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What Is Company Culture and Why Is It Important?

Company culture is the environment in which your company operates and what your employees experience on a regular basis while working at your company. This includes your core values, mission, goals, and even policies. A company’s culture can also be cultivated through perks, benefits, and even activities.

Company culture is often used as a form of recruitment and retention. It also contributes to your reputation. Good company culture is essential to maintain a productive workforce.

How does it work?

There is no set standard on what the ideal workplace is, and each company needs to develop its own culture that works for them and their employees. Good cultures often evolve over time as their work environment changes.

Although all workplace cultures vary there are four identifiable types:

1. Clan Culture

Clan culture is largely based on a team-based mindset. Many often compare it to a network made up of a large family in which it is very collaborative and carries a big sense of loyalty. There is a lot of tradition and common ground in these types of cultures. Often these types of cultures are more difficult to maintain as the company grows. 

2. Adhocracy Culture

Companies that have this type of culture are huge on taking risks. Employees are willing to take chances and leaders tend to be consistently inspirational to push their workforce to the next level. They are very willing to adapt and encourage change through innovation. Although these companies tend to be known for their cutting-edge approach, there is always a potential downside in taking risks. It can lead to heavy competition amongst employees which can be both good and bad. If not handled properly, this culture can get too fast to keep up with. 

3. Market Culture

Market culture is mainly focused on the bottom line of the company and prioritizes profits and the company’s larger fiscal goals. These types of companies can be very successful and profitable. However, the focus on quotas and numbers can eventually lead to an increase in turn-around rates and a decrease in internal satisfaction- Which can ultimately hurt the bottom line. 

4. Hierarchy Culture 

Hierarchy culture has a more traditional approach in which there is an emphasis put on processes and procedures. Leaders focus on a hierarchical structure for its employees to work towards and follow strict guidelines and practices. These companies have a clear sense of direction and can be very stable. However, they do not leave a lot of room for creativity or collaboration which can stunt their own growth.

These different types of company cultures come with varying pros and cons. When cultivating your own culture, regardless of which route is taken, it is important to keep in mind the cons and how they can ultimately be detrimental.

Your company’s culture says a lot about you. It can dictate how your entire organization is managed and how it produces results. Evaluate where you are currently at, what is important, and what aligns best with your vision going forward.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.