Customize the Microsoft 365 theme for your organization explained

For users

You can customise (select) your Office 365 theme from almost any page (Office, Yammer, OneDrive, OneNote, Stream, Excel… nut not Teams or SharePoint) –
selecting gearbox “Settings” on the top right and selecting theme. Once you changed you theme – it will change for you everywhere (except Teams).
There is one theme called “Organisational theme” – you can seee the name when you hover your mouse – that can be changed by your admins.
If your current theme is “Organisational theme” and admins modified it – you will see new theme here.
If your current theme is not an “Organisational theme” and admins modified “Organisational theme” – you will still have your theme current.

Admins might choose “Prevent users from overriding their theme”. If so – your current team will change to “Organisational theme” and the only alternative option will be a “High contrast” theme.

 

For admins

You can customize the Microsoft 365 default theme for your organization and create custom themes.

“Microsoft 365 admin center” > “Settings” > “Org Settings” > “Organization profile” > “Custom themes”

If you change the “Default Theme”, this impacts users who did not change their theme (whose current theme is “Organizational theme”).
(If a users changed his theme previously – i.e. selected any theme other than “Organisational theme” – this user will not be affected)

If you select “Prevent users from overriding their theme” – users will be switched to the “Organisational theme” with only one alternative – “High contrast” theme.

If you select “Prevent users from overriding their theme” – apply change and then remove “Prevent users from overriding their theme” – all users wiill returns to their original theme (until somebody changed his theme during this time).

Custom (non-default) theme

You can create a custom (non-default) theme.
That does not mean users will be able to select from org default and custom themes.
When you create a custom theme – you have to “Choose up to five ‎Microsoft 365‎ groups”.
And “Users in these groups will see this custom theme instead of the ‘Organizational Theme’.”
I.e. any user will se or ‘Organizational Theme’ or Custom Theme.
This is probably was designed for tenants holding affilate organisations with different corporate colors).

Conflict with Custom (non-default) theme

What if a user belongs to multiple groups and there are different themes configured for his different groups?
That user will have a default “Organizational Theme”, none of the custome theme will be applied to him.

 

References

Microsoft: Customize the Microsoft 365 theme for your organization

 

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