What Is Organizational Climate?

what is organizational climate?

Beth and Mike are recent Marketing graduates who met up on Friday evening to celebrate their first week on new jobs. Beth noted that all anyone seemed to talk to her about was the importance of good customer service. They had a Wednesday morning staff meeting where the main agenda item was how to avoid customer service failures. Mike’s experience was quite different. At his company people’s focus was on maximizing sales and not wasting time. His supervisor talked to him about one of his colleagues who wasted months trying to cultivate a relationship with a customer, only to have that customer buy from someone else. Clearly Beth and Mike had very different first week experiences. They quickly learned that the climates of their companies were different, but what is organizational climate exactly?

What Is Organizational Climate?

Organizational climate concerns the policies and practices of an organization or unit of an organization. It concerns the behaviors that are encouraged and supported. It is communicated in several ways.

  • Policies: These are the written rules for the behaviors that people should and should not do. Policies describe how things should be done.
  • Practices: These are the behaviors that employees and their supervisors engage in, in other words, how policies are or are not enacted.
  • What is encouraged and discouraged. These are the expectations that supervisors and other employees express about what each employee should and should not do. For Beth is was customer service and for Mike it was efficiency.
  • Where the rewards are. Nothing expresses expectations like rewards. These can be monetary, such as bonuses for high sales volume, or nonmonetary, such as praise for a job well done.

How Is Climate Different from Culture

The terms climate and culture are often used interchangeably, but they are not the same concept. Climate is part of culture and reflects the sorts of behaviors that are encouraged and presumably engaged in within an organization. Culture is far more than encouraged behavior patterns. Culture includes artifacts (e.g., the sorts of clothes people wear), symbols (e.g., the company logo), technology (e.g., salespeople’s use of tablets to ring up sales), and values (e.g., profitability). Although these aspects of culture might support the climate, they go beyond climate, and much of organizational culture might not link to climate.

Types of Climate

Organizations and units of organizations vary in what they encourage. One place to see different kinds of climate is in the academic literature where hundreds of research studies on different kinds of climate can be found. Some of the more popular are climates for:

  • Customer Service. This is an emphasis on providing good customer service, as was the case in the Beth example. Companies with good customer service climate adopt a strategy on focusing on customer needs and placing the customer first.
  • Cybersecurity. The extent to which companies emphasize keeping information safe through following sound cybersecurity practices.
  • Diversity. Companies with diversity climates encourage employees to treat all people the same, regardless of their differences. Such companies are likely to have good minority hiring records.
  • Ethics. A company with a strong ethical climate emphasizes that employees should maintain high ethical standards in their dealing with others. Such companies are likely to have fewer legal problems.
  • Justice. This is an emphasis on treating everyone fairly. This includes not only fairness in reward systems (e.g., how salary raises are distributed), but in how people are talked to and treated.
  • Safety. Working in industries, such as aviation, healthcare, and manufacturing, comes with a significant risk for accidents and injuries. Many organizations in these industries put a strong emphasis on keeping employees and others safe, by requiring that safety protocols be followed.

Why Is Organizational Climate Important?

Climate is important because employees are likely to engage in the behaviors that are encouraged. In Mike’s company the emphasis is on efficiency and productivity, so that focuses employee attention in those areas. Employees are likely to adopt an efficiency/productivity mindset that guides their interactions with others and their work. In Beth’s company, the emphasis is on customer service. There will be less focus on efficiency/productivity and more on serving customer needs. If a potential customer leaves a message, Beth is likely to call back right away and will be patient if the customer is long winded on the phone. Mike, on the other hand, will be more strategic in how he spends time, and he might not be in a hurry to return the call if he does not believe the customer is a good prospect. The amount a customer is likely to purchase will determine the time he is willing to invest.

Companies can use climate to encourage the behaviors they wish from their employees. To a great extent climate is encouraged by the sorts of issues and problems the company deals with. For example, financial services companies are likely to develop strong ethical climates that discourage unethical or illegal acts involving money. Construction companies, where people work with dangerous machinery, are likely to develop strong safety climates. Even within the same organization, there can be department differences in what is emphasized. In a manufacturing company, for example, ethical climate is highly relevant to the accounting department and safety climate to the assembly plants

How To Build Organizational Climates

Organizational climates are built through both actions and messaging. Climate is both a bottom up and top down phenomenon. Policies are often set at the top, but practices occur at the bottom. Linking the two can be challenging, but not impossible.

  • Climate is a strategic decision. Top management should decide what is important and what should be emphasized. Climate often means tradeoffs because resources devoted to one thing are not available for another. Safety, for example, requires effort and time. Is it ok to take 5 minutes to put on safety equipment if that means a little less productivity?
  •  Policies should be clearly communicated through the organization. It is not enough to just write policies. They must be disseminated and discussed throughout the organization.
  • What is encouraged should be expected of everyone. Managers need to model the sorts of behavior expected. If assemblers are expected to wear safety gear on the shop floor, managers (and even visiting executives) should too.
  • Climate needs to be discussed. This discussion should occur at all levels. To build an ethical climate, for example, ethics needs to be a frequent topic of conversation at staff meetings. Ethical lapses reported in the news, even from other companies, can be a good conversation starter.
  • Supervisors should take corrective action. When employees engage in behaviors that are discouraged, supervisors should take appropriate corrective action. Depending on the seriousness of the breach, this might be just a friendly discussion of the situation and how the employee might have better handled it. Such incidents can also be the topic of conversation at a staff meeting, not to embarrass individuals, but to help employees understand what is expected.

Building the climate you want can take time, but a strong climate can help keep employees focused on what management considers the important priorities.  

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18 Replies to “What Is Organizational Climate?”

  1. Excellent article that describes the organizational climate concept. A question that may arise is: what is the difference between organizational climate and psychosocial factors concept?

    1. Climate would be an aspect of the psychosocial environment of an organization. Psychosocial is a broader concept that focuses on the interpersonal or social aspects of an organization. Part of that is the climate, but psychosocial factors can go beyond climate into other aspects of how people interact.

  2. Over the past six years, my organization has shifted its organizational climate from one of service to [technological] innovation, then back to a service orientation. The last two CEOs made the changes to climate relatively quickly by practicing sound change management methodologies, which included consistent messaging, followed by modeling and rewarding the desired behaviors. Both were very effective and provide good examples of climate being driven from the top and bottom.

  3. Great article, clear and succinct definition of climate versus culture. While working with a specialty chemical company, we needed to encourage different behaviors related to safety. Across 5k employees worldwide, we needed to a shift in our safety practices, therefore our Safety Climate was in need of an overhaul. Policies, procedures, and practices were changed and focused on in how we executed this new climate. after over a year, we saw an amazing shift in safety performance, perspectives on safety, and everyday behaviors we were looking to encourage were happening.

  4. I found this article very helpful in clarifying the difference between organizational culture and organizational climate.

  5. Great point. Usually we think about culture at the country level, such as culture-values. But you can also think about climate and whether there are national policies that result in wide-spread practices. I don’t know of any research on this, but it could make for a great study to compare countries on some aspect of climate.

  6. Excellent article, clear and concise in describing the difference between climate and culture. Although they are different, the two concepts are interdependent. Organizational culture is the tree. Its health depends on the soil in which it is planted. The climate and its communication are the fertilizer that feeds the tree roots. The healthier the roots and the climate in which they develop, the better the corporation will be in all circumstances – whether it is growing in a healthy economy or withstanding a storm or drought of a recession.

  7. To continue on my tree example above, if my current employer were that tree, the leaves and limbs would be extremely dry and on the verge of rotting. Today we had a meeting regarding our most recent employee engagement survey, and 34% of our company is what would be considered by the survey to be engaged. Our organizational climate is playing a large role in those numbers. Our climate is a customer service climate. The major problem within our corporation is with the practices within our policies. They are overbearing and confusing, because they are constantly changing. Many of the practices have absolutely nothing to do with the customer service provided, but not performing one of these actions in a specific way hurts employee ratings. This practice has become so common that our monthly ratings, called SPR’s have become known as “Stop Pay Raises.”

    The meeting today was the organization’s attempt to find out from the employees what is leading to the disengagement within the company. In a way, these meetings will test another part of our climate – corporate justice. Many of our employees feel that management does not care about what they have to say. This reputation has been earned, because in the past, employee suggestions for improvement have been ignored. Communication on the “why” of corporate practices is almost non-existent. This, combined with many overbearing and worthless practices creates an environment of employees feeling like their time is being wasted and for unknown reasons.

    Our organization culture is based on the concepts of growth and cost control. Often times, employees are overlooked, and the company has a reputation of being a “revolving door” – employees come, find out what things are really like and leave for greener pastures. This has lead to a problem of being understaffed at many levels, further complicating the above issues.

    Hopefully upper management can gain an understanding of the importance of corporate climate, listen to the employees and make the adjustments necessary to further not just dollar growth, but employee growth. If not, root rot is bound to set in.

  8. I appreciate the clear and succinct discussion of climate and culture in this blog, particularly how they differ. As I reflect on turnaround experiences at three organizations (Disney Theme Park Operations, Vulcan Materials, and Anaheim Union High School District) during various stages of my career, each context illustrated the challenging importance of the simultaneously bottom up and top down phenomenon of climate building. Our best outcomes were realized at Disney and Anaheim Union where policies, messaging, and behaviors were aligned with expectations and values of everyone involved. It is gratifying to visualize and facilitate the process of positive change!

  9. The boundaryless organizations must suffer from varying organizational climates since employees are hired for temporary job assignments based on their specializations to tasks and commitments. Moreover, outsourcing of jobs to other countries or organizations present unique challenges also as the cultures and climates of the organizations may either be a good-fit or may just be a situation where they have to settle for efficiency/productivity.

    I really enjoyed reading this article.


  10. This article really helped me better understand the difference between culture and climate. Prior to reading the blog post, I really thought that both terms had pretty much the same meaning. Reading it makes me interested in the specific climate of CPA firms. I would assume that these firms would strive to establish ethical climates since that is paramount to the accounting profession; however, the fall of Arthur Anderson leads me to believe that might not always be the case. It would also be interesting to see if there is a difference between climate at a “Big Four Firm” (EY, KPMG, PWC, Deloitte) versus a regional firm (Dixon Hughes, Moss Adams, BDO, etc.)

  11. Interesting article. I had not previously considered culture different from climate – until this article. Within my Organization we are currently trying to recreate/improve our climate. Employee surveys identified an Organizational Justice problem and after reading this article I can see how our policies and practices such as poorly designed (and written) performance reviews can lead to those perceptions.

  12. While succinct, I found the article quite informing. As a labor attorney who has represented over one hundred organizations through labor organizing campaigns, I have seen upfront the distinction between organizational climate and culture. To see firsthand how changes in an organizations policies and its enforcement can have an immediate and distinct impact on a facilities culture is an eye opening experience. Then to see an how an organization attempts to recapture it culture is fascinating.

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