Climate is the atmosphere of an organization, a relatively enduring quality of its internal environment, which is experienced by the members and influences their performance. It conveys the impression people have about the internal environment within which they work. It may also be viewed as the degree to which organizational rules are reinforced by the administrative component. It also represents the attitudes of the organizational members toward the organization itself.

Thus organizational climate often distinguishes one organization from another. It is relatively enduring over a period of time, and influences the behaviour of the members of an organization. There may be differences in the climate of different departments like HR, production, research and development.

In understanding organizational climate it is necessary to know how organization members communicate and relate to each other, the amount of cooperation between the level of satisfaction and so forth. All these factors determine the effectiveness of an organization.

An organization is likely to be more effective if there is two-way communication; employees are cooperative and have a positive view of the organization.  Such employees have higher job satisfaction and commitment. Their productivity will also be higher. A positive organizational climate results in making employees more satisfied and productive.

Determinants of Climate

Many factors determine the climate of an organization. At least four of these seem especially relevant. These are:

  1. Organizational Structure: It is the frame work of authority - responsibility relationship in an organization. It clarifies who is to supervise whom and who is responsible to whom. It serves as the basis of interpersonal relationships between supervisors, subordinates and coworkers. For example if the top management feels the need to give greater emphasis to the subordinates, it will follow a decentralized structure. This means there will be fewer layers in the hierarchy and employees would be encouraged to participate in decision making. But if top management likes to maintain greater consistency in decision making, it would follow a centralized structure.

  2. Technology: The nature of technology employed by an organization also influences the organizational climate. For example, routine technologies like assembly lines tend to create rules, leading to a rigid climate where trust and creativity are low. More dynamic and changing technologies e.g. aerospace engineering seem to lead to greater trust and personal responsibility for task accomplishment.

  3. External Environment: External events or factors that have relevance for employees may also affect the climate. For example when economic conditions are severe, organizations are forced to cut down the number of employees. Those who remain would probably perceive the climate as threatening with little warmth, support and low motivation.

  4. Management Policies and Practices: Managers who provide their subordinates with more autonomy and feedback contribute significantly to the creation of achievement oriented climate leading to greater productivity.