Organisational Culture and Climate

Two private banks in the same city sell the same products at similar rates. In one, a clerk who spots an error tells the manager at once; in the other, she keeps quiet. No rule book explains the difference.

Culture is made of shared values, beliefs and norms. It shapes how things are done there, and new members pick it up mostly by watching.

Three levels. Edgar Schein showed that culture sits at different depths. What you can see on a visit is only the top layer.

In the first bank, the artefact might be an "error of the week" board. The espoused value is "we own our mistakes". The basic assumption, never written down, is that reporting an error will not cost you your job. That last layer is why the clerk speaks up.

Seven characteristics. Robbins and Judge list seven characteristics that, taken together, capture an organisation's culture. Each runs from low to high, so a culture is a profile across all seven.

For illustration: a young software firm in Bengaluru might score high on innovation and outcomes and low on stability. A long-established insurance office might show the reverse profile. Neither is wrong; each fits different work.

Don't confuse culture with the rule book. Policies are written and official. Culture is what people actually do. When the two disagree, people usually follow the culture.

Where it breaks. The seven characteristics describe a culture; they do not say which culture is best. That depends on the work and the strategy. Culture is also hard to measure: surveys pick up espoused values far more easily than the assumptions underneath.

For exams. Learn the Robbins and Judge definition word for word, the seven characteristics, and Schein's three levels in order: artefacts, espoused values, basic assumptions.

In a family-run chain of sweet shops, every new hire hears the founder's rule on day one: never sell yesterday's sweets. Years later, staff still throw out unsold stock with no manager watching. That is what a strong culture looks like.

Dominant culture and subcultures. A dominant culture is the core values most members accept, often shaped by founders and top management. Subcultures are smaller cultures within departments, locations or professions. They combine the organisation's values with local experience.

Example: in a pharmaceutical company, the sales team prizes speed and targets, while the quality-control lab prizes caution. Both still share the company's core value of patient safety. That shared core is the dominant culture; the two styles are subcultures.

What culture does. Culture does five jobs for an organisation:

The behaviour-guide function is why the sweet-shop staff need no supervisor. A strong culture works like an unwritten rule book, so the organisation needs fewer written rules.

Don't confuse a strong culture with a good one. Strength measures how widely and firmly values are held, not whether they are the right values. A culture can be strongly committed to hiding bad news.

Where it breaks. Strength cuts both ways. A strong culture can become a barrier to change when the market moves. It can push out people who think differently, working against diversity. And two strong cultures often clash after a merger.

For exams. Expect the five functions as a matching question, especially "social glue" (stability). Know that subcultures sit inside a dominant culture, not against it.

Boundary, identity, commitment, stability, guide.

A founder who answered every customer complaint personally sells his firm twenty years later. Staff still answer complaints within the day. Nobody wrote that down; it was built in, and then kept alive.

Who builds it. Culture starts with the founder's philosophy, whose values shape hiring, leadership style and expectations. Top management keeps it alive as role models, through their decisions and behaviour. Reinforcement mechanisms strengthen it: selection, training, performance evaluation, rewards and promotion.

How newcomers learn it. Socialisation runs in three stages. Follow a new probationary officer joining a public-sector bank:

When metamorphosis goes well, the newcomer becomes more productive and committed, and is less likely to leave.

A positive culture builds on employees' strengths rather than dwelling on weaknesses. It rewards more than it punishes, and supports growth through learning, creativity and career development. Its limit: positivity does not remove the need for objective standards and constructive feedback.

Don't confuse socialisation with training. Training teaches the skills of the job: how to process a loan. Socialisation teaches the norms: whether you may question the manager's decision on it.

Where it breaks. A founder's influence fades as a firm grows and hires people who never met them. Hiring for "fit" keeps the culture strong, but it can shut out people with different backgrounds and ideas. Reinforcement only works if the rewards match the stated values.

For exams. Know the three socialisation stages in order, and the five reinforcement mechanisms.

Go deeper for practitioners

What leaders really teach. Edgar Schein argued that people learn a culture from what leaders do, not what they announce. Staff watch what leaders pay attention to and measure, how they react in a crisis, and how they spend money. They also watch whom leaders reward, hire and promote.

A decision. You head a regional sales office. The company's stated value is "customer first", but bonuses are paid only on monthly volume. Staff push stock onto dealers at month-end, and returns follow. A poster campaign about customers will not change this. Changing what the bonus counts, for example adding dealer returns to the calculation, will. Which lever do you pull first?

Links. Selection and training appear in the recruitment and training chapters of this unit. Their cultural role is often bigger than their formal one.

Pre-arrival, encounter, metamorphosis.

A government office has the same rules and values it had for decades. Then a harsh new head arrives, and within a month people stop speaking up in meetings. The culture has not changed; the climate has.

Four types of culture. Kim Cameron and Robert Quinn's competing values framework sorts cultures by two questions. Does the organisation look inward, at its own people and processes, or outward, at customers and competitors? And does it prize flexibility or stability?

For illustration: a small family business in Surat may run like a clan, a start-up like an adhocracy, a sales-driven consumer firm like a market, and a district treasury like a hierarchy.

Climate. Climate can be people-oriented (well-being and morale), rule-oriented (policies and procedures), innovation-oriented (creativity and new ideas) or goal-oriented (targets and performance).

Don't confuse culture with climate. Culture is the deep layer of values that takes years to shift. Climate is the surface feel that one manager can change in a month, as in the government office above.

Where it breaks. Few organisations are pure types; most mix two or more, and departments differ. The framework's point is the tension between corners, such as control against creativity. A climate survey is also a snapshot: it can swing with one bad quarter.

In practice. A manager cannot change the culture alone, but can change the climate of a team quickly. How you react to the first piece of bad news you hear sets it.

Go deeper for practitioners

A decision. A clan-like family firm is bought by a market-type group. The new owners bring monthly targets and league tables. Long-serving staff feel the warmth has gone, and two senior people resign. The buyer can keep the targets and protect what the clan valued, such as mentoring, by building it into managers' goals. Or it can expect the culture to adjust on its own. Which costs more if it fails?

Opposite corners. In the framework, clan sits opposite market, and adhocracy opposite hierarchy. Moves between opposite corners are the hardest, because the values directly conflict.

Culture is values and meaning; climate is perceptions and feelings.

Two branches of one bank have the same rules and the same targets. In one, staff wait for the manager's nod before every small decision. In the other, they take on problems that nobody assigned them. The two climates feel very different.

Six motives. Pareek's framework asks which motive a workplace arouses most. The motive that scores highest in a survey marks the dominant climate.

In the first branch above, dependency and control dominate. In the second, achievement and extension do. Control and dependency are often seen as the less healthy climates, because they discourage initiative.

Why climate matters. Employees form an overall picture of their organisation from things like risk tolerance, team emphasis and support for people. That picture then affects their performance and satisfaction, and the more widely shared that picture is, the bigger the effect. Climate also has a target. A person in a positive climate for performance thinks about doing a good job more often and believes others support their success. A person in a positive climate for diversity feels more at ease working with colleagues from any background.

Don't confuse these motives with McClelland's three needs. McClelland names achievement, affiliation and power. Pareek's list adds extension, control and dependency, and describes what a workplace arouses, not what one person needs. Likewise, climate describes what members perceive; it does not say whether they like it. Liking is job satisfaction.

Where it breaks. Climate scores show a link with performance, not proof that climate causes it; good results can also lift the mood. Members of one team may also perceive the same workplace differently. And the six motives are a lens: real workplaces mix them.

For exams. The urge to be relevant and useful to large groups, including society, is the extension motive, not affiliation, influence or achievement. A climate linked to motivation and job satisfaction is also linked to employee efficiency and performance.

Achievement, affiliation, influence, control, dependency, extension.