Abhinav

International Monthly Refereed Journal of Research In Management & Technology

ISSN 2320-0073

Volume III, January14

FACTORS INFLUENCING ORGANISATIONAL

CLIMATE
Md. Khaja Moinuddin Farokhi1 and Dr. T. N. Murty2
1

Research Scholar, Commerce & Business Administration, Acharya Nagarjuna University,

Nagarjuna Nagar, India
Email: [email protected]
2
Director, Nimra College of Business Management, Vijayawada, India
Email: [email protected]

ABSTRACT
The study of the climate of an organisation is necessary for an insight into important
dimensions such as communication, cooperation, creativity, employee satisfaction, morale,
etc. All these factors determine the effectiveness of the organisation. Organisation is likely
to be more effective if there is two-way communication and employees are cooperative and
have better perception of the organisation. Employees perception about the climate
influences the employees involvement and commitment to the organisation. So the
perception of the employees about the organisational climate helps the organisation to
achieve the goals of the organisation. Therefore, the research question addressed in this
study is: How organisational climate influences the perception of employees and their
involvement in an organisation?

Keywords: Organisation; Climate; Organisational effectiveness

INTRODUCTION
The study of the climate of an organisation is necessary for an insight into important
dimensions such as communication, cooperation, creativity, employee satisfaction, morale,
etc. All these factors determine the effectiveness of the organisation. Organisation is likely to
be more effective if there is two-way communication and employees are cooperative and
have better perception of the organisation. Such employees have higher job satisfaction and
feel committed to the organisation. Their productivity will also be higher. Thus, good
organisational climate is instrumented to higher employee satisfaction, better human
relations and higher productivity. The role of climate in employees satisfaction and
organisational effectiveness can be shown with a hypothetical model that specifies the
relationship between the major sets of variables. Along with structure, technology, external
environment and managerial policies and practices exert important influences on climate.
The emerging climate represents the arena which is influenced by managerial policies,
organisation structure and technology and external environment. When climate is conducive
to the needs of individuals, we would expect goal directed behavior to be high. The ultimate
behavior or outcomes are determined by the interaction of individuals needs and perceived
organisational environment. The feedback regarding resulting level of performance
contributes not only to the climate of the particular work environment, but also to possible
changes in managerial policies and practices. Thus, climate has an important influence on
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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

performance and satisfaction of the employees. If the climate is favorable, there would be
greater organisational effectiveness.
OBJECTIVES OF THE STUDY
The present study has undertaken the following Objectives:

To identify the factors that influence organisational climate,

To study the techniques in improving the organisational climate

METHODOLOGY
The study is carried out through primary and secondary data. The primary data are collected
through survey method. Survey is conducted using well formulated questionnaire. Simple
random sampling is applied for generating data. Samples for the purpose of the study are
selected systematically. Totally 616 questionnaires are distributed among the total employees
of the select Bank who are around 8,000. Out of the distributed questionnaires, 116 are not
usable. Only 500 of them are found suitable for primary data analysis. Hence the exact
sample size is 500. The secondary data were collected from Books, Journals, periodicals,
websites and company manuals, files and records.
REVIEW OF THE LITERATURE
According to Newman (2010), Joyce and Slocum (2010), the structure of the organisation
can influence employees perceptions of their climate. Steven P. Brown and Thomas W.
Leigh (1996) stated that perceptions of motivating and involving psychological climate were
related to job involvement, which in turn was related to effort. Effort was also related to
work performance.
The perceptions of organisational climate and organisational change on the part of 10 senior
business leaders in the life insurance industry who self-identify as exhibiting
transformational leadership style is discussed and suggests that how to prepare for and adapt
to their rapidly changing competitive environment and providing new or alternative
strategies for identifying and developing business leaders (Willett, Scott R., Ph.D., 2009).
The employees perceived the organisational climate of their organisation to be at a moderate
level and Continuance commitment to organisation appears to be the lowest of the three
components
of
the
organisational
commitment.
(Fauziah
Noordin, Safiah
Omar, Syakirarohan Sehan, Shukriah Idrus, 2010).
The relation between the dimensions of organisational climate, perceptions of support for
innovation and performance is moderated by organisational slack and a strong connection
exists between the different dimensions of organisational climate and perceptions of support
for innovation (Antonia Ruiz-Moreno Vctor J. Garca-Morales, Francisco Javier LlorensMontes, 2008). There is a positive and strong relationship between diversity management
and organisational climate dimensions: policies and procedures, discrimination, gender
issues, equality in conditions of employment, discrimination and employment equity (Tjale,
Tsedile Ethel, 2005).
Peter Kangis, and D. Gordon and S. Williams (2000) showed a consistent association
between climate and performance, independently of sector, companies performing above
average showed higher values on climate dimensions than those performing below average.
Mark A. Shadur Rene Kienzle , John J. Rodwell (1999) collected data from 269 employees
of an information technology company and examined the relationship between employee
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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

perceptions of involvement and organisational climate. The authors stated that employee
involvement is composed of three essential variables, namely, participation in decision
making, teamwork, and communications.
Mathis Schulte, Cheri Ostroff, Angelo J Kinicki (2006) used a sample of 1,076 employees
from 120 branches of a US-based bank indicated that individuals' perceptions of the climate
accounted for a large percentage of variance in individuals' satisfaction. The results suggest
that the overall climate in a work unit has some influence on individual attitudes, after
accounting for individuals' idiosyncratic perceptions of the climate. Patterson M, Warr
P, West M (2004) stated that company productivity was more strongly correlated with those
aspects of climate that had stronger satisfaction loadings. Managers' perceptions of climate
would be positive and linked to company productivity than non-managers.
Zhang Zhen, Ma Li, Ma Wenjing (2003) explored the relationship between organisational
climate and employee involvement in organisations in Mainland China. After clarifying the
constructs of organisational climate and employee involvement, the study conducted one
way ANOVA and regression analyses to examine how organisational climate influenced
employee involvement in organisations. The results showed that significant geographical
difference was found in employee involvement. Non bureaucratic, supportive and
communicative climates were the strongest predictors of the employee involvement.
Victoria Bellou, Andreas I. Andronikidis (2009) showed that efficiency, reflexivity,
innovation and flexibility, supervisory support and quality were among the most prominent
characteristics affected by organisational climate, whereas outward focus and pressure to
produce were least affected. Moreover, the only differences revealed between managerial
and non-managerial employees were in the areas of involvement and efficiency.
Tengku Marini (2007) revealed that male staff perceived organisational climate more
favorable as compared to females. Meanwhile the friendly, precise and attentive style was
found to be the predominant communication styles among the staff and the predominant
organisational climate was achievement oriented climate. Male and female officers are
influenced in a similar manner by organisational climate variables, although the magnitude
of that influence varies by gender and suggest that climate variables have a greater impact on
job satisfaction than individual level variables (Marie L. Griffin, 2001).
Young, Scott Alan (2000) found that agreement within work groups with respect to climate
perceptions may not be as critical as agreement in organisational values and goals. Ali
Dastmalchian( 1986) stated in his study that different environmental characteristics have
different associations with organisational climate and the relationships between
organisational environments and climate are not similar to those found between
environments and structure.
Lawrence R. James and Allan P. Jones (1974) focus on the extent to which organisational
climate duplicates other organisational and individual domains. Descriptive measures of
organisational climate have organisation-specific variance and constitute organisational
attributes (John A. Drexler 1976) several organisational process variables (but no structural
variables) were significantly related to the climate of the organisation as perceived by
scientists. Perceived climate in turn was shown to be significantly related to measures of
organisational performance and to job satisfaction (Edward E. Lawler, III, Douglas T. Hall
and Greg R. Oldham 1974).
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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

Johnson, Joyce J. (2000) used a sample of 8,126 employees in a large government service
agency using an anonymous survey measuring nine aspects of quality culture and ten aspects
of organisational climate. Results show that supervisors perceived all nineteen aspects of the
culture and climate measured on the survey significantly more positively than did nonsupervisors.
Cooper, Michelle A. (1997) discussed the impact of participation in decision making on staff
perception of organisational climate/culture, commitment, and influence on work. There was
no statistically significant difference for perception of climate/culture compared to results
from the same questionnaire administered one year before but commitment and influence on
work were significantly lower.
Schnake, M. E. (2011) used a sample size of 269 employees of an information technology
company and revealed that affective response affects the dimensionality of perceptual
measures of organisational climate. James F. Gavin (1975) conducted a study of 140
managerial level bank employees to determine the extent to which climate perceptions could
be accounted for by measures of personal and organisational variables. Findings fail to
support the expected interaction of personal and organisational measures but do indicate that
personal and organisational variables alone accounted for significant amounts of variance in
climate perceptions.
Most of the studies show that there is a relation between organisational climate and
employees performance. So there is a need for the organisation to provide conducive
climate to the employees. Organisations find it difficult to understand what type of climate
that the employees preferred because employees perceptions differ from time to time and
from situation to situation.
To bridge the gap, the researcher has made an attempt in the study to provide information
about the climate variables and employees perceptions towards such variables taking into
account one of the multinational organisations namely Standard Chartered Bank.
Factors Influencing Organisational Climate
Organisational climate is a manifestation of the attitudes of organisational members towards
the organisation. These attitudes are based upon such things as management policies,
supervisory techniques, the fairness of management, labors reactions to management, and
literally anything that affects the work environment. Lawrence James and Allan Jones have
classified the factors that influence organisational climate into five major components:
1. Organisational Context: The management philosophy of an organisation will be evident
from the goals, policies and functions of the organisation and the manner in which the goals
are put into operation. For instance, the reputation of a particular company regarding the
treatment of employees would provide some indication of the managerial philosophy
regarding the utilization of human resources. This philosophy of management is expressed
by policies, rules, regulations and, of course, by the actions of mangers. The reaction of the
employees and the degree to which they agree within managements philosophy is critical to
the development of a favorable climate. If management is able to match employees goals to
organisational goals, it is most likely to put a positive influence on climate. The
managements attitude towards employees is indeed a major determinant to the overall
organisation climate.
2. Organisation Structure: An organisation structure is the framework of authorityresponsibility relationships in an organisation. It clarifies who is to supervise whom and who
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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

is responsible to whom. It serves as the basis of inter-personal relationships between the

superiors and the subordinates and the peers (people of same rank in the organisation).The
organisation structure followed by management is critical organisational climate. If the top
management feels the need of giving greater importance to the subordinates, it will follow a
decentralized structure. There will be fewer layers in the organisational hierarchy and
participative decision-making will be encouraged. The organisational climate will be
inductive to the development of the employees. But if the top management like to maintain a
greater degree of consistency in decision-making, it would follow a centralized structure.
This would enable greater control over decisions; and organisational climate will encourage
centralized information management and decision-making.
3. Relationship between superior and subordinates: Every employee has to interact with
his superior or boss for necessary instructions and guidance. It is the immediate superior who
allows (or disallows) the subordinate to participate in decision-making, gives assignments,
does performance appraisals, conducts performance reviews, interprets policies, determines
pay increments, and decides who has the potential to be promoted. These functions are
inherent in managing and every manger is concerned with these functions. The relationship
between superior and subordinate is not only of an interpersonal nature, but it also represents
the primary interface between the organisation and the employee. All mangers must
therefore be aware of the possible influence on climate when deciding the type of leadership
(autocratic or participative to be provided to the subordinates. The effectiveness of a
leadership style is determined mainly by the particular situation. In other words, the
leadership style must suit the situation faced by the manger. If it is not so, the motivation
level of the workers will be low, they will feel frustrated and dissatisfied and productivity
may also go down. If the workers are not satisfied with the type of leadership provided,
effective communication will be hindered and their morale will also be low. Therefore, every
manager must consider the likely impact of this style of functioning on the organisational
climate.
4. Physical environment: It has been observed that office decor, office size and the physical
space allotted to a person at work (private office or general office) etc. have an important
influence to the development of a favorable attitude towards the job. Noise has also been
considered instrumental in influencing the climate of organisation. High level of noise may
bring a bad feeling and lead to frustration, nervousness and aggression and thus have a
negative effect upto organisational climate. Some degree of immunity to noise may be
possible when it is a steady part of the external environment. Therefore, noise to a tolerable
extent may not adversely affect the organisational climate.
5. Values and Norms: Over a period of time every organisation develops a culture of its
own. Culture is the social or normality glue that holds an organisation together. It expenses
the values or social ideals and beliefs that organisation members come to share. In the words
of Bro Utal, Organisation culture is a system of shared values (what is important) and the
beliefs (how things work) that interact with a companys people, organisation structures, and
control systems to produce behavioral norms (the way we do things).The above quotation
suggests that organisations have different cultures goals and values, managerial styles, and
norms - for carrying out activities. We have already discussed as to how organisational goals
and managerial styles influence the organisational climate. Now we shall study the impact of
values and norms.

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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

Techniques for Improving Organisational Climate

The following techniques may be helpful in improving the organisational climate:
(i) Open Communication: There should be two-way communication in the organisation so
that the employees know what is going on and react to it. The management can modify its
decisions on the basis of employees reactions.
(ii) Concern for People: The management should show concern for the workers. It should
work for their welfare and improvement of working conditions. It should also be interested
in human resource development.
(iii) Participative Decision-making: The employees should be involved in goal setting and
taking decisions influencing their lot. They will feel committed to the organisation and show
cooperative attitude.
(iv) Change in Policies: The management can influence organisation climate by changing
policies, procedures and rules. This may take time, but the change is long lasting if the
workers see the change in policies procedures and rules as favorable to them.
(v) Technological Changes: It is often said that workers resist changes. But where
technological changes will improve the working conditions of the employees, the change is
easily accepted. There will be a better climate if the management adopts improved methods
of work in consultation with the employees.
How Managers and Employees in Influence Climate?
Management plays an important role in shaping the climate the organisation. It does so by
determining organisational goals, laying down organisational structure and pattern of
communication and decision-making processes and also shaping of organisational norms and
values. Besides, management also has direct control over the physical environment under
which the employees work. In fact, managements control over these comments means that
management has the ability to affect changes in climate through adjustments in any of the
components. Given the nature of the make-up of an organisations climate, the real effect of
any action by management can never be accurately predicted. Nonetheless, management
must take the initiative in improving the subordinate-manager relationship and the
organisational climate The role of mangers in establishing a favorable climate is primarily
action-oriented while the employees role is one of reaction. The employees also exert their
influence on organisational environment. They do so by trying to control their environment
and bring about changes that will make their lot more endurable.
CONCLUSION
The organisational climate leans upon job satisfaction, continuous motivation and training
and leadership qualities of employees. Communication technology motivates to work in a
challenging work environment. The leadership qualities create supportive spirit, optimistic
interpersonal relationship and conducive work environment. On the whole the employees are
satisfied with their work environment and job and feel proud of belonging to their
organisation.
SUGGESTIONS
When the climate is worker oriented the employees will direct their behavior to attaining
organisational goals. Positive working conditions such as proper motivation, warm
environment, a differential reward system, orientation for new workers, co-operation among
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Abhinav
International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

co-workers, job variety , opportunity for growth and development, supportive monitoring
and belonging to a team influence the employees perceptions. Therefore, measures to
initiate such a climate are justified. The following suggestions are offered to make the
organisational climate more conducive and effective:

The top level management is suggested to improve the motivational factors such as
core values and supervisors efficiency.

Positive work environment can be made through providing challenging work as

employees have weak perceptions on such work environment factor of the
organisational climate.

The organisation should take special measures to support the work groups and
encourage the team spirit among employees.

The management should encourage employees to work on their interested project

which increases their efficiency and job satisfaction.

The organisation has to develop training methods and training premises for
employees to improve their knowledge, skills and abilities and to do a quality job.

The organisation has to increase opportunities for personal growth and development
of the employees

The organisation has to help the employees in selecting the best suited career in their
job.

Communication must be transparent and sufficient for smooth performance of

employees.

Management must encourage the employees to participate in decision making which

brings good communication between subordinates and superior and to achieve
organisational goals and objectives.

The organisation has to provide various conducive work environment like work
schedule options, motivating factors, career development, training methods,
communication system and leadership style to suit the various needs of different
categories of employees based on demographic factors.

SCOPE FOR FURTHER RESEARCH

A comparative study of employees perception of organisational climate variables between
departments, between branches, between nations of the organisation can be studied for
future research in addition to organisational climate variables of public sector can be
compared with private sector.
SOCIAL RELEVANCE
The study provides useful information to the Organisation, employees, Employers,
Government and society.
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International Monthly Refereed Journal of Research In Management & Technology
ISSN 2320-0073

Volume III, January14

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International Monthly Refereed Journal of Research In Management & Technology
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