Various business management theorists have introduced models of the types of corporate culture because there is no one common theory of the different models of organizational culture. It is mainly because businesses are very different in the ways that they operate.
Terrence Deal and Allan Kennedy proposed a theoretical model of corporate culture that is the way how things get done within a business organization. Specifically, it is based on how quickly employees receive feedback and reward after they have done something and the level of risks that they take.
Dimensions of corporate culture by Terrence Deal and Allan Kennedy
Every business organization has its own mix of the following dimensions of corporate culture including:
- Feedback and reward. This refers to the speed of feedback given and level of rewards within a business organization. These two factors are a major driver of people working in companies. The general feedback and specifically designed rewards indicate whether they are doing a good job. Rapid (immediate) feedback and fair rewards are likely to lead to a consistent corporate culture as any unproductive conduct in quickly removed and those who slack during work hours or cannot survive will either leave on their own or be dismissed. If the feedback takes longer to arrive, then this will most likely leave mistakes uncorrected.
- Risk. This refers to the degree of uncertainty in a business organization. While risk and uncertainty are something that some people thrive on that drives employees to do better, for some other people risk will be very stressful highly demotivating. Therefore, management needs to manage risks to some extent. Where the risk is high it needs to be controlled or accepted, and where the risk is low people might be willing to take risks up to acceptable limits. In general, employees will most likely not stay long in the kind of jobs that do not match their risk-profile as the job will be either too boring or too stressful.
Types of corporate culture by Deal and Kennedy
Based on different mix of dimensions, the following types of organizational culture can emerge:
- Tough-guy macho culture. This culture is characterized as having rapid feedback and high risks. Employees receive rapid feedback on the effectiveness of their work with feedback coming in the form of financial rewards and in many other ways. They believe that they must be tough to do their job and resilient when things go wrong in order to survive. Tough-guy macho culture is prevalent in fast-paced organizations with difficult and highly stressful environment to work in due to the high risks. It nurtures short-term views and profit maximization with business managers making decisions quickly and accepting high risk. There will be a lot of internal politics and workplace conflict. This corporate culture exists in companies such as commodity brokers, financial markets, stock exchanges, the police force, surgeries, professional sports clubs, sales-orientated organizations such as financial services, real estate, entertainers, etc. A world of individualists who regularly take high risks and get quick feedback on whether their actions were right or wrong.
- Work-hard, play-hard culture. This culture is characterized as having rapid feedback and low risks. Employees receive rapid feedback that is related to supplying customers with a quality product or service. Stress usually comes from the scope and pace of work as this type of culture is characterized by high levels of activity through meetings, conventions, teamworking, office parties, jargon, buzzwords, etc. Work-hard, play-hard culture is prevalent in large organizations and in fast-paced customer-orientated businesses. Business managers need to ensure that high level of energy is being directed at the right tasks and that quality accompanies the high levels of activity. The success is measured by persistence and customer satisfaction. This corporate culture exists in companies such as restaurants, hotels, IT companies, fashion houses, telecommunication firms, etc. Fun and action are the rule here, and employees take few risks, all with quick feedback. To succeed, the culture encourages them to maintain a high level of relatively low-risk activity.
- Bet-the-company culture. This culture is characterized as having slow feedback and high risks. Employees do not receive rapid feedback nor immediate rewards, but must face a high degree of risk and uncertainty because results of their work take a very long time to materialize, if at all. It is stressful working in such organizations because it can take many years before getting any results. Bet-the-company culture is prevalent in business organizations involved in projects that consume large amounts of resources and take a long time to be realized. These large projects are very risky and the organization must do everything to ensure it makes the right decisions initially. This corporate culture exists in industries such as construction, oil exploration, pharmaceutical, aerospace, mining, etc. Cultures with big-stakes decisions, where years pass before employees know whether decisions have paid off. A high-risk, slow-feedback environment.
- Process culture. This culture is characterized as having slow feedback and low risks. There is low uncertainty and employees receive slow feedback and they are more concerned with the process (how work is done) rather than with what the work is (what is done). Employees are very defensive because they fear that they will be punished when they have done things incorrectly, hence they tend to protect themselves. Process culture is prevalent in bureaucratic business organization that care about how things are done paying attention to details, rather than focusing on achieving the aims and objectives of the organization. Therefore, there is a danger that artificial environments develop which have nothing to do with the real world. This corporate culture exists in organizations such as government departments, insurance companies, etc. A world of little or no feedback where employees find it hard to measure what they do. Instead, they concentrate on how it is done. We have another name for this culture when the processes get out of control – bureaucracy!
It is important to note that these are just four types of corporate culture, and in reality, most companies will have a culture that is a mix of these types. The best type of corporate culture for a company will depend on a variety of factors, such as the company’s industry, size, and stage of development.
