What is corporate culture?
Corporate culture refers to an organization's shared values and goals, including the attitude and behaviors the organization upholds. Corporate culture is also called organizational, company, and workplace culture.
A solid corporate culture is integral to an organization’s talent acquisition and recruitment strategy and its long-term employee engagement strategy. Organizations leverage employee engagement software to build more meaningful corporate cultures and create happier employee experiences.
Types of corporate culture
These four types of corporate cultures are the most widespread.
- Adhocracy culture: Organizations with an adhocracy culture are innovative risk-takers. Startups pursuing their aspirational goals and business growth display an adhocracy culture. Members of these organizations are gambling on finding the “next big thing,” and so employees are encouraged to bring forth new ideas. An ad hoc culture has greater risk, but also the potential for higher reward. Potential disadvantages include too much opportunity for failure and a possible lack of stability due to constantly changing initiatives.
- Clan culture: A clan culture, also referred to as a collaborative culture, emphasizes teamwork. Organizations with a clan culture put relationships, participation, and mentorship at the forefront. This type of culture reduces the barriers of hierarchies within the organization, creating more collaboration between senior and junior roles. Clan culture offers open communication and highly engaged employees, but career paths may be unclear due to the horizontal structure. Clan culture is also hard to maintain as companies grow larger over time.
- Hierarchy culture: Organizations with a hierarchy culture adhere to traditional corporate styles with a clear chain of command and defined structure. This type centers around stability, structure, and processes. Employees working under a hierarchy culture have a definite understanding of what is expected of them, but that comes with inflexibility and the discouragement of innovation.
- Market culture: A market culture prioritizes growth and evaluates decisions with the organization’s bottom line in mind. Companies with a market culture tend to be competitive; leaders expect employees to deliver in high-pressure environments. Market culture produces hardworking employees who reach company goals, enabling their company's success. But these same employees can experience high stress levels, job burnout, and a lack of purpose due to focusing on numbers.
Characteristics of corporate cultures
Many characteristics play a role in the overall feel of corporate culture. Key elements to consider include:
- Vision: An organization’s purpose and mission are critical components of the corporate culture.
- Values: Company values guide employees’ actions, behaviors, and attitudes to help the organization achieve its goals and fulfill its purpose.
- Practices: The practices are the policies, procedures, and day-to-day operations that employees and teams follow.
- People: An organization’s people bring a corporate culture to life and are the backbone of the culture.
- Narrative: Organizations should incorporate their histories and stories into their company culture.
- Place: A company's location and atmosphere contribute to the working culture.
Benefits of corporate cultures
Organizations with solid corporate cultures experience many benefits, including:
- Higher retention rates: Companies that build corporate cultures that employees enjoy have greater retention rates. When employees appreciate the company culture, they are more likely to remain loyal to the organization.
- Positive reputations: Healthy corporate cultures build positive reputations, which can attract new talent and impress clients and the public. A reputable business is crucial for ongoing success and growth.
- Stronger teams: Engaged employees immersed in the corporate culture build stronger bonds and relationships with one another. This can unify employees and lead to better teamwork.
Corporate culture best practices
There’s no one-size-fits-all approach to building a strong corporate culture. However, there are some general best practices organizations should consider when building or changing their corporate culture.
- Include employees in the process. Without people, there is no corporate culture. Involve employees in discussions around the direction of the culture to obtain their buy-in and allow them the opportunity to help shape it.
- Set top-down examples and model behavior. All team members play a role in contributing to the culture, including an organization’s leaders. It’s essential to model behaviors and beliefs from the top-down to create a consistent message and framework for employees to follow.
- Prioritize diversity. Companies should make it a top priority to invest in creating a diverse team. Hiring a diverse workforce will improve corporate culture and lead to better business outcomes.
- Be transparent. Communicating changes and transparency builds trust with employees and a strong company culture. This can be more challenging as a business grows, but it’s essential to prioritize open and honest communication for long-term success.
Alyssa Towns
Alyssa Towns works in communications and change management and is a freelance writer for G2. She mainly writes SaaS, productivity, and career-adjacent content. In her spare time, Alyssa is either enjoying a new restaurant with her husband, playing with her Bengal cats Yeti and Yowie, adventuring outdoors, or reading a book from her TBR list.
