Culture is a vital part of your organization, regardless of its size. It affects how your team works, how customers perceive you and ultimately, your success.
Managing organizational culture creates a positive work environment, keeps you competitive and builds a resilient business.
In this article, you’ll learn about the different types of organizational culture, the factors that influence it and how you can start improving yours today.
What is organizational culture?
Organizational culture definition:
Organizational culture is the shared values, beliefs and behaviors that shape how people work together and make decisions within a company.
Culture manifests in various ways, such as human resources processes, communication styles, work arrangements and even the technology your employees use.
Organizational culture evolves as your business grows and the world around it changes. Successful business leaders guide this change. They adapt culture to support their strategic goals while maintaining the company’s core values.
Why does organizational culture matter?
A positive corporate culture can turn your employees into a high-performing team, passionate about showing up to work each day and achieving their goals.
In small business management, where resources are often limited, organizational culture can become a critical differentiator that helps these enterprises compete with larger companies.
Here are key ways a strong organizational culture can benefit your business:
Drive productivity and performance
Employees who feel valued and aligned with your company’s culture are motivated and productive, directly affecting your bottom line. Gallup found that companies with strong organizational cultures reported an 85% increase in net profit over five years.
Employees in these organizations are more likely to provide superior service experiences that boost customer retention.
Increase employee engagement
Research shows employees who feel more connected to their organization’s culture are four times more likely to be engaged at work. Engaged employees are more emotionally invested in their jobs, which can boost overall productivity and performance.
They’re also more likely to take initiative, contribute ideas and improve business processes while being proactive in customer dealings. Engaged employees are also more receptive to feedback and more inclined to give detailed, thoughtful and accurate responses in surveys and interviews.
Attract and retain top talent
Culture affects how others perceive your organization. A strong and positive culture helps attract qualified candidates who choose to work with you because they resonate with your values.
Gallup’s research showed that employees connected to their organization’s culture are almost six times as likely to recommend their organization as a great place to work. Endorsements like these act as social proof, motivating top talent to apply to your company.
The same study also found that employees who love their workplace’s culture are 43% less likely to search for other jobs. Building a strong culture helps you attract and retain talent.
Create brand alignment
Companies with strong cultures have superior internal communication processes, so their employees often align on customer needs and brand guidelines.
When everyone is on the same page, your company can deliver consistent messaging across all touchpoints, from your website to customer service channels to social media.
Brand consistency can also impact your bottom line. A study by Lucidpress (now Marq) showed that brand consistency can drive profitability up by 10-20%.
4 types of organizational culture (with examples)
There is no universal culture that works for all companies – each defines organizational culture to suit its needs and values. The culture continues to evolve with the company’s growth, people and external conditions.
Nevertheless, Robert E. Quinn and Kim S. Cameron (professors at the University of Michigan known for their work in organizational culture) identified the four most prevalent types of culture.
Well-known companies and modern concerns (e.g., remote-first, customer-first, diversity) fit into these existing frameworks.
1. Clan culture
Core values: Collaboration, flexibility and internal focus
Clan culture is people-oriented and collaborative. It’s an environment where employees feel a strong sense of belonging.
Companies with clan culture prioritize teamwork and open communication. They also tend to be more flexible and internally focused. In a clan culture, employees are valued, supported and encouraged to provide feedback, while leaders act more like mentors than traditional managers.
Clan cultures thrive in startups and small businesses with horizontal (flat) structures. Early-stage organizations often adopt this culture to fit tight-knit teams collaborating on most projects.
However, this approach can also benefit larger companies looking to maintain strong teamwork across departments or divisions.
Pipedrive is an excellent example of clan culture. Our core values include being team-first and celebrating each other’s achievements.
Focusing on teamwork and recognition makes employees feel valued while promoting a strong sense of community and collaboration among team members.
When clan culture works best
Clan culture can influence building a strong, unified team – especially in smaller companies, where employees often wear many hats. It’s also proven to increase employee engagement and is especially helpful for companies that allow remote work.
Maintaining a sense of belonging and community can be challenging in remote team management. Clan culture’s focus on frequent, transparent communication that celebrates individual and team achievements helps bridge that gap.
2. Adhocracy culture
Core values: Innovation, risk-taking and external focus
Companies with adhocracy cultures thrive on innovation and risk-taking. Employees often think outside the box and experiment with new ideas. Leaders support their initiatives, creating an entrepreneurial spirit throughout the organization.
Adhocracy cultures prioritize autonomy and agility. They’re also dynamic and flexible with an external focus (i.e., on market trends and new opportunities), which makes them adaptable in fast-changing industries. Technology, media and design organizations often adopt an adhocracy culture to stay competitive amid constant disruption.
Google (Alphabet) is one example of an adhocracy culture. Its solutions help it compete with other large companies like Meta, Microsoft and Apple. Google’s culture supports this innovation by offering a flexible work environment.
Here’s a snapshot from Google’s office in Zurich.
The company also encourages employees to dedicate 20% of their time to personal or creative projects. Popular products like AdSense and Google News came out of this “20% time”.
When adhocracy culture works best
Adhocracy cultures support agile workflows that help with rapid growth, product development and innovation. The dynamic nature of this culture also allows companies to adapt to market shifts, consumer trends and new technologies.
Additionally, employees in adhocracy cultures typically experience more psychological safety and mindfulness, which can improve engagement and performance. They take risks, challenge norms and test their ideas, which gives them a greater sense of ownership in their roles.
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3. Hierarchy culture
Core values: Control, structure and stability
Hierarchy cultures include clear structures, rules and processes. They’re prevalent in companies that like predictable and reliable operations, typically controlled by leaders through a top-down approach.
Hierarchical cultures are common in multinationals, government organizations, financial institutions and manufacturing companies. Any organization under strict regulations or with complex processes tends to favor a hierarchical approach.
McDonald’s is one example of a hierarchy culture. No matter where you are, you know what you’re getting when you walk into one of their restaurants. That consistency is due to processes and standardization implemented globally for food preparation and customer service.
For example, the company’s “Hamburger University” helps existing and aspiring store managers build proficiency in skills like leadership, operations and customer service.
With locations worldwide, including Chicago, Hong Kong, Sydney and Tokyo, McDonald’s training program helps every manager run restaurants consistently.
When hierarchy culture works best
Hierarchy culture works well in industries that require high predictability. It helps employees understand their roles clearly and perform tasks according to set guidelines, which reduces the chance of error or variability in the final product.
Small businesses can also benefit from elements of structure as they grow. Establishing clear product delivery and customer service protocols early on helps ensure consistent buyer experiences as you scale.
4. Market culture
Core values: Competition, profitability and customer focus
Market culture is competitive and results-oriented. Organizations with this culture prioritize growth, profitability and market dominance over everything else. For employees, any rewards or incentives tie directly into their performance.
Companies with market culture are often customer-focused and agile. They understand that speed and flexibility are critical to keeping up with trends and competitors.
Market culture is common in sales-driven organizations (e.g., retail), consulting firms, financial services and large tech companies.
For example, Grubhub’s careers website promises a “cutting edge work environment where we think like owners and innovate like entrepreneurs”.
The company shares and tracks key performance indicators (KPIs) to keep employees focused on performance goals. It also offers incentives to inspire consistent performance from its drivers.
A results-oriented approach centers on goal-setting and continuous improvement, helping companies with strong market cultures to stay ahead of the competition.
When market culture works best
The primary benefit of market culture is its focus on results and performance. Clear objectives and incentives motivate employees, driving productivity. Market culture encourages a sense of urgency and high performance across the board.
What factors influence organizational culture?
Various moving parts shape an organization and contribute to its culture. These factors can vary depending on who you ask.
Here are seven key drivers of organizational culture:
Leadership and communication. Organizational culture and leadership are closely tied together. Leaders set the tone for the entire organization. Their management styles, decisions and ability to communicate across the company influence values and expectations.
Core values and traditions. Guiding principles and rituals that define “how things get done around here”. They create a shared identity and influence daily work life.
Human capital management. The process a company uses to recruit, develop and retain talent. It includes policies on hiring, training, promotions and work-life balance, which impact culture.
Performance management. How a company sets goals, measures success and handles feedback affects employee behavior and priorities. It influences what people focus on and how they approach their work.
Workplace design and structure. The physical (or virtual) environment where work happens impacts interaction and collaboration. Office layout, remote work policies and organizational hierarchy all play a role in shaping culture.
Technology and systems. The company’s tools and processes can support or hinder its desired culture. They determine how people work, communicate and solve problems.
External environment. Factors outside the company’s direct control also influence its culture. Examples include government regulations, customer expectations, economic conditions and local customs in different regions.
10 tips to improve your organizational culture
Knowing about culture is one thing, but implementing it across your organization requires careful planning and small steps that add up over time.
Here are some best practices for building a strong organizational culture that supports your company’s growth, brand image and long-term goals.
1. Hire the right people
Hiring employees who align with your values ensures they contribute positively to your culture from day one. Look beyond skills and experience to find the right people. For example, you could ask cultural fit questions in interviews that help you assess a candidate’s attitude.
Involving current employees in hiring is also a great way to get diverse perspectives. Remember to be open-minded when interviewing applicants. A candidate might not fit into your existing culture but may add to it and make it even better.
2. Commit to your values
It’s not enough to write down your cultural values. You need to define and live by them through your actions. Incorporate your values into all aspects of your business, from hiring practices to project management to decision-making processes.
Communicate company values regularly in meetings and emails, and even put them on the walls. Remember to celebrate team members who live up to these values. When you walk the walk, you create a strong company culture that everyone can get behind.
3. Lead by example
As a leader, you set the cultural tone in your organization. Your actions speak louder than any memo or mission statement. Your team will follow suit when you model the behavior you want to see.
Hold yourself accountable and expect the same from other leaders. You should also be comfortable asking for feedback on your leadership style because countless small actions and decisions shape culture.
4. Be flexible to change
The business world is evolving constantly. Organizations with stagnant cultures are often slow to adapt to new technologies, consumer habits and competition. Embracing cultural change helps your company stay resilient and innovative over time.
Keep an eye on your industry and ask for feedback from everyone, not just the managers. Use this information to evolve your practices and policies. Encourage your team to see change as an opportunity, not a threat. When things go wrong, treat them as lessons, not failures.
5. Promote transparency and open communication
Healthy organizational cultures prioritize clear, honest communication. Transparency and open dialogue can build employee trust while reducing rumors and politics within your company.
Break down silos by encouraging cross-departmental collaboration. Address conflicts quickly and fairly, giving employees multiple ways to share their thoughts, such as suggestion boxes, surveys and open-door policies with managers. Listen to employee feedback and act on it to show you value their input.
6. Trust your team to make decisions
Encouraging autonomy, ownership and independent thinking in your team is one of the best things you can do to improve your company culture.
Avoid micromanaging your staff. A survey revealed 55% of employees said micromanagement hindered their productivity. Moreover, 68% of employees said it decreased their morale, and 39% even switched jobs.
Great leaders provide clear directions, expectations and resources that people need to do their best work. They step back and trust employees to do their jobs. Practicing this behavior and delegating tasks regularly helps your team build confidence while creating a positive, productive and innovative work culture.
7. Take care of your employees
Physically and mentally healthy employees are your company’s best asset. Understand their needs and invest in their development to build a positive workplace culture that attracts and retains high-quality talent.
Give employees plenty of opportunities to grow personally and professionally. Pay them well, offer benefits and flexible work options, provide training and support and check in regularly to show that you care about their well-being.
8. Recognize and reward wins
Celebrate your team’s achievements – both big and small – to create a culture where people feel appreciated and motivated to do their best work. Gallup found that well-recognized employees are 45% less likely to leave a company after two years.
Instead of focusing on results, ensure you recognize (and reward) hard work. Along with formal recognition programs like “employee of the year” awards and performance-based incentives, normalize small but impactful habits like shout-outs in team meetings or short and sweet thank you notes.
9. Encourage teamwork
A collaborative and supportive culture makes everyone feel part of something bigger. It motivates employees to work toward shared goals, complete projects faster and generate creative ideas with fresh perspectives.
Set up regular team-building activities, both work-related and fun. Even if your team is remote, interact face-to-face via video calls and in-person meetups. Encourage projects that require different teams to collaborate and reward successful team efforts to show that working together matters.
10. Invest in the right tech
Using the right technology can support your culture. For example, if you have employees working remotely, invest in asynchronous, mobile-friendly communication like Slack and Zoom to keep everyone aligned and up-to-date at all times. You can also enhance collaboration by integrating these tools in Pipedrive.
If your teams are often working on multiple initiatives simultaneously, use project management tools to streamline workflows, track progress, assign tasks and set deadlines. Similarly, use BI reporting tools to ensure employees understand your company’s key metrics and make data-driven decisions.
Final thoughts
Organizational culture plays a crucial role in your company’s success. A healthy culture can help you hire and retain the right people while engaging employees and driving performance. Creating a positive culture can bring additional benefits to small businesses, such as the ability to compete with larger, more established firms.
Understanding the different types of cultures and what influences them can help you implement the best fit in your company. Part of the implementation process involves using the right tech that empowers employees to do their best work.
Pipedrive offers sales automation, customer relationship management, project management, email marketing and reporting tools on one platform. It also integrates with the rest of your tech stack, so you won’t need to switch between tools. Sign up for a free trial today – no credit card required.
