Organizational Culture and Climate: What are the Differences?

Organizational culture is the collective beliefs, assumptions, ideas, and approaches developed by a group of professionals that informs how they interact with each other and the methods they apply to overcome obstacles. These established ideas are taught to and adapted by new group members as appropriate and acceptable. Member experiences shape the innate beliefs held by the collective and the overall organizational culture. A company’s culture represents the basic values of an organization: its guiding philosophy, employee expectations, and is the determining factor for an organization’s future.

Although each organization builds its own culture, there are some basic characteristics that can help you define a company’s culture and see if you are a good fit. The usual categories are:

Market culture

Market culture values productivity and motivates employees through competition. Employees focus their efforts toward a defined goal and completing the most tasks accurately, efficiently, and quickly. Tasks are clearly defined, there is little collaboration, and individuals are responsible for their own productivity. The end goal of a market culture is to maximize profit. Market culture suits many introverts who shy away from collaboration and like to be self-sufficient.

Clan culture

Clan culture is relaxed and mirrors the habit of a large family or clan. The culture is collaborative and friendly. Employees have many commonalities and form bonds of loyalty and tradition. They work in support of one another, and the strong relationships serve as motivation for career and project success. Employees tend to refer to the atmosphere as a “home” and employee turnover is reduced. Although it can be difficult to feel a part of the group for newcomers, this culture is welcoming and satisfying for those who prefer to work in teams.

Adhocracy culture

The root of the word, “ad hoc,” is Latin for “to this.” An adhocracy culture is collaborative and employees work together facing challenges at a team. The culture places an emphasis on creativity, innovation, industry, and cultivates a work environment that is dynamic. Individuals are encouraged to take risks and create new methods. This atmosphere is best for people who are nonconformists and work best on their own schedule.

Hierarchy culture

There are strict and long-established procedures in a hierarchy culture. Employees typically familiarize themselves with the handbook immediately, and leadership emphasizes company procedures. Corporate initiated protocols are used to resolve issues and operate consistently. Hierarchy culture values uniformity and uses strict standards to measure productivity. This structure suits individuals who thrive in structured environments and function with rules.

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Organizational culture is important because it is the driving force behind employee behavior and relations. It is key in determining the future, success, and company direction. It reflects the organizational identity, determines individual actions, affects professional relationships, and employee freedom. Aspects that reveal company culture are:

• How leadership views and treats employees and customers.
• Chains of command.
• Communication systems and processes.
• The input employees have in company decisions.
• Employee work ethic.
• Diversity and inclusion.
• Fair opportunities for advancement.

Learn more: What Aspects of Company Culture Matter Most for Your Next Job

The organizational climate is the pervading feeling or emotions associated with the particular work environment. Climate is influenced by leadership, the type of language used in interactions, and can change often based on the quality of interactions and the types of events. The organizational climate is your perception of your work environment. The strategies leadership uses to motivate, accessibility to company information, daily obstacles to work performance, structure of the organization, and employee recognition impact company climate.

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Organizational climate is important because it represents your company and mission, and affects employee morale. A positive organizational climate is motivating, optimistic, can help in overcoming obstacles, and increases employee productivity. Aspects that shape company climate are:

• Level of motivation.
• Delegation of responsibilities.
• Leaderships styles.
• Performance evaluation process.
• Attitudes at work and toward requirements.

Learn more: Common Leadership Styles and How to Improve Yours

Although many companies and hiring managers use the phrases company culture and organizational climate interchangeably, it is important to note the differences so you can understand the reasons behind company employee behavior and decide if they are a right fit for you.

Company culture characteristics

These characteristics are unique to company culture.

• Culture is abstract. Company cultures are embedded belief systems held by employees and leadership. They are passed down and reveal themselves through policy and unwritten expectations.
• Difficult to change. Because it is composed of abstract regulations that govern behavior, company culture is static and very difficult to change. A positive culture attracts new talent, but if company culture is unhealthy, there will be considerable employee turnover and transfers.
• Governs employee behavior. Much of human behavior is dictated by the established norms of the community. Culture will guide the interactions and affect employees’ ability to build professional relationships. A company culture that values professionalism will reveal itself through employee conduct.
• Embedded in beliefs and actions. Because it is hard to identify the embedded beliefs of a company that affect expectations and actions, it is hard to measure the effect of culture.

Company climate characteristics

The following characteristics differentiate company climate:

• Climate is based on employee opinion. Climate is the attitude employees have toward the workplace environment. Because different employees have unique experiences, the adapted attitude changes from employee to employee. If you are deciding whether a company is right for you, consider all aspects and perspectives before committing.
• Can be an emotional response. If an employee has experienced something positive, such as receiving an award for quality performance, their perspective on company climate will be positive. Coaching has become a common strategy in company’s to ensure leadership feedback fosters a positive work environment, influencing a positive employee opinion.
• It changes according to the situation. If a team is working diligently to meet a deadline and is under stress, they may feel the climate tense and uninviting. On the other hand, an office party celebrating a coworker’s promotion will be festive and inviting.
• Linked to environment. The floorplan of the physical work environment, the decorations or lack thereof, and the office furniture all communicate a type of environment. Flexible seating arrangements with bean bags and movable furniture show collaboration and comfort are important, but heavy office chairs, thick couches, and large tables indicate set structures.
• Affects productivity and performance. An organization’s climate directly affects employee job satisfaction, task completion and productivity, and job performance. If employers improve workplace climate, they can succeed in improving employee performance.

Some strategies employers will implement to improve company culture are listed below.

• Identify the established organizational climate. Leadership will focus on understanding the foundational culture to identify how that flows into climate.
• Revisit the company’s mission, vision, and purpose. Companies will stress the importance of the mission statement to show employees their individual contributions are valuable.
• Understand employee motivation. Leadership can implement motivational strategies that influence and inspire employees to work efficiently and complete tasks on time. Small incentives function as benchmarks to guide productivity.
• Clearly define responsibilities and job descriptions. Employers ensure strong communication and establish clear expectations for job performance by conducting annual evaluations and providing formative feedback throughout the quarter.
• Encourage collaboration. Encouraging employees to feel part of a team validates their work and helps employers communicate individual value for each employee.

Understanding how climate vs culture affects work environment will help you make an informed decision regarding your future work environment and career goals. Finding a leadership style and climate that fits your personality and skills will give you greater job satisfaction and help you establish yourself as a valuable employee.

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