Organizational Culture: Definition, Examples, & Best Practices

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Organizational culture is the rules, values, beliefs, and philosophy that dictates team members’ behavior in a company. The culture consists of an established framework that guides workplace behavior. Examples include integrity, teamwork, transparency, and accountability. The purpose of organizational value is to differentiate your organization from others and act as a model for decision-making processes.

The ideas in this article are similar to improving company culture, employee engagement activities, having fun with employees, and creating a positive work environment.

This article includes:

• definition of organizational culture
• types of organizational culture
• organizational culture examples
• organizational culture best practices
• importance of organizational culture

Let’s get started.

Definition of organizational culture

Organizational culture is a set of values, rules, principles, and practices that dictates how members of a workplace should behave. These expectations make your company stand out. For a clearer picture, organizational culture tells others, “This is how we act here.”

A solid organizational culture is a proven metric for success. A company with great organizational culture will likely be more successful than one without a guiding principle.

It is necessary to clarify the difference between organizational culture and mission statements. A mission statement is a short description that communicates the company’s culture to customers or prospective stakeholders. On the other hand, the organizational culture is a building block that informs the company’s business strategies and corporate decisions.

Several factors can determine your company’s organizational culture, including the following.

1. Leadership Principles

These principles are values and beliefs a leader possesses. Your employees are a reflection of your values and orientation. Whether good or bad, leadership principles greatly determine the success of the company’s culture.

2. Type of Business

Your brand or products also determine your chosen organizational culture and how your employees will behave. If your products are common items that help solve the problems of the masses, your organizational culture will revolve around being a solution provider.

3. Clients and Staff

While growing the company is important, the biggest goal of every company is to ensure their client’s satisfaction. The profile of your target audience will determine your company’s culture.

Any company can boast of having the best work ethic, but its organizational culture reveals the truth. For instance, a company’s positive corporate culture depends on how well the employees and staff perform. Leaders’ and followers’ behavior, conflict resolution, communication methods, and even corporate events can all express workplace efficacy.

The type of organizational culture you choose to adapt will determine the company’s performance and how suitable the workspace is for potential employees.

Types of organizational culture

According to professors Robert Quinn and Kim Cameron at the University of Michigan, there are four main types of organizational culture. These types are the Adhocracy Culture, Clan Culture, Hierarchy Culture, and Market Culture.

1. Adhocracy Culture

Also known as the Create Culture, this corporate structure enables a fast-paced and creative working environment where employees can think outside the box. Companies with this organizational culture always seek cutting-edge solutions to clients’ problems. To put it simply, these workers are risk-takers. Individual ideas are welcome, and every team member is free to experiment if the concept contributes to the company’s success. For example, Apple is a well-known company with this corporate culture.

2. Clan Culture

In some environments, almost every team member feels like family. Such an organization most likely operates under the Clan Culture. Also known as the Collaborative Culture, workspaces with this organizational structure have a collaborative spirit where employees collectively contribute to the company’s growth. Most family-owned businesses tend to adopt this corporate value style. For example, the American food company Chobani operates with this organizational culture. Sometimes, the boss acts more like a parental figure than an employer. Employees tend to consult each other before making an important business decision, and such organizations often thrive on loyalty.

3. Hierarchy Culture

The Hierarchy Culture, or Control Culture, is usually more formal than most. Here, every operation follows a procedure, and deviation from the structure is impossible. Unlike the Adhocracy or Clan Culture, Hierarchy Culture operates on traditional business ethics. Examples include companies in the healthcare sector. These businesses have a recognized chain of command, and employees are only sometimes free to mingle with their bosses. Routines, careful planning, employee expertise, and total risk avoidance characterize the Hierarchy Culture.

4. Market Culture

The Market Culture, as the name indicates, is results-driven.  Market Culture is also known as Compete Culture, and the primary goal of companies adopting this model is usually to dominate the market. Deadlines, sales targets, and constant strategizing usually characterize such workplaces. The companies that operate with this culture are highly competitive with demanding bosses who expect employees to deliver results as fast as possible. Amazon is an example of a company that practices this organizational culture. Overall, profitability is the primary framework for the Market Culture.

It is hard to determine which organizational culture is best because each has its benefits and drawbacks. However, you can decide on more than one of these styles in your company’s corporate culture.

Organizational culture examples

Adopting a positive organizational culture affects a company’s success. It is little wonder why several companies develop cultures that align with their goals. We have you covered if you are curious about which companies have the best culture. Here are five examples of companies with great work cultures.

1. Google

It is impossible to talk about companies with great cultures without mentioning Google. Aside from being one of the most famous companies in the world, Google is also known for its commendable work culture that emphasizes employee satisfaction. At Google, the hiring process is based on talent as well as individual values and beliefs that resonate with the company. Employees are entitled to healthcare services, in-office recreational stations, and other incredible perks. Google’s open communication policy is also commendable for the work culture. Employees can express themselves to the CEO or high-ranking executives freely. Overall, Google’s admirable organizational culture allows for a creative, collaborative, and innovative work environment.

2. Netflix

Netflix has an admirable work culture. The entertainment company is popular for its culture that emphasizes people over process. At Netflix, all employees can participate actively in important decision-making processes. There are no inhibiting rules, and staff members can communicate freely and directly. Netflix chooses employees based on integrity, teamwork, passion, humility, innovation, and selflessness.

3. Microsoft

As of 2022, Comparably ranked Microsoft with the best global work culture. Microsoft has a commendable work culture mainly focused on a growth mindset. The company is popular for employees dedicating their skills, time, and money to help make a difference in the world. This difference contributes to employee diversity and inclusion, considering Microsoft has employees from all backgrounds and walks of life working to ensure customer satisfaction.

4. Zappos

Zappos is popular for its footwear and fascinating organizational culture. The company has a connected, creative, and bubbly work culture. The company’s culture focuses mostly on employees’ happiness to improve its performance. As a customer-centric brand that emphasizes wowing customers over everything else, Zappos has core values that provide a conducive environment for employees. For instance, the footwear company is famous for its “pay to quit” culture that offers $1,000 to employees tired of their roles. The company also organizes talent shows and eat-ins and provides self-care rituals for every employee. Since adopting the Holacracy business constitution in 2013, employees have mainly controlled all decision-making processes.

5. IBM

A company with a positive organizational culture worthy of mention is IBM. According to a report, 76% of employees at IBM say it is a great place to work. IBM is famous for its THINK culture, which is a system that encourages team members to be thinkers and contributors. IBM believes in diversity, gender equality, and an innovative and flexible work approach. Employees can communicate freely and receive proper respect. IBM offers a work-from-home policy, an opportunity for growth within the company, and amazing interaction with the leaders.

Organizational culture best practices

Many companies seek best practices to help adopt a healthy organizational culture. However, this process involves more than printing your new values on the office handbook, distributing it to employees, and expecting an instant change. Adopting a thriving work culture does not work like magic. Rather, culture building requires consistency and a roadmap that helps build these best practices. Here are useful organizational cultural best practices to help you rebrand your company culture.

1. Communicate with your Employees

Communicating with your employees is the first step in adopting a healthy work culture. You should discover what employees like or dislike about the work process, leadership, and environment. You should also find out what motivates team members and redesign the existing work culture that is not serving these needs. Similarly, it would help if you encouraged employees to engage more in decision-making. If you can get employees to feel great working with you, then there is a high chance you will notice an increase in productivity.

Learn internal communication tips.

2. Encourage Creativity and Innovation

A company that encourages employees to be risk-takers, creative, or innovative will likely experience more growth. A single idea may be all you need to launch your company to the next level, and it could be sitting in an employee’s head. You can make a difference in your organizational culture by encouraging employees to undertake personal tasks that align with the company’s goals.

Here is a list of books about creativity.

3. Create a Diverse Workspace

Companies like Microsoft did not just become influential overnight. Diversity is a major part of workplace culture. You can incorporate diversity by creating a fun and inclusive workspace where workers from different walks of life can collaborate on impactful projects. By encouraging an equitable onboarding process, you can create a diverse company culture that encompasses all employees and gives them a sense of belonging. You can also conduct confidential surveys or meetings where employees candidly communicate their feelings.

Read about the benefits of diversity in the workplace.

4. Hire Employees With Similar Values

To promote a long-lasting and successful organizational culture, hiring workers with similar values is one practice you should take seriously. You cannot sustain a positive work culture if new hires think and act differently from existing employees. Hiring based on qualifications or talent is not enough. You should also pay attention to your worker’s personal beliefs and principles, like honesty, innovation, passion, and creativity. You should ensure employees have what it takes to treat clients in a way that mirrors the company’s culture. Before hiring new staff, these questions should always be on your mind.

Here is a guide to company core values.

5. Leverage Individual Strengths

One of the best work culture best practices is leveraging each employee and their specific strengths. For instance, the company writer may be better off as a marketing consultant. You can utilize this skill rather than delegating a particular role to an employee simply because they applied for it. When your employees utilize their strengths more, you will discover a leap in productivity.

6. Let Leadership Reflect the Company’s Culture

If you want a healthy organizational culture, then you must model it yourself. It is advisable to access your personal values and work behavior to ensure they align with the new work culture you want. Your HR team and other high-ranking executives should also mirror these new values. For instance, you cannot encourage punctuality in employees when you are always the last to arrive at work. Healthy organizational culture practices work when team members obey the rules and regulations. Your employees tend to follow suit if the leadership structure embraces this healthy work culture.

Here are historical examples of good leaders.

7. Conduct Regular Evaluations

After kickstarting your company’s culture best practices, you should monitor the reaction of your employees to the changes. Thankfully, certain indicators or KPIs help you determine if you are making progress. If you notice a favorable change, then you should maintain and improve upon these changes. On the other hand, you may need to put more effort and work into shaping your company’s culture if there is no positive change.

Building the best organizational culture practices takes a lot of time and demands a high level of commitment. However, you can achieve an amazing work culture with time and patience.

Importance of organizational culture

Aside from increasing a company’s success rate, organizational culture produces a well-structured and highly functional workspace. Here are some reasons why organizational culture is important for every company.

1. Improve Your Brand Identity

A company’s organizational culture influences its inner workings and how others see you, affecting its reputation. A positive corporate culture should focus on more than just satisfying your employees. Your culture can also be a great marketing strategy because customers who share similar values will want to do business with you. An organizational culture speaks volumes and helps you stand out from your competitors.

2. Produce Happier Employees

Millions of employees dislike their jobs. You want your employees to avoid falling into that category. A company with a stellar work culture tends to have satisfied employees who look forward to each day of work. A positive atmosphere will surely impact your staff’s mood and behavior. In this case, happier employees equal increased productivity.

Read about the benefits of happy employees.

3. Increased Productivity

Satisfying your employees’ needs will boost their morale and make them feel important. When your employees get useful tools and a friendly work environment, an increase in work output is inevitable because they are motivated to work. An organizational culture ensures every team member gets important roles and becomes an important contributor. Hence, employees within a healthy workspace willingly go the extra mile to ensure the company continues to thrive.

Here is a list of productivity tips for work.

4. Employee Retention

It is rare for employees to quit a company that caters to their emotional and physical well-being. An organizational culture builds an employee experience that eliminates the need to quit. Some of the most influential companies have the best performers in their industries as employees. These companies have created a workspace that values every skill and helps employees reach their full potential. Besides, a good organizational culture reduces turnover rate and human and financial resources depletion.

Read about employee retention strategies.

5. Healthy Workspace

Organizational culture eliminates disputes, chaos, or animosity between team members. A healthy culture encourages a collaborative atmosphere where employees work to achieve the company’s goals. A workspace that caters to workers’ needs and sees others as more than just colleagues is important for a company to stand out from others. A healthy workspace accelerates the decision-making process, fuels purpose, and outlines clear expectations. Therefore, you can expect top-notch results that will benefit both the company and its customers.

Conclusion

Organizational culture is one of many factors that determine a company’s success. A company’s culture greatly influences the perception of others about you and your team. Thankfully, this article provides a concise overview of organizational culture and its importance. Learning about the different types and best practices can shape your current work culture for the best.

Next, check out our guide to creating a strong remote work culture.