Impact of Organizational Climate on Organizational Performance - Essay Example

? Impact of organizational climate on organizational performance Table of Contents Introduction 3 Background of the Study 3 Analysis 4 Conclusion 9 Recommendation 9 10 References 11 Introduction Organizational climate is something that is felt or sensed rather than something that is identified cognitively. Organizational climate is actually a set of attributes that can be perceived about a certain organization and the subsystems of the organization. It is a collective view of people within the organization. All in all the organizational climate of a company includes both internal and external organizational environmental factors (Buchanan and Huczynski, 2010, p. 221). With the increase in competition and frequent changes in the external environment, organizations round the globe are to build up a healthy organizational climate to attract, motivate and retain the human resources; because the organizations round the globe have started to understand the fact that human resource of a company is the biggest asset. Organizational climate is actually a reflection of the organizational culture and hence organizational climate tends to have major impact on the overall performance of an organization. Background of the Study In order to describe the impact of organizational climate on the overall organizational culture a multiple case study approach would be used in this study. One of the companies chosen would the digital giant Google and another company would be the company which signified sound and melody through its products-HMV. In order to analyze the impact of organizational climate on organizational performance various motivational and business theories has been used over the course of study. Analysis From the humble beginnings in 1998 in a small garage Google Inc has become one of the largest companies in the world. One of the major keys to the success of the company has been the organizational climate. Google is quite famous for having a rather informal organizational culture as one of the main organizational positioning statement of the company happens to a person can be serious even without a suit. Google also believes that work should be challenging and challenge should be fun. Google also has a relatively flat organizational structure. There are no official channels of hierarchical communication and hence various ideas can flow from one group to another. Google also does not believe in creating large organizational groups. Rather the company focuses on creating small groups consisting of some self driven individuals. Such groups are usually monitored by project managers. One of the most unique organizational cultures of Google happens to be one individual can change group and move to another group without even consulting he superiors (Buelens, Sinding, Waldstrom, Krietner and Kinicki, 2011, p.223). The above information can be analyzed by using the Douglas Mc-Gregory’s X and Y theory of motivation. The X theory advocates that employees are lazy and avoid responsibility; hence the employees need to be constantly threatened and monitored to get the job done. On the contrary Theory Y believed that employees are self reliable and if given the proper opportunity and environment employees would practice self responsibility and hence very little monitoring is needed. Based in the above information it can be easily seen that Google follows theory Y. The management and the leadership show trust on the employees and this instils confidence in the employees resulting in overall improvement of the organizational performance (Mullins, 2010, p. 331). The management team of Google believes in providing best possible benefits to the employees. Also the company seeks to get rid of any probable things which may cause hindrance in the performance of individuals and the organization. For example the management of the company provides top class facilities in the form of laundry services, gym, community buses, car washes etc. One Schmitt, the present CEO was found quoting that the employees would love to work; but it is not so sure whether the employees would like to work on laundry or not. The above information of the company can be analyzed by using the Herzberg’s two factor theory. The two factor theory invented by Herzberg mainly focuses on two main factors. These two factors include outcomes that may lead to higher levels of motivation and satisfaction in job. On the other hand the other set of outcomes are those that may cause obstacles in the progress of individuals and lead to dissatisfaction (Maylor and Blackmon, 2005, p. 209). From the above analysis it can be seen that the Google management looks to get rid of any factors that causes hindrance in the performance of the employees and looks to focus on improving the factors which would increase the level of motivational and job satisfaction among the employees leading to a healthy and productive organizational climate. While continuing the discussion of the unique organizational culture of Google, along with the healthy compensation provides the best of perks, insurance, vacations and packages to the employees. One of the most important motivational schemes used by the company is the rewards. A few years back the company has a figure of profit over $209,624 per employee; this happened to be more than other tech companies like Apple, Microsoft, Intel, etc. Above information can be analyzed through McClelland's Theory. McClelland's Theory of motivation advocated that a people have three basic needs such as the need for power, affiliation and achievement. The healthy monetary and non monetary benefits provided by Google helps the employees to feel a sense of affiliation, achievement and power (Simons, 2011, p.275). Google is also often praised over respecting the personal lives of the employees. The company understands that each and every individual has a personal life and it is important for the employees to spend time with the families. Such policies of the company lead to a happy, satisfied and most certainly motivated employees. Such policies of the company can be assessed by using the Abraham Maslow’s theory of motivation. Maslow’s hierarchy of needs consist of four levels of needs in the form of; basic needs, safety needs, social needs, esteem needs and self actualization Among these, the policy of Google to respect the family life of a company comes under the social needs or love needs. If Google would not allow an employee to take some time off in the form of vacation it would be hurting the love or social needs of an employee which may lead to a de-motivated employee (Boxall and Purcell, 2007, p. 131). So far it has been seen that how the internal organizational policies of Google has helped the company to develop a healthy organizational climate which has lead to Google becoming one of the most successful global companies. However, it is also important for companies to understand the impact or external organizational factors; failing to do so can hurt a company badly. One of the classic examples would be His Master’s Voice. In the early days HMV through its wide and quality range of products enjoyed great success in the global markets. But the rise of the digital medium meant that people can use internet to download songs from internet. As a result the company started to incur losses. Instead of looking to become more familiar with digital medium the company decided to cut down employee benefits and thus lead a set of de-motivated employees and an un-healthy organizational climate. As a result the giant store of the company collapsed and on January of this year the company was bought by Hilco (Redman and Wilkinson, 2006, p. 131). Conclusion To conclude things it can be said Google has done wonderful job of creating an organizational climate which has lead to a set of self motivated individuals who love their job. The rather informal approach of the company backed by healthy monetary and several non monetary benefits have helped the company to motivate the employees and create a sense of belongingness and achievement among the employees. It shows how important it is for an enterprise to develop a healthy organizational climate as it tends to have major impact on the performance of a company. On the other hand it can be seen that how just like internal environment the external environmental factors are also to be respected by the company; as those actors are critical in developing a healthy organizational climate. HMV as a company failed to cope up with digitization and as a result had to incur losses. To combat the financial crisis the company had to cut down on the employee benefits leading to a set of de-motivated employees. Recommendation For Google it would be all about carrying out the good work; as according to a study conducted by Fortune it has topped the list for the hundred best companies to work for. For HMV though things would be different. The main focus for the new owners would be developing a healthy organizational climate to improve the morale of the employees of HMV, which would on a down wards spiral. Also it would a phase of organizational change. Therefore it is suggested that Hilco may decide to follow the Kurt Lewin’s three stage model of organizational change in the form of unfreezing, change and refreezing (Boselie, 2010, p. 299). References Boselie, P. 2010. Strategic human resource management: a balanced approach. London: McGraw Hill. Boxall, P. and Purcell, J. 2007. Strategy and human resource management, London: Palgrave Macmillan, 2nd edition Buchanan, D. and Huczynski, A. 2010. Organizational Behaviour. Harlow: Pearson Buelens, M., Sinding, K., Waldstrom, C., Krietner, R. and Kinicki, A. 2011. Organisational Behaviour. Berkshire: McGraw-Hill Education Maylor, H. and Blackmon, K. 2005. Researching in Business and Management. London: Palgrave Macmillan Mullins, L.J. 2010. Management and Organisational Behaviour (9thedn). Harlow: Pearson Redman, T and Wilkinson, A. 2006. Contemporary Human Resource Management: Text and Cases (2nd ed.), Harlow: FT/Prentice Hall. Simons, R., 2011. Human Resource Management: Issues, Challenges and opportunities. Florida: CRC Press Read More