Chapter 4: Organisational Culture and Climate

Introduction

Organizational culture is about the values and beliefs that the people in an organization have, how these are ‘taught’ to new members, and the stories that are told from generation to generation to pass the culture along. It has been described as social energy causing people to act, as programming of the mind, and as social glue binding people together.

Organizational climate, on the other hand, is related to more observable characteristics of the organization, such as practices, policies, and procedures. However, climate is not a list of these characteristics. Its main concern is the way organizational members interpret them and what sort of a shared understanding these individuals have about them with respect to demands on their attitudes and behaviors.

Defining the Concepts and Their Origins

Organizational culture is a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

Organizational culture is shared by those who possesses it, which means it belongs to a group. In that sense, culture is to the organization what personality is to the individual.

Organizational climate is the shared perceptions of and the meaning attached to the policies, practices, and procedures employees experience and the behaviors they observe getting rewarded and that are supported and expected.

Organizational culture is usually discussed as an aspect of the totality of the organization. However, from an early time, organizational climate research has focused on specific types of climate, such as safety climate or justice climate. These relate to particularly important aspects of organizational functioning, which have specific practices and procedures that govern them. More importantly, the consequences of such climates are not only related to financial profit or loss but also to more immediate and specific performance concerns.

Organisational Culture

According to Schein, organizational culture manifests at three different levels, going from the most visible, surfacelevel phenomena to the least tangible and unconscious understandings:

1. Artifacts
2. Espouses values
3. Basic underlying assumptions

Artifacts:

When we talk about artifacts, we refer to observable phenomena; everything employees see, hear, do, and talk about as well as the way they talk about them. Generally speaking, we can group artifacts into several categories:

Symbols: These include everything from company logos to dress codes, to company culture manifestos; things that make you think of the organization when you see them.

Language: This refers to common terminologies and ways of speaking or writing, the short-hand way people communicate with each other that outsiders may not recognize.

Rituals and stories: These concern the history of the organization, events that have happened in the past that employees know about or events that are repeated on a regular basis and carry some meaning.

Espoused Values:

Espoused values are less visible than artifacts but they will still have concrete expressions, such as a declaration of corporate values. When we speak of values, we mean those principles or qualities that are considered important and describe the way things ‘ought to be’, such as honesty, helpfulness, humility or fairness. Some values, such as honesty, are universal but others are specific to organizations. Each organization will have a different set of espoused values. And members of that organization will be able to articulate them.

The espoused values of an organization are those beliefs and values that members of an organization share because these beliefs and values have proven useful in the past. It is important to remember that organizational members should see that the benefits of a specific value repeatedly before it becomes part of the organizational culture.

Basic Assumptions:

Unlike espoused values, basic assumptions are unconscious; they are “taken-for-granted beliefs, habits of perception, thought, and feeling” . In organizations, they ensure that members pay attention to the same things in the same ways, interpret them in similar ways, and react similarly emotionally.

As you may already have guessed, basic assumptions are the least visible element of organizational culture and they are the most difficult to discover. This is mostly because organizational members make these assumptions unconsciously. However, because these assumptions are the least visible and most ingrained, they may also result in very serious problems when different organizational cultures meet.

Organisational Climate

Climate, like culture, is shared among a group. While culture is about more abstract concepts like values and assumptions, climate talks about policies, practices, and procedures; these are things employees can observe and experience. Culture researchers often use case studies – although you should not forget that we also talked about survey-based methods. However, in organizational climate research, surveys where researchers ask employees about “observable experiences that people have in work settings” are the dominant method of research.

Organizational Climate at a Focus:

When we study organizational climate with a focused approach, we look at types of climate such as service climate, safety climate, justice climate, and ethical climate. Then we try to link these to how well safety measures are observed, how employees perceive their organization to be in terms of organizational justice or how ethical employees behave. Or we could ask how we might create these types of climates. For example, if an organization is operating in a dangerous industry, having a robust safety climate may lower workplace accidents.

Climate strength indicates the degree of agreement or similarity between members of the same group about their perceptions of climate. Higher agreement or similarity indicates higher climate strength.

Service Climate is how employees collectively perceive the formal and informal ways and rules in terms of serving customers in an organization and what they see being rewarded and punished in terms of service behaviors.

Service climate concerns “employees’ shared sense of the service quality”. This ‘sense’ impacts how employees treat customers resulting in customer reports of satisfaction. Customer satisfaction, in turn, leads to higher financial performance.

Safety Climate is how employees collectively perceive the formal and informal ways and rules in terms of workplace health and safety in an organization and what they see being rewarded and punished in terms of workplace safety behaviors. Training is a critical determinant of safety compliance and safety participation. Employees must have sufficient knowledge of safety measures and have the necessary tools to comply with procedures.

Ethical Climate is about how employees collectively perceive the formal and informal ways and rules in terms of ethics in an organization and what they see being rewarded and punished in terms of ethical behaviors.

All organizations have goals; survival and profit are the main goals of a corporation or company. As we have seen in the past, this sometimes leads companies to act in an unethical and/or illegal manner.

It is important to keep in mind that while some organizations may act unethically some of the time, that does not mean all organizations are always unethical. One of the determinants of whether an organization and the members of that organization engage in unethical behaviors is the ethical climate of an organization.Ethical climate is defined as “the shared perception of what is correct behavior, and how ethical situations should be handled in an organization”.

Unlike the other climate types we discussed, research on ethical climates has concentrated on 5 specific types of ethical climates (Victor and Culen, 1987, 1988):

1. Instrumental – concerns putting self and company interests first.
2. Caring – concerns putting the interest of friends and the team first.
3. Independence – concerns putting an individual’s own personal morality first.
4. Rules – concerns following company rules and procedures.
5. Law and code – concerns following laws and the requirements of professions.

Creating, Maintaining, and Changing Organizational Culture and Climate

When studying how culture and climate are formed and maintained, researchers have focused on two very important and interrelated elements: i) the role of leaders, and ii) the selection and socialization processes within organizations.

Leadership:

People tend to think of the highest level of management when they think of leaders. These people are often either the CEO, the chair of the board, or a representative of the largest shareholder.

Top management teams have control over the strategy and operations of their organizations. They make the decisions and set the targets, they are the ones who choose which values to emphasize and which rules and policies to prioritize, and they determine the procedures to follow. In short, they impact everything that goes on in the organization. So, the highest level of management is very important in terms of understanding an organization’s culture and various climate facets.

There are three main reasons why founders have a central role in how organizational culture is created:

1. An organization usually starts out small and the founder chooses people with similar values, beliefs, and vision to work with.
2. Even if founders hire people who do not share their values and beliefs (for example because they need someone with a specific expertise that is not widely found), they can eventually ‘socialize’ these employees to their system of values and ideas.
3. The way the founder behaves will influence the people they work with because founders can act as role models to their employees.

When you think of leadership, you should not only think of the CEO but also of the team leaders and department heads etc. These leaders will influence their teams by prioritizing certain policies, practices, and procedures over others (affecting the climate) and emphasizing some values and assumptions more than others (affecting the culture).

Selection and Socialization:

The core question in this area is about compatibility; how well the personality, values, norms, and attitudes of an individual are aligned and compatible with that of his or her organization. It should not be surprising that a better fit is usually related to desirable outcomes, such as lower turnover and higher job satisfaction, organizational commitment as well as higher performance.

Socialization is especially important for PersonOrganisation (P-O) fit because it ensures that once someone enters the organization, they become aligned with the values of the organization and remain that way. You might also guess that organizational culture is an important determinant of P-O fit.

Employees in an organization typically go through at least two of three stages: First, they are selected into the organization. In other words, they get hired. Even at this stage, organizational culture and climate play important roles.

Once the selection stage is complete and an employee is hired into an organization, the second stage, socialization, begins. Socialization is about “how the organization influences the person’s values, attitudes, and behaviors during membership” and it is critically important to maintaining the organizational culture. It is better to think of socialization as an ongoing process but the early stages when the employee first enters the organization are clearly the most critical.

Organizational Change:

Culture change takes concerted effort by a dedicated leadership team. Climates are also susceptible to the influence of leaders. For example, if an organization wants to promote ethical behaviors and enhance its ethical climate, its leaders must act as role models, demonstrating ethical leadership.

Another way cultures and climates can change is through mergers and acquisitions.

When two organizations merge, employees with similar roles will start working together under the same departments. However, they will have different espoused values and basic assumptions. They will also have different understandings of which behaviors are rewarded and which behaviors are punished. You might guess the confusion that may result when employees start seeing different things than they are used to but eventually, something new will emerge.