5 Types of Corporate Culture

By Brian Engard

Millennials, according to Pew Research Center, make up more of the workforce than any other age group. What’s more, 60 percent of newly graduated millennials value corporate culture above pay, and that number rises to 69 percent when those already in the workforce are included, according to Accenture. For an employer interested in attracting new talent, corporate culture has become the newest, biggest selling point.

Corporate culture is a collection of qualities within a company that govern how employees and management interact, says Investopedia. Few companies define corporate culture in explicit terms, but it has a profound effect on employee relations, benefits, pay, hiring and firing, and nearly every other facet of working at a company. Most importantly, corporate culture has an important impact on employee satisfaction and motivation.

Importance of Corporate Culture

A few generations ago, jobs were hard to get and money was tight; consequently, job security and good pay were incredibly important to those in the workforce. “Millennials, by contrast, grew up in a time of financial prosperity and rapid technological advancements,” according to Entrepreneur. Job stability has become less important, and more employees are examining how they feel about their companies and whether their values align with those of their employers.

At the same time, talent is in shorter supply than job opportunities are. Because prospective employees can afford to be more discerning, corporate culture has become an important tool for recruitment and retention. Flexible hours, leave time and professional development policies can help employees feel valued and appreciated, which increases job satisfaction, motivation, and ultimately productivity and retention.

Types of Corporate Culture

There are five broad types of corporate culture that you can use as a starting point.

Standard Corporate Culture

According to Enplug, many companies adhere to conventional corporate culture: a professional dress code, rigid hierarchies, risk-averse decision-making, and employee rewards and compensation that are primarily monetary. While these traditions have worked for a long time, technology has forced some companies to adapt. Due to the changing values of the workforce, companies that limit employees’ ownership or autonomy are likely to have trouble keeping talent.

Entrepreneurial Culture

Entrepreneurial companies value innovation and encourage risk-taking. An innovative type of corporate culture gives its employees a considerable amount of leeway. But that flexibility doesn’t come without potential problems. Because employees are encouraged to take risks and try new things, occasionally they will fail. An entrepreneurial company must decide whether successes can make up for these failures and whether it’s willing to bear the costs of such failures.

Social Culture

A company with a social culture, also called team-based culture by companies like Zappos, values its employees and puts their needs first. There’s a customer-focused reason for this: A happy, energized workforce is motivated to provide top-quality customer service. Teamwork and collaboration are highly encouraged, and employees have access to professional development programs, training and other benefits that help them grow as individuals and bond with their coworkers. Social companies often encourage their employees to participate in charities and other programs for social good. Organizations with a social culture build strong ties among employees to ensure they’re all invested in each other’s success.

Talent-Based Culture

While all companies strive to attract talent, a talent-based company prioritizes attracting “rock star” talent with single-minded focus. Talent-based companies have rigorous hiring standards and employ only those who excel in their field. They push for growth and change and sometimes use untested means. A talent-based culture borrows some elements from entrepreneurial culture and social culture, but the company’s primary focus stays on high-quality output. Companies with a talent-based culture can grow quickly and succeed. Burnout is a potential pitfall, however, and competition among employees can lead to workplace tension.

Horizontal Culture

In a horizontal culture, titles tend not to be important.  Everyone is encouraged to pitch in and take ownership of projects. There is a flattened hierarchy; traditional roles like “boss” and “subordinate” don’t exist or are minimized. Companies with a horizontal culture can suffer from lack of direction and accountability; with a lack of authority, there’s nowhere for the buck to stop. But horizontal culture has the benefit of motivating employees to see their projects succeed, because they have a high stake in their projects and the freedom to choose which projects they work on.

Philadelphia University’s online human resources degree can give you the knowledge to build the right culture at your company. Understanding the strengths and weaknesses of the different types of corporate culture is vital to establishing the best culture for your organization.

For  additional insights on corporate culture and millennials, check out this video: