Thursday, May 17, 2012

Chapter Two - Organizational Climate - Definition, Studies, Measurement

Chapter Two
Literature of two distinct areas was reviewed.  First, studies about organizational climate are summarized including definitions, tools used to measure the construct, and also important findings of other researchers.  The second area of review focuses on fundraising practices.  Studies are reported that describe how the practice has been characterized and studied in the past.
Organizational Climate - Definition
Organizational climate has many definitions that have evolved over time.  What truly makes up the climate within an organization?  Many of these definitions come from the worldview of the researcher. Depending on what definition we accept and what worldview we espouse the direction (bias) a researcher brings to the research will be influenced (Puusa, 2006).  So what is organizational climate? “Organizational climate, defined as the way in which organizational members perceive and characterize their environment in an attitudinal and value-based manner (Denison, 1996; Moran and Volkwein, 1992; Verbeke, Volgering, and Hessels, 1998), has been asserted as an important and influential aspect of satisfaction and retention, as well as institutional effectiveness” (Thompson, nd).  Calahane and Sites (2008) paraphrasing James & James, 1989; James, James & Ashe, 1990; James & Jones 1974 and James & Sells, 1981 stated: “Organizational climate is a collective perception of the work environment by the individuals within a common system.” “Climate, as such, is a stable organizational characteristic that is maintained overtime and which gains considerable inertia as generations of workers come and go (Wiener, 1988)” (Calahane, et al, 2008).  “Organizational climate is a relatively ending quality of the internal environment that is experienced by the members, influences their behavior and can described in terms of values of a particular set of characteristics of the organization (Renato Tagiuri, 1968)” (Wordpress, 2008).  “Organizational climate is the set of characteristics that describe an organization and that (a) distinguish one organization from other organizations; (b) are relatively enduring over time and (c) influence the behavior of the people in the organization (Forehand & Gilmer, 1964)” (Wordpress, 2008).  Patterson, Warr & West (2004) quoting Denison 1996 described climate as “those aspects of the social environment that are consciously perceived by organizational members” (pg 193).
A very close cousin to organizational climate is organizational culture.  I believe that Deshpande and Webster (1989) provide a clear distinction between culture and climate in quoting Schnieder and Rentsch (1987)…
“climate refers to the ways organizations operationalize the themes that pervade everyday behaviors that get rewarded, supported and expected by organizations (the ‘what happens around here’).  Culture refers to the history and norms and values that members believe underlie climate (the ‘why do things happen the way they do’) and the meanings organizational members share about the organization’s imperative” (pg 5)

Another way to look at climate and culture is demonstrated in the following diagram.  The observable culture could also be the organizational climate.  This is what people (internal and external) see and thus perceive how the organization functions. 

Schneider & Snyder (1975) provide an excellent definition of organizational climate and one that aligns itself with the worldview of this researcher: 
“Organizational climate is most adequately conceptualized as a summary perception which people have of (or about) an organization.  It is, then, a global impression of what the organization is. Many different classes of events or organizational practices and procedures may contribute to the global or summary perception people have of their organization” (pp 318-319, italics mine).

Organizational Climate - Studies
There are many studies about the impact of organizational climate on organizations.  Of the studies reviewed for this research project, there are three types of organizations studied: manufacturing, retail sales and child welfare agencies.  These studies also featured topics such as productivity, effectiveness, customer perception, employee involvement and retention.  We will begin this section with a description of these studies
Johannsen, Johnson & Stinson (1976) investigated relationships between organizational climate, productivity and satisfaction among coal miners.  Kangis, Gordon & Williams (2000) looked at the electronic manufacturing sector and the knitwear and hosiery manufacturing companies.  Companies performing above or below an average will also show different climate measurements.  Corporate effectiveness was observed when the perception of employees’ of involvement in decision making, information sharing and management support was greater. 
Elankumaran (2004) studied the relationship between personality, organizational climate and job involvement with 300 workers at the floor level in two identical textile mills in India that were a part of the National Textile Corporation owned by the Government.  90 respondents were selected to receive the Organizational Climate questionnaire as the final phase of the study.  The results of this study found no significant relationship between organizational climate and job involvement or organizational climate and personality.  To increase job involvement and enhance organizational effectiveness one must have a realistic view of personality and organizational climate.
Patterson, et al (2004) studied organizational climate and company productivity: the role of employee affect and employee level at 42 manufacturing companies in the UK with employees ranging from 70 – 1150.  Organizational climate was described with five aspects that were found to correlate significantly with productivity: “concern for employee welfare, skill development, reflexivity, innovation and flexibility and performance feedback” (pg 206).  Employees that perceived their organization placing more emphasis on these aspects were more productive than others. 
Neal, West, Patterson (2005) studied whether effective human resource management (HRM) practices are contingent on organizational climate and competitive strategy among 92 UK manufacturing firms ranging from 60 – 1769 employees.  Organizational climate was measured to assess the perceptions of employees and their work environment.  Their results revealed when there is a poor organizational climate there is more correlation between HRM and productivity.  This is because favorable organizational climates had less room to show improvement since they were already functioning in a productive manner.
These studies demonstrate the strong relationship between organizational climate and productivity and effectiveness.  They also demonstrate that organizational climate is a perceptional construct.  The results of Johannsen, et al, (1976) indicated that organizational climate is positively related to productivity (pg 68).  “Climate is much more in the foreground of organizational members’ perception” (Kangis, et al, 2000, pg 533).  Kangis, et al (2000) identified a significant relationship between organizational climate variables and performance variables.  Job involvement influenced by personality and organizational climate is an important construct maximizing organizational effectiveness (Elankumaran, 2004).  Employees who allocate discretionary effort to their work rate the organizational climate as positive (Neal, et al, 2005).  Employee perception of the organization meeting their expectations were more productive than others (Patterson, et al, 2004).
Retail Sales
Rogg, Schmidt, Shull & Schmitt (2001) studied HR practices within organizations and relating those practices to measures of organizational effectiveness mediated by organizational climate.  Organizational climate then influences the attitudes and behaviors of employees and ultimately effectiveness.  This study featured 385 franchise automotive dealerships. 
Cooil, Aksoy, Keiningham & Maryott (2009) studied perceptions of organizational climate and business-unit outcomes.  They felt measuring organizational climate was critical because of the link to organizational success.  The study was with 107 superstores of a multinational retail grocer in continental Western Europe. 
In discussing organizational climate and organizational performance “employee evaluations of organizational climate have been related to the perceptions of the customers who purchased the organization’s services or products” (Rogg, et al., 2001, pg 435).  The perception of organizational climate of the organizational member influences the perception of organizational climate of the customer.  Relationships between organizational climate and customer service are statistically significant.  Variables involving customer orientation and employee commitment dimensions were significant as well.  Organizational climate and customer satisfaction are correlated (Rogg, et al., 2001).  Cooil, et al. (2009) found that a positive organizational climate is necessary for financial success but not the cause of such success.
Child Welfare Agencies
Glisson & Hemmelgarn (1998) conducted the first study stating organizational climate is a major predictor of the quality and outcomes of children’s services (pg 402).  “The research suggests that attitudes shared by employees about their work environment are important determinant’s of the organization’s effectiveness (pg 404).  This study focused on the service quality received by children placed in state custody and have been in custody for at least one year.  “Organizational climate had a positive effect on both process and results” (pg 417).  Bednar (2003) found similar results.  “Apparently employee’s perceptions of the workplace and their roles in that workplace can have an influence on client’s perceptions of services” (p 10).
Glisson (2007) cited a number of studies done by his organization that linked culture and climate to service quality, service outcomes, worker morale, staff turnover, the adoption of innovations and organizational effectiveness.  Data was collected from 97 child welfare agencies nationwide with 88 agencies meeting the study criteria.  The results of this study of child welfare systems found that those agencies with significantly better outcomes had significantly better climates.
Cahalane & Sites (2008) discussed the climate of child welfare employee retention.  Organizational factors are a major predictor of turnover.  Factors include quality of supervision, intrinsic worker fulfillment, job satisfaction from appropriate assignments, personnel policies and agency climate.  This study was with graduates of a Title IV-E program that had received funding for their education with the stipulation that they maintain employment with a sponsoring child welfare agency.  Individuals selected for the study were those who had completed their obligation.  “Employee’s interaction and experience within the organization in which they work is replicated with those who receive their services” (pg 96).
Child Welfare agencies are a particular interest to this researcher.  Glisson, et al. (1998) found that service effectiveness had more relationship to organizational climate than to system configurations.  Previous studies seemed to fail because they focused on the system configuration rather than on the dimension of organizational climate and related attitudes of service providers. 
Organizational climate was again shown to be a perceptional construct.  Glisson (2007) states that climate is the property of the individual and captures the way people perceive their work environment.  “Organizational climate is created when the individuals in a work unit, team or organizational share the same perceptions of how their environment affects them as individuals” (pg 739).  Organizational climate was also shown to impact turnover.  The results suggest that creating positive organizational climates lead to retention of highly skilled and educated employees.  Personnel issues are a significant factor in child welfare agencies (Cahalane, et al., 2008). 
In reviewing literature about fundraising, one finds much about how to have a successful fundraising event, writing a winning direct mail piece, website enhancements, telephone scripting, etc.  Sargeant (2001) is a proponent of relationship fundraising as first recognized by Burnett (1992).  Relationship fundraising is about the donor (NPF) relationship with the donor-advancement team member (NPA).  How does the NPA facilitate the NPF relationship after a donation is made?  This is a critical relationship but is not the focus of this research. 
“Donors exhibiting a high level of loyalty may develop favorable perceptions as a consequence of their relationship, or their favorable perceptions may predispose them to continuing their association for a long period” (Sargeant, 2001, pg 188).  Again, these donor perceptions are with the donor-advancement team members (NPA) and not the organization (NPO) as a whole.  As in the model presented, there is a two-way relationship between the NPA and NPF.  This relationship does create successful fundraising.  The focus of this research is that the overall organization’s climate (NPO) impacts this two-way relationship in a negative manner. 
Shapiro (2010) asked the question, “does service matter?  The value of service quality and donor perceptions of service is apparent within the non-profit sector” (pg 154).  Shapiro continued to discuss the importance of service quality and fundraising success particularly in college athletics.  The service quality is referring to the donor-advancement team member’s (NPA) quality of service to the donor (NPF).  The quality of this service can influence donor satisfaction and behavior.  A donor’s (NPF) perception of service quality (NPA) tends to lead to staying active and becoming loyal contributors.  This perception is one reason that for this project the donor-advancement team (NPA) is not considered a part of the nonprofit organization (NPO).
Arthur Brooks (2004) wrote about the effectiveness of nonprofit fundraising.  Social welfare agencies receive 12% of all individual charitable giving (pg 363).  Most donations to social welfare agencies are of the smaller on average gift as compared to educational institutions.  Since social welfare agencies depend on these smaller gifts they need more of them.  Being effective in the funding acquisition is important.  “Fundraising performance is an evaluation focus that governments and other funders will almost certainly increasingly adopt in their contracting and granting processes” (pg 364).  How is effectiveness measured?  At some point, when the last dollar spent to fundraise returns less than a dollar, is it effective?  Population, economics and demographics of the area where a nonprofit provides its service(s) also impacts what may be considered its effectiveness.  He discusses two ratios of fundraising: one that deals with what is left over after fundraising and the other in an organization’s ability to retain and target donors.  Brooks then prefers to use the Adjust Performance Measures (APM) because of its ability to account for environmental influences that may make the raw data comparisons unfair and unreliable.
Organizational Climate - Measured
In the studies cited in this research there were several different instruments used to measure organizational climate.  Some were created by the researchers.  Others used previous instruments that are proven.  Others used a mixture of these two approaches.  The instruments varied from nine items to more than 115 items.  There is no established instrument for measuring organizational climate.  Glisson (2007) cited a literature review performed by Verbeke, Volgering & Hessels (1998) where they identified more than 30 definitions for organizational climate (pg 739).  Patterson, et al. (2004) cited a 2000 study by Wilderon, Glunk & Maslowski where they identified organizational climate dimensions associated with organizational performance.  The issue was different organizational climate aspects emerged as important in each different study (p 194).  A brief description follows of the difference approaches taken.
Johannsen, et al. (1976) used a nine item tool that included organization of work, supportiveness, job satisfaction (6) and productivity.  They computed correlations between the two climate dimensions and both satisfaction and productivity.  Glisson, et al. (1998) used the Psychological Climate Questionnaire assembled by James and Sells (1981) to develop their own Children’s Services Organizational Climate Survey.  This questionnaire included versions of 10 scales used by numerous researchers over the past three decades (pg 411).  Kangis, et al. (2000) used the Perceived Work Environment (PWE) developed by Newman (1977) using 31 items in six climate dimensions.  Rogg, et al. (2001) used a 22 item survey on four aspects of organizational climate: employee commitment, cooperation and coordination, customer orientation, management competence and consistency.  Elankumaran (2004) used a questionnaire based on Likert’s Profile of Organizational Characteristics.  This tool has 51 items that cover 8 dimensions of organizational climate: leadership process used, character of motivational forces, character of the communication process, character of the interaction-influence process, character of the decision-making process, character of goal setting or ordering, character of control process and performance goals and training (pg 121). 
Patterson, et al. (2004) created their own inventory based on 17 dimensions determined to be important based on previous research and discussions with managers (pg 200).  Glisson (2007) used their Organizational Social Context (OSC) to measure organizational climate on three second order factors: engagement, functionality and stress.  Cahalane, et al. (2008) used the Children’s Services Organizational Climate Survey developed by Glisson & Hemmelgarn (1998).  This instrument uses 115 items that measure 14 domains of the work environment.  Cahalane (2008) also added to the inventory to collect demographic and other data not covered in the instrument. Cooil, et al. (2009) created their own instrument based on interviews with the research organization and employee perception questions developed by a firm specializing in employee perceptions.
Literature Review Conclusion
Each of these studies successfully related organizational climate to the outcome they were looking for.  Manufacturing companies increased their productivity, retail sales organizations increased customer satisfaction and child welfare agencies better served their clients and impacted employee retention.  There is no argument that organizational climate impacts many aspects of an organization whether they are a for-profit or non-profit organization. 
Organizational climate has a one way impact on particular aspects of an organization.  Can organizational climate cause a specific reaction in one aspect of an organization and cause another specific reaction in another aspect?  The goal of this research is to study the impact of organizational climate and a nonprofit’s ability to secure funding through its donor advancement team.  The organizational climate of a nonprofit organization (NPO) creates a specific reaction with the nonprofit funders (NPF) that is different from the specific reaction between the nonprofit advancement team (NPA) and the nonprofit funder (NPF).
Organizational climate is about perception.  “Climate is often considered largely limited to those aspects of the social environment that are consciously perceived by the organizational members” (Denison, 1996).  “Climate is internal to the extent that it is affected by individual perceptions” (Woodman & King, 1978).  Successful fundraising is about perception.  Shapiro (2010) examined studies on the nature of service and the impact of perceived service quality on donor behavior (p. 154).  “Donors who scored high in perceptions of satisfaction were 1.8 times more likely to remain active contributors” (Shapiro, 2010, p. 157). 
Organizational climate perception is more than that of the organizational members; it also includes stakeholders and the community at large.  This perceived organizational climate of the stakeholders and community at large is the influence on successful fundraising.  If this organizational climate perception is facilitated by the advancement team (NPA), then successful fundraising will be the outcome.  If this organizational climate perception is facilitated by other organizational members (NPO), then successful fundraising may not be the outcome.

Matt Johnson
Copyright 2012

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