Every organisation has some characteristics which are common with any other organisation. At the same time, each organisation has its unique set of characteristics and properties. This psychological structure of organisation and their sub-units is usually referred to as Organisational Culture.

For a layman, culture is a commonly experienced phenomenon and many words like, climate, atmosphere, environment and milieu are often used interchangeably to describe it. In fact, most of the studies which have tried to measure an organisation’s “Culture” have operationalised it in terms of “Organisation Climate”. A couple of formal definitions of organisation climate are given below for your perusal:

Organisational climate is a relatively enduring quality of the internal environment that is experienced by the members, influences their behaviour, and can be described in terms of values of a particular set of characteristics of the organisation (Renato Tagiuri, 1968).

Organisational climate is the set of characteristics that describe an organisation and that (a) distinguish one organisation from other organisations; (b) are relatively enduring over time and (c) influence the behaviour of the people in the organization (Forehand & Gilmer, 1964).

Compare these two definitions of “Organisational Climate” with a definition of “Organisational Culture” as given by Stephen P. Robbins (1986): Organisational Culture is a relatively uniform perception held of the organisation, it has common characteristics, it is descriptive, it can distinguish one organisation from another and it integrates individual, group and organisation system variables.


If you examine closely these sample definitions, you will not only be able to identify the commonalities but also be able to see that the abstract concept of culture and operational concept of climate basically refer to the perceived personality of an organisation in very much the same sense as individuals have personality. Just as you have a personality -a set of relatively stable traits-so does an organisation. Just as any culture has some do’s and don’ts in the form of totems and taboos which dictate how each member should behave with a fellow member or an outsider, similarly each organisation has a culture that influences the behavior of employees towards clients, competitors, colleagues, supervisors, subordinates and strangers. In this, we shall be concerned with this relatively stable perceived internal environment of an organisation, called Organisational Climate or Organisational Culture (OC).

It should be noted that Organisational Culture or Organisational Climate (OC) is the perceived aspects of an organisation’s internal environment, but within the same organisation there may be very different OCs. This might happen because people with different length of experience or at different levels of organisation’s hierarchy, may perceive internal environment of an organisation differently. Personal characteristics such as Values, Needs, Attitudes and Expectations determine the manner in which an individual is likely to perceive the various aspects of the internal working environment of the organisation. 


You have seen that OC refers to a set of some commonly experienced stable characteristics of an organisation which constitutes the uniqueness of that organisation and differentiates it from others. You might have faced some difficulty in identifying this set of characteristics because you do not yet know the various dimensions or factors of OC in which you should look for these characteristics. In the last two decades, extensive studies have been conducted which have helped us to identify some key factors of OC. Some of these common dimensions are described below:

Individual Autonomy: This refers to the individual’s freedom to exercise his or her responsibility. In other words, individual autonomy is the degree to which employees are free to manage themselves; to have considerable decision making power; and norm to be continually accountable to higher management.

Position Structure: This refers to the extent of direct supervision, formalisation and centralisation in an organisation. In other words, position structure is the degree to which objectives of the job and methods for accomplishing it are established and communicated to the individual by supervisors.

Reward Orientation: This refers to the degree to which an organisation rewards individuals for hard work or achievement. An organisation which orients people to perform better and rewards them for doing so, will have an OC characterised by high ward orientation.

Consideration, Warmth and Support: This refers to the extent of stimulation and support received by an individual from other organisation members. In other words, if there is a sense of team spirit among the members of an organisation, the OC is likely to be perceived as considerate, warm and supportive.

Conflict: This refers to the extent of conflict present between individuals and the willingness to be honest and open about interpersonal differences.

Progressiveness and Development: This aspect refers to the degree to which organisation conditions foster the development of the employees, allow scope for growth and application of new ideas and methods.

Risk Taking: The degree to which an individual feels free to try out new ideas and otherwise take risks without fears of reprisal, ridicule or other form of punishment, indicate the risk-taking dimension of OC. This dimension is akin to “cautious” versus “venturesome” quality of an organisation.

Control: This dimension refers to the degree to which control over the behaviour of organisational members is formalised. In a highly bureaucratic organisation, control systems are well defined. In a low-control organisation, most of the controls are self regulated, i.e., individuals monitor their own behaviour. You can think of this dimension as “tightness” versus “looseness” of an organisation.

These eight dimensions account for most of the research findings, but they do not account for all that we intuitively feel to be present in the “Climate” or “Culture” of an organisation. For example, you may perceive an organisation culture to be “paternalistic”, or a climate to be “impersonal”. Though the fourth OC dimension (consideration, warmth and support) may cover both these different qualities, yet the “richness” that you find in the two qualities is not fully reflected in that dimension. However, the identification of these eight dimensions (which are not absolutely independent of each other) do help us in mapping and measuring OC.

Before we move on to the next topic on Determinants of OC take the following pair matching test to check whether you have understood the focus of each dimension. 


At the very onset of this topic, it is useful to distinguish between determinants and dimensions of OC. Determinants are the causes, while dimensions are the components of OC. You may say, determinants are those which influence whereas dimensions are those which are influenced.

Although OC refers to the internal environment of an organisation, the nature of OC is determined by a variety of internal and external factors. One of the basic premises of organisational behaviour is that outside environmental forces influence events within organisations. After acknowledging the dynamics of internal as well as external factors in this section, we will consider in greater detail the following seven internal factors. You will find these factors as determinants of OC in the following order:

1 Economic Condition

2 Leadership Style

3 Organisational Policies

4 Managerial Values

5 Organisational Structure

6 Characteristics of Members

7 Organisational Size 

Economic Conditions

Several dimensions of OC are influenced by an organisation’s position on the economic cycle. The economic condition of any organisation influences whether its budget should be “tight” or “loose”. In times of prosperity-when budgets are more loose than tight-the organisation tends to be more adventuresome. On the other hand, tight budget would lead to an air of caution and conservatism within an organisation.

Few managers are willing to suggest new programmes (probably deserving merit) when the order from above is to exercise tight control over expenses. So, dimensions of OC like “Risk-taking”, “Control”, “Progressiveness and Development” etc. are directly influenced by economic conditions. 

Leadership Style

The leadership style prevailing in an organisation has a profound influence in determining several dimensions of OC. The influence is so pervasive that you may often wonder whether OC is a product of the philosophy and practices of prominent persons in an organisation.

Consider, for example, the results of an experimental study where three organizations were “created” by simulation. All these three Organisations-A, B and C-were identical in terms of nature of business, size of the organisation, characteristics of employees, and initial economic condition. The major difference among these three organisations was the “leadership style”. Organisation A was characterised by authoritarian style with high power motivation. Organisation B was characterised by democratic style with affiliation motivation. Organisation C was characterised by goal directed style with achievement motivation. The meaning of – these different leadership styles and their effects on different dimensions of OC can be seen in Table 1. You will notice that one type of leadership style can influence more dimensions of OC than another style.

Table-1 : Leadership Style of three Simulated Business Firms and their effects on Dimensions of OC table 1 leadership style 12

Organisational Policies

Specific organisational policies can influence a specific dimension of OC to quite an extent. For example, if the company policy states that layoffs will be used only as a last resort to cope with business downturn, then it would, in general, foster an internal environment that is supportive and humanistic.

Similarly if you are working in a company where it is agreed that the first beneficiaries.; of increased profit would be the employees of that organisation and shareholders would get second priority, then the OC will be characterised by High Reward Orientation and probably by High Progressiveness and Development. 

Managerial Values

The values held by executives have a strong influence on OC because values lead to actions and shape decisions. Values add to perceptions of the organisation as impersonal, paternalistic, formal, informal, hostile or friendly. You will learn more about managerial values under the topic: Managerial Ethos. 

Organisation Structure

The design or structure of an organisation affects the perception of its internal environment. For example, a bureaucratic structure has an OC much different from a System 4 organisation. What is a System 4 organisation? According to Rensis Likert, all organisations can be classified into four major groups, depending upon the way basic organisational processes are conducted. These major groupings are as follows:

System 1 – Exploitative Authoritative

System 2 – Benevolent Authoritative

System 3 – Consultative

System 4 – Participative

How does one know whether an organisation should be categorised as System 1 or 2 or 3 or 4? It depends on the way following processes are perceived and rated in an organisation:

  • Leadership process
  • Motivation process
  • Communication process
  • Decision-making process.
  • Goal-setting process
  • Control process,

Employees of an organisation rate these processes on a rating scale; asking questions like the following:

  • How much confidence is shown in subordinates?
  • Where is responsibility felt for achieving organisation goals?
  • How well superiors know problems faced by subordinates?
  • How much covert resistance to goals is present?
  • At what levels are decisions formally made?
  • Is there an informal organisation resisting the formal one?

Based on the answers to these questions, an organisation can be classified as system 1 or 2 or 3 or 4. A bureaucratic structure is likely to be rated as System 2 or System 3. A System 4 organisation will have a distinct OC where the main theme would be strong involvement and self-control of all organisation members at all levels in all basic organisational processes 

Characteristics of Members

Personal characteristics of the members of an organisation also affect the climate prevailing in the organisation. For example an organisation with well educated, ambitious and younger employees is likely to have a different OC than an organisation with less educated, and less upwardly mobile, older employees. The former might inculcate an environment of competitiveness, calculated risk-taking, frankness of opinions, etc.

Organisational Size

In a small sized organisation it is much easier to foster a climate for creativity and innovation or to establish a participative kind of management with greater stress on horizontal distribution of responsibilities. On the other hand, in a large organisation it is easier to have a more authoritative kind of management with stress on vertical distribution of responsibilities. This in turn leads to distinct environments as has been explained with the help of the concept of System 4 organisation.

We have now studied seven basic determinants of OC. The list is not exhaustive but these are the basic internal factors determining the internal environment of an organisation.

Note that OC is not influenced by factors existing within the organisation only. Societal forces help shape OC as well. To understand societal influences on OC, let us consider an example in relation to the changing profile of existing and future employees. You may have noticed at least two changes which are taking place in our society. First, educational level of employees of all categories is rising. Second, societal values toward recreational and leisure activities are becoming stronger. The effect of the first change is in the expectations of employees. People want more satisfying and fulfilling work which should match their qualifications and abilities.

The impact of the second change is that the passion for non-work is increasing: people feel less passionate about job performance. So, while one change is pushing towards increased professionalism, the other change is pulling towards leisure orientation. Against these backdrops of societal forces influencing the profiles of the employees, the content of the job and the organisation processes determine the OC. To sum up, OC is determined by a variety of internal and external factors where internal factors are specific to the organisation while external factors refer to a number of societal forces.

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