Four Types of Organizations

One way to ‘measure’ organizational types is by using OCAI, the Organizational Culture Assessment Instrument. This system is quite popular due to its effective and simple nature. Two primary characteristics are measured by this system:

• The ratio of stability versus flexibility, and
• The ratio of internal versus external mindedness.

Based on these two dimensions, four types of organizations can be discerned, which are briefly discussed here.

1. Hierarchical Organization

The hierarchical organization is very effective in a relatively stable environment, where the efficient and predictable delivering of products is its main reason of existence. Following the rules and procedures is of the utmost importance here. This type of organizations are often characterized by a machine bureaucracy with a role culture.

2. Market Organization

In a more competitive environment, hierarchical organizations are no longer that effective, since they are too ‘internal minded’. A more external minded organization is required in such conditions. This type is called the market organization and is strongly focused on the result of the production processes. The economical and political environment is perceived is dangerous and is approached aggressively. The focus in this type of organization lies primarily on the results and productivity. The feeling that holds the company together is that feeling of being better than the competition. Here, a task culture dominates.

3. Family Organization

In a family organization (which is most often a professional bureaucracy) the idea that success is a consequence of individual development, teamwork and shared norms and values is paramount. The freedom of action for the individual employee is cherished. This type of organization is characterized by a lot of attention for the individual and a strong sense of solidarity. The culture in this type of company is a personal culture.

4. Adhocracy

In an adhocracy, the temporary character of the organization is the central tenet. This is a consequence of the central position of innovation and fast adaptation to new situations. Hierarchical power levels are missing and someone’s influence can strongly fluctuate based on the problem that is being solved. In cultural perspective, creativity, entrepreneurship and a dynamical attitude dominate. The overall task is innovation and the production of unique and original services and products. The dominant culture in this type of organization is a combination of a task and personal culture.

These four organizational types are strongly correlated with the structure and culture in that are being implemented in the organization.