Organizational Culture Definition: Types, Examples, and How to Change It
The organizational culture definition sounds simple until you try to apply it to your own business. As an executive coach, this is one of the questions I get asked most often. What is organizational culture, really? What are the actual types and examples?
And why does organizational culture and change so often trip up companies that get everything else right? Let's break it down.
The Organizational Culture Definition That Actually Matters
The clearest organizational culture definition is this: the combination of beliefs, assumptions, values, and habits that shape your workplace environment. If that sounds abstract, think of it this way instead. Organizational culture refers to the way people in your business interact with one another and with the customer, especially when no one in leadership is in the room.
Organizational culture is a part of every business, whether you are aware of it or not. That means every business has a choice. You can actively define your organizational culture, building a set of values and customs. Or, instead, you can allow your culture to happen haphazardly. If you choose the second option, do not be surprised if your organizational culture turns out to be weak, ineffective, or even toxic.
That is 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 is what I am going to address here.
Types of Organizational Culture (With Real Examples)
The first thing to consider is the basic types of organizational culture. No two businesses have quite the same culture, because none are made up of the same people. Indeed, your people ultimately make your culture unique.
With that said, there are certainly some basic types of organizational cultures. Specifically, these are the four most common ones, along with real-world examples of each. Most real organizations are a blend rather than a pure example of just one.
The Clan
Clan cultures are all about collaborative work. In a clan culture, employees view themselves as part of a big family. Consequently, everyone is united by the same sense of purpose, and they work together to achieve the same ends. Clan cultures are bound together by teamwork and open communication, and leadership happens through agreed-upon standards rather than rigid hierarchy.
Example: Companies known for strong internal community and mentorship programs often reflect a clan culture. As a result, employee tenure and internal promotion are common, because people genuinely want to stay.
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, which makes this culture common in startups and fast-moving industries.
Example: Early-stage technology startups typically exemplify adhocracy. Similarly, product innovation teams inside larger companies prioritize speed and experimentation over rigid process.
Market Culture
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.
Example: Sales-driven organizations with aggressive quotas and leaderboards are classic examples of market culture. Consequently, performance-based compensation makes results visible and constantly compared.
Hierarchy Culture
Finally, there is the hierarchy culture. Here, the dominant values are control and rigid adherence to structure. As a result, most large, stereotypical bureaucracies fall under this umbrella, along with heavily regulated industries where process and compliance genuinely matter.
Example: Government agencies, large banks, and healthcare systems commonly reflect hierarchy culture. Accordingly, standardized procedures and approval chains take priority over speed.
These are broad terms. Still, they should give you some idea of which bucket describes your own organizational culture, and which one you want to build toward.
"Organizational culture is a part of every business, whether you are aware of it or not. The only real choice is whether you define it, or let it happen to you."
Organizational Culture and Change: Why the Two Cannot Be Separated
Most conversations about organizational culture and change treat them as two separate projects. First you decide the new strategy, then you worry about culture afterward. In practice, that order is backwards. Culture is the mechanism that determines whether the change actually takes hold at all.
Why Strategy Alone Is Not Enough
A new strategy can be well designed on paper and still fail in practice if the existing culture continues to reward the old behaviors. For example, a company can announce a new focus on collaboration. But if it keeps promoting and paying people based purely on individual output, the culture will not shift, no matter how many times the new value gets repeated in an all-hands meeting. Ultimately, employees follow what gets rewarded, not what gets announced.
Effective organizational culture and change efforts start by identifying the specific behaviors the culture currently rewards. From there, leaders deliberately shift the incentives, modeling, and daily habits that reinforce those behaviors. That is a leadership discipline, not a one-time communications campaign. Consequently, it connects directly to adaptive leadership more broadly.
Why Organizational Culture Is Important
We have now covered the organizational culture definition, the main types and examples, and how organizational culture and change interact. The next step is understanding why organizational culture matters in practice.
The Three Reasons Culture Drives the Bottom Line
- It's important for recruiting and retaining top talent. Among employees across generations, culture is consistently one of the top factors in considering a new job or career change. As a result, people want to be part of a work environment that is healthy, positive, purposeful, and productive.
- Culture sets the tone for productivity. The kind of work environment you create determines the extent to which employees will collaborate and the extent to which they will be self-motivated.
- Your organizational culture impacts your employees, and it spills over into interactions with customers. 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 to be proactive and strategic about culture. Therefore, treat the organizational culture definition as a business tool, not an academic exercise.
Bring Dr. Rick Goodman to your next leadership event to help your organization define and build the culture you actually want, not the one that happens by accident.
The Benefits of a Strong Culture
Drawing on the organizational culture definition and why it matters, here are the concrete benefits a strong culture delivers.
- A strong culture can be a major selling point for potential employees, and a great way to attract new talent.
- Culture can 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 bleeds into interactions with customers, enhancing your team's ability to delight its clientele.
- In a positive culture, employees are more willing to go above and beyond in innovating new strategies and solutions.
These are just a few of the reasons it is worth being intentional about the kind of culture you build.
See It In Action
Watch: Building a Strong Organizational Culture
Dr. Rick Goodman explains the organizational culture definition in practical terms and how leaders can be intentional about building the right one.
Learn More About Building a Strong Culture
There is much your company can do to ensure a favorable culture. Above all, it starts with being intentional. Outline in real terms what a strong culture looks like for you, since it may look different from one organization to the next.
Working With an Executive Coach
Something else worth considering is hiring an executive coach who brings expertise in culture-building and managing organizational culture and change together. It happens to be a field I know well. Therefore, I would love to talk with you more about effective culture making.
About Dr. Rick Goodman, CSP
Dr. Rick Goodman is a Certified Speaking Professional, six-time Global Gurus Top 30 Leadership Expert, and author of five books including the Amazon number one bestseller The Solutions Oriented Leader. He has delivered more than 2,000 programs across all 50 states and 32 countries, helping organizations define and build the culture that drives real business results.
His keynote programs, workshops, and executive coaching engagements are customized and immediately actionable.
Continue Building Your Organizational Culture
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Build the Culture Your Organization Actually Needs
Dr. Rick Goodman is a Certified Speaking Professional and executive coach who helps organizations define, build, and strengthen their culture with practical, leadership-driven strategies rather than generic values statements.
Recognized six consecutive years as a Global Gurus Top 30 Leadership Expert. Author of five books. Certified Speaking Professional.
Organizational Culture: Questions Leaders and Organizations Ask Most
Common Questions About Defining and Building a Strong Culture
If your question is not answered below, call us at 1-954-218-5325 or email rick@rickgoodman.com.
The organizational culture definition most executives find useful is this: it is the combination of beliefs, assumptions, values, and habits that make up the environment of your workplace. In simple terms, organizational culture is the way people in your business interact with one another and with your customers, both when leadership is watching and when it is not.
There are four widely recognized types. Clan culture is collaborative, built around teamwork and a shared sense of purpose. Adhocracy is creative and entrepreneurial, rewarding innovation and risk-taking. Market culture is competitive and goal-oriented, with employees driven to outperform rivals. Hierarchy culture emphasizes control and structure, common in large, traditional organizations.
Yes. Technology startups often exemplify adhocracy culture, prioritizing speed and experimentation. Companies known for strong internal community and shared purpose often reflect clan culture. Sales-driven organizations with aggressive performance targets typically reflect market culture. Government agencies, large banks, and heavily regulated industries commonly reflect hierarchy culture, where process and compliance take priority.
Organizational culture and change are directly linked because culture is what determines whether change initiatives actually take hold. A strategy can be sound on paper, but if the underlying culture rewards the old behaviors, the new strategy quietly fails. Successful change efforts treat culture as the mechanism of change, not an afterthought to announce once the strategy is set.
Culture matters because it directly affects recruiting and retention, since culture is consistently one of the top factors employees consider in a job or career change. It also sets the tone for productivity and collaboration, and it inevitably spills over into how employees treat customers.
Every business has a culture whether it is intentional or not. Companies that do not actively define their values and customs risk letting culture happen haphazardly, which frequently results in a weak, ineffective, or even toxic environment.
A strong culture becomes a major selling point for attracting talent, improves morale and retention, empowers employees to do more creative and collaborative work, and enhances customer interactions. It also makes employees more willing to innovate and go beyond the minimum.
Start by being intentional. Outline in real, specific terms what a strong culture looks like for your organization, since it will look different from one company to the next. Many leaders find that working with an executive coach accelerates this process significantly.
Dr. Rick Goodman works as an executive coach and keynote speaker helping organizations define, build, and strengthen their organizational culture, drawing on decades of experience across industries and organization sizes. To start the conversation, visit the booking calendar or call 1-954-218-5325.