What is Organizational Climate? 7 Steps to Improve Yours

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What is Organizational Climate? 7 Steps to Improve Yours

Organizational climate affects employee behavior in every business, whether you’re a small startup or a multinational organization. But what exactly is organizational climate? What’s an example of organizational climate in the work environment? And how can it help you build strong relationships with your employees? Here’s everything you need to know.

Contents
What is organizational climate?
What are the dimensions of organizational climate?
Impact of organizational climate
Types of organizational climate
How to improve organizational climate: What HR can do

What is organizational climate?

Organizational climate refers to an employee’s long-lasting perception of the working environment and culture of the business they work for. You can think of climate as similar to personality: every person has a unique personality, and every organization has a unique climate. This is reflected as a set of characteristics and features perceived by employees. These influence employees’ behavior at work across various dimensions such as relationships, autonomy, and organizational structure.

A positive organizational climate increases organizational commitment – the bond employees have with their organization.

Climate is not created overnight; rather, it is built up and shaped over a long period through a collation of experiences and interactions. For example:

  • whether an employee feels trusted to perform their role without micromanagement,
  • how managers and peers treat them,
  • whether they feel like they’re growing and developing within the organization,
  • how effectively conflict is managed,
  • how incentivized they are to perform,
  • and much more.

Businesses can use organizational climate to gauge how employees feel about their policies, practices, and culture and ensure these align with their overall vision, long-term goals, and strategy. This is key to creating a workplace environment that your employees love and thrive in. The happier they are, the more productive they will be, and the stronger their results. 

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Organizational culture vs. organizational climate

Although organizational culture and organizational climate are both concerned with the characteristics of an organization, there are some key differences. 

Organizational culture centers on the values and behaviors of employees within a company, whereas organizational climate focuses on the atmosphere created in the company based on the culture.

Culture reflects the authentic image of an organization, while climate reflects individuals’ perceptions regarding the quality and characteristics of the organization.

Culture focuses on the macro vision of a company, while climate focuses on the micro image.

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In other words, organizational culture is considered a relatively broad and loose term entailing organizational behaviors of employees and leaders, as well as norms, while organizational climate is a more narrow concept of how employees perceive these behaviors and norms.

Organizational Climate and Performance
Image based on an article from Putter (2010).

What are the dimensions of organizational climate?

Different dimensions comprise organizational climate.

There are a variety of approaches to defining the dimensions of organizational climate in research. According to Hassanpour et al (2019), these include:

  • Structural dimensions – Referring to organizational structure
  • Interactive dimensions – How members of an organization interact with each other
  • Perceptual dimensions – How individuals perceive the climate within an organization

Let’s have a look in more detail at some examples of organizational climate dimensions as defined by Litwin and Stringer (1968).

Organizational structure

Structure forms the basis of interpersonal relations between those leading and those being led. Who works under whom, and who is responsible for whom? Centralization of authority has been proven to reduce participation from subordinates in decision-making. On the other hand, decentralization encourages it.

Conflict

The organizational climate depends on how effectively all types of conflict are managed. Effectively managed conflict will create an atmosphere of cooperation and facilitate mature conversations. Conversely, mismanaged conflict will create an atmosphere of distrust and non-cooperation where gossip and slander are common. 

Risk-taking

If an employee has the freedom to explore new ideas without fear of failure or consequences, they won’t hesitate to act quickly or take calculated risks, leading to an atmosphere of creativity and innovation. Whereas in a risk-averse organization, a cautious approach stunts employee growth and minimizes innovation.

Individual responsibility

Responsibility refers to the amount of autonomy, freedom, authority, and power employees have in the workplace. When given enough autonomy, employees will get to define their work and activities, which also reduces the workload of managers. In a climate of low responsibility and autonomy, employees are passive and forced to work to a specific pre-approved structure and set of tasks. This often leads to frustration.

Rewards

If rewards are distributed fairly and purely based on performance and productivity, employees will engage in healthy competition and want to work hard. Any bias in the distribution of words will damage employee morale. 

Warmth and support

This dimension refers to the level at which employees help each other in their work and also feel that they will get support from their colleagues and managers in challenging times. A strong level of fellowship between employees leads to confidence in sharing ideas and opinions without fear of ridicule or reprimand.

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Meanwhile, Schneider and Barlett suggested broader dimensions or factors affecting organizational climate:

  1. Management support
  2. Management structure
  3. Concern for new employees
  4. Inter-agency conflict
  5. Agent dependence
  6. General Satisfaction

In general, there are many factors that affect organizational climate, including:

  • Working with a competent manager
  • Working with cooperative, agreeable employees
  • Perception of risk
  • Levels of conflict and how it is dealt with
  • Having confidence in the appropriate records
  • Employee responsibility
  • Operating procedures
  • The degree of centralization 
  • Employee safety
  • Physical space
  • Organizational values
  • Leadership and decision making styles
  • The goals and mission of the organization

Impact of organizational climate

  • It can operate as a constraint system – Organizational climate provides employees with information on what kind of behavior will be rewarded or punished. Therefore, it can influence the behavior of those who value the rewards on offer. 
  • It helps employees form a perception of the organization – In turn, this perception influences an employee’s behavior. 
  • It affects leader efficacy – Higher leader efficacy equates to improved employee retention, customer happiness, and higher revenue. 
  • It influences employee happiness and productivity – A positive organizational climate can lead to happier, more motivated employees, improved job satisfaction, and ultimately greater efficiency and productivity.
  • It helps a business achieve its long-term goals – The organizational climate has the power to impact your employee’s performance, your business performance, and your ability to achieve goals. 

Types of organizational climate

Organizations tend to have a mix of several types of organizational climate rather than just one, but there will often be one dominant type. 

Here are the common types of organizational climate:

People-oriented climateAn organizational culture that has a core set of values that focus predominantly on caring for its employees and their results.
Rule-oriented climateAn organizational culture providing a set of rules and structure and places high importance on following these rules and attention to detail from everyone.
Innovation-oriented climateAn organizational culture that consistently develops and introduces new ways of working and processes (and encourages employees to do the same) to achieve innovative results.
Goal-oriented climateAn organizational culture that places preference on values and refining details of processes to achieve the desired result.

How to improve organizational climate: What HR can do

1. Determine the state of the current organizational climate

An organizational climate assessment is vital if you want clarity on where your organization stands today. An organizational climate survey will show you what initiatives are having a positive impact on your climate. You will also get insights into the ones that aren’t having the desired effect you’re looking for. This can help you improve and shape your organizational climate. 

Regular organizational climate questionnaires, where honest feedback is encouraged, can help you discover the true state of your current climate. Then you can take action based on the results. You may also want to encourage feedback in team meetings and one-on-ones. However, make sure your employees know this is a safe space to voice their true feelings and any concerns without fear of negative repercussions if they do. 

2. Translate company values and goals into desired behaviors

Many businesses have a set of clearly defined organizational values, yet many of their employees fail to embody these. 

Why? 

Because although they might be written on posters or mounted on a large wall-plaque somewhere, those values are not woven into everyday culture. If you want employees to live your values every day, they need to understand what they equate to in terms of behavior.

The solution?

Train managers to identify the values they’re looking for in terms of behavior. Give feedback to their team that focuses on a task as well as how someone operates day-to-day.

For example, let’s say one of your values is agility. Ask your managers to define what this looks like for them in action. What would a person be doing and saying if they were demonstrating agility in their role? Perhaps agile means being able to move from one project to the next without wasting time and learning the ropes quickly. In that case, the behaviors they might look for could include consistently meeting deadlines without compromising the quality of work and having a “can-do” attitude with new projects and tasks.

Focusing on behavior helps all your employees experience your culture at work every day, leading to higher levels of motivation. It also lets everyone know the part they can play in helping the organization meet its goals.

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3. Improve the working environment

Another way to improve organizational climate is to assess your current workspace, whether it’s a central office or the individual workspaces of your remote employees. A comfortable workspace that stimulates creativity, and has all the tools an employee needs to perform their job will significantly improve your climate. 

It’s all too easy to assume this is about spending a small fortune on automatic doors and sleep pods, but it’s less about luxury and swagger and more about creating a space conducive to work that is inspiring to be in. Pay attention to how furniture is arranged, the colors, and the equipment you have. All of these affect your employee’s experience at work. If you have a fully remote team, offer them a guide or something in their welcome pack that helps them set up a beautiful workspace at home. 

4. Strengthen employee recognition

For an employee to see an organization in a positive light, they need to be consistently recognized and valued for their work, dedication, and achievements; from the top down and from their peers

Recognition can take the form of a public shoutout, a small gift or coupon, additional leave, a monetary bonus, or an award. For example, you might start an awards system where each month, one of your employees gets crowned “employee of the month” for going above and beyond for the organization. Although this may seem small, not only does this help the employee feel recognized and appreciated by their organization, it can also inspire other colleagues and create healthy competition. 

5. Advance your leadership

The perception of leadership in your organization will also greatly influence the climate. It’s therefore crucial that your organization has a leadership style that supports your mission and goals and promotes transparency and decision-making. When hiring leaders, look for professionals who have the power to inspire others and tap into their full potential, and foster teamwork. Offer regular training to ensure leaders are all on the same page and have the skills and tools to operate in the desired manner. 

One of the primary tasks of any leader is to ensure the organizational climate continues to go from strength to strength. For this reason, strong leadership is key to a positive organizational climate.

6. Promote autonomy

Every employee must have a clear understanding of how they individually contribute to the organization’s goals and how they create value. Any changes in the company’s mission and direction must be communicated to the entire team. 

Employees must also be able to make decisions on their own, take calculated risks when opportunities arise, and have support from management to do so. When employees are encouraged to think for themselves and have a clear set of responsibilities and freedom, they will be happier and more motivated at work, which will have a positive effect on your organizational climate. 

7. Focus on inclusion and belonging

Organizations that create an inclusive environment in the workplace are likely to see stronger team morale and employees who stay with the company longer. This ultimately has a positive impact on organizational climate. 

Ensure that your managers lead by example and encourage inclusion and teamwork. Have them regularly offer feedback to employees on performance. Let them know what they’re doing well and where they can (and should) improve. Be constructive and provide clear actions. This will lead to a stronger, cooperative team and a healthier bond between the organization and its employees, which is vital for growth.  

A final word

Organizational climate is a complex phenomenon that you need to understand from multiple perspectives, including its dimensions and impact. Although improving your organizational climate is a long-term game and investment of resources, your business will reap the benefits in the long run.

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