How to Encourage Positive Organizational Culture

Key takeaways

Organizational culture influences how people in your organization approach work, think about problems, and engage with their team members.

• The four main types of organizational culture are adhocracy, hierarchy, clan, and market. 

• A strong organizational culture can improve talent retention, boost employee morale, and encourage employee growth. 

• You can improve your organizational culture by determining your core values, building trust between leadership and employees, and nurturing employee well-being. 

Discover why a robust organizational culture matters and how to cultivate one in your business. If you’re ready to start providing employees with learning opportunities to help them gain in-demand skills for success and drive their development, Coursera for Business can provide valuable training materials in a wide range of areas, including Guided Projects and Professional Certificates.

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What is an organizational culture?

Organizational culture is the set of collective beliefs, attitudes, and values at work within an organization, as well as the policies and other communication methods reinforcing them. As a leader, you likely already know that a strong company culture is essential to keeping your employees engaged and productive. For example, if your leadership team values input from all employees, they may solicit advice from all team members before changing company policy. This helps create a collaborative work environment and may increase buy-in.

Although often intangible, organizational culture reveals which priorities are most important for your company. The type of company you have, the leadership style your senior team demonstrates, and who your clients and staff are can impact your organization's culture.

Why is organizational culture important?

Organizational culture is important because it impacts both employees’ work experience and attitudes, as well as their productivity and output.

According to findings from a recent report from OC Tanner, "when organizations provide avenues for skill building and career advancement, coupled with a culture that values flexibility and shows appreciation, the likelihood of a thriving workforce surges" [1]. Some key benefits of building a healthy and successful organizational culture in your business include the following:

• Attracts and retains top talent: A strong organizational culture can help you locate suitable applicants and maintain your employees' satisfaction, making them more likely to stay with your company.

• Keeps employee morale high: The key components of building a strong company culture include clear communication, inclusivity, collaboration, and flexibility, which help keep employees encouraged and motivated.

• Encourages employees to take on leadership roles: When employees are more satisfied with their work and feel it has purpose and vision, they are more likely to assume leadership roles and go above and beyond expectations.

Read more: Your Guide to Employee Retention

Types of organizational culture with organizational culture examples

Although every organization has a unique culture, each typically falls into one of four categories: adhocracy, hierarchy, clan, and market [2]. The four categories of organizational culture include:

• Adhocracy

• Hierarchy

• Clan

• Market

Discover more about each type of organizational culture. 

Adhocracy

The word “adhocracy” is a play on the word bureaucracy, meaning to put together a set of rules ad hoc or for a particular purpose. In this organizational culture, processes and procedures exist to accomplish each task creatively and flexibly.

While bureaucracies are infamous for rigid, unchangeable rules, adhocracies are the antithesis of this concept. In adhocracies, rules can be reinvented and adjusted as needed to meet the company's needs.

Adhocracy organizational culture example: Google

Google is an example of an adhocracy culture in which leadership expects employees to adapt to the demands of the tech industry, often seeking creative solutions. Its culture rewards innovation and experimentation that drives growth with groundbreaking ideas. 

Hierarchy

Hierarchy culture is a more formal organizational culture typically found in companies that need to mitigate risk. It usually operates within a well-defined company structure that emphasizes top-down decision-making, repeatability, and predictability.

Unlike an adhocracy, a hierarchy will defer to the formal process already in place wherever possible.

Hierarchy organizational culture example: Banking industry

With the amount of financial risk in banking, many in the industry operate within a hierarchical culture that depends on each component doing its part. 

Clan

In an organization with a clan culture, leadership encourages employees to work in teams, seek feedback from coworkers before making decisions, and collaborate on projects and ideas. Clan culture also focuses on providing employees with mentorship or development while rewarding loyalty and teamwork.

Clan organizational culture example: Whole Foods

In its mission statement, Whole Foods emphasizes collaboration and collective contributions from all members. Their environment fosters growth, diversity, and open communication between team members. 

Market

Competition defines market culture, and you'll typically find this type of organizational culture at work in companies aiming to achieve the best market position possible. The underlying beliefs of this culture prioritize competition between employees to increase innovation, productivity, and profitability. Market organizational culture example: Amazon

Amazon strives to meet customer needs at all levels, from efficient delivery to customer satisfaction. By doing so, it can achieve a competitive edge in its industry by continually streamlining operations to meet customer needs. 

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How to change organizational culture

To change your organizational culture, start by addressing the root cause of problems. Some ways you can begin to do so include:

• Taking an honest, thorough assessment of your workplace culture through both qualitative and quantitative surveys of employees 

• Ensuring leadership is on board with the cultural changes and can communicate that to employees

• Focusing your employee efforts on the three elements of thriving: career development, skill building, and flexibility 

Explore some more tactics for changing your organization's culture. 

Determine your company’s core values.

The first step toward a strong organizational culture is to understand which of your company’s core values are most important to reach your goals. You should be able to find these core principles in your mission statement or statement of values.

These values can lead you to a stronger company culture and provide the backbone of what your culture will entail. When your employees are passionate about your values and feel a sense of purpose in your mission, they are more likely to be satisfied with their work.

Build trust by demonstrating company values through leadership.

Organizational culture begins with leadership and trickles down throughout the company. If leadership embraces collaboration, for example, it can send a message to all other team members that collaboration is important.

If your senior leadership does not embody your company's core values day to day, their actions send a mixed message to your team about where their real priorities lie. On the other hand, when leadership demonstrates these values, it builds trust with employees.

Be grateful and praise your employees.

Appreciation and gratitude help employees feel more valued, improving office morale. Employees who feel valued and respected may be more engaged.

Look for opportunities to celebrate their successes, support their growth, and respect their time. A handwritten note, an offer to pay for training, and reducing the number of meetings go a long way toward showing your appreciation for their work.

Clearly define your expectations and maintain transparency.

When employees know they can rely on the expectations you’ve set in the past, you can encourage stability and predictability. This extends beyond treating employees equally and includes rewarding good work fairly and consistently responding when employee conduct goes against company values. You'll also find that maintaining transparency in all your interactions helps build communication and model your expectations.

Nurture employee well-being.

An environment where your employees can freely express their concerns, problems, and innovative ideas while engaging productively with their team is one way to help your employees manage their stress levels.

According to Gallup, workplace engagement, which a strong culture promotes, improves employee well-being by 70 percent [3]. You can also endorse a higher sense of well-being and satisfaction. For example, you can develop a company culture that encourages employees to take frequent breaks for short walks or games during their workday.

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