We hear the term organizational culture bandied about a lot these days, but what does it actually mean? The definition of organizational culture is best summarized this way: This is the combination of beliefs, assumptions, values, and habits that make up the psychological environment of your workplace. And if that sounds like a mouthful, maybe think of it this way: Organizational culture just refers to the way people in your business interact with one another, and with the customer.

What is Organizational Culture?

Something else to know about organizational culture is that every business has one, whether you’re aware of it or not. What that means is that all businesses have a choice: Either you can actively define your organizational culture, building a set of values and customs, or you can just allow your culture to happen haphazardly. If you choose the second option, don’t be surprised if your organizational culture turns out to be weak, ineffective, or even toxic.

That’s the basic organizational culture definition, but what does all of this mean practically? How can organizational culture impact your bottom line? What good should your organizational culture do you? That’s what I’m going to address here.

Types of Organizational Culture

The first thing we’ll need to consider is the basic types of organizational culture. To be clear, no two businesses have quite the same culture, because no two businesses are made up of the same people, and your people ultimately make your culture unique.

With that said, there are certainly some basic archetypes; some broad categories into which most organizational cultures can be placed. These are some of the most common ones:

The clan. Clan cultures are all about collaborative work. Basically, in a clan culture, all your employees view themselves as part of a big family; everyone is united by the same sense of purpose, and they work together to achieve the same ends. Clan cultures are bound together by the values of teamwork and open communication, and leadership happens through agreed-upon standards.

Clan cultures are all about collaborative work. Basically, in a clan culture, all your employees view themselves as part of a big family; everyone is united by the same sense of purpose, and they work together to achieve the same ends. Clan cultures are bound together by the values of teamwork and open communication, and leadership happens through agreed-upon standards. Adhocracy. The second type of organizational culture is the adhocracy, which is all about creative energy. Innovation and risk-taking are rewarded. The people who tend to succeed are the ones with the most entrepreneurial mindsets. The primary values are being nimble, dynamic, and ready to embrace change.

The second type of organizational culture is the adhocracy, which is all about creative energy. Innovation and risk-taking are rewarded. The people who tend to succeed are the ones with the most entrepreneurial mindsets. The primary values are being nimble, dynamic, and ready to embrace change. Market cultures. Market cultures are all about employees competing with one another to see who can yield the most impressive results. These are highly goal-oriented cultures, with leaders who can be fairly exacting, aggressive, and demanding. In a market culture, everyone wants to beat their rivals—period.

Market cultures are all about employees competing with one another to see who can yield the most impressive results. These are highly goal-oriented cultures, with leaders who can be fairly exacting, aggressive, and demanding. In a market culture, everyone wants to beat their rivals—period. Hierarchy culture. Finally, there’s the hierarchy culture. Here, the dominant values are control and rigid adherence to structure. Most large, stereotypical bureaucracies fall under this umbrella.

Again, these are broad terms, but you can probably get some idea of which bucket you’d choose for your organizational culture.

Why is Organizational Culture Important?

Now that we’ve discussed the primary types of organizational culture, the next step is understanding what makes organizational culture so meaningful. Why does any of this matter, anyway? There are a few reasons:

It’s important for recruiting and retaining top talents. In fact, among millennial employees, the #1 most important factor in considering a new job or a career change is culture. People want to be part of a work environment that’s healthy, positive, purposeful, and productive.

factor in considering a new job or a career change is culture. People want to be part of a work environment that’s healthy, positive, purposeful, and productive. Culture sets the tone for productivity. Indeed, the kind of work environment you create determines the extent to which employees will collaborate, the extent to which they will be self-motivated, etc.

Your organizational culture impacts your employees, but it can’t help but spill over into interactions with customers, as well. A toxic culture can lead to lax standards of customer service, while a healthy and positive culture empowers employees to treat clients and customers respectfully.

These are just some of the reasons why it’s important for your business to be proactive and strategic in developing a strong sense of culture.

The Benefits of a Strong Culture

We can now draw on our definition of organizational culture, as well as those bullet points about why it is important, to determine some potential benefits of your culture.

A strong culture can be a major selling point for potential employees, and a great way to attract new talents.

Culture can also help improve morale, engagement, and retention—helping you avoid the high costs of employee turnover.

The right kind of culture empowers employees to do their most creative, productive, and collaborative work.

A positive culture can’t help but bleed into interactions with customers, enhancing your team’s ability to delight its clientele.

In a positive culture, employees will be more willing to go above and beyond in innovating new strategies and solutions.

These are just a few of the reasons why it’s important to choose the kind of culture you want, rather than just letting it happen by chance.

Learn More About Building a Strong Culture

There’s much your company can do to ensure a favorable culture. It starts with just being intentional: Outlining in real terms what a strong culture looks like for you, understanding that it may look different from one organization to the next.

Something else you might consider is hiring an executive coach who brings some expertise in culture-building. It happens to be a field I know well, and I’d love to talk with you more about effective culture making.

Let’s chat about it today! Contact me at www.rickgoodman.com or call 888-267-6098.