By Francesca Spinelli
Francesca Spinelli is an adjunct faculty member at SMU Cox in the area of strategic human resources. She served as the chief human resources officer at PetSmart, Inc. and RadioShack Corporation. At Wal-Mart Stores, inc. she was Vice President of Organizational Development and Vice President of Human Resources for McLane Company, a former division of Wal-Mart. She teaches about corporate culture in the Cox Certificate in Leadership program. Here she shares the four types of corporate culture that she uses in the program. Which one is yours? Do your organization’s leadership behaviors and other practices align with it?
–Frank Lloyd, Associate Dean, Executive Education, SMU Cox School of Business
An organization’s culture is determined by shared values and shared norms, the values, people, structure and systems, and appropriate attitudes and behaviors that support those norms. A strong culture agrees on what is valued and demonstrates passion and commitment to those values. Values and norms are manifested in an organization’s management style, customer focus, communication, employment practices, decision-making and corporate identity.
Why does a culture matter?
According to recent research, companies with a strong culture tend to have better financial performance. This is particularly true in stable environments and when cultural characteristics align with the company’s strategy, industry and business environment. In addition, companies with a long term view than considers customer and employee stakeholders, as well as shareholders, tend to perform better. Many reengineering, total quality management and downsizing efforts do not achieve desired results because there isn’t a concurrent focus on the culture changes to support these. And cultural integration in a merger or acquisition can be the difference between success and failure.
According to K.S. Cameron and R.E Quinn in “Diagnosing and Changing Organizational Culture,” there are four primary types of corporate and business unit cultures — Adhocracy, Clan, Hierarchy and Market.
#1 Adhocracy characteristics:
- Risk taking
- Glue: commitment to experimentation and innovation
- Leading edge
- Success: unique and new products and services
- Individual initiative and freedom
- Company examples: Facebook
#2 Clan characteristics:
- Extended family
- Cohesion and morale
- Teamwork, participation and consensus
- Glue: loyalty and tradition
- Success: sensitivity to customers and concern for people
- Company example: Zappo’s
#3 Hierarchy characteristics:
- Formalized and structured
- Procedure oriented
- Stability, predictability, efficiency
- Consistency and uniformity
- Glue: formal rules and policies
- Success: dependable delivery, smooth scheduling, low cost
- Company example: McDonald’s
#4 Market characteristics:
- Results oriented
- Goal oriented
- Reputation and success are valued
- Glue: winning
- Success: market share and penetration
- Company example: GE
Over time most companies undergo culture changes for a variety of reasons, such as overcoming shifts in the competitive environment, deliberate attempt to improve performance, technology advances, supporting employee effectiveness, mergers and acquisitions, and others.
Leveraging Culture Understanding
Leaders can enhance their personal skills and success by understanding and acting appropriately in their company’s present or shifting culture. Leaders in an Adhocracy Culture encourage innovation, creativity and new ideas. They are visionary and future-focused, and foster continuous improvement in the context of flexibility and productive change. Leaders in a Clan Culture are team-builders and mentors. They facilitate high performing teams, encourage effective relationships and develop others. Leaders in a Hierarchy Culture are organizers and monitors. They help individuals understand what’s expected of them, ensure procedures are in place, and foster coordination. Leaders in a Market Culture are hard drivers and results oriented. They foster orientation towards exceeding competitor performance, energize employees through motivation, inspiration and celebration, and place a relentless emphasis on satisfying evolving customer needs.