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How is organizational climate linked to performance?

Organizational climate is “the product of some of the underlying assumptions and is, therefore, a manifestation of the culture” (Edgar H. Schein. Organizational Culture and Leadership).

Multiple studies show that the most successful organizations embody their goals by setting the organizational climate, or the workplace environment, that will align their values and beliefs with the way their leaders and employees communicate and reach those goals. As a consequence of this alignment between the culture and the climate, organizational effectiveness is expressed by the increased performance outcomes. By ignoring the importance of the climate factor, any organization risks lowering performance and employee retention because “being in the organization then is not only an employment contract but some kind of commitment by the employee to further the organization’s purpose”(Schein, E. Organizational Culture and Leadership).

Culture and climate are not synonyms

What agile leaders can do to measure organizational goals

“Internal culture impacts all people strategy initiatives,” says Kimberly Currier, senior vice president of people strategy at North Highland Worldwide Consulting. “The culture will either support or create roadblocks to initiatives” (2020).

The first thing organizational development professionals can do is ” to help the company identify specific types of feedback they need to implement to measure business outcomes. Thus, doing a cultural analysis will help organizations develop better “measurements” of their performance. Thus, a consultant can start off by observing the existing visible “artifacts and exposed beliefs and values of this group” (Schein).

Next, analyzing employee satisfaction appears to be the core contributor to improved overall financial performance. A research report done by Glassdoor has showcased that “using a method known as an “event study, they found that “being named a “Best Place to Work” leads to a roughly 0.75 percent jump in stock returns during the ten days after the announcement”.

Another aspect that organizational leaders must pay attention to is customer satisfaction as it is a key contributor to overall business success. An example with Uber shows that widely broadcasted employee morale problems appear to have affected their revenues.

By taking the right actions to observe the visible artifacts, organizational leaders can empower their employees, not only for enabling them to exceed customer expectations. A goal-oriented culture is a strategic decision that sets the most important drivers of behavior within the climate, and agile leaders should constantly review and analyze strategic goals and adapt to the changes that occur in the business environment.

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