and customer-focused, providing clear direction and setting ambitious goals to drive performance. This culture is prevalent in industries where market dynamics play a significant role, such as sales, investing, and finance. 

4. Hierarchy Culture

Lastly, a culture of hierarchy is characterized by stability, control, and formalization.  

In such cultures, there are clear lines of authority and well-defined roles and responsibilities. Decision-making processes are centralized, with top-down control and a focus on maintaining order and stability. Rules, policies, and procedures are carefully codified and strictly enforced to ensure consistency and compliance across the organization.  

Additionally, employees are expected to adhere to established norms and follow protocols set by management, while leaders in hierarchy cultures are typically authoritative and directorial, providing structure and guidance to their teams.  

This culture is popular among traditional organizations such as government agencies, large corporations, and institutions where stability, compliance, and consistency are valued. 

Defining Company Culture Matters 

Being intentional about creating and defining company culture is integral because it sets the tone for employee interactions, decision-making, and internal workflows.  

At its core, company culture encompasses the shared values, beliefs, behaviors, and norms that shape the workplace environment. By clearly defining and articulating these cultural elements, organizations provide employees with a framework for understanding expectations, guiding their actions, and aligning their efforts with the company's mission, vision, and goals.

A well-defined company culture serves as a powerful tool for attracting and retaining top talent. In today's competitive job market, candidates are increasingly prioritizing workplace culture when considering job opportunities. Therefore, a strong and positive culture can act as a magnet, drawing in individuals who resonate with the organization's values and vision.  

Moreover, once employees are onboarded, a clearly defined culture helps foster a sense of belonging and purpose, leading to higher levels of engagement, satisfaction, and retention. 

Furthermore, company culture plays a pivotal role in driving organizational performance and success. A positive culture that emphasizes collaboration, innovation, and continuous improvement can fuel creativity, productivity, and morale. It also helps create an environment where employees feel empowered to take ownership of their work, contribute their best ideas, and work towards common objectives.  

On the other side of the coin, a toxic or dysfunctional culture can have detrimental effects on employee morale, spike the churn rate, and ultimately hinder the bottom line.  

All-in-all, defining company culture matters because it lays the foundation for building a cohesive and high-performing organization that can adapt, thrive, and succeed in today's rapidly changing business landscape. 

Wrapping Up on the Four Types of Organizational Cultures

Understanding the organizational culture in your workplace will help tune you into how employees interact with one another, standard daily workflows, and even effective motivators/incentives.  

By being intentional with the culture you create, you can attract and retain a higher caliber of talent, curate a healthy and productive workplace for your staff, and establish a sustainable path for growth.

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