July 22, 2021 By SmartBiz Team

“We believe that it’s really important to come up with core values that you can commit to. And by commit, we mean that you’re willing to hire and fire based on them. If you’re willing to do that, then you’re well on your way to building a company culture that is in line with the brand you want to build.”

– Tony Hsieh, CEO, Zappos

Zappos is known as one of the greats when it comes to company culture. Company culture isn’t just a buzz word. It’s a vitally important component to any business – large or small.

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In the past, company culture was implied and developed organically over time. These days, companies that want to attract and retain top talent actively work to establish and promote a healthy company culture. Read on to learn about the different types of company culture and the positive ways it can move your business forward.

What Is Company Culture?

Company culture, also known as corporate culture, is the set of values that define a small business and its employees. Company culture influences employee mindset and behavior, including customer service interactions.

All types of company culture include the following aspects:

  • Work environment
  • Company mission
  • Company values
  • Ethical values
  • Leadership style
  • Employee expectations

Each type of culture includes notable differences in some or all of these categories as compared to other cultures.

Why Is Company Culture Important?

If you’ve ever heard of a job prospect not getting a job (or an employee being fired) for being a poor “culture fit,” then you’re familiar with one big reason why company culture matters. Increased employee engagement, and thus better work, is more likely when an employee’s values align with those of the employer – namely, the company’s culture. Good company culture also leads to a positive work environment that leads to happier employees and less turnover.

Company culture matters for external affairs too. Sure, most consumers don’t know which types of company cultures any given company might use, but consumers might describe the brand as accommodating, fairly priced, or accessible . Such descriptors reflect your company culture – if selling at reasonable prices is a key company value, then consumers may notice this and choose you over your competitors.

Types of Company Cultures

Businesses aren’t pigeonholed into one kind of company culture. If you’re interested in building a strong culture, you can piece together elements from two or more types that will move your business forward.

Clan Culture

A clan is described as a group of close-knit and interrelated families with a lot in common. A clan culture in business is friendly and collaborative with loyalty playing a big role. Clan cultures are described as the most cooperative and the least competitive. Clan cultures typically involve weekly one-on-one meetings with the main emphasis being on team presentations and all-hands meetings. Adopting a culture with a clan-like feel helps employees think and work as a team.

Adhocracy Culture

The adhocracy type of culture was given prominence by writer Alvin Toffler in 1970. He popularized the phrase "adhocracy", referring to a company that operates without a formal hierarchy. An organization adopting this philosophy emphasizes creative thinking. Adhocracy oriented cultures are entrepreneurial and focus on risk-taking and innovation. 'Keep moving' is this culture's motto and this environment is suited to those who think big then act larger. Some of the drawbacks of an adhocracy culture are a lack of planning and risk management. In an adhocracy culture, the company responds to issues as they come up instead of having a plan in place to avoid the problem in the first place.

Hierarchy Culture

A business with formal rules, regulations, and bureaucracy operates with a hierarchy culture. Leadership is based on organized coordination and monitoring and the chain of command through management layers is followed closely. Organized, efficient operations are key. This type of company culture is common with government organizations (think the Department of Motor Vehicles). Businesses of all types have some elements of hierarchy.

Team-first Corporate Culture

Team bonding, cross-department collaboration, and employees' happiness is this culture’s top priority. It’s a “people over process” mentality. One company often cited as a team-first leader is Netflix. They offer a full year of unlimited family leave, allowing employees the opportunity to decide what works best for them. Team-oriented companies hire for culture fit before considering skills and experience. They hold team-building events often and offer creative employee benefits.

Elite Corporate Culture

Have you heard about the legendary and grueling hiring process at Google? The giant company has an elite corporate culture, hiring only the best-of-the-best. Innovation and forward-thinking are expected and employees want the business to become an industry leader. An elite corporate culture encourages out-of-the-box thinking and going above and beyond the status quo.

Horizontal Corporate Culture

Smaller companies and start-ups benefit from a horizontal corporate culture. All employees pitch in and collaboration is vital. Since the company is typically young, a horizontal corporate culture is flexible and encouraging. Increased productivity comes with this culture as employees are involved directly in the decision-making process and management supervision is minimal.

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Conventional Corporate Culture

Conventional corporate culture usually happens in older, established companies (Think Chrysler or GE). There are strict policies governing individual roles, different departments rarely interact, and the major decisions are left up to the CEO. While this type of culture doesn’t sound very appealing, it does work for businesses that are successful, have cornered the market, and are well-established.

Progressive Corporate Culture

Human Resources expert Liz Ryan describes the progressive culture as:

“A progressive culture is one where the culture is deemed worthy of attention all the time. The company recognizes and celebrates the fact that its employees make the company great, so-so, or terrible as the case may be.”

Employees are valued in a progressive culture leading to employee happiness and business success.

Customer Service Excellence

A customer service culture is when a company's efforts are centered around the customer. This means that the entire company, even departments that don't normally interact with customers, are focused on the customer. Every decision is made with the customer in mind, and everyone in the organization knows how they impact the customer service strategy and customer experience. Zappos is an excellent example of this type of culture.

Innovation Culture

An innovation culture nurtures unconventional thinking. When management fosters a culture of innovation, they generally believe that innovation is not just for upper management but can come from any employee. Leading customer service consultant Micah Solomon encourages business owners to identify three distinct areas that are ripe for innovation–product (what you sell or make), process (how you make and sell it), and business model (how your company is conceptualized and organized).

Market Company Culture

In market culture, leaders emphasize competition and growth. Under this type of company culture, you and your team leaders will encourage employees to focus on stabilizing and controlling all your products and services. You’ll also prioritize differentiating your company from others and putting your brand directly in front of consumers.

The external focus of market company culture is often correlated with stronger team building, as it gives your team a common goal toward which to work. However, as with all things growth-related, market company culture is tied to metrics, and meeting numerical goals can create extra pressure for certain employees. As such, market company culture can accidentally result in an unfavorable work environment for some employees.

Market company culture is most prevalent among current industry leaders. That’s because its aggressive approach often brings companies to the forefront of their sectors, though perhaps at the risk of team members’ mental well-being. To implement it, calculate the ROI of all your company’s positions and set firm productivity goals for each employee.

Caring Culture

If market company culture somewhat prioritizes results over employee satisfaction, then caring culture is its opposite. Caring organizations prioritize teamwork and strong, meaningful relationships among employees. A friendly and upbeat, but nevertheless task-oriented work environment is a strong indicator of a caring culture.

As you might guess, caring culture has tremendous benefits for employee loyalty and retention. It has few obvious drawbacks, though some might argue that it can result in too much mingling of work and fun.

To implement a caring culture, just encourage your employees to be friendly with one another and actually get to know each other. If you do this all right, you might be on track to replicate Disney’s highly successful caring model – the media giant’s bottom line has never suffered for the less buttoned-up work environment that accompanies caring culture.

Additional Resources

Want to dive deeper? Check out the book Diagnosing and Changing Organizational Culture by business experts Robert E Quinn and Kim S Cameron. This well-researched book provides ways to understand and change a company’s culture in order to make it more effective. You’ll also learn strategies and methodology for changing organizational culture and personal behavior.

The SmartBiz Small Business Blog has articles you can use to help establish a healthy company culture:

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