The Relationship between Organizational Climate and Employee Perceptions of Personnel Management Practices

Article excerpt

The management process in an organization can be described as the application o certain principles and techniques to achieve organizational objectives. The tas of management can therefore be conceptualised as the achievement of specified objectives by utilising the three basic resources of money, capital and people. While these resources are to an extent interdependent, it is people that are th prime concern of the personnel management function. Personnel management is therefore that part of general management which focuses on the management of people, and involves the recruitment, selection, maintenance, development, utilization of, and accommodation to human resources by the organization (French, 1987).

In every work setting there are dozens of organizing forces operating simultaneously on the behaviour of employees (Landy, 1989). While industrial/organizational psychology is concerned specifically with the behaviour of individuals in their jobs, the understanding, prediction, and control of occupational behaviour can only be achieved through the context of the organization. It follows that any research about personnel management practice must be must be considered in the context of the organization and the effect it has on those working in that organization. One of the better known ways of studying enterprises has been to measure organizational climate.

Organizational climate is a concept that enables the industrial/organizational psychologist to identify how the organization is a psychologically meaningful environment for individual organization members (Payne and Pugh, 1976). Descriptively, it represents the individual member's perceptions of the conditions, factors, and events that occur in the organization (Ekvall, 1987). The concept is useful in attempting to diagnose problems in organizational settings. Just as the perceptions of the individual are at the centre of any clinical intervention in clinical psychology, so are the perceptions of the characteristics of the organization, by the members of the organization, centra to the diagnosis of organization's problems and dysfunctions.

Organizational climate can be viewed as that which is represented by the employees' perceptions of the objective characteristics of an organization (Landy, 1989). For example the number of managers employed by an organization i objective, but employees' feelings about those managers is subjective. Climate differs from the structure of an organization. Structure is the anatomy of the organization, the bare bones or the skeleton. Climate, on the other hand, is th way the employees view the personality of the organization. Muchinsky (1987) debates whether the components of climate are actual attributes of organization or merely the perceptions of the employees working in the organization. That most researchers concur that organizations differ by climate, implies that it could be seen as an organizational attribute. Yet such a view contradicts the idea expressed by Landy (1989) above, that climate is a representation of employees' perceptions.

Dimensions such as structure, standards and reward policies can be conceived as being made up of attribute sets that may be generated from the way organization deal with their members and environments (Hellriegal and Slocum, 1974), and are identified through the responses of employees to questionnaires (Litwin and Stringer, 1968). There is nothing inherently good or bad about an organization' climate, rather it assumes value only when it is related to certain outcomes (Muchinsky 1987). This is similar to when a wet day is "bad" for a day at the beach, but "good" for the growing of crops.

There is evidence to suggest that organizational climate can influence both job performance and employee satisfaction (Lawler, Hall, and Oldham, 1974). Unlike the weather, which is unable to be controlled, some organizational climates can be promoted to facilitate the achievement of organizational goals (Muchinsky, 1987). This makes organizational climate a worthwhile concept to study in industrial and organizational psychology, despite difficulties with its definition.

Because climate is best described as employee perceptions of the organization, it follows that the measurement of climate will be a function of employee attitudes and values. If the measurement of climate is considered to be a barometer, then the measures that the "barometer" yields will depend on the typ of barometer used. So far as weather is concerned, barometers can give a reasonably valid measure of the climate by measuring atmospheric pressure. However atmospheric pressure is only one measure of climate. Unfortunately organizational climate measures do not have this high degree of validity.

An early definition of organizational climate is Forehand and Gilmer's (1964) suggestion that organizational climate is a set of descriptive characteristics of an organization that are relatively enduring over a period of time. These characteristics distinguish one organization from other organizations and influence the behaviour of people that belong to it. This definition represents the multiple measurement-organizational approach to measurement, which is one o three approaches identified in a review of climate theory by James and Jones (1974). The other two are the perceptual-organizational attribute, and the perceptual measurement-individual attribute approaches. According to James and Jones, the descriptive characteristics arising from definitions such as Forehan and Gilmer's are measured by a variety of methods, and the attributes or main effects will include such variables as size, structure, systems complexity, leadership style, and goal direction.

The perceptual-organizational attribute approach to measurement views climate a an organizational attribute, but, unlike the first approach, is measured purely by perceptual rather than by objective measures such as the size and structure of the organization. For instance Tagiuri and Litwin (1968) agree with Forehand and Gilmer's definition, except that the descriptive characteristics are measured by the experiences of its members. In those circumstances the perceptions by the organization members of the set of descriptive characteristics, rather than the objective structural realities, constitute climate. For instance if size is taken as a descriptive characteristic, the first approach would simply measure it in terms of the specified dimensions, while the second approach would measure it in terms of the employees' perceptions of these dimensions. Campbell, Dunnette, Lawler, and Weick (1970) suggest that definitions of this sort view climate as a situational or organizational main effect.

The perceptual measurement-individual attribute approach views climate as a set of summary or global perceptions reflecting an interaction between actual event in the organization and the perception of those events. Here the emphasis swing away from actual organizational attributes to a summary of individual perceptions (Schneider and Hall, 1972). In this context, it can also be considered an intervening variable that is caused by both organizational and individual events, which in turn affects behaviour among individuals. In this sense climate can be both a dependent variable and an independent variable.

James and Jones (1974) note that these three approaches to organizational climate reflect the conceptual diversity expressed in the literature. They suggest that the concern in climate research has focused on measurement techniques rather than understanding the underlying constructs. Toulson and Smith, (1991) make a similar point in their discussion of the semantic ambiguit associated with many current constructs in industrial and organizational psychology. This diversity and contradiction has led Guion (1973) to conclude that the concept of organizational climate is "fuzzy". James and Jones suggest as a first step in reconceptualization that a distinction be made between climate being regarded as an organizational attribute (organizational climate), and as an individual attribute (psychological climate). The term "organizationa climate" would therefore include both the multiple measurement-organizational attribute and perceptual measurement-organizational attribute approaches, and the term "psychological climate" to apply to the perceptual measurement-individual attribute approach.

A distinction needs to be made between organizational climate and organizationa culture, organizational culture consists of managerial and employee beliefs and values that define the ways in which the business of an organization is conducted. In correspondence with the anthropological view that a society's prevailing culture dictates what people are to learn and how they are to behave (Luthans, 1985). An organization's culture dictates what people have to know an the ways that things are done. Core values, about how to treat employees, customers, suppliers, and others, are thought to lead to sustained superior financial performance in organizations with strong cultures (Barney, 1986).

The culture of an organization can be defined as the emergent pattern of beliefs, behaviours, and interactions that uniquely characterize the organization as it operates within an industrial and a societal context (Fombrun, 1984). It is therefore the set of important beliefs, values, and understandings that all members of the organization share in common (Kast and Rosenzweig, 1985). Since culture defines the way the organization conducts business, it strongly affects management practice. In fact organizations with strong cultures go to great lengths to socialize new members into the prevailin beliefs and values that determine the way things are done in the organization, and this may be the major feature in employee orientation and induction practices in such organizations. Highly successful organizations tend to have strong cultures (Peters and Waterman, 1982).

The measurement of organizational climate is the means to uncover an organization's culture (Desatnick, 1986). Climate surveys measure the perceptions and reactions to, the culture of the organization, as well as reactions to other organizational attributes, and the culture is reflected through its management style. Therefore climate surveys measure employees' perceptions about the way they are being managed.

A variety of organizational climate measures have been developed to measure climate in most types of organizations (Woodman and King, 1978). Litwin and Stringer's (1968) organizational Climate Questionnaire (LSOCQ) is used most frequently in business organizations. They define organizational climate as a "...set of measurable properties of the work environment, perceived directly or indirectly by the people who live and work in this environment and assumed to influence their motivation and behaviour." They called their approach to organizational climate the perceptual measurement-organizational attribute approach. Litwin and Stringer drew from the McClelland-Atkinson motivation theory (McClelland and Atkinson, 1953), and based their dimensions of organizational climate and their effects, on the need for achievement, the need for power, and the need for affiliation. They proposed that climate is made up of the dimensions of structure, responsibility, rewards, risks, tolerance and conflict. These are described briefly in Table 1.

These dimensions may actually describe the way an organization treats its employees (Campbell, Dunnette, Lawler and Weick, 1970). Woodman and King (1978) list the LSOCQ as one of the most frequently used organizational climate scales Consequently it has been the focus of much research. The scale consists of 50 items where the respondent is required to indicate strength of agreement or disagreement according to a five point Lichert-scale.

The first major review of the LSOCQ was undertaken by Sims and Lafollette (1975). Using a sample of medical professionals and support staff within a larg medical complex in the Midwest United States, they administered the original LSOCQ questions (slightly reworded to fit the medical centre environment). The results of 997 usable questionnaires were factor analyzed using the PA2 extraction and a varimax rotation (Nie, Bent, and Hull, 1970). Eighteen separat analyzes were undertaken on the data using both varimax and oblimin rotations. After an examination of the results, a six factor orthogonal solution was chosen. The factors were: general affect tone towards other people in the organization; general affect tone towards management and/or the organization; policy and promotion clarity; job pressure and standards; openness and upward communication; and, risk and decision making.

In more recent research, items from the LSOCQ have been used to measure aspects of organizational climate along with other measures (Batlis, 1980; Heller, Guestello, and Aderman, 1982). It has also been used in studies unchanged, without any anxiety being expressed about its internal consistency or strucutur (Ganesan, 1983; Mossholder, Bedeian, Touliatos, and Barkman, 1985; Putti and Kheun, 1986).

The LSOCQ has also been used in a modified form. Schnake (1983) administered a 30 item version of the LSOCQ to a sample of 8,938 non-supervisory employees of large utility, together with an 11 item job satisfaction measure. The 30 item questionnaire was factor analyzed using the same procedures as the earlier studies reported above (PA2 and varimax rotation). Again six non-trivial factor were identified, and it was concluded that the results provided evidence that job satisfaction may influence perceptions of organizational climate.

While the measurement of organizational climate is fraught with difficulties of replication and validation, there is, nonetheless, some research evidence that instruments like the Litwin and Stringer Organizational Climate Questionnaire are useful indicators of perceptions about management in organizations. Such perceptions are important determinants of behaviour in the work place and are therefore relevant for investigation.

As part of a large scale study of personnel management practices in New Zealand we considered the organizational climate as being important to the practices adopted by human resource managers. The aim of this study therefore was to establish whether there is any relationship between the way personnel managemen is practiced in organizations and the climate of organizations. Since climate deals with the perceptions that employees have about their employing organizations, it follows that the way personnel management is practiced can impact on climate.

Method

The LSOCQ was administered with another work attitude scale to a sample of New Zealanders in 40 organizations. 2,111 usable questionnaires were returned representing a response rate of 52 percent. Three measures of personnel practic were used in the study. They were the level of participation; the level of proaction; and, tone. Level of participation was selected because it is an important variable involved in personnel management practice. Some organization seem to encourage employee participation, while others prefer to follow more traditional managerial prerogatives in their management practices. Employee participation has aroused considerable interest in New Zealand, especially in the mid to late 1970's (Boxall, 1986). The need for New Zealand to become more internationally competitive, and therefore to produce products which satisfy th high standards imposed by customers and potential customers means the implementation of total quality control in many business organizations. This requires high level involvement where organizations are created in which every level of management, type of functional specialist, and people at the operator level actually participate (Boxall, 1986). If this is in fact the case then the degree to which employees are able to participate in the practices that affect them in the organization becomes an important measure of the effectiveness of personnel. Participation is needed not merely for moral or motivational reasons but more importantly for survival in world markets dominated by such producers as the Japanese and other associated competitors. In a world where innovation i a key to success, participation is particularly motivating in innovative situations (Kanter, 1985).

The level of proaction was selected because of the expressed desire of personne managers to be more proactive in the personnel management function. The difference between traditional personnel practice and contemporary personnel practice is assessed mainly in terms of how proactive the personnel function is seen in an organization. Gilbertson's (1984) research stressed the need for the personnel manager to break out of the traditional reactive "fire-fighting" mode and become more proactive, if role stress and ambiguity are to be reduced. Therefore the level of proaction in personnel practice becomes another importan variable in personnel practice.

Tone or management style was selected as the third measure of personnel practic because of the close link between the management style of the organization and the personnel management function. Purcell and Gray's (1986) typology in employee relations was used to assess tone. Boxall (1989) suggests that in response to more competitive product markets, organizations can move in one of two directions. Either they can choose to move towards building much greater employee commitment and involvement or they can choose to move towards reinforcing their control and prune labour costs and so thus make the "hard commercial decisions". The former, in Purcell and Gray's terms, means moving towards sophisticated human relations or consultative styles, and the latter towards constitutional, traditional, or opportunistic styles.

Indices of these three measures were derived from structured interviews with th senior executive responsible for the personnel management function in 40 organizations that employed the 2,111 employees who completed the LSOCQ. Each executive was to enumerate the major personnel practices undertaken in each organization.

To measure the level of participation by employees, each interviewee was asked to rate the level of participation in each practice using a four point scale from no input to high input. The mean participation score was calculated for each organization and was computed by dividing the sum of the participation ratings for each organization by the number of practices undertaken.

For the assessment of tone, each interviewee was asked to select out of five descriptions, printed on cards, the one that best describes the organization. These descriptions were based on Purcell and Gray's (1986) five predominant management styles.

The three measures of personnel practice described above were the independent variables measured at the organizational level of analysis. This meant that a measure of organizational climate at the same level for each organization using the LSOCQ needed to be derived as the dependent variable. Before undertaking this, given the fact that the LSOCQ research has highlighted difficulties with replication and validation, it was necessary to analyze the dimensions of the scale responses at the individual level of analysis.

A factor analysis of the LSOCQ was undertaken.(1) The results demonstrated the difficulties in attempting to replicate its factor structure across studies (Rogers, Miles, and Biggs, 1980). The evidence from our study suggested the operation of one large factor accounting for a quarter TABULAR DATA OMITTED of the total variance. It was therefore decided to use a modified version of the LSOCQ as a measure of overall feeling of climate including the 34 items that loaded on the general factor. These items are described in Table 2.

The alpha coefficient obtained from an Alpha reliability check (Cronbach, 1951) was .9359. This result indicated that the modified LSOCQ had a high internal consistency. The climate score was the sum total of these 34 items (with the negative items reverse scored).

Organizational practices scores and climate scores

The raw scores from the modified Litwin and Stringer scale are at the individua level of analysis. It was therefore necessary to convert these to organizationa measures, since the personnel practice measures are all at the organizational o analysis. This was achieved by computing the mean scores for the employees in each of the organizations on each of the modified Litwin and Stringer scale total. These mean scores and the standard deviations by organization are shown in Table 3.

A one way analysis of variance and the Scheffe multiple range procedure reveale significant differences between the asterisked pairs of means. These difference were significant at the .01 level.

The relationship of personnel practices to organizational climate

Pearson product moment correlation coefficients were computed to determine the relationships between the three independent personnel practice variables and th dependent variable, organizational climate. This represented a first look at th data at the organizational level. Table 4 shows the resultant correlations.

There are no significant correlations between each of the personnel practice variables and organizational climate. However a moderate relationship is indicated between tone and climate. Tone (as measured by Purcell and Gray's fiv categories of management style) is a categorical variable. The values vary from (1) traditional to (5) opportunistic. The categorical scale, in this particular variable, is in ascending order, and the obtained correlation may have been indicative of a relationship. Therefore, a one-way analysis of variance for climate and tone was undertaken. The results are shown in Tables 5 and 6.

The differences between each type of tone and climate are not significant. Thes results therefore indicate that the tone of the organization has no effect on climate.

Discussion

These results show no significant relationships between measures of personnel management practice and a general measure of organizational climate. This has some important implications for industrial/organizational psychology and human resource management.

TABLE 3: Means and Standard Deviations for organizational Climate Scores by
organizations

Org         Count         Mean          Standard         Standard
                                        Deviation        Error

1            25          89.7382        18.6297          3.7259
2            42          85.0591        16.3084          2.5164
3            19          94.7911        15.5628          3.5703
4            29          87.8621        13.5929          2.5241
5            43          96.4690        18.9789          2.8943
6            17          94.1765        13.3521          3.2384
7            46          85.1102        15.0836          2.2240
8            29          88.8171        15.2389          2.8298
9            36          97.3287        15.7140          2.6190
10           90          93.1021        14.0076          1.4765
11           71          91.0112        16.0089          1.8999
12          100          86.8461        15.9391          1.5939
13          105          79.6785        15.2236          1.4857
14           45         102.0603(**)    14.1716          2.1126
15           28          86.6429        14.8903          2.8140
16           45          91.2000        14.6870          2.1894
17           50          89.6897        15.7467          2.2269
18           70          83.3394        18.2863          2.1859
19           35          95.7680        16.9925          2.8722
20           15          81.1072        14.3006          3.6924
21           32          84.2652        19.4433          3.4371
23           67          88.9792        15.6840          1.9161
24           34          92.1176        17.3236          2.9710
25          115          86.5038        16.6093          1.5488
26           18          97.9832        16.3774          3.8602
27           17          83.4706        14.4833          3.5127
28           29          79.3971(*)     19.8286          3.6821
29           21          86.5238        10.5338          2.2987
30           42          93.2381        20.8324          3.2145
31           95          86.9582        15.1447          1.5538
32           18          99.5623        17.5030          4.1255
33           72          81.1676        18.2526          2.1511
34          124          85.8388        15.3766          1.3809
35           41          91.5626        16.6756          2.6043
37           23          67.7903(***)   18.4554          3.8482
38          103          80.6605(*)     15.3923          1.5166
39           66         101.0055(*)     15.2838          1.8813
40           93          82.2118        16.4630          1.7071
41           72          94.0866        15.8555          1.8686
42           86          85.7851        17.1086          1.8449
           2111          87.9471        17.1728           .3740

The first is that much of the theory associated with personnel management practice is not reflected in the workplace. While human resource management professionals and practitioners believe that particular personnel management practices will improve the climate of the organization, this is not shown from the results obtained in this study.

Table 4: Correlations of Practice and Organizational Climate Scores

                             Organizational Climate

Participation score                 .0958
Proaction score                     .0345
Tone category                       .3097
Table 5: Group Means and Standard Deviations

Group             N    Mean    Std Dev   Std Error     Min     Max     95 Pct

Traditional       1   79.68

Constitutional    9   85.54      9.75       3.25      67.79   102.06   78.05
                                                                       TO
                                                                       93.03

Consultative          11        89.74       5.60       1.69    82.21   99.56859
                                                                       TO
                                                                       93.02

Sophisticated    15   89.72      5.97       1.54      81.11   101.01   86.41
Human                                                                  TO
Relations                                                              93.02

Opportunistic     4   91.61      4.10       2.05      87.86    97.33   85.09
                                                                       TO
                                                                       98.54

TOTAL            40   88.72      6.90       1.09      67.79   102.06   86.52
                                                                       TO
                                                                       90.93

Management style, for example, which is often touted as having a direct affect on organizational climate, does not appear to do so in this study. Therefore it does not matter whether organizations move towards building greater employee commitment and involvement i.e. towards sophisticated human relations or consultative management styles, or, alternatively, towards reinforcing their control and pare back labour costs, taking the "hard commercial decisions" with as few constraints as possible (i.e. towards constitutional, traditional or opportunistic styles). So any style in Boxall's (1989) human relations and direct control terms will be equally viable in maintaining a competitive edge.

The measures of each of the concepts used in the study were the best available. Much of the research supporting claims that practices can affect climate are largely anecdotal, and based on single case studies (e.g. Fombrun, Tichy, and Devanna (1984). It may well be overdue to revise assumptions based on such research.

Table 6: Analysis of Variance

                          Sum Of          Mean         F           F
Source           D.F.     Squares         Squares      Ratio       Prob.

Between Groups    4       232.7240        58.1810      1.2557      .3058
Within Groups             35              621.6163     46.3319

Total                     39      1854.3403

Multiple Range Test (Scheffe Procedure) Ranges For The 0.010 Level:

                  5.59      5.59          5.59         5.59

The Ranges Above Are Table Ranges.

The Value Actually Compared With Mean(J)-Mean(I) Is..
4.8131 * Range * DSQRT (1/N(l)) + 1/N(J))

- No Two Groups Are Significantly Different At The 0.010 Level

The second major implication from this research is that concepts like employee participation, proaction, and tone could improve organizational climate, but current conceptualizations from which the measures are derived, are ambiguous and lack clarity. This provides an alternative interpretation of the results in this study. A relationship could exist between these variables, but our methods of measurement are inadequate. This problem is central to many of the research questions that confront industrial/organizational psychologists. We have alread suggested that the construct of organizational climate and its concomitant research is in a similar state to that of work attitudes, and is marked by confusion and ambiguity (Toulson and Smith, 1991). We believe that all concepts in industrial/organizational psychology which depend on the attitudes and perceptions of employees could be affected in the same way. It could well be that when employees are given a questionnaire which asks for opinions, it may b that some opinions are obtained which did not exist, prior to seeking those opinions.

It may well be the case that improved climate in one organization may not retur the same benefits in another. Different instruments are perhaps needed not just from investigation to investigation, but from location to location within the same investigation. There is value in continuing to explore and search for more measures of these concepts. For instance the distinction between the consideration of organizational climate as an organizational attribute or a psychological attribute in reconceptualization (James and Jones, 1974) is only important in terms of the particular research context that it is being used in.

In the same way, theoretical positions adopted by industrial/organizational psychologists to generate testable hypotheses, should not only address measures of employee perceptions and attitudes, but also appropriate measures of industrial relations and personnel practice (Toulson and Smith, 1991). To this extent, a possibility for further research is to utilize a number of organizations that have different ways of undertaking their personnel practices The modified LSOCQ developed in this study could be used as measure of general positive or negative feelings towards the management of the organizations, by looking at specific personnel practices that affect samples of employees.

There is no doubt that such measures of climate are useful in trying to identif the determinants of behaviour in the work place. Whether the results from their use provides the basis for improving the competitive edge in New Zealand business organizations in both internal and external markets is debatable. Beliefs that are almost accepted as truisms, like the improvement of competitiv edge can only be achieved through the enhancement of the productivity of people need empirical confirmation. If the greatest potential for adding value to the products and services of organizations is by focusing on their human resources, then the human resource function needs demonstrate this. This can be achieved through refining our concepts such that their construct validity is unquestioned.

Note

1 The technical details of this factor analysis may be obtained from the author on request.

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TABLE 1: The Dimensions of the LSOCQ

a. Structure. Structure indicates the feeling that employees have about the constraints in the group, how many rules, regulations, procedures there are; is there an emphasis on "red tape" and going through channels, or is there a loose and informal atmosphere?

b. Responsibility. Responsibility is the feeling of being your own boss; not having to double-check all your decisions; when you have a job to do, knowing that is your job.

c. Reward. Reward is the feeling of being rewarded for a job well done, emphasizing positive rewards rather than punishments; the perceived fairness of the pay and promotion policies.

d. Risk. Risk is the sense of riskiness and challenge in the job and in the organization; is there an emphasis on taking calculated risks, or is playing it safe the best way to operate?

e. Warmth. Warmth is the feeling of good general fellowship that prevails in th work group atmosphere; the emphasis on being well-liked; the prevalence of friendly and informal social groups.

f. Support. Support is the perceived helpfulness of the managers and other employees in the group; emphasis on mutual support from above and below.

g. Standards. Standards are the perceived importance of implicit and explicit goals and performance standards; the emphasis on doing a good job; the challeng represented in personal and group goals.

h. Conflict. Conflict is the feeling that managers and other workers want to hear different opinions; the emphasis placed on getting problems out in the open, rather than smoothing them over or ignoring them.

i.Identity. Identity is the feeling that you belong to a working team; the importance placed on this kind of spirit.

(From Litwin and Stringer 1968, pp.81-82).

Paul Toulson is a Senior Lecturer at Massey University, and a registered occupational psychologist who specialises in personnel management. Before his present appointment, he was employed by the New Zealand Armed Forces as both a psychologist and a personnel administrator.

Mike Smith is a Senior Lecturer at Massey University, teaching in the areas of Industrial/organizational Psychology and Human Engineering. He has published widely in areas such as a personnel selection, trainability testing, in-basket testing, computer/human interfaces, and career choice.