Every organization has a particular work environment, which dictates to a considerable degree how its leaders respond to problems and opportunities. This is brought about by its heritage of past leaders and its present leaders.
Goals, Values, and Concepts
Leaders exert influence on the environment via three types of actions:
1. The goals and performance standards they establish.
2. The values they establish for the organization.
3. The business and people concepts they establish.

Successful organizations have leaders who set high standards and goals across the entire spectrum, such as strategies, market leadership, plans, meetings and presentations, productivity, quality, and reliability.
Values reflect the concern the organization has for its employees, customers, investors, vendors, and surrounding community. These values define the manner in how business will be conducted.
Concepts define what products or services the organization will offer and the methods and processes for conducting business.
These goals, values, and concepts make up the organization’s “personality” or how the organization is observed by both outsiders and insiders. This personality defines the roles, relationships, rewards, and rites that take place.
Roles ad Relationships
Roles are the positions that are defined by a set of expectations about behavior of any job incumbent. Each role has a set of tasks and responsibilities that may or may not be spelled out. Roles have a powerful effect on behavior for several reasons, to include money being paid for the performance of the role, there is prestige attached to a role, and a sense of accomplishment or challenge.
Relationships are determined by a role’s tasks. While some tasks are performed alone, most are carried out in relationship with others. The tasks will determine who the role-holder is required to interact with, how often, and towards what end. Also, normally the greater the interaction, the greater the liking. This in turn leads to more frequent interaction. In human behavior, its hard to like someone whom we have no contact with, and we tend to seek out those we like. People tend to do what they are rewarded for, and friendship is a powerful reward. Many tasks and behaviors that are associated with a role are brought about by these relationships. That is, new task and behaviors are expected of the present role holder because a strong relationship was developed in the past, either by that role holder or a prior role holder.
Culture and Climate
There are two distinct forces that dictate how to act within an organization: culture and climate.
Each organization has its own distinctive culture. It is a combination of the founders, past leadership, current leadership, crises, events, history, and size. This results in rites: the routines, rituals, and the “way we do things.” These rites impact individual behavior on what it takes to be in good standing (the norm) and directs the appropriate behavior for each circumstance.
The climate is the feel of the organization, the individual and shared perceptions and attitudes of the organization’s members. While the culture is the deeply rooted nature of the organization that is a result of long-held formal and informal systems, rules, traditions, and customs; climate is a short-term phenomenon created by the current leadership. Climate represents the beliefs about the “feel of the organization” by its members. This individual perception of the “feel of the organization” comes from what the people believe about the activities that occur in the organization. These activities influence both individual and team motivation and satisfaction, such as:
• How well does the leader clarify the priorities and goals of the organization? What is expected of us?
• What is the system of recognition, rewards, and punishments in the organization?
• How competent are the leaders?
• Are leaders free to make decision?
• What will happen if I make a mistake?
Organizational climate is directly related to the leadership and management style of the leader, based on the values, attributes, skills, and actions, as well as the priorities of the leader. Compare this to “ethical climate”—the “feel of the organization” about the activities that have ethical content or those aspects of the work environment that constitute ethical behavior. The ethical climate is the feel about whether we do things right; or the feel of whether we behave the way we ought to behave. The behavior (character) of the leader is the most important factor that impacts the climate.
On the other hand, culture is a long-term, complex phenomenon. Culture represents the shared expectations and self-image of the organization. The mature values that create “tradition” or the “way we do things here.” Things are done differently in every organization. The collective vision and common folklore that define the institution are a reflection of culture. Individual leaders, cannot easily create or change culture because culture is a part of the organization. Culture influences the characteristics of the climate by its effect on the actions and thought processes of the leader. But, everything you do as a leader will effect the climate of the organization.