What is organizational climate?

Your organizational climate describes the perception your employees have about the work environment within your company. It’s how they feel about their experience there and relates to the overall mood about working for your company. It also affects the behavior and performance of your staff. Your organization could have a generally positive organizational climate, which results in happy, motivated, productive employees, or a negative one, which can create dissatisfied employees with lower productivity.

Culture vs. climate

Organizational climate and culture are related, but they’re not the same thing. Your company culture describes the values, norms and ways of doing things that have become widely accepted within your organization. The climate is how your employees feel about the culture. If your culture values diversity, inclusion, curiosity and teamwork, those positive attributes will likely lead to a positive organizational climate.

Culture isn’t the only thing that affects climate, though. Your company culture is generally consistent, but the climate can change based on what’s happening in the company. For example, if you see a sudden loss in revenue, it can cause the climate to drop significantly if it forces layoffs, decreased bonuses or other results that negatively impact your employees.

Importance of organizational climate

How employees feel about your company affects their behaviors. If they feel good about their experiences, they’re generally more likely to remain with your company, have a positive attitude and perform well. Negative feelings have the opposite effect — you might notice low employee morale, lower productivity and high turnover rates.

Organizational climate can affect the following aspects of your business:

• Employee retention: When employees feel good about the workplace, they’re more likely to stay with your company. Higher employee retention reduces employment costs and keeps productivity high.

• Productivity and performance: Satisfied employees are more likely to perform well and keep their productivity levels higher. This allows you to offer the best possible service to your customers and keep profits higher.

• Reputation: Organizational climate can go beyond your workforce. If you have a positive organizational culture, your employees will likely talk about it to people outside the company. This can create a positive reputation and encourage people to apply so they can be part of a positive organization.

• Risk-taking: Employees might be more willing to take risks when they feel supported and have a positive impression of your company. This can lead to innovative ideas that help your company grow.

• Behaviors: The way employees perceive the workplace can impact their behaviors and decision-making. For instance, they might act a certain way to earn rewards or avoid punishments based on how your company operates.

• Goals: Your business is more likely to achieve its goals when you have a positive organizational climate. Employees are more motivated and productive, which enables them to help you achieve those goals.

What impacts the climate?

Several elements go into creating the climate, and many are within your control. Identifying issues and correcting them can improve the perception your employees have of your company. Here are some factors that impact organizational climate:

• Leadership: Your management team sets the tone for employees and can greatly impact how they feel about the company. Collaborative leaders who coach their employees and support their autonomy can have a positive impact.

• Colleagues: The interactions employees have with their colleagues also affect the climate. A highly competitive, cut-throat environment or a toxic workplace with gossip can decrease morale.

• Conflict: All organizations have some conflict — it helps create change and improve the company. How you deal with that conflict can influence perceptions of the company. Keeping the conflict productive and resolving it appropriately can improve the climate.

• Physical environment: A clean, comfortable physical environment creates a positive impression on your employees, while an outdated, dark or uncomfortable environment can hurt your company’s climate.

• Safety: Physical and psychological safety also play a role in climate. A physically secure workplace makes your employees feel valued and can reduce stress. Psychologically, employees need to know they’re free of ridicule, discrimination or other factors that can affect them mentally.

• Communication: How well you communicate with your staff impacts their perception of the company. Strong, open communication keeps employees informed and may make them feel more confident in the leadership team. It also helps them perform better since they have the information they need.

How to improve your organizational climate

All companies can work on improving the climate, even if it’s already generally positive. Improving the perception your employees have about your organization can increase satisfaction and encourage your staff to tell others about it. Here are some ways you can make positive changes.

1. Analyze where you are

Starting with a workplace climate assessment helps you gauge the current situation. An effective way to do that is with an employee survey to get direct feedback from your staff. This gives you a baseline, so you can compare changes in the climate as you implement strategies to improve it. Your initial assessment also helps you identify areas where you need to make the most improvement. You can see where your employees are feeling disappointed and where you perform well.

2. Seek regular feedback from employees

Continuing to survey your employees helps you monitor the climate situation. Pulse surveys can be effective for doing quick temperature checks to see how your staff feels about the organizational climate. They’re short surveys with just a few questions that you conduct frequently.

Regular surveys also help you catch new issues or seasonal factors that change how employees feel about your company. For example, if you run a business during an extremely busy season, you might discover that employees don’t feel they receive enough support during those hectic times.

3. Unite around the mission, vision and values

Your company’s mission, vision and values can help unite your employees and improve the climate. Don’t expect your employees to know and embrace these ideals if you never talk about them. By publicizing them and making them part of the workday, your employees get a better sense of what they’re working for. It adds to the overall transparency of your workplace.

4. Emphasize DEI

Diversity, equity and inclusion can have a strong effect on how employees feel about your company. Promoting an inclusive environment that accepts and celebrates diversity can help all employees feel like they belong. It creates a positive environment where staff members work together and respect their differences and similarities. DEI can also create stronger bonds among your employees, which helps them work as a team. Companies that focus on DEI initiatives often see improved employee retention and satisfaction.

5. Train your leadership team

Since your management team has a major impact on organizational climate, focusing on their performance can trickle down to the rest of your employees. Evaluate leadership styles and expectations within your organization to determine if there are changes that need to be made. Effective leaders offer support and inspiration without micromanaging.

Working with individual managers to improve their leadership can improve the organizational climate. Continuing education and training opportunities for effective leadership can also help. Managers should learn how to establish and express expectations, coach employees and provide useful feedback.

6. Encourage open communication

Open, two-way communication can make employees feel like a valued part of your organization. Transparency clears up confusion and prevents rumors from starting, which can help you prevent negativity. Listening to your employees can also help you identify additional strategies that can improve your organizational climate.

7. Increase employee autonomy and trust

Employees tend to perform better when they know their employer trusts them and gives them the autonomy to do their jobs effectively. Giving them decision-making power, within reason, helps empower your team and encourages them to take risks that could benefit the company. Having that freedom to work within your established expectations can increase employee satisfaction and motivation. 

8. Evaluate employee motivation sources

Keeping employee motivation high can improve the overall climate, but not everyone responds to the same motivators. Some people are intrinsically motivated, while others are externally motivated. Getting to know your workers helps you identify preferred motivational methods for each person.

Improving overall employee recognition can often boost motivation. Most people respond well when employers show appreciation for their efforts and successes. Collaborate with managers to provide spontaneous verbal recognition when employees perform well, and consider a formal employee recognition program to offer continued motivation to your employees.