On the other hand, organisational climate is often described as the “mood” of an organisation. So the climate is ‘How we feel about how we do things around here.’
While there is some overlap between organisational culture and organisational climate, they are different concepts. Organisational culture is more deeply ingrained and enduring, while organisational climate is more situational and subject to change. In addition, organisational culture tends to be relatively stable over time. In contrast, external factors and organisational changes can influence organisational climate.
Culture and climate are essential in understanding an organisation’s working environment. They can significantly impact employee behaviour, attitudes, and performance.
Recent research by the McKinsey Global Institute emphasizes the critical importance of attracting and retaining talent . Companies that excel in developing and managing their workforce, known as "people and performance winners," gain a long-term competitive advantage. These winners demonstrate more consistent earnings, greater resilience during crises, and lower attrition rates than their peers.
The study highlights key findings in this regard. Firstly, companies that successfully build human capital have more consistent earnings than sector peers and greater resilience during crises. They also excel in retaining talent, with attrition rates five percentage points lower than those of their peers. Additionally, some organizations simultaneously prioritize talent development and achieve top-tier profitability, becoming large-scale superstars across various sectors.
Furthermore, companies that combine people and performance success have a distinctive organizational signature. They challenge and empower employees while fostering bottom-up innovation, activating human capital and creating a competitive advantage. As a result, these people and performance winners are significantly more likely to remain in the top quintile of their sectors regarding return on invested capital (ROIC) for extended periods.
Investing in people's development benefits not only the organizations but also the employees themselves. Skills acquired on the job contribute substantially to an individual's lifetime earnings. As a result, companies focusing on building human capital are more likely to propel their employees into higher earnings brackets throughout their careers.
However, the research also highlights several issues that need attention. The Great Attrition, where employees leave their jobs, affects workers at all levels and across various income brackets. No role, level, or industry is immune to this trend, which is expected to continue. Moreover, the traditional perception of work is changing as alternative employment opportunities, such as being an Uber driver or social media influencer, have emerged. This creates additional competition for employers seeking talent.
There is also a disconnect between employers and employees. Employers primarily attribute employee departures to better job prospects, compensation, and work-life balance. However, employees express different reasons, such as feeling undervalued by the organization or their managers and lacking a sense of belonging at work. Employees seek greater emphasis on relational factors in their work experience.
In conclusion, the research emphasizes the critical role of attracting and retaining talent in organizations. Companies can gain a long-term performance edge and maintain a competitive advantage in the evolving labour market by developing and managing their workforce effectively, addressing employee expectations and needs, and fostering a sense of value and belonging.
This is key to creating a resilient delivery culture.
 The State of Organizations 2023: Ten shifts transforming organizations