The Truth About Company Culture

Defining “company culture” is the first step in figuring out how best to change a culture that proves a poor match for a given company’s mission. Looking at what constitutes company culture and examining the four most common types of company cultures can help business owners decide what needs to be done to improve their own company culture.

What Is Company Culture Made Up Of?

A company’s culture is akin to our individual personalities, at least in terms of complexity. For a company, its culture is made up of dozens of characteristics like shared behaviors of group members, common attitudes, prevailing assumptions within work teams, company beliefs and workers’ shared values. In short, corporate culture is a catchall term that refers to the attitudes and behaviors that characterize how staff members interact with one another and get work done.

One of the best ways to view the concept of “company culture” is to see it as the personality of the business entity. Every company is defined in large part by the behavior and decisions its employees make. Those decisions are the result of attitudes, principles and assumptions of the group as a whole. And just as most of us have things we would like to change about our individual personalities, such is the case with company culture.

What Are the Different Kinds of Company Culture?

Like personalities and snowflakes, there is almost endless variation in the types of company cultures. And, also like personalities and snowflakes, we can make some helpful generalizations about basic types of corporate environments in order to get a basic handle on how they affect everyone in a given company.

Many researchers refer to four common types of workplace cultures:

Ad hoc corporate cultures, sometimes called the “adhocracy style,” is one of the more modern among the four types. It stresses innovation and individuality, and tends to work well for companies that develop cutting-edge products — such as those in the tech and aerospace fields. Organizations that need to be very flexible in the projects they work on, and that reward creativity above all else, are prime examples of the ad hoc style of corporate culture.

Clan cultures value the work of small teams, and foster a family-like atmosphere with few management layers and very easy working relationships between all the groups within the organization. Leaders of these entities are viewed more as mentors than bosses and most of the daily work is done in teams rather than by individuals acting on their own.

Market-based corporate cultures are usually present in sales-oriented companies that offer bonuses and recognition for meeting quotas of units sold or client hours booked. When the main goal of the corporation is to move product or sell services, this type of culture works well but there are often high levels of competition among workers.

Traditional/hierarchical entities are the stereotype people think of when they imagine what an “old fashioned” corporation is. Multiple layers of management, slow decision-making processes, and an emphasis on rules and systems are just three of the characteristics of this type of culture. Insurance companies and banks are good examples of industries where this culture is found.

Is It Possible to Change Company Culture?

The larger and older a company is, the harder it is to change its culture. However, if the organization’s leaders set their minds to the task, it is possible to alter the core culture of just about any organization. You’d be surprised at what can happen with a little leadership involvement! There are dozens of ways to change corporate culture, some more complicated than others, but one of the most commonly used ways is a four-step process.

The first step is for the company’s leaders to gain a clear understanding of what needs to be changed. That means figuring out what the status quo culture is like. Is teamwork valued or not? Do individuals feel as if they’re rewarded for input or not? Those are just two questions that can help managers focus on discovering what needs to be improved in the current culture. This step is akin to a medical checkup in which a doctor attempts to see exactly what’s wrong with a sick patient.

The second and third steps are giving direction about what, exactly, needs to be changed and then executing the plan. After step one, management usually has to spend less time deciding what components of corporate culture to change. Once the decision is made about what the new culture should look like, a more difficult step, execution, is next. Many companies meet the most resistance at this point of the process. Execution can mean hard decisions about letting some people go, hiring new employees and spending money to put new processes in place.

The fourth, and final, stage of changing a company’s culture is centered on validation of the results. Large organizations might spend a year or more on this phase, carefully assessing whether their efforts worked exactly as they desired or fell short. This step, usually called the “validation phase,” is a time to collect data and input from employees, customers and managers to see what the changed culture looks like. If all went well, no additional work is necessary. In most cases, management might have to face the fact that adjustments are necessary in order to create the new culture they’re aiming for.

What Does It All Mean?

Corporate or company culture is one of those “slippery” business concepts that everyone talks about but few can define. That’s why it’s so often equated with the psychological definition of “personality,” except as applied to a group rather than to an individual. And like that psychological concept, there are as many definitions of corporate culture as there are experts who study it.

Even so, corporate culture is a reality. It can be studied, evaluated and changed when necessary. You probably have a good feeling for what aspects of your own company culture could be better. When a business entity discovers the right culture for its particular mission, the result can be higher profits, happy employees and even plenty of social good.