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Of all the decisions that you make when you are starting your business, one of the most important decisions is creating a proper corporate structure for your company. This decision is important as it would impact the way your company runs and how it grows. For instance, have you ever wondered why some companies have CEOs while the others have presidents? Well, that is what we are going to talk about in this article.

Keep reading to know all about the corporate structure basics and the different corporate structure types.

Corporate Structure: Understanding It's Basics

Let us begin by understanding the basics. Presidents, vice presidents, CEOs and CFOs - what is the difference between them? With the changing corporate horizon, it has become very difficult to keep track of what people do and where they stand in the corporate ladder. Should you pay attention to the news related to the vice president or the CFO? What do each one of them do?

Corporate governance is one of the main reasons why these terms exist. The evolution of public ownership has created a separation between management and the ownership in a company. Before the 20th century, most companies were family-run, family-owned and small companies. But today, there are many large international conglomerates that trade publicly on a global scale.

To be able to create a corporation in which the interest of the stockholders are looked after, a lot of firms implemented a two-tiered corporate hierarchy. The first tier is made of the board of directors or governors, who are individuals elected by the shareholders of the corporation. And the second tier is the upper management, where the individuals are hired by the board of directors.

Definition: A corporate structure is the organization of different business units or departments within a company. Based on the industry and goals of the company in which it operates, the corporate structure can greatly vary amongst companies. To be more precise, each department has a specific function that it has to perform while constantly collaborating with the other departments to achieve the overall values and goals of the corporation. Not all companies follow the same structure, and some companies might divide up business units by addressing a single project or p roduct as a department.

Let us start off by understanding the basic parts of a corporate structure and what each of its members do. Also, it is important to note that the structure shared here is what is common in the US and can be different in other parts of the world. But by the end of this, you will get the basic idea about what a corporate structure is.

Corporate Organization Structure

As mentioned above, the corporate structure is a way of running a business. Corporate structures include:

#1 Board of Directors

The board of directors usually report to the shareholders in the company and their tasks include:

Holding annual meetings

Protecting shareholders

Creating committees

Writing bylaws

Company compliance

Reviewing the company's goals, budgets, and plans

Keeping the CEO and upper management on track

The board can be just one person or many people from a diverse background. And as mentioned previously, the shareholders elect board members while the company's bylaws will tell how many members the board needs. Normally, the number of board members is always an odd number to avoid tied votes. Even though the member's personal assets are separate from the company, they are still responsible for the business debts, the corporation, its employees, agents, officers, and subsidiaries.
The directors in the company may include:

Chairman: This is known as the main person who leads the business and is responsible for the actions of the board. The person would work with the top officers in the company to keep the process going. They also act as the public face of the company.

Inside Directors: The inside directors, also called executive directors, are the ones who are in charge of the company's budget. They may be shareholders or top managers.

Outside Directors: The outside directors have the same responsibilities as the inside directors, but they are not the company's managers or officers. They offer unbiased opinions.

#2 Corporate Officers/Management Team

Corporate officers are a part of the upper management team of the company and are chosen by the board. These officers handle day-to-day tasks and look out for the interest of the company. There are four kinds of officers in a company:

President or CEO: This officer works with the board of directors, signs documents, and enforces policy in the company. They may also be the president.

Vice President or Chief Operations Officer (COO): This person is the senior executive in the company. COOs run the daily business, sales, products, marketing, and staff. The VPs normally replace the president if they are no longer acting in this capacity.

Treasurer or Chief Financial Officer (CFO): This person is in charge of the finances in the company. A CFO writes budgets, reports, and tracks the spending in the company. Most CFOs give reports to the Securities and Exchange Commission (SEC), the board, and other government agencies.

Secretary: This officer keeps records, minutes, and the books.

#3 Shareholders

From the name it is understood that the shareholders own the company. These people do not normally take part in the daily business of the company, especially if they are made up of investment firms for larger corporations. And the number of shareholders in the company is based on the business entity structure. For instance, an S corporation normally has fewer than 100 shareholders and C corporations have more than that.

Since each shareholder holds a part of the company, owning more of the business gives that shareholder more power. Shareholders typically own the common stock shares in the company, and are not personally liable for the company but do help in making some decisions. And even though the corporation's owners are its first shareholders, larger companies can have many public shareholders.
The shareholders in the company have the rights to vote on:

Disposing of assets

Dissolving or merging the company with another

Changing the Articles of Incorporation or the bylaws

Choosing the members of the board of directors

Special Considerations

Even though the normal corporate structure has been described, there are some special cases. To begin with, the management and the board of directors have the same goal of maximizing share value. In theory, the management handles the daily operations while the board ensures the shareholders are adequately represented. But in reality, many boards include members of the management team.

The main idea here is that internal and external board members have a good balance. If not, the board members tend to become management to make things run more smoothly. This makes it uncommon to see boards that are made of the current CEO (who is also the chairman), the COO and the CFO, along with the retired CEO, family members, etc. It is not a bad corporate structure, but you need to see what is best for your company and its goals.

Why is Corporate Structure Important?

Corporate structure separates the managers and the owners of the company. It is important to have a solid structure as it can grow a small family business into an MNC (Multi national corporation). A proper corporate structure helps a company share its goals and outline the responsibility and roles. A business needs a structure to be profitable and grow, and it's also monumental for attracting investors for your company.

Here are some of the reasons why a corporate structure is important in a company:

Structure Allows for Better Communication: For a company to be successful, the flow of information has to be smooth. The structure will help people have clear lines of communication in mind. Everyone will know what they need to share with whom.

Clear Reporting Relationships: The reporting relationships also need to be clear so that every member knows what their responsibility is in the company and who they are accountable to. If this is not done, the task might fall through the cracks which can affect the success in the company. Additionally, a clear relationship also helps managers supervise those below them and the employees know who they can turn to for help or direction.

Expansion & Growth: Proper corporate structure can help the tasks to be done in a better way. This in turn can help the company succeed and grow. Without a proper structure, there would be weak spots in a company which would hinder company growth and expansion.

Fit's Company's Needs: Different industry companies have different mixes of talents, so it's important to manage the functions properly. This is done with a well-defined corporate structure. For example, in a software company, there is a large team of development staff. Structuring the reporting relationships in the team can help increase productivity, creativity and the deadlines are met. All this is important for the company's success.

Efficient Task Completion: In continuation to the previous point, with a proper corporate structure, the projects and tasks would be completed on time and with the best quality as everyone knows what their roles are and what they are accountable for. In short, deadlines and quality requirements are met in this case.

Corporate Share Structure

Corporate share structure is the establishment of shares of one or more types in a company and the issuance of some or all those shares to the shareholders. In short, the type of shares that are created and issued is the corporate share structure for that company. And even though the share structure changes in the company, it is always beneficial to start off the corporation on the right footing.

To explain more, a c ompany needs to have at least one class of shares which can have one or more series of shares if the special rights and restrictions connected to the class are created.

For example, let us say that company XYZ has Class A preference shares that have about 10,000 shares in it with no restrictions or rights attached. Now, the same company can also have another class of shares, Class B preference shares with 500 shares in it and voting restrictions. There can be any number of classes in the corporate share structure in a company. These different types of shares issued are deemed the "classes of shares". It is also called the capital share structure. Basically, shareholders can hold the same classes of shares just like other shareholders or even hold more than one class of shares in a company. In short, there are no limits to the number of different share classes a company can have.

Corporate share structure classes

There are three kinds of share structures that a company can have. One is the simple single class share structure where all the shares have the same rights and restrictions. But for more complex share holdings, here are two more share structures, as below:

Dual-Class Share Structure: This structure divides the voting rights and the profit-sharing rights. And it in turn offers the founders and management with more voting power as compared to the ordinary shareholders in the company. Due to this, the founders can easily enjoy the following benefits in the company:

Founders can focus on the innovation and growth of the company without any interference from the shareholders.

The owners that have a long-term view for the business would be protected from the urge from the investors and other shareholders to focus on short-term gains.

This structure guards the founders against takeovers, mostly when the company becomes public.

Multi-Class Share Structure: A multi-class corporate share structure is when a company has more than two classes of shares. This is the most favored share structure that many companies follow as it helps the company evolve better as per the needs of the business.

A company just needs to create the corporate share structure most suitable for its amount and types of shareholders. It should also be able to differentiate between the founders and the shareholders in the company so that each gets what they deserve from the company.

Eqvista Cap Table Software

Eqvista is a cap table management software that allows you to record all the shares in your company while you track and manage them. It would also help you understand the corporate share structure of your company. You can use the application to record your share structure. It is an efficient and cost effective way to handle the cap table and manage the shares of the company.

When you use Eqvista, you will be able to manage all the shares in the company and the share structure easily. It will also help you keep track and avoid any errors that many lead to forensic audits later on. In case something out of place is added in Eqvista, it would have you correct the error before processing the transaction.
Here are some of the key advantages of the Eqvista software:

It would assist you in filing your company with your Division of Corporations of your state.

The management of the cap table would display a clear provenance record.

All the shares of your company would be handled by Eqvista in a transparent manner.

It would reduce manual work and eliminates the need to rely on third party databases.

A direct communication link would be set between investors and the issuers.

Eqvista would accurately calculate the corporate items like share issuances and vesting schedules.

The software is free to use (for smaller companies).

The Eqvista cap table would help you stay on top of your corporate share structure and keep a proper structure of your company as you make smarter financial decisions.

Corporate Structure Examples

Let us get back and talk about the corporate structure types. Among the types of organizational structures, two of them stand out, with the first one presenting 3 subtypes. Each of them have been explained in detail below with an example to help you understand it better.

#1 Line, functional and line-and-staff structures

This is the first type that has three subtypes in it. Each of these are explained below in detail.

Organizational structure example - Line

The line corporate structure has the CEO or president at the top. It is then followed by the VPs or directors for specific areas. After that comes the managers and so on. This structure can be seen below:

This is a very rigid structure that has little information exchange. It is normally used in bureaucratic companies in which there is little collaboration. These days, this structure is not used as it was in the past for academic, religious and military organizations. In this basically one area does not interfere with the work of the other and staff only obey the order of their superiors.

Organizational structure example - Functional

This structure comes from the line structure. The only difference is that the employees in an area need to report to all the directors.

For instance, an employee in the development team is called by the HR manager to handle a matter in this area. The development team manager can do the same by calling the same employee. This helps to avoid excessive specialization and centralization in tasks in your area. This is how the hierarchy looks like:

In the world today, this is the most used corporate structure in many companies. Everything here depends on the relationship between managers to aid the internal communication.

This structure is great for small companies where informal structures allow functional control over employees without generating conflicts between managers.

In short, it is used in companies like medium-sized car repair shops, manufacturing companies, hotels, medical clinics, etc.

Organizational structure example - Line-and-staff

This is the same as the line corporate structure just that the staff advises, authorizes, makes reports, gives opinions and supports the organization.

This structure is normally used in law firms, engineering firms, insurance companies, regulatory agencies, etc.

In short, it is used in companies that need isolated technical advice to assist employees who manage or handle the daily operations on the front line.

#2 Project-based Structures

This corporate structure is used for highly dynamic and creative companies such as the special industrial equipment installation projects companies, architecture firms, software companies, and event organization companies. It has a series of specialized employees that gather a work team as needed. And for each project, the collaborators report to a different leader. As soon as the project is done, the manager assigned them another project and leader.

Conclusion

In the end, it is important to know everything about the corporate structure and its types. It would help you choose the right structure for your business which eventually helps it in growing and succeeding. And while you focus on these things, remember that you need to keep a track of all the shares you are giving out. Eqvista can help you with it. Click here to learn more!

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Corporate Structure - All you need to know | Eqvista

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A corporate structure is the organization of different business units or departments within a company. Learn how to organize and types of corporate structure.

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Project Management is the application of specific knowledge, skills, methodologies, and techniques aimed at achieving specific and measurable project goals, including, ultimately, successful project completion. It differs from general "management" because project management relates directly to the goals and time-bound objectives achieved within the scope of a project itself, on a limited timeline, rather than an ongoing one.

What is a Project?

A project is a temporary, time-bound sequence of tasks that aim to achieve a particular goal. Projects bring together the talents of multiple team members in order to deliver a tangible result or outcome over a predetermined span of time. Often, projects involve the work of multiple individuals, across numerous areas of expertise, requiring an upfront investment in time and resources.

What is a Project Manager?

Project managers take ownership over the entirety of the project lifecycle from start to finish, from directing team efforts to navigating day-to-day challenges, implementing project management strategies, and more. Ultimately, they are responsible for the successful competition of the project and the distribution of key deliverables and project outcomes.

Responsibilities of a Project Manager

Project managers are responsible for a wide range of project-related duties, including but not limited to:

Establishing and managing the project timeline

Assigning project tasks and delegating responsibilities to team members

Communicating with key stakeholders

Executing each phase of the project

Facilitating team adaptation of project management aids and tools (such as project management software, and Gantt charts)

Monitoring the project budget and project scope, preventing cost or scope overruns

Troubleshoot and mitigate potential roadblocks and issues

Establishing set meeting schedules and facilitating team discussions

Monitoring ongoing project progress

Concluding the project lifecycle with relevant end-of-project responsibilities, including facilitating project reviews, and turning over deliverables

Essential Skills of a Project Manager

Project managers handle a wide variety of project-related responsibilities and duties, and understandably, need to wield a broad and flexible skillset. Some of the essential skills a project manager should possess include the following:

Examples of Project Management

In order to better conceptualize what project management is, it's helpful to understand how project management plays out in real-life applications. Here are a few examples of how project management is used across various industries every day:
Example One: Project Management in Construction
In 2005, BAA Airports Ltd. was presented with an enormous task: remodeling Terminal 1 within Heathrow Airport, the busiest international airport in the world while keeping the terminal open to the 20 million annual travelers that pass through the airport. The project was extremely complex, and made even more challenging by a strict deadline and significant public health concerns, given the construction project was taking place within an active terminal.

Throughout the project lifecycle, David Buisson, PMP, and the project manager in charge of the Heathrow renovation project, encountered many unexpected obstacles, including asbestos in the ceiling and inconsistencies with the floor level. Buisson and his team were able to properly navigate project challenges, operational risk, and communication management with key stakeholders. They successfully delivered the project on time and on budget-without any major mishaps-utilizing the PMBOK Guide from the Project Management Institute, the standard guide for project management professionals.

The 2005 renovation of Heathrow Airport Terminal 1 is widely considered one of the most successful case studies in construction project management to date.
Example Two: Project Management in Healthcare
During the Covid-19 pandemic, pharmaceutical and biotechnology company, AstraZeneca partnered with the University of Oxford to address the international need for a vaccine. The research partners at Oxford University had begun showing promising research around an early vaccine option. Paired with AstraZeneca's manufacturing capabilities and global supply chain experience, it was a no-brainer for the two entities to pair up to address the pandemic.

However, the partnership would face numerous challenges throughout the project lifecycle, including, most notably, a highly unpredictable and rapidly evolving public health crisis. Adaptability had to be the name of the game, and the structured guidelines of project management provided a baseline for the team to work from. Ultimately, the project was an overwhelming success, with over 1 billion doses of the vaccine delivered to over 170 countries.
Example Three: Project Management in Aerospace Technology
The Mars Pathfinder Mission began in 1996 as a result of budget cuts within NASA, shifting the organization's focus to projects that could be completed "faster, better, and cheaper." The goal was to spend less than $150 million dollars on the project in total and implement it within 36 months. Based on the initial goals established by NASA, just getting the spacecraft to Mars and landing it in one piece would have been a success.

Instead, by the time the project reached completion in September 1997, the Mars Pathfinder returned 2.3 billion bits of information, including more than 16,500 images from the lander and 550 images from the rover, as well as more than 15 chemical analyses of rocks and soil and extensive data on winds and other weather taking place on Mars. Ultimately, the project was such an exemplary example of project management at work that it won the Project Management Institute's coveted ''Project of the Year Award'' for 1998.

Phases of Project Management

Check out the video below for an in-depth walkthrough of the five phases of the project management lifecycle.

The project initiation phase focuses on establishing a high-level vision for the project while securing approvals from sanctioning stakeholders. This phase is not meant to dive into excessive detail, but rather to get the ball rolling and get the team thinking about what is to come.

During the project planning phase,teams build upon the vision established in the initiation phase in much more detail. First, teams must answer a few essential questions surrounding what the project will aim to accomplish, how the project will be carried out, when it will begin, on what timeline, and how project success will be measured. Once those initial questions have been answered, teams can dive into building out project infrastructure, covering essential topics such as:

Project scope

Deliverables

Key stakeholders

Goals and milestones

Resources needed (internally and externally)

Team roles

Project timeline

Potential risks or roadblocks

Dependencies

End of project outcomes

The project execution phase is the starring act of the project, and where most of the deliverables come from. During this phase, the project manager(s) coach and guide the team to present essential project deliverables while keeping stakeholders in the loop and monitoring progress against key milestones and KPIs. Throughout the project execution phase, project management systems, such as project management software, can make life easier by keeping track of deadlines and deliverables, serving as a platform for team member collaboration, and more.

During the monitoring phase, the project manager(s) keep tabs on the progress of the project overall and the status of the team. Whether teams are on track and delivering stellar results or struggling with roadblocks and challenges, the project manager can help eliminate stressors, solve problems, and communicate updates with key stakeholders.

The closing phase of the project lifecycle is a time for wrapping up project activities, delivering project deliverables and outcomes, and reflecting on the wins and losses of the project overall. Communication is key within this final phase, where team members have an opportunity to reflect and celebrate.

Download Our FREE Project Lifecycle Guide

Project Management Methodologies & Frameworks

Project management methodologies establish a guiding set of rules and principles that teams can implement in order to achieve greater efficiency while maximizing positive project outcomes. Each methodology approaches project management through a slightly different lens, providing teams with a specific set of repeatable steps to follow throughout the project lifecycle. Methodologies are rigid and cannot be used in combination with other methodologies.

Project management frameworks can exist within methodologies, providing a more focused view of how a methodologies guidelines can be applied and implemented. While the structure and rules follow the teachings of the methodology, frameworks can color in detail how and when those rules are applied in a project setting.

Project Management Methodologies

Agile

Agile project management focuses on an iterative and highly flexible approach to project management that focuses on delivering the project in pieces throughout the project lifecycle, rather than all at once at the project's conclusion. In Agile project management, teams have more flexibility to adapt to challenges and redirections than in more structured methodologies, such as Waterfall.

Software development teams

Teams dealing with high levels of uncertainty

Teams who are creating prototypes that need multiple levels of edits and changes

Teams working closely with external parties and stakeholders

Waterfall

Waterfall project management is a traditional approach to project management that involves rigid, sequential project phases. In the waterfall model, each phase of the project must be fully completed before the next phase can begin, and project deliverables are turned over only at the conclusion of the project.

Projects with a well-defined goal

Projects with concrete timelines

Teams who need to define rigid project requirements early on

Project Management Frameworks

Scrum

Scrum project management, as the name suggests, is inspired by the camaraderie and teamwork of a Rugby team within the Agile methodology. Led by a Scrum master, Scrum teams are encouraged to learn through their experiences, self-organize as they problem-solve, and progress throughout the project lifecycle.

Smaller teams tackling numerous unknowns and ever-changing variables

Teams who are creating prototypes that need multiple levels of edits and changes

Teams working closely with external parties and stakeholders

Kanban

The Kanban framework is a subset of the Agile methodology that emphasizes continuous improvement and flexible task management. In the Kanban framework, teams utilize Kanban boards, vertical boards that separate individual task cards into categories based on their status in the project lifecycle (for example: "not started," "in progress," and "completed").

Teams who are new to project management and looking for a simple, organized framework

Projects with numerous individual tasks and assignments

Teams who need quick access to a high-level view of task overviews and completion status

Critical Path Method (CPM)

Critical Path Method is a project management framework within the Waterfall methodology that identifies critical and non-critical tasks, prioritizing them based on their importance-eliminating bottlenecks and roadblocks. The CPM method emphasizes the importance of calling out relationships between tasks and task dependencies.

Teams managing large, complex projects

Projects that require a large number of tasks with subtasks and dependencies

Teams who want to maximize efficiency and prevent roadblocks from the start of the project (especially for projects that have a high likelihood of complication)

PRINCE2

PRojects IN Controlled Environments, or PRINCE2, is a framework within the Waterfall project management methodology that emphasizes organization and control. Frequently used in the UK and internationally, The PRINCE2 model breaks down projects into smaller, more manageable chunks in order to manage risk and resources while clearly defining team roles and responsibilities.

Teams who have less experience in project management (PRINCE2 follows clearly defined, easy-to-understand steps)

Teams who need more clarity around specific role-based responsibilities

Compartmentalizing project steps and actions

Project Management Tools

Project Management Software

Project Management Software helps teams organize all project essentials in one place, while streamlining and simplifying the project management process overall. At every phase of the project lifecycle, project management software supports teams' ability to assign tasks, manage deadlines, view task dependencies, track team progress against goals, access data insights, and much more.

Example of a list-style project view in project management software. Source: monday.com, accessed September 2023.
Project Management Charts

Gantt Charts

Gantt charts are one of the most common planning tools in project management. In a timeline-inspired format, Gantt charts highlight tasks against the project timeline, task dependencies, and designated assignees. Gantt charts are useful for teams who want to visualize projects at a high-level view while avoiding resource overload.

Best for: Visualizing project timelines and task dependencies

Example of a simple Gantt chart. Source: TeamGantt, accessed September 2023.
Burn-Up/Burn-Down Charts

Burn-up and burn-down charts visually represent how project tasks have been completed across a predetermined timeframe. This type of chart is popular with Scrum teams for tracking work across sprints, as it can easily reveal the total scope of work against items that have been completed or left unfinished.

Best for: Tracking project progress

Example of a burn down chart. Source: Teamwork, accessed September 2023.
Collaboration Tools

Slack

Slack is a communication-focused collaboration software that enables teams to communicate asynchronously through messaging, audio calling, and video conferencing. While many project management software offerings include collaboration features, Slack is a faster solution for teams who need to communicate efficiently as project updates come up.

Example of Slack's chat functionality, complete with a mobile app option. Source: Slack, accessed September 2023.
Miro

Miro is a collaborative mind-mapping software that can help teams brainstorm throughout the project lifecycle in real-time. The application functions as a virtual whiteboard for teams to map ideas, add digital sticky notes, and plan out timelines.

Example of Miro's team brainstorming features. Source: Miro, accessed September 2023.
Featured Partners: Project Management Software

Interested in learning more? Check out our FREE guide on how to choose project management software.

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What is Project Management? Definition, Types & Examples

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Project Management is a process of planning and organizing resources to achieve a specific goal. Learn about the types and examples to help you get started.

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What Is Corporate Culture?

Corporate culture refers to the values, beliefs, and behaviors that determine how a company's employees and management interact, perform, and handle business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people that the company hires.

A company's culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of employees and clients, client satisfaction, and every other aspect of operations.

Understanding Corporate Culture

Awareness of corporate or organizational culture in businesses and other organizations such as universities emerged in the 1960s. The term "corporate culture" developed in the early 1980s and became widely known by the 1990s. Corporate culture was used during those periods by managers, sociologists, and other academics to describe the character of a company.

Corporate culture emanated from generalized beliefs and behaviors, company-wide value systems, management strategies, employee communications and relations, work environment, and attitude. It would go on to include company origin stories put forth by charismatic chief executive officers (CEOs), as well as visual symbols such as logos and trademarks.

By 2015, corporate culture was not only created by the founders, management, and employees of a company, but was also influenced by national cultures and traditions, economic trends, international trade, company size, and products.

There are a variety of terms that relate to companies affected by multiple cultures, especially in the wake of globalization and the increased international interaction of today's business environment. These include:

Cross-culture refers to people from different backgrounds interacting in the business environment.

Culture shock refers to the confusion or anxiety people experience when conducting business in a society other than their own.

Reverse culture shock is often experienced by people who spend lengthy time abroad for business and have difficulty readjusting upon their return.

Companies often devote substantial resources and effort to create positive cross-culture experiences and to facilitate a more cohesive and productive corporate culture.

Importance of Corporate Culture

A carefully considered, even innovative, corporate culture can elevate companies above their competitors and support long-lasting success. Such a culture can:

Provide for a positive workplace environment

Create an engaged, enthusiastic, and motivated workforce

Attract high-value employees

Reduce turnover

Drive and improve performance quality and productivity

Result in favorable business results

Underpin a company's longevity

Strengthen return on investment (ROI)

Provide an implacable competitive advantage

Clarify for employees the goals of their positions, departments, and a company overall

Contribute to the diversification of the workforce

Types of Corporate Culture

Clan Culture

Clan cultures are about teamwork and collaboration. In such a culture, those in management function as enthusiastic mentors who provide guidance to subordinates. Good relationships, encouragement, trust, and participation are key aspects. The contribution potential of every employee is a component of a clan culture. Also, clan culture can easily adapt to change and implement needed action quickly.

Adhocracy Culture

Adhocracy culture creates an entrepreneurial workplace in which executives and employees function as innovators and risk-takers. In this flexible environment, agile thinking is nurtured. Employees are encouraged to pursue their aspirational ideas and take action to achieve results that can advance company goals. New and unconventional products and services are the main outcome of the adhocracy culture.

Market Culture

Market culture is focused on meeting specific targets and bottom line goals. This culture creates a working environment that's competitive and demanding. Management is most interested in business results. Employees are encouraged to work hard and "get the job done" to enhance a company's market presence, profits, and stock price. While employees may feel stressed in such a workplace, they can also feel enthusiastic and excited about their work.

Hierarchy Culture

A hierarchy culture is a traditional corporate culture that functions according to a company's executive, management, and staff organizational structure. That is, it follows the chain of command from top down, where executives oversee employees and their work efforts to meet specific goals. The hierarchy culture prizes stability and conventional methods of operation The work environment can be seen as more rigid than some other cultures but employees can clearly understand their roles and objectives. They may also feel a sense of security because of the more conservative approach to running a company.

Examples of Contemporary Corporate Cultures

Just as national cultures can influence and shape corporate culture, so can a company's management strategy. In top companies of the 21st century, such as Google, Apple Inc. ( AAPL), and Netflix Inc. ( NFLX), less traditional management strategies that foster creativity, collective problem solving, and greater employee freedom have been the norm. They are thought to contribute to business success.

Alphabet ( GOOGL), the parent of Google, is well known for its employee-friendly corporate culture. It explicitly defines itself as unconventional and offers perks such as telecommuting, flextime, tuition reimbursement, free employee lunches, and on-site doctors.

At its corporate headquarters in Mountain View, Calif., the company offers on-site services such as oil changes, car washes, massages, fitness classes, and a hairstylist. Its corporate culture helped it to consistently earn a high ranking on Fortune magazine's list of " 100 Best Companies to Work For."

Progressive policies such as comprehensive employee benefits and alternatives to hierarchical leadership (even doing away with closed offices and cubicles) have been trends that reflect a more tech-conscious, modern generation of corporate culture. These trends mark a change from earlier aggressive, individualistic, and high-risk corporate cultures, such as that of former energy company Enron.

High-profile examples of alternative management strategies that significantly affect corporate culture include holacracy. This has been put to use at shoe company Zappos, owned by Amazon ( AMZN), and agile management techniques applied at music streaming company Spotify.

Holacracy is an open management philosophy that, among other things, eliminates job titles and other such traditional hierarchies. Employees have flexible roles and self-organization, and collaboration is highly valued. Zappos instituted this program in 2014 and has met the challenge of transition with varying success and criticism.

Similarly, Spotify, a music-streaming service, uses the principles of agile management as part of its unique corporate culture. Agile management, in essence, focuses on deliverables with a flexible, trial-and-error strategy that often groups employees in a start-up environment approach to creatively tackle the company's issues at hand.

Characteristics of Successful Corporate Cultures

Corporate cultures, whether shaped intentionally or grown organically, express the core of a company's ideology and practice. They affect every aspect of a business, from each employee and customer to a company's public image.

The Harvard Business Revie w identified six important characteristics of successful corporate cultures in 2015.

First and foremost is vision. Whether communicated via a simple mission statement or a corporate manifesto, a company's vision can be a powerful tool. For example, Google's famous slogan "Don't Be Evil" is a compelling corporate vision.

Values, while a broad concept, can embody the thinking and perspectives necessary to achieve a company's vision. They can serve as a beacon for behavior necessary to progress toward all manner of success. Examples of values include fairness, trustworthiness, integrity, performance excellence, teamwork, and a high-quality customer experience.

Practices are the tangible methods, guided by ethics, by which a company implements its values. For example, Netflix emphasizes the importance of knowledge-based, high-achieving employees and, as such, Netflix pays its employees at the top of their market salary range, rather than through an earn-your-way-to-the-top philosophy.

People come next, with companies employing and recruiting in a way that reflects and enhances their overall culture. Plus, people are the key to bringing corporate culture to life and obtaining the high-value performances that can lead to favorable business outcomes.

Narrative and Place

Lastly, narrative and place are perhaps the most modern characteristics of corporate culture. Having a powerful narrative or origin story, such as that involving Steve Jobs and Apple, is important for growth and public image. The place of business, such as the city of choice and also the office design and architecture, is one of the most cutting-edge advents in contemporary corporate culture.

Other characteristics of corporate culture can include:

Employees should be encouraged and trained to work together with camaraderie and trust toward common goals. The benefits of teamwork, such as problem-solving, the development of innovative ideas, and improved productivity, should be demonstrated to the workforce.

Training and Education

Companies should provide the means for employees to improve their skills and enhance their knowledge so that the vision and goals of the company can be more reliably reached. Training and education can also provide employees with a path to new opportunities within their companies. This can motivate individuals to learn and do more.

Innovation

Innovation is exciting and can underscore the spirit of a company's vision. It can instill pride, confidence, and loyalty in the workforce.

Leadership

A company's management, including C-suite executives, should be accessible and open to providing assistance that supports all employees.

How to Develop a Corporate Culture

There is no single strategy for building a corporate culture because companies, industries, and people can be so different. However, the basic steps below may help you envision a corporate culture that spells success for your employees, clients, and company.

1. Define a company vision, values, and behaviors.

2. Gather feedback from employees about your company's values, ideas, and work methods to improve the workplace environment and performance.

3. Use small discussion groups, surveys, or town hall-type meetings to engage your employees and give them a voice.

4. Establish methods, such as training at regular intervals, to communicate company values/behaviors and determine how well they are understood.

5. Employ high-quality internal communications to maintain consistent contact with employees about company goals, the working environment, and employees' roles in the company's success.

6. Establish guidelines that reinforce company values; e.g., a rule that employees should not be disturbed by work phone calls, emails, or texts during vacations or other types of time off.

7. Recognize employees in a positive and public manner as a reward for their contributions to corporate success.

8. Practice what you preach-ensure that management maintains a consistent behavioral approach to operations rather than cutting corners when convenient.

9. Be approachable so that all employees may address their concerns and feel connected/of value.

10. Foster teamwork rather than silos and isolation.

11. Set goals for diversity and inclusion; celebrate the differences among people as you encourage consistent behavior from all.

What's Meant By "Corporate Culture"?

What Are Some Examples of Corporate Culture?

Why Is Corporate Culture Important?

The Bottom Line

Corporate culture has become a vital, even essential, ingredient in the ongoing success of a business. It represents the values, beliefs, and goals of a company, as well as the consistent behavior expected from all employees, from top to bottom.

Not only is corporate culture an important key to attracting and retaining employees. It can also support high-quality employee performance, ongoing achievement, and the longevity of a company.

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Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact.

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