What is Organizational Climate?

Perhaps one of the most important and significant characteristics of a great workplace is its organizational climate.

Organizational climate, while defined differently by many researchers and scholars, generally refers to the degree to which an organization focuses on and emphasizes:

• Innovation
• Flexibility
• Appreciation and recognition
• Concern for employee well-being
• Learning and development
• Citizenship and ethics
• Quality performance
• Involvement and empowerment
• Leadership

Organizational climate, manifested in a variety of human resource practices, is an important predictor of organizational success. Numerous studies have found positive relationships between positive organizational climates and various measures of organizational success, most notably for metrics such as sales, staff retention, productivity, customer satisfaction, and profitability:

• Denison found that an organizational climate that encourages employee involvement and empowerment in decision-making predicts the financial success of the organization.
• Schneider found that service and performance climates predict customer satisfaction.
• Patterson, Warr, & West found that manufacturing organizations that emphasized a positive organizational climate, specifically concern for employee well-being, flexibility, learning, and performance, showed more productivity than those that emphasized these to a lesser degree.
• Potosky and Ramakrishna found that an emphasis on learning and skill development was significantly related to organizational performance.
• Ekvall found a positive relationship between climates emphasizing creativity and innovation and their profits.
• Hansen and Wernerfelt found that organizational climate factors explain about twice as much variance in profit rates as economic factors.  
• Thompson found that companies utilizing progressive human resource practices impacting climate such as customer commitment, communication, empowerment, innovation, rewards and recognition, community involvement/environmental responsibility, and teamwork outperformed organizations with less progressive practices.

Organizational climate clearly influences the success of an organization. Many organizations, however, struggle to cultivate the climate they need to succeed and retain their most highly effective employees. 

Hellriegel and Slocum (2006) explain that organizations can take steps to build a more positive and employee-centered climate through:

• Communication: how often and the types of means by which information is communicated in the organization
• Values: the guiding principles of the organization and whether or not they are modeled by all employees, including leaders
• Expectations: types of expectations regarding how managers and behave and make decisions
• Norms: the normal, routine ways of behaving and treating one another in the organization
• Policies and rules: these convey the degree of flexibility and restriction in the organization
• Programs: programming and formal initiatives help support and emphasize a workplace climate
• Leadership: leaders that consistently support the climate desired

Making a climate change in your organization is one of the core fundamental steps to beginning to create a great place to work.