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Organizational Behavior

ORGANIZATIONAL
BEHAVIOR
GULZAR AHMED

Organizational Behavior

ACKNOWLEDGEMENT
It gives me great pleasure to express my sincere gratitude to Mr. R. Raguram for providing
me an opportunity to complete the module in Organizational Behavior at the British College
of Applied Studies.
I sincerely thank my family and friends for their guidance and encouragement in carrying out
this project work. I also wish to express my gratitude to the officials and other staff members
at BCAS who rendered their help during the period of my assignment.
Lastly, I also thank the chief assessor Department of Business Management, Mr. Bernard
for providing me the opportunity to embark in this particular field.

Organizational Behavior

TABLE OF CONTENTS
Introduction05
1. Understanding the relationship between organizational structure and culture..06
2.1 Leadership styles.34
2.2 Organizational theories43
2.3 Classical and behavioral approaches...47
3.1 Transaction and transformational leadership styles and its applicableness in
Contemporary business world..51
3.2 Identify two motivational theories and applying it for the given scenario54
3.3 Motivational theories and its usefulness for organizational managers58
4.1 Natures of groups and group behavior, within a selected organization..63
4.2 Factors that would foster and hinder development of effective
Team work within an organization66
4.3 Evaluate dominance of IT on virtual business71
Action Plan.77
Conclusion. 78
List of references.. 79

Organizational Behavior

LIST OF TABLES
Table 1 Managerial Roles ................................................................................................... 45
Table 2 Herzberg Motivational Theory ................................................................................ 60

LIST OF FIGURE
Figure 1 Amazon Revenue ................................................................................................. 74

Organizational Behavior

INTRODUCTION
In this module, Organization behavior is concerned with explaining the organization as a whole or
populations of organizations. The focus of organizational behavior is to understand the structure
and processes of organizations and how organizations interact with industries and societies.
Therefore it talks on various aspects of organizational culture and structure and further more
explains about the different ways in which organizations are lead from the industrial revolution o
the modern IT revolution. The assignment also looks at the various approach given by several
authors with regard to mangling the organization and how to motivate employees, maintain
groups effectively etc. Lastly the report will give an in-depth brief up on the importance of team
work and what hinders this process. Finally the assignment concludes with the importance of IT
in the present world acting as the core for virtual business.

Organizational Behavior

1. UNDERSTANDING
THE
RELATIONSHIP
ORGANIZATIONAL STRUCTURE AND CULTURE

BETWEEN

In the following presentation conducted by team Suhayl, on the 10th May 2015 as part of the
Organizational Behavior module. Our team was given the privelege of presenting about John
Keells Holdings PLC. We discussed in brief about the organizational structure that prevails
at John Keells Holdings and its culture followed by employee behavior. The team comprised
of Suhayl, Gulzar, Aravinthan, Shanujan, Thushaynth and Azra.

Organizational Behavior

John Keells Holdings PLC (JKH) is the largest listed company on the Colombo Stock
Exchange, with business interests primarily in Transportation, Leisure, Property, Consumer
Foods & Retail, Financial Services and Information Technology, among others. Started in
the early 1870s as a produce and exchange broking business by two Englishmen, Edwin
and George John, the Group has been known to constantly re-align, re-position and reinvent itself in pursuing growth sectors of the time. JKH was incorporated as a public limited
liability company in 1979 and obtained a listing on the Colombo Stock Exchange in 1985.
Having issued Global Depository Receipts (GDRs) which were listed on the Luxembourg
Stock Exchange, JKH became the first Sri Lankan company to be listed overseas. The
Groups investment philosophy is based on a positive outlook, bold approach, commitment
to delivery and flexibility to change. JKH is also committed to maintaining integrity, ethical
dealings, sustainable development and greater social responsibility in a multi-stakeholder
context. JKH is a full member of the World Economic Forum and a member of the UN Global
Compact. The holding company of the Group - John Keells Holdings PLC is based at 117,
Sir Chittampalam A. Gardiner Mawatha, Colombo 2 and has offices and businesses located
across Sri Lanka, India and the Maldives.

Organizational Behavior

Following are the industries that prevail in the organization. At John Keells Holdings it has
basically the following seven structures that is
1. Transportation
2. Leisure
3. Property
4. Consumer and food
5. Financial services
6. Information and technology
7. Others such as plantation.
In this presentation the author wishes to only talk about a selected few industries which will
be discussed later in the presentation. It is to note that JKH is a highly diversified
organization with regard to the number of sectors in various fields.

Organizational Behavior

The above diagram constructed by the author based on his understanding of the
organizational structure that persists at John Keells Holdings PLC. As mentioned earlier that
selected few sectors are taken into account while doing the presentation. The following
sectors are illustrated above with regard to their relevant internal structure.
The selected sectors are:
1.
2.
3.
4.
5.
6.

Consumer
Retail
Leisure
Transportation
Financial services
Others such as plantation

In the above drawn structure it is clear that the organization is highly complex in the form of
both functional and divisional aspects. And this is only an overview of the structure and
detailed structure will be discussed in the following slides to come.

Organizational Behavior

The four member committee is the most esteemed stakeholders in the organization that
appoints the chairman and looks into the organizations needs and wants. Hence the four
member committee comprises of the following key committees:
1. Human resource and compensation committee
2. Related party transaction review committee
3. Audit committee
4. Nominations committee

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Organizational Behavior

After the four committee member appoints the chairman, under him follows the set of group
executives namely:
1. Group executive committee
2. Group operating committee
3. Group management committee
4. Sector committee
And below them falls the different sectors, industries that are under the John Keells Holding
PLC. Along with this committee there are several other groups involved such as the group
tax, group HR, group finance etc.

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Organizational Behavior

As discussed earlier, the sectors that are to be discussed are consumer, retail, and leisure.
Transportation, financial services and others such as plantation and IT. It is to note that apart
from the functional and divisional structure that prevail over here in the above illustration.
These sectors are governed by a matrix system as well by the top management. For
example, every finance department under every product and services that come under
unique sectors are accountable to the group finance at the top management level.

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Organizational Behavior

In the above slides four important sectors are depicted along with the structure that seem
common to all the sectors. Each of these sectors has three different product or services in
various locations. Hence initially they are divided based on the divisional method in terms of
product/service and geography. Further each of these sectors has its own set of
departments i.e. marketing, finance, HR, R&D etc. and these departments have their own
set of employees that report directly to the departments which report to the sector product
who in turn accounts for the sector, which is overall governed by the group. There functional
and matrix play a vital role in running this organization successfully by meeting its needs.

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Organizational Behavior

In the above slides three important sectors are depicted along with the structure that seem
common to all the sectors. Each of these sectors has different product or services in various
locations. Hence initially they are divided based on the divisional method in terms of
product/service and geography. If we look at the Sri Lankan resorts by JKH, it is divided into
Sri Lankan resorts and Maldivian resort, under each country resort different hotels fall.
Further each of these sectors has its own set of departments i.e. marketing, finance, HR,
R&D etc. and these departments have their own set of employees that report directly to the
departments which report to the sector product who in turn accounts for the sector, which is
overall governed by the group. There functional and matrix play a vital role in running this
organization successfully by meeting its needs.

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Organizational Behavior

Hence to have a better understanding of the organization structure at John Keells Holdings
PLC. Its sectors are compared with its sector wise competitors to compare and contrast the
structures with the competitors.

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Organizational Behavior

Initially looking at the consumer and retail industries, for the consumer sector Cargills magic
is taken as elephant houses competitor and Cargills food city is compared with Keells super.
It is interesting to note that both the competitors for these two sectors are from the same
company named CT holdings PLC. Hence JKH and its competitors in the field has similar
structure in place according to their company reports.

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Organizational Behavior

When comparing and contrasting the structure between the transportation sector both the
organization that is JKH and Jetwing travels are two completely different structures. In the
John Keells model the functional and matrix system prevails. As all departments in all
sectors are governed by a unique group that is responsible for a unique set of work.
Whereas with respect to the Jetwing travels they have a common department system that is
not governed by a matrix governing body.

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Organizational Behavior

When comparing and contrasting the structure between the transportation sector both the
organization that is JKH and Commercial Bank are two completely different structures. In the
John Keells model the functional and matrix system prevails. As all departments in all
sectors are governed by a unique group that is responsible for a unique set of work.
Whereas with respect to the Commercial Bank they have a common department system that
is not governed by a matrix governing body.

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Organizational Behavior

When comparing and contrasting the structure between the transportation sector both the
organization that is JKH and Kingsbury Hotel are two completely different structures. In the
John Keells model the functional and matrix system prevails. As all departments in all
sectors are governed by a unique group that is responsible for a unique set of work.
Whereas with respect to the Kingsbury Hotel they have a common department system that is
not governed by a matrix governing body.

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Organizational Behavior

The structure followed by John Keells Holdings is more of a mixed organizational structure
(Hybrid) that vary along the organization. It has both functional and divisional structures
along with an overall matrix structure that overlaps the entire set of sectors hence governing
each sector from the group head office. To an ordinary company this structure might seem
like a ad hoc like, but when taking into account the complexity of the organization one can
easily agree on the adopted structure at John Keells.

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Organizational Behavior

Matrix structure is basically to be effective as possible for developing new activities and for
coordinating complex situations amongst the organization. Cost may be a factor in terms of
holding such a structure in place due to the immense man power that exists due to the fact
of the high number of white collar jobs. But due to the fact that the organization earns
revenue fit to run a matrix style for this structure, it is well suited here. Hence cost is
disregarded at the end of the day.

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Organizational Behavior

The culture practiced at John Keells Holdings is a performance Centric Culture. The groups
performance centric culture has not taken away the fun employees derive from work and
work environment. While an open door system exist in the organization its employees are
encouraged to find their respective balance of life and work whilst the group. At a
corporate and business level, encourage and facilitates opportunities to find that right
balance.

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Organizational Behavior

When we look at the above slides it is clear that JKH PLC follows Edgar Schein system of
artworks and color codes with an impact of theme. If we look at the leisure sector Cinnamon
group of resorts depict a vibrant culture. Each one is unique and has its own culture
depending on the geographical location of the resort. So does chaaya resorts, depict the
similar culture. Each hotel is uniquely designed with a common logo and distinct dress code
based on the theme of the resort.

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Organizational Behavior

If we look at the culture at chaaya they too reflect the same as cinnamon resorts. But the
uniqueness can be seen at the Maldivian resorts as it clearly signifies Sri Lankan culture
while blending in with the Maldivian culture.

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Organizational Behavior

Overall the JKH leisure sector in moving on to forming a common culture by the end of this
year, converting all their resorts to cinnamon brand resulting in cinnamon resorts having 14
hotel properties and over 2400 rooms under one umbrella but varying culture depending on
external factors such as the environment.

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Organizational Behavior

At the following sector a strict culture is maintained by keeping in mind about the
international relation the organization has to maintain. Furthermore it also follows the JKH
common culture of performance centric culture as well.

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Organizational Behavior

JKHs banking and insurance services have a performance centric culture with an open door
system. They too follow color theme codes and have a friendly attitude towards their
customers and within the management as well.

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Organizational Behavior

JKHs consumer and retail services have a performance centric culture with an open door
system. They too follow color theme codes and have a friendly attitude towards their
customers and within the management as well.

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Organizational Behavior

At John Keells Holdings PLC there are negative and positive aspects of the culture that
prevails in the organization not only in one but several sectors alike.

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Organizational Behavior

If we take Cinnamon Red as an example, it is found that staffs are found to be loitering in the
back drop of the lobby, at the hotel making it a sign of negative culture that is being in place.
Also it is noted that now a days employees are not benefited they way they were use to. As
the Z culture was removed and the new A/Z culture was incorporated into the organization.

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Organizational Behavior

Some of the positive aspects of John Keells Holdings are its unique culture practiced within
their organization. If we take a look at the leisure sector the hotels are renowned and of
excellent standard and they follow Edgar Schein culture with theme impact, style name and
preference. Followed by unique logos and color codes making it a culturally diversified
sector and organization. Even other sectors such as the finance, retail, consumer etc all
have their unique means.

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Organizational Behavior

Various conflicts arise at an organization, one such important conflict is resource allocation.
Where different sectors and different departments fight among each other for sufficient
resource per annum. Also there are other behavioral concepts such as OCEAN model
involved in understanding employee behavior.

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Organizational Behavior

The above slide depicts how the work was distributed among the team members in making
sure this presentation reach its success.

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Organizational Behavior

2.1. LEADERSHIP STYLES


Leadership is the ability to develop a vision that motivates others to move with a passion
towards a common goal. So leadership is a process by which a person influences others to
accomplish an objective and directs the organization in a way that makes it more cohesive
and coherent.
In this task, we will be discussing the possible leadership styles practiced in organizations
such as:

Autocratic

Bureaucratic

Democratic

Coercive

Laissez - Faire

AUTOCRATIC LEADERSHIP
Initially looking at the Autocratic leadership style, it is a classical approach where the
authoritarian leader makes decisions alone as power is centralized in one person. Decisions
are enforced using rewards and fear of punishment. It is an abusive, unprofessional style.
At an extreme level, according to Money Zine (2014,) autocratic leadership can take the form
of a dictatorship. In this situation, the leader's word is "law." The typical autocratic leader
does not involve their followers in the decision-making process. This type of leader might
resort to force, manipulation, or even threats to accomplish their goals.
PROS AND CONS OF AUTOCRATIC LEADERS
Unfortunately, there aren't a lot of positive things to say about autocratic leaders. This style
can be very stressful on fellow employees, and the work environment will oftentimes be
rather unpleasant. But like all leadership styles, there is a time, and a situation, where the
style is both appropriate and effective.
(Slide share, 2009)
CONS
1. The communication style of an autocratic leader is usually described as one way.
2. They tell their followers exactly what they want done.
3. The feedback received from this type of leader would usually be unplanned.

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Organizational Behavior
4. They would simply tell a follower when they've made a mistake.
5. The decision-making process is usually unilateral, and they accomplish goals by
directing people.
6. These attributes might not sound like the type of leader someone would follow, but
there are situations when this style is very effective.
PROS
In the workplace, some operating conditions may call for urgent action. In these cases, an
autocratic style of leadership can be the best style to adopt. Surprisingly, many individuals
have already worked for an autocratic leader, and therefore have little trouble adapting to
that style.
In times of stress or emergency, subordinates prefer an autocratic style. The autocratic
leadership style is very effective when critical business decisions or actions are needed, but
very stressful on followers or coworkers when the added pressure is no longer necessary.
1. In brief suitable in the following situations:
2. When there are new and untrained staffs.
3. Effective supervision can be provided only through detailed orders and instructions.
4. When there is limited time in which to make decision.
5. A managers power is challenged by staff.
Examples of Autocratic Leaders
While the notion of being labeled an autocratic leader might not seem flattering to most
individuals; Following are two examples of autocratic leadership styles followed by two well
known individuals. This is not to say that they exhibited this style constantly, only that these
particular individuals gained notoriety for exhibiting this style.

MARTHA STEWART
She built her empire with personal attention to every detail. Whether you admire Martha
Stewart or not she was meticulous and demanding. She was also very successful in her
endeavors, and oftentimes used an autocratic management style.
Many industry analysts might argue that it was Martha's autocratically demanding style
that allowed her to flourish in the entertainment industry, which is an extremely
competitive environment. Others might argue that even more success might have
awaited her if she had not relied so heavily on such a demanding and potentially
damaging style.
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Organizational Behavior
(Money-Zine, 2014)

HOWELL RAINES
Newspapers and companies in heavy industries often flourished under autocratic leaders
that stood watch over workers, making sure their factories kept humming. It might not be
easy to work under these circumstances, but the autocratic leadership style is certainly
efficient.
Howell Raines was the Executive Editor of the New York Times from 2001 until 2003.
Widely cited as a "hard-charging" Executive Editor, Raines was known for his policy of
"flooding the zone," using all of the New York Times' resources to cover what he deemed
were important stories.
Howell Raines is a classic example of how an autocratic style can be used successfully
in a highly-demanding industry. The daily pressure associated with publishing one of the
highest quality newspapers in the world is extreme.
(Money-Zine, 2014)

AUTOCRATIC LEADERS IN THE WORKPLACE


Finally we can conclude that, several studies suggest that organizations with many
autocratic leaders have higher turnover and absenteeism than other organizations. With
today's corporate world revolving on joint decision-making and empowerment, employees
just entering the workforce will be highly resistant to this management style.
The autocratic style should not be used when a leader wants to get their employees
engaged in the decision-making process. It's also not effective in situations where
employees might become resentful or fearful.
Finally, if a company is struggling with low morale, or is interested in building employee
relationships, an autocratic leadership style will only serve to further degrade the work
environment.
BUREAUCRATIC LEADERSHIP
Money-Zine (2014), the bureaucratic leadership style was first described by Max Weber in
1947. The bureaucratic style is based on following normative rules, and adhering to lines of
authority. The characteristics of this style aligned with Weber's description of transactional
leaders.

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Organizational Behavior
Bureaucratic leadership is one of the most prevalent forms of management today.
Bureaucratic leadership is leadership based upon fixed official duties under a hierarchy of
authority, applying a system of rules for management and decision-making.
The characteristics of the bureaucratic style include:
1. Leaders impose strict and systematic discipline on the followers, and demand
business-like conduct in the workplace
2. Leaders are empowered via the office they hold: position power
3. Followers are promoted based on their ability to conform to the rules of the office
4. Followers should obey leaders because authority is bestowed upon the leader as
part of their position in the company
FEATURES OF BUREAUCRATIC LEADERSHIP
According to Study (2015), bureaucratic leadership has the following features within it.
Fixed Official Duties
All administrative and management tasks are broken down into permanent offices that
permit clear lines of authority, responsibility and accountability. If we take a company as an
example. The company may be broken down into divisions such as research and
development, production, marketing, distribution and administration.
Hierarchy of Authority
Positions in the organization are arranged in a hierarchy where lower positions are
answerable to and under the supervision of the level above it. In a company example,
employees in the research and development division are supervised by their team
supervisors, who are under the control of their department heads. The department heads are
answerable to the vice president of the research and development division. The vice
president takes his orders from the CEO, who takes her orders from the board of directors.
Technical Expertise
Qualification for bureaucratic leadership is usually based upon the technical expertise
required to efficiently and effectively manage the management tasks. In a company
example, the vice president of the research and development division may have a
background not only in management but also software engineering.

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Organizational Behavior
System of Rules
A bureaucratic leader is subject to a system of behavioral rules and technical
rules. Behavioral rules define the scope of a manager's behavior and constrain his conduct,
while technical rules control how work is to be performed and how decisions are to be made.
For example, the vice president of research and development of a company is subject to
behavioral rules that only permit him to manage his division. He may not direct the activities
of any employee of another division such as the production division. Moreover, he is subject
to technical rules that require him to go through a much formalized process when requesting
funds for a new project. He is also subject to the company's employment policies relating to
personal conduct.
Written Documentation
The organization maintains written records of all rules, decisions and administrative actions.
These records will help leaders by taking guidance from the past. Written records also help
with accountability.
PROS

1. Most effective, when staff performing routine task over and over.
2. When staff need to understand certain standards or procedures.
3. When staffs are performing tasks that require handling of cash.
CONS
1. It becomes ineffective when work habits form rather hard to break, especially if they
are no longer useful.
2. Staffs lose their interest in their jobs and in their co-workers.
3. Staff do only what is expected of them no more.

For example, Slide share (2009), if we take the organization Orange Country Choppers, it is
run by the father and son team of Paul Teutul Sr. and Paul Teutul Jr. which makes custom
made American bikes/choppers. They follow a bureaucratic style of leadership.

Hence we can conclude that, this style of leadership can be advantageous in highly
regulated lines of business, and it can be an efficient management style in companies that
don't require much creativity or innovation from employees.

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Organizational Behavior
DEMOCRATIC LEADERSHIP
Democratic leadership is based on the principles of self-determination, inclusiveness, and
equal participation in the decision-making process. This leadership style is characterized by
the distribution of responsibility and the empowerment of others. Democratic leaders tend to
be empathetic listeners who encourage open communication through all levels of the
organization. Companies with democratic leaders tend to foster a positive and motivating
corporate culture, empowering employees to perform at their highest levels of capability.
These companies emphasize reward over punishment, they value teamwork, and they
encourage participative decision-making. Democratic leadership is most appropriate when
managing an experienced and professional team of employees. Industries that lend
themselves to a democratic leadership style include those that leverage creativity and
creative problem solving, Mars (2009).
As per Slide share (2009) Democratic leadership breaks down, however, when a group
faces a set of complex decisions, and when organizational agility is required to adapt to
rapidly changing market conditions.
For example if we look at how Nissan works,
Carlos Ghosn is a successful business leader who employed democratic leadership
principles and is credited for the remarkable turnaround of Nissan in 2000.
He is the present Chief Executive Officer, Nissan Japan. Ghosn was very reasonable while
dealing with his subordinate. He provided them challenges to perform better and at the same
time made they realized that he trusted them with their capabilities.
Carlos Ghosn believed in empowering in his employees to take decision.
He also believed that change in the organizational culture should come from the bottom level
and not from the top management, Slide share (2009).
This kind of leadership is most effective when:
1. The organization wants to keep the staff informed about matters that affect them.
2. They want staff to share in decision making and problem solving.
3. They want to provide opportunities for staff to develop a high sense of personal
growth and job satisfaction.
4. When the organization wants to encourage team building and participation.

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Organizational Behavior
COERCIVE LEADERSHIP
The coercive leader was first described by Daniel Goleman in conjunction with the six
leadership styles defined in his theory of Emotional Intelligence.

While managers

understand the need to adapt different styles to changing conditions, the coercive style is
one that should be used with caution.
ATTRIBUTES OF COERCIVE LEADERS
Goleman uses the following phrase to summarize the style of coercive leaders: "Do as I
say." The style is most effective when an organization or group is faced with a crisis. This
can range from dealing with ineffective employees to a complete turnaround for a company
or group.
For example, if a department is having trouble with employees using unsafe work practices,
the leader might utilize the coercive style to gain immediate compliance with the company's
safety standards. A manager might also employ this style when a business unit is not
operating profitably due to wasteful practices.
PROS AND CONS
One of the advantages of using the coercive style is the leader has a great deal of control
over what's happening in their particular organization. He or she is providing direction and
demanding conformance. This works especially well when an organization is in trouble.
On the other hand, research has found this style has a very negative impact on the overall
work climate. In fact, by its very nature the coercive style is inflexible, provides little reward,
and removes from workers all responsibilities for their actions; just as long as they are
following orders.
While some workers actually enjoy being told exactly what to do each day, the majority will
find the coercive style unbearable over the long haul.
EFFECTIVELY USING THE COERCIVE STYLE
The two most important factors to keep in mind when using this style are as follows:

It's most effective when a turnaround is essential to a department's viability, or there


exists a business need for immediate compliance with an instruction or order.

This style has the most negative impact on workers, so it should only be used for a
short period of time. Once the crisis has subsided, the leader should begin practicing
a more positive approach such as the affiliate style.
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Organizational Behavior
Managers that find themselves in a situation that no longer demands the use of this style
should also consider taking steps to undo the damage it may have caused their department.
For example, the manager might want to reward the employees or followers after the crisis is
over. Another approach would be to hold a teambuilding session to help regain a feeling of
teamwork and cooperation among the members.
Examples of the Coercive Style
It's easy to recognize a situation where someone is using the coercive leadership style at
work. Words that might be used to describe this kind of individual include: relentless,
overbearing, unyielding, persistent, harsh, and ruthless.
The words that are synonymous with coercion usually leave people with a very negative
feeling inside. That's how workers feel when they report to a manager that doesn't realize
it's time to stop using the coercive style.
Hence we can come to a conclusion that, there is a time and a place where the coercive
style is extremely effective; especially during a crisis. The troubling part about this style is
when it's abused. Managers that act as if there is a crisis every day, and continue to use
this style over a long period of time, do more harm than good to an organization's morale.
Left unchecked, it can also result in degradation in employee performance.
LAISSEZ FAIRE LEADERSHIP
The Laissez Faire leadership style is a non-authoritarian type. It is a hands-off method to
managing, with the presumption that people left to their own devices to excel. As a leader
exercising this style, you have to intervene only when necessary and with a minimum level of
supervision. According to experts, this style is effective when every team member is fullgrown and has a wide knowledge in the field. It is also ideal on teams with high competence
and seniority.
COMMON LEADERSHIP STYLE EXAMPLES
One of the common Laissez Faire leadership style examples is when managers delegate
responsibility for the accomplishment of work objectives and decision-making power to their
workers. Laissez Faire leadership works well in various companies or organizations. If you
are planning to exercise the Laissez Faire leadership style examples, you have to know its
various characteristics. These include:

Little guidance from leaders.

Complete freedom for workers to make decisions.


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Organizational Behavior

Leaders offer the resources and tools needed.

Teams are expected to solve problems on their own.

QUALITIES OF LAISSEZ FAIRE LEADERS


Leaders using this style delegate their power to another person who decides everything on
their behalf. The Laissez Faire leadership examples are best suited for bigger organization
where the people with good talents are available at lower ranks. Before you follow the
Laissez Faire leadership style examples, you have to consider the desires of your teams. In
case they are not professional or if they choose more direct supervision, they will not react
well to this leadership style. However, if your teams are dependable, task-oriented, and
highly skilled, this leadership style is your best option.
This type of leadership allows each teams trained members to dream up. Through this, they
can easily recognize suitable solutions to problems and execute these decisions accurately.
As an outcome, the business prevents the cost involved in some meetings like opportunity
costs of not completing other tasks, lost customer face time, missed sales calls.
Warren Buffett, the CEO of Berkshire Hathaway and one of the worlds wealthiest people, is
widely considered one of the most successful investors of all time. He is known for making
shrewd and profitable business decisions and for being a suburb manager (Sorkin, 2011). It
comes as some surprise then that Mr. Buffett employs a hands-off management style,
which has worked extremely well for him (Stern). This style of leadership is referred to as
Laissez-Faire, or delegate leadership, and often leads to low productivity levels (Cherry).
In Buffetts case, however, this oft-maligned leadership style has had positive effects; by
allowing his managers full autonomy, he has created an atmosphere where his employees
feel confident and motivated by their extreme latitude (Stern). In Berkshire Hathaways 2010
Annual Report, Buffett states, We tend to let our many subsidiaries operate on their own,
without our supervising and monitoring them to any degree. Most managers use the
independence we grant them magnificently, by maintaining an owner-oriented attitude
(Stern).
The Laissez-Faire style can work if followers are motivated and highly skilled, but quite often,
this is not the case (Cherry). Followers that are not highly skilled, competent or good
problem-solvers often end up failing at their tasks or not meeting their deadlines (Cherry). It
would seem that Mr. Buffett has the ability to choose highly motivated and capable
managers who thrive in a results-oriented environment. By choosing whom to place his trust
in wisely, he is able to afford them the autonomy that they need to be successful.

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2.2 ORGANIZATIONAL THEORY


Organization theory is very important because if put into practice, it can affect the overall
performance of the company. It is a sociological study of formal organizations and their
interaction with the environment in which they operate. Examination of the organizational
structure and culture; the different organizational theories and management approaches;
different leadership styles and motivation theories - all of them have been developed over
the past centuries, and they are still in changing and upgrading, so that managers can
clearly understand their role in the organization and be able to respond adequately to
various changes to the operational efficiency and success.
Management theory can be defined as a collection of ideas and general rules designed to
help managers in their work The management theory helps managers know and understand
the objectives of the organization; it helps them to plan the work to achieve these goals in
the most efficient and effective manner; it helps them to understand what motivates people
and shows them how the means to do so.
There are various management theories and management approaches. The oldest once are
called classical theories. The representatives of the classical school are: Mr. Weber, F.
Taylor, Gantt H. Frank and Lillian Gilbert, M Follett, H Fayol, etc. The classic management
theories date back from the industrial revolution. They focus on work planning, unity of
command, the balance between authority and responsibility, and the adoption of a logical
and rational behavior.
There are three areas that act as pillars for good practice of management as per the
organizational theories suggest. They are the functions of management, managerial roles
and nature of managerial authority.
FUNCTIONS OF MANAGEMENT
In the management five major functions occur for a management to succeed in its goals.
These functions act as the basic layer for any organization to function, since it carries out the
basic duties of a good management in practice. Following are the listed five functions of
management.
Planning
The planning function of management controls all the planning that allows the organization
to run smoothly. Planning involves defining a goal and determining the most effective course
of action needed to reach that goal. It involves flexibility, as the planner must coordinate with
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Organizational Behavior
all levels of management and leadership in the organization. Planning also involves
knowledge of the companys resources and the future objectives of the business, Chron
(2014).
Organizing
The organizing function of leadership controls the overall structure of the company. The
organizational structure is the foundation of a company; without this structure, the day-to-day
operation of the business becomes difficult and unsuccessful, making it the basic function of
management. Organizing involves designating tasks and responsibilities to employees with
the specific skill sets needed to complete the tasks. Organizing also involves developing the
organizational structure and chain of command within the company, Chron (2014).
Staffing
The staffing function of management controls all recruitment and personnel needs of the
organization. The main purpose of staffing is to hire the right people for the right jobs to
achieve the objectives of the organization. Staffing involves more than just recruitment;
staffing also encompasses training and development, performance appraisals, promotions
and transfers. Without the staffing function, the business would fail because the business
would not be properly staffed to meet its goals, Chron (2014).
Coordinating
The coordinating function of leadership controls all the organizing, planning and staffing
activities of the company and ensures all activities function together for the good of the
organization. Coordinating typically takes place in meetings and other planning sessions with
the department heads of the company to ensure all departments are on the same page in
terms of objectives and goals. Coordinating involves communication, supervision and
direction by management, Chron (2014).
Controlling
The controlling function of management is useful for ensuring all other functions of the
organization are in place and are operating successfully. Controlling involves establishing
performance standards and monitoring the output of employees to ensure each employees
performance meets those standards. The controlling process often leads to the identification
of situations and problems that need to be addressed by creating new performance
standards. The level of performance affects the success of all aspects of the organization,
Chron (2014).

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Organizational Behavior
MANAGERIAL ROLES
As a manager one may have to fulfill different roles every day. For instance apart from
leading a team you might have to resolve conflict, come to negotiation represent the
department etc. hence one is constantly switching roles and tasks.
According to Mintzberg he devised the ten management roles which divides initially into
three categories and further subdivides into 10 roles that a manager plays in an
organization.
Table 1 Managerial Roles

Category

Roles

Interpersonal

Figurehead
Leader
Liaison

Informational

Monitor
Disseminator
Spokesperson

Decisional

Entrepreneur
Disturbance Handler
Resource Allocator
Negotiator

If we discuss the managerial roles form the category point of view we get a clear picture as
to how a manager needs to act or role play during his role as a manager in the operational
level.
As an interpersonal person he needs to be responsible, provide leadership and
communicate within his network. Hence acting as a figurehead, leader and liaison. Secondly
as an informational role player he needs to monitor about the organizations performance and
look for relevant changes. He should be able to communicate potentially to his colleagues
and represent the organization at major events and meetings. Lastly as a decisional role, he
needs to act innovative handle conflicts within the organization allocate resources as and
when needed in the right proportion and be able to negotiate in an assertive manner. Hence
Managerial role plays a vital role in good and effective practice of management.

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Organizational Behavior

NATURE OF MANAGERIAL AUTHORITY


At the most general level, business personals in the management level in concerned with the
process of influencing other people so as to bring about changes in their attitudes and
behavior through the concept of managerial authority. The ability to exert influence depends
on the type of and amount of power the leader posses. A persons position in an
organization gives them authority and comprises legitimate power, especially when followers
accept the leader has the right to direct them.
Hence, authority can act as a legitimate power. Therefore this legitimate power comes from
three basic authorities namely charismatic, traditional and regional authority. All these styles
of authorities emphasizes that personality, status and strength are the basic pillar that hold
up a managerial authority in a management.
Hence we can conclude that all of them have been developed over the past centuries, and
they are still in changing and upgrading, so that managers can clearly understand their role
in the organization and be able to respond adequately to various changes to the operational
efficiency and success of the management.

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Organizational Behavior

2.3

CLASSICAL AND BEHAVIORAL APPROACHES AND THEIR


APPLICATION TO SELECTED ORGANIZATION

Classical management theory and human relations theory represent two views of
management on the opposite ends of the spectrum. One view focuses on looking at workers
solely as a means to get work done, while the other focuses on developing an organization
and the behaviors and motivations of employees. Most managers find that a combination of
the two theories serves them best in their businesses.
CLASSICAL APPROACH
Classical approach forms the foundation for the field of management. These approaches
suggest the following means of sub approaches put forward by several scholars:
1. Scientific management
2. Administrative theory
3. Bureaucratic management
Scientific management:
FW Taylor put forward the idea that workers are motivated mainly by pay. His Theory of
Scientific Management argued mainly that workers do not naturally enjoy work so need close
supervision and control.
Taylors methods were widely adopted as business saw the benefits of increased
productivity levels and lower units costs. Taylors approach has close links with the concept
of an autocratic management style, as managers take all the decisions and simply give
orders to those below them.
Limitations of scientific management were that it did not focus on the management of an
organization from a managers point of view while ignoring the human desires for job
satisfaction.
Bureaucratic management:
Max Weber put forward the bureaucratic system which dealt with work specification and
division of labor. It had abstract rules and regulation. Impersonality to managers.
According to Money Zine (2015), Bureaucratic leadership is one of the most prevalent forms
of management today. Bureaucratic leadership is leadership based upon fixed official duties

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Organizational Behavior
under a hierarchy of authority, applying a system of rules for management and decisionmaking.
The characteristics of the bureaucratic style include:
1. Leaders impose strict and systematic discipline on the followers, and demand
business-like conduct in the workplace
2. Leaders are empowered via the office they hold: position power
3. Followers are promoted based on their ability to conform to the rules of the office
4. Followers should obey leaders because authority is bestowed upon the leader as
part of their position in the company
Limitations of this system were that they are not universally applicable to todays complex
organizations due to the fact that principle characteristics of bureaucracy changes in the
global environment. Nevertheless it is well suited for factories that have a high number of
blue collar workers.
BEHAVIORAL APPROACH
Human relations theory:
Elton mayo believed that workers are not just concerned with money but could be better
motivated by having their social needs met whilst at work. He introduced the human relation
school of thought, which focused on mangers taking more of an interest in the workers,
treating them as people who have worthwhile opinions and realizing that workers enjoy
interacting together.
Mayo conducted a series of experiments at the Hawthorne factory of the western electricity
company in Chicago. He isolated the groups of people and studies the effect on their
productivity levels of changing factors such as lighting and their working conditions. He
expected to see productivity levels decline as lighting and other conditions became
progressively worse.
From this study which had several other tests, mayo concluded that workers are best
motivated by:

Better communication between managers and workers, as Hawthorne workers were


consulted over the experiments and also had the opportunity to give feedback.

Greater manager involvement in employees working lives as Hawthorne workers


responded to the increased level of attention they were receiving.

Working in groups or teams, as they did not previously work in teams.


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Organizational Behavior
Hence in practice therefore business should re-organize production to encourage greater
use of team working and introduce personal departments to encourage greater manger
involvement in looking after employees interest. His theory closely fits with a parentalistic
style of management. And well suited for service sectors of the present day.
Considering the given two organizations at hand that is Dialog Axiata PLC and Cargills
Ceylon PLC. They are two entirely different organizations with different type of operation.
Dialog is a service organization where as Cargills is a manufacturing cum production
organization.
Firstly looking at Dialog Axiata PLC, it is a well reputed and leading service oriented
organization in its sector and ranks among the top PLCs in the country according to LMD
rating of 2014.
According to Dialog Axiatas annual report (2014), it clearly depicts the organizational
behavior within its organization. Since the early 2000s the organization has been strictly
following a behavioral approach where, high importance are given to employees. The
organization considers the personality and attitude of the employees as it plays a vital role in
the organizations success as employees are in constant and direct contact with their
customers.
Employees working at dialog has a high end office, with the latest technologies incorporated
into them. Furthermore, the organization has laid out several employee benefits that include
special discounts at the organization and other institutions, starting form hospitals to
department stores. All of this is done in par with Elton Mayos theory of human relation.
It is interesting to note that social relationships are at the heart of the organizational behavior
effectiveness on the well-being of workers. Over here it seems that workers communicate
opinions, complaint, suggestion, and feelings to increase satisfaction and production. Also it
is to be noted that employees are motivated as well in this system of behavioral approach as
a means to encourage employees to climb the corporate ladder and at the same time fulfill
their basic needs and several other needs in life.
When organizations like Dialog offer such behavioral approaches relating to human relations
theory, it is clear that these types of organization cannot remain in the industry if this type of
approach is not practiced as it is vital for service oriented organizations to keep its
employees satisfied and run the business effectively at the same time. Since job roles in the
sector involves people rather than machines in some other sector such the Cargills PLC,
mentality of the employees are vital for the organization. A healthy mentality will lead to a

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Organizational Behavior
healthy industry at the end of the day hence social behavior of the employees should be kept
in mind and the author would like to conclude that behavioral approach is well suited for
Dialog Axiata PLC.
Secondly if we look at Cargills PLC, which again is a well reputed and listed organization
according to the Colombo Stock Exchange, it is a Manufacturing cum Production Company
where it maintains a high number of employees in factories, which is categorized as blue
collar jobs.
According to Cargills annual report (2014), they maintain a classical approach in this sector
of manufacturing and production because of the required output from this sector. If we look
at the industry closely, it is noted that the organization is dependent on the workforce and
final output of products. Overall the employees needs are nevertheless regarded in this type
of industry as the workers in this sector only look for the basic needs of job and pay.
In this industry the classical approach is well suited. As two different types of management
are involved in this sector with regard to classical approach i.e. scientific approach and
bureaucratic approach.
To be accurate a hybrid form of both scientific and bureaucratic structure is in place. The
employees are run with a strict order that dwells in the form of rules and regulation. If the
rules are broken they are punished if not, they remain as they are. Though rewards may
exist it is quite rare. But best employee of the month is a way to motivate the employees in
this type of industry which is in contrast to the system the follow. Hence we can also say
that it has an influence of transactional leadership approach as well but not entirely, just a
few aspects of it.
Therefore we can conclude that, the organizations taken into consideration are well suited
with the suggested type of management approach. And both type of approach are available
even now in practice but effective in different sectors and type of job performed and
mentality of the employees.

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Organizational Behavior

3.1

TRANSACTIONAL AND TRANSFORMATIONAL LEADERSHIP


STYLES AND ITS APPLICABLENESS IN CONTEMPORARY
BUSINESS WORLD

Number of Leadership theories evolved on the basis of Trait, Behavioral, Transformational,


Situational, and Charisma. Researchers and thinkers made efforts linking some of the
theories across these leadership islands. But each model has its own pros, cons,
assumptions & limitations. Hence this report briefly discusses about the transformational and
transactional type of leadership style with real world examples.
TRANSACTIONAL LEADER
In a convergent state, the organization is operating under stable conditions. This gives rise
to a transactional style of leadership which aims to optimize performance through
incremental changes to existing organizational policy and structure.

Contingent reward good performance rewarded, achievement recognized.

Active management by exception searches for deviations from rules or standards,


corrects behavior.

Passive management by exception corrects only where standards are unmet.

Laissez-faire decision making avoided.

Hence through this kind of leadership it clearly defines the roles and expectations from the
leaders to the followers. The style also ensures that culture within an organization is
maintained, with the rules strictly followed as well as the behavioral norms.
From a business point of view this may seem to be effective from the above mentioned point
of view and prove to be quite useful, especially in industries that are much involved in
manufacturing or producing goods. One good example could be a garments factory where, if
an employee works per the instructions given they are rewarded. But on the other hand if all
employees comply with this reward scheme by performing well and producing a higher
number of units for a given period of time can result in the organization rewarding every
individual. This in turn can increase the business expense though it makes higher revenue
due to higher production.
Example An example of a transactional business leader is Sir Alan Sugar, who tends to
make gradual changes to his business over time, rather than attempting radical change. He
will not attempt to intervene unless the situation demands it (CIMA global, 2015).

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Organizational Behavior
TRANSFORMATIONAL LEADER
On the other hand transformational leadership model in which the leader works as a model
and a motivator, encouraging the followers to work not because of an exchange of values
but for the love of their work. The transformational leader encourages his followers to love
their craft and value their own input, making a positive change towards being future leaders.
This style presents a leader who inspires followers, knows his followers by strength and
weakness to assign them the right jobs and challenge them to work at the best in their field
of expertise (CIMA global, 2015).
Hence transformational leaders are:

Charismatic provides vision, has mission, is respected and trusted.

Inspires communicates high expectations, explains purpose but in simple ways.

Intellectual stimulation values intelligence, rational thinking, problem solving.

Individual attention personal attention, coaches and advises employees.

To look at how transformational leadership styles effectiveness and impact in todays


business world, lets look at the famous Virgin Company run by Sir Richard Branson.
According to Dr. Chaitanya Niphadkar (2014), Virgin group is fast growing organization with
the virgin brand encompasses a variety of business from airlines to bridal wears, from mobile
phones to pension plans and not to forget, music as well. It probably is the only brand in the
world that transcends such a vast array of products and services. And all this achievement
brought in by virgin group is due to its leader Richard Branson and his transformational
leadership style.
While other entrepreneurs may get involved in corporate quarrels Richard Branson thinks
business challenges as a campaign. Though Virgin staffs are paid less than the market rates
yet they are happy to work for Virgin because they find themselves to enjoy being in the
team. This is in contrast to the fact that employee retention has become a major issue at
modern day HR and organizations.
Bransons style of leadership doesnt regard money as a measure to retain employees but
the work culture; that everyone feels proud to be the part of the Virgin family, which stops
them from moving to other jobs even though it may provide them some salary hike.
Moreover, Branson believes business should be fun. His own appetite for work and the
success of his business ventures rests on this belief. Going to the office at Virgin isnt the
same that one usually thinks of. It is rather an excitement and similar to play ones favorite
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Organizational Behavior
sport; that does has challenges but the desire to win is more important than the pains. In this
sense, Branson inspires people, creates an exciting work culture that motivates people and
makes them want to deliver their best. His adventurous spirit and confidence that no
mountain is too high is infectious. The sense of fun, excitement and challenge keeps Virgin
employees happy. Leading with self-example, Branson inspires his staff.
Virgin sales and profit levels are far above the industry standards. Branson wants and
expects his people to do their best to achieve the goals he sets for them. Doing the
impossible, possible is rooted in the Virgin culture. It is a way of life than a job.
As per Forbes (2012), one of the important qualities of Bransons leadership style is not
expecting people to follow blindly but giving them liberty to think and freedom to create. He
dominates the team by being the most enthusiastic party animal. Thus, challenged and
exhilarated by the Virgin philosophy, people are moved. One of Bransons greatest attributes
is to initiate, then step aside and allow others to get on with it.
Hence we can conclude that different managers employ distinctly different management
styles, ranging from relatively hands-off, facilitative styles to autocratic, micromanaging
styles. Managers can also employ different motivational strategies and techniques to boost
employee performance or accomplish internal change. Transformational and transactional
leadership are polar opposites when it comes to the underlying theories of management and
motivation. Therefore in a business both these styles of leadership can work in either
effective or non effective way. But each one has its own way of managing things and
achieving success.

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Organizational Behavior

3.2

INDENTIFY TWO MOTIVATIONAL THEORIES AND APPLYING


IT FOR THE GIVEN SCENARIO

Scenario in brief:

ABC is a multinational firm from UK.

Staff and middle line managers are sourced from the local market.

Due to financial distress, they have to lay off 50 staffs and 10 middle line managers.

But the trade union of ABC is against this proposed delayer and is protesting by
slowing work, which in turn reduces the firms revenue on a daily basis.

Hence the firm promised the leader of the trade union that they are in the process of
strategically planning to overcome the problem and will recruit them back again after
the issue is sorted out.

The two ideal motivational techniques for the given scenario are Mc Gregors Theory X and
Theory Y.
Initially used Theory X
This assumes that employees are naturally unmotivated and dislike working, and this
encourages an authoritarian style of management. According to this view, management
actively intervenes to get things done. This style of management assumes that workers:

Dislike working.

Avoid responsibility and need to be directed.

Have to be controlled, forced, and threatened to deliver what's needed.

Need to be supervised at every step, with controls put in place.

Need to be enticed to produce results; otherwise they have no ambition or


incentive to work.

X-Type organizations tend to be top heavy, with managers and supervisors required at every
step to control workers. There is little delegation of authority and control remains firmly
centralized.
McGregor recognized that X-Type workers are in fact usually the minority, and yet in mass
organizations, such as large scale production environment, X Theory management may be
required and can be unavoidable. Which is also was in close parallel to FW Taylors
motivational cum leadership style.

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Organizational Behavior
Also FW Taylor put forward the idea that workers are motivated mainly by pay. His Theory of
Scientific Management argued mainly that workers do not naturally enjoy work so need close
supervision and control.
Taylors methods were widely adopted as business saw the benefits of increased
productivity levels and lower units costs. Taylors approach has close links with the concept
of an autocratic management style, as managers take all the decisions and simply give
orders to those below them.
However workers dislike this scheme as they were only boring, repetitive tasks to carry out
and were being treated little better than human machines. Firms could lay off workers as
productivity levels increased. This led to an increase in strikes and other forms of industrial
action by dissatisfied workers.
In the scenario given ABC firm gave a scientific approach to the problem that aroused due to
the fact that they were running on financial distress. Hence they came to a solution like FW
Taylor mentioned laying off some of the workers so as to cover up the cost. Hence it would
benefit the company to fall in its previous state of financial security.
Later on used Theory Y
This expounds a participative style of management that is de-centralized. It assumed that
employees are happy to work, are self-motivated and creative, and enjoy working with
greater responsibility. It assumes that workers:

Take responsibility and are motivated to fulfill the goals they are given.

Seek and accept responsibility and do not need much direction.

Consider work as a natural part of life and solve work problems imaginatively.

This more participative management style tends to be more widely applicable. In Y-Type
organizations, people at lower levels of the organization are involved in decision making and
have more responsibility. This highly spoke and regarded well the study done my Elton Mayo
Elton mayo believed that workers are not just concerned with money but could be better
motivated by having their social needs met whilst at work. He introduced the human relation
school of thought, which focused on mangers taking more of an interest in the workers,
treating them as people who have worthwhile opinions and realizing that workers enjoy
interacting together.
Mayo conducted a series of experiments at the Hawthorne factory of the western electricity
company in Chicago. He isolated the groups of people and studies the effect on their
55

Organizational Behavior
productivity levels of changing factors such as lighting and their working conditions. He
expected to see productivity levels decline as lighting and other conditions became
progressively worse.
From this study which had several other tests, mayo concluded that workers are best
motivated by:

Better communication between managers and workers, as Hawthorne workers were


consulted over the experiments and also had the opportunity to give feedback.

Greater manager involvement in employees working lives as Hawthorne workers


responded to the increased level of attention they were receiving.

Working in groups or teams, as they did not previously work in teams.

Hence in practice therefore business should re-organize production to encourage greater


use of team working and introduce personal departments to encourage greater manger
involvement in looking after employees interest. His theory closely fits with a parentalistic
style of management.
Therefore in this scenario, similar to this theory put forward by Mc Gregors Theory Y,
employee look for assertive solutions form the mangers. As the workers resisted, the
management came up with an agreement with the trade leader that satisfied both their
needs and wants. Hence in a situation such as this, where the employee are now worsening
the situation by causing a loss of LKR 10 Mn in revenue a day, it is ideal to come to terms
with them than hinder the situations by taking any actions against them.
Hence from both the motivational techniques, we understand that initially the ABC firm took
hold Mc Gregors Theory X, which had means of scientific approach of laying off its workers,
which resulted in workers working slowing by causing a huge revenue drop to the
organization on daily basis. After the first motivational technique lead to this present
situation. The firm changes its scientific means to a more behavioral means that is it followed
the Elton Mayos means of treating them as humans, listening to their needs and coming to
terms that the laid off employees will be taken into account after the organization recovers
itself from the present crisis, is an ideal example of Mc Gregors Theory Y concept.
Therefore an assertive solution was formulated at the end of the day.
The interesting thing to note in this situation is that the firm was able to implement two
contrasting methods of motivational techniques to come to better terms, initially the Theory X
scientific method and then the theory Methods. Though Theory X, cost the firm a loss,
nevertheless brought the management to better terms with the leader of the trade union.

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Organizational Behavior
Assuming myself as a manger handling the problem in this scenario, the author wishes to
pick a different means of way to overcome the problem. Initially the author would look into
unnecessary expenses that could be cut down temporarily or even permanently to slow the
crisis down. Further try postponing the trade payable day after negotiating with the suppliers.
As this would reduce the financial crisis to a certain extent.
But to control the financial problem furthermore, the author would make sure that by using
Herzbergs two factor theory, keep the hygiene factors and stop the satisfiers for a selected
period of time till the situation brought to a stable condition and at the same time formulate
talks with the trade union leader about the plans and promise for the satisfiers to be returned
once the firm in back on track.
As a similar approach was taken according to Dialog Axiata PLC (2009), the company
underwent a similar situation hence the management decided to lay off the employee
benefits for a short period of time, till it came to a stable position back in the year 2011. But
unfortunately Dialog had to lay off some its employees as well but was a scientific approach
which had its negative effect on the company. Nevertheless it is important to note that
motivational techniques are very important in running a successful organization as human
beings play a vital role as individuals in running a business successfully.

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3.3

MOTIVATIONAL THEORIES AND ITS USEFULNESS FOR


ORGANIZATIONAL MANAGERS

Motivation is a term that refers to a process that elicits, controls, and sustains certain
behaviors. It is a group phenomenon which affects the nature of an individual's behavior, the
strength of the behavior, and the persistence of the behavior
According to Boundless (2015), There are many approaches to motivation: physiological,
behavioral, cognitive, and social. It is the crucial element in setting and attaining goalsand
research shows you can influence your own levels of motivation and self-control. According
to various theories, motivation may be rooted in a basic need to minimize physical pain and
maximize pleasure; or it may include specific needs such as eating and resting; or a desired
object, goal, state of being, or ideal; or it may be attributed to less-apparent reasons such as
altruism, selfishness, morality, or avoiding mortality. Conceptually, motivation should not be
confused with either volition or optimism. Motivation is related to, but distinct from, emotion.
MASLOW'S HIERARCHY OF NEEDS
Abraham Maslow developed the Hierarchy of Needs model in 1940-50s USA, and the
Hierarchy of Needs states substantial needs of human inspiration, administration preparing,
and self-improvement. Undoubtedly, Maslow's thoughts encompassing the Hierarchy of
Needs concerning the obligation of employees to give a working environment that urges and
empowers workers to satisfy their own exceptional potential (self-completion) are today more
pertinent than any other time in recent memory.
Basically this theory comprises of five stages that are in hierarchy with human needs. And
these stages are divided as the following:
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep,
etc.
2. Safety needs - protection from elements, security, order, law, limits, stability, etc.
3. Belongingness and Love needs - work group, family, affection, relationships, etc.
4. Esteem needs - self-esteem, achievement, mastery, independence, status,
dominance, prestige, managerial responsibility, etc.
5. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking
personal growth and peak experiences.
(Business Balls, 2015)

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Organizational Behavior
This is the definitive and original Maslow's Hierarchy of Needs. While Maslow referred to
various additional aspects of motivation, he expressed the Hierarchy of Needs in these five
clear stages.
Organizations can use the following motivational technique to motivate their employees in
several ways. Initially the organization has to understand where the employees stand in the
given hierarchy of needs. And then place them accordingly. Followed by this positioning
employees then need to be motivated in terms of bringing out their performance. once they
achieve the desired result by the organization. The company then provides them with the
necessary needs to push them forward in the hierarchy. This method can not only be used to
motivate employees but also deport them as well, in the case of transactional leadership
style.
By looking at this theory in detail, at the bottom of the pyramid are basic needs. And these
needs are met through pay and individual job security. Secondly they are given or promoted
to different levels in the organizational hierarchy which in turn pushes them forward to
pursue higher needs and eventually lead to self actualization which is quite rare. But still this
motivation helps the organization in achieving their goals through the employee motivational
technique.
HERZBERG'S MOTIVATION-HYGIENE THEORY
To better understand employee attitudes and motivation, Frederick Herzberg conducted
studies to determine which factors in an employee's work environment caused satisfaction or
dissatisfaction. He published his findings in the 1959 book The Motivation to Work.
According to netmba (2010), the studies included interviews in which employees where
asked what pleased and displeased them about their work. Herzberg found that the factors
causing job satisfaction (and presumably motivation) were different from that causing job
dissatisfaction. He developed the motivation-hygiene theory to explain these results. He
called the satisfiers motivators and the dissatisfies hygiene factors, using the term "hygiene"
in the sense that they are considered maintenance factors that are necessary to avoid
dissatisfaction but that by themselves do not provide satisfaction.
The following table presents the top six factors causing dissatisfaction and the top six factors
causing satisfaction, listed in the order of higher to lower importance.

Factors Affecting Job Attitudes

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Organizational Behavior
Table 2 Herzberg Motivational Theory

Leading to Dissatisfaction

Leading to Satisfaction

Company policy

Achievement

Supervision

Recognition

Relationship w/Boss

Work itself

Work conditions

Responsibility

Salary

Advancement

Relationship w/Peers

Growth

Implications for Management


1. If the motivation-hygiene theory holds, management not only must provide hygiene
factors to avoid employee dissatisfaction, but also must provide factors intrinsic to the
work itself in order for employees to be satisfied with their jobs.
2. Herzberg argued that job enrichment is required for intrinsic motivation, and that it is
a continuous management process.
According to Herzberg:
1. The job should have sufficient challenge to utilize the full ability of the employee.
2. Employees who demonstrate increasing levels of ability should be given increasing
levels of responsibility.
Therefore, employees in this sector can easily understand or assess themselves to achieve
their goals. If employees work according to the needs of the management by achieving the
goals the management as motivated earlier would grant the satisfiers gradually depending
on the success rate, therefore it would lead the organization to assess the employ progress
and set even better motivators.
If we take a real life example for this motivational theory, one fine example is portrayed by
Dialog Axiata PLC, where the organization went up in total financial crisis and had to make
necessary changes to overcome them.
According to Dialog Annual Report (2009), it was noted that the company was totally in debt
during that year hence to overcome them they took up a motivational technique as the one
mentioned above. What Dialog did was instead of laying off some of the employees it
reduced the satisfying factors such as employee benefits and as result of reducing the
expenses and promised to increase them if they work harder to gain more revenue and the

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Organizational Behavior
scheme would be later on incorporated. So it has been successful and dialog regained its
financial status and so did the employees get their needs fulfilled.
MCGREGORS X-Y THEORY
According to Business Balls (2015), Douglas McGregor, an American social psychologist,
proposed his famous X-Y theory in his 1960 book 'The Human Side of Enterprise'. Theory x
and theory y are still referred to commonly in the field of management and motivation, and
whilst more recent studies have questioned the rigidity of the model, McGregors X-Y Theory
remains a valid basic principle from which to develop positive management style and
techniques. McGregor's XY Theory remains central to organizational development, and to
improving organizational culture.
McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing
people, which under the pressure of day-to-day business.
McGregor's ideas suggest that there are two fundamental approaches to managing people.
Many managers tend towards theory x, and generally get poor results. Enlightened
managers use theory y, which produces better performance and results, and allows people
to grow and develop.
McGregor's ideas significantly relate to modern understanding of the Psychological
Concepts, which provides many ways to appreciate the unhelpful nature of X-Theory
leadership, and the useful constructive beneficial nature of Y-Theory leadership.
Theory x ('authoritarian management' style)
1. The average person dislikes work and will avoid it he/she can.
2. Therefore most people must be forced with the threat of punishment to work towards
organizational objectives.
3. The average person prefers to be directed; to avoid responsibility; is relatively
unambitious, and wants security above all else.
Theory y ('participative management' style)
1. Effort in work is as natural as work and play.
2. People will apply self-control and self-direction in the pursuit of organizational
objectives, without external control or the threat of punishment.
3. Commitment to objectives is a function of rewards associated with their achievement.
4. People usually accept and often seek responsibility.

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Organizational Behavior
5. The capacity to use a high degree of imagination, ingenuity and creativity in solving
organizational problems is widely, not narrowly, distributed in the population.
6. In industry the intellectual potential of the average person is only partly utilized.
Hence through this means of motivation one can easily manage its employees. But then
again it all depends on the type of organization. To certain organizations theory x may be the
right means such as manufacturing and productions sectors, whereas in the other prevailing
organizations the most suitable theory is theory Y. Theory y is easy to understand by the
employee and employer and can lead to better success of common goals of the
organization.
Comparing Theory X and Theory Y

Motivation
Theory X assumes that people dislike work; they want to avoid it and do not want to
take responsibility. Theory Y assumes that people are self-motivated, and thrive on
responsibility.

Management Style and Control


In a Theory X organization, management is authoritarian, and centralized control is
retained, whilst in Theory Y, the management style is participative: Management
involves employees in decision making, but retains power to implement decisions..

Rewards and Appraisals


Theory X organizations work on a carrot and stick basis and performance appraisal is
part of the overall mechanisms of control and remuneration. In Theory Y
organizations, appraisal is also regular and important, but is usually a separate
mechanism from organizational controls.

Application
Although Theory X management style is widely accepted as inferior to others, it has its
place in large scale production operation and unskilled production-line work. Many of
the principles of Theory Y are widely adopted by types of organization that value and
encourage participation. Theory Y-style management is suited to knowledge work and
professional services. Professional service organizations naturally evolve Theory Ytype practices by the nature of their work.

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Organizational Behavior

4.1

NATURE OF GROUP AND GROUP BEHAVIOR WITHIN A


SELECTED ORGANIZATION

According to Chron (2015), almost every company has a formal structure in place, even if
that structure is only loosely adhered to. Most organizations also have an informal structure
as well. There are moments when the informal group conflicts with the formal group, making
it important to understand both types of groups. Disregarding the informal group as not as
significant as the documented or formal structure can mean lost opportunities for a business
as well as personal business success.
With regard to an organization such as the Transparency International, formal and informal
structure or groups are present. In an NGO such as the Transparency International groups
play vital role in running the organization towards its goals and eventually leading them to
success. At this NGO various specialized people dwell in so called groups who carry out
distinct work independently of each other.
FORMAL GROUP
Formal Group is primarily concerned with the relationship between authority and
subordinate. A typical organization chart illustrates the formal group at work in a company or
part of a company. The hierarchical organization begins at the top with the most senior
leader and then cascades down to the subordinate managers and then subordinate
employees below those managers. There are job titles, financial obligations and clear lines
of authority for each box on the organization chart.
For example at the Transparency International, HR department plays a vital role in going
ahead with the organizations goals in terms of a formal group. As the NGO requires skilled
personals from around the world, the HR department acts as a whole group, in indentifying
and recruiting the right human resources to the organization. Having specialized in one set
of work and from different social and geographical areas they more over prove the
effectiveness of such formal groups in such organizations alike.
Appointments to all positions will be made on merit, regardless of gender; region; religion;
disability; family status; sexual orientation, etc. We are committed to open, fair, and
transparent appointment, recruitment, hiring, and procurement procedures and practice.
(Transparency International, 2015)
Furthermore formal groups tend to go through the several stages of formation and
development i.e. forming, storming, norming, performing and adjourning.
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Organizational Behavior
Initially when a group is formed team acquaints and establishes ground rules. Formalities
are preserved and members are treated as strangers. Then they move on to the storming
stage where they start to communicate their feelings out but still view them as individuals
than a group. A lot of resistance occurs. Followed by the norming stage, where people start
to feel part of the group and thats when they move into performance where the group
actually sits and works towards the goals till they adjourn or in other words come to an end.
The formal groups can be abolished at any time. Since these are created by organizational
process, these can be abolished by organizational process also. In fact, many of the formal
groups are constituted for certain specific purpose or period. When this is over this group
also disappears.
INFORMAL GROUP
Informal Group typically develop around social or project groups. Because informal
structures are based on camaraderie there is often a more immediate response from
individuals. This saves people time and effort, thus making it easier to work with in informal
structures. People also rely on informal structure if the formal structure has stopped being
effective, which often happens as the company grows or changes but doesnt reevaluate its
hierarchy or work groups.
In the case of transparency international, Informal groups play a greater role similar to formal
structured groups, so as to fulfill certain organizational needs and wants. Especially at times
these informal groups take place or are allowed to take place for employees to liaise among
themselves for personal benefits or knowledge sharing in an informal manner. One true fact
being that this organization is in the service sector and well reputed internationally, the
organization motivates its employees through this informal session either for work or
personal related matter to retain its employees, and the organizations success.
The informal groups are difficult to abolish by organizational process. In fact, any attempt by
management to abolish the informal group may be thwarted by the members and may lead
to the formation of many more groups. Since the informal groups are by products of natural
desire of human beings to interact, management does not have any control over them.
Most people associate formal structure with large corporations. Its true formal structure is
adhered to more officially in a large company, but even small organizations typically have a
formal structure in place. Smaller organizations have fewer resources (financial and human)
so they are not as concerned with hierarchy as they are with just getting the job done. Most

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Organizational Behavior
people in a small organization are used to doing many tasks, so this informal structure feels
natural.
LEADERSHIP
The lines of authority are quite clear in a formal organization, but become blurry when talking
about an informal structure. A key thing to remember in an informal leadership role, because
you have no direct authority your ability to lead is reliant on your ability to gain the respect
and alliance of others. People aware of the informal leadership at work in their business can
use this to their advantage to accomplish more, Chron (2015).
BEHAVIOR OF MEMBERS
The behavior of members in the formal groups is governed by formal rules and regulations.
The rules are normally directed towards rationality and efficiency. In the informal groups, the
behavior of the members is governed by norms, belief, and values of the groups. The kind of
behavior that is expected of a member is specified by these factors. If any member defies
these, he is disliked by other members and for the person, the group does not remain
attractive and he leaves it.
Hence we can come to a conclusion that, Formal and informal structures can be beneficial or
detrimental to a company depending on how well they are understood and used. Formal
structures should be evaluated as the organization grows or takes on new responsibilities.
Take the time to understand the informal structure of a company as well. Often groups that
develop into an informal entity make a lot of sense, and are more efficient and productive
than the formally structured groups. Therefore at the end of the day these informal groups
can one day lead to formal entities of an organization.

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Organizational Behavior

4.2

FACTORS

THAT

DEVELOPMENT

WOULD

FOSTER

AND

HINDER

OF EFFECTIVE TEAM WORK WITHIN AN

ORGANIZATION
FACTORS THAT HINDER EFFECTIVE TEAM WORK
Lack of common goals and philosophy
As per Chron (2015), According to Rice University Web Services, a team is driven by a
common goal. In order to have an effective team, that common goal needs to be spelled out
in advance and understood by team members. What helps a team to be successful is by
focusing on the team goals. Back in the days at Apple during Steve Jobs period in 1983 the
company had a lack of common goal.
Steve Jobs to John Scully, about the Apple Lisa Computer, 1983: Were going to
blow IBM away. Theres nothing they can do when this computer comes out. Over here
Steve jobs just portrayed his goal on this computer rather than the organizations view.
(Forbes, 2015)
Lack of leadership
Teamwork is supported by effective leadership. All teams benefit from one or several
sources of inspiration and direction; If leaders cannot support collaboration by coordinating
the efforts of team members and encouraging team members to speak their minds during
team meetings. They cannot ensure the projects will stay on track by checking in with
different contributors and by not measuring daily/weekly progress against overall timetables
and objectives. The same case existed among the Swiss Air company, where leadership
failed by the board members.
According to Business Pundit (2015), the former national airline of Switzerland, Swissair,
used to be so financially stable that it was known as the Flying Bank. Founded in 1931,
Swissair epitomized international transportation until the late 1990s, when the airlines board
decided to follow an aggressive borrowing and acquisition policy called the Hunter strategy.
Then, the terrorist attacks of September 11, 2001 put a void in the companys plans Swissair
found itself hamstrung with debt. Unlike some other airlines, however, Swissair couldnt
handle the financial hit. Mismanagement and bad ideas by the top managementtrundling
large sums of cash to purchase fuel at foreign airports.

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Organizational Behavior
Lack of Communication
Communication in developing an effective team happens on two levels: communication
between team members and communication from management to the team. Encourage
open communication among teammates so they can learn how each other communicates.
Less interaction between team members outside of the office leads to bad communication. If
Managers doesnt hold regular meetings to keep a team updated on important information
and to offer training. These are the kinds of ways in which the team might suffer due to lack
of communication from management and the company to be effective.
According to Business Pundit (2015), such was the case with Pan Am. Founded in 1927, the
airline was a part of American culture for the better part of the 20th century. It led the
industry in international flights and luxury travel. It was also the first airline to make
widespread use of jumbo jets, and the first to use an air staff of stewardesses as a PR focal
point. Unfortunately, a few horrific incidents, coupled with the increased global competition
with regard to training staffs and teaching the ethics of good communication, that came with
deregulation, caused the airlineand its accompanying erato collapse in 1991.
Putting off decision making
Being able to contribute ones thoughts and ideas on a problem is essential to an
organization from a democratic point of view. As involving employees not only motivate them
but also helps the team to come to a better solution after a 360 evaluation by a number of
members and critical judgment. Team leaders especially need to consult their team for ideas
and future plans form an organizational point of view.
William Orton, President of Western Union Telegraph company, upon being invited to buy
the patent for the telephone for $100,000: Mr. Bell, after careful consideration of your
invention, while it is a very interesting novelty, we have come to the conclusion it has no
commercial possibilitiesWhat use could this company have for an electrical toy?. Here the
President did not consult his subordinate nor employees. Hence the organization lost a
technology that will change the future of business for good.
(Forbes, 2015)
Prejudice, racism and sexism
Finally the social issue that prevails in our country with respect to racism and sexism are
problems that tend to exist in a country like Sri Lanka. This type of ideology can definitely
drive the team to an epic downfall if practiced in the long run. As we need to understand that

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Organizational Behavior
diversity in team is what actually helps run the organization in a better way. Teams that lack
diversity can find it difficult to solve particular problems; it is much harder to find innovative
solutions when all of the team members think about problems in the same way draw on
similar experiences for support and come to the same conclusions.
According to Commercial Bank of Ceylon (2012), If we look at the Commercial Bank of
Ceylon in Bangladesh, the board of directors is all Sri Lankans and Buddhist. What the
author tends to say is that it needs to be comprised of both the parent and geographical
ethnical diversification, if the company is to last.
FACTORS THAT FOSTER EFFECTIVE TEAM WORK
Diversity
According to chorn (2015), Effective teams embrace and are constituted by a diversity of
cultures, talents and personalities. Diversity can promote creativity and innovation, and raise
awareness of and respect for differences, which will support effective teamwork.
For example at the Transparency International, HR department plays a vital role in going
ahead with the organizations goals in terms of a formal group. As the NGO requires skilled
personals from around the world, the HR department acts as a whole group, in indentifying
and recruiting the right human resources to the organization. Having specialized in one set
of work and from different social and geographical areas they more over prove the
effectiveness of such formal groups in such organizations alike.
Appointments to all positions will be made on merit, regardless of gender; region; religion;
disability; family status; sexual orientation, etc. We are committed to open, fair, and
transparent appointment, recruitment, hiring, and procurement procedures and practice.
(Transparency International, 2015)
Communication
Small Business (2015), Effective teamwork is facilitated by clear and open communication.
All team members should be on the same page with respect to targets, responsibilities and
timelines. This cohesion is facilitated by effective communication. Effective communication is
supported by the prevalence of organizational protocols which determine particular methods
and mediums of communication. All team members should feel comfortable asking
questions regarding the clarification of jobs and responsibilities, and they should feel free to
make suggestions when they feel they can advance the team objectives. When a challenge

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Organizational Behavior
or conflict arises, effective teams will engage and overcome it with effective communication,
rather than avoiding the issues or participating in gossip.
According to JKH annual report (2014), the organization reports a high level of
communication practiced in the organization. The entire company is driven by performance
centric culture that involves an open door practice for its employees and smooth two way
communication style.
Leadership
Teamwork is supported by effective leadership. All teams benefit from one or several
sources of inspiration and direction; leaders can support collaboration by coordinating the
efforts of team members and encouraging team members to speak their minds during team
meetings. They can ensure the projects stay on track by checking in with different
contributors and measuring daily/weekly progress against overall timetables and objectives.
Additionally, they can work to motivate and discipline team members to ensure that
everyone is performing to their highest potential.
According to JKH annual report (2014), if we look at the organizations means of leadership
style it is interesting to note how the leisure sector is well lead. This sector is well headed by
its leaders making it an island wide success.
Team-Building Exercises
Effective teamwork is developed through shared experiences and practice. The use or
avoidance of team-building activities can be an important factor in determining the
development of effective teams; in the age of advanced technology and fast-paced business
environments, some team members would never see one another face to face if they did not
make a point to do so. Team-building exercises can be targeted to improve particular
aspects of team performance such as communication, problem-solving or creativity. Games
and drills are an effective way to bring people together to build relationships, boost morale
and promote mutual understanding of interests, personalities, strengths and weaknesses.
According to JKH annual report (2013), the organizations put in a lot of effort in training the
employees and building healthy team by sending their employees through a training period
that is attached to city and guilds. By this way employees go through the several stages of
forming and developing a team and eventually come out well experienced.

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Organizational Behavior
Involving team in decision making
By involving the team in decision making it puts the team into a state of individual
importance, where each team members feels as if they are part of the team and works
towards achieving the common goal. In areas of problem when the team in involved in
making a decision through a 360 evaluation of the problem different answers or solutions will
pop in making the goal a success.
According to JKH annual report (2013), if we look closely at the operations at Keells super
employees are involved in deciding how they wish to decorate their branch for special
seasons.
Through this we understand the importance of an effective team and how to overcome the
factors that hinder one. Hence we can conclude that an effective team requires cohesion
that is held together by several factors. In order to understand how to assemble an efficient
team, you first need to know the factors affecting effective teamwork. When you know how to
create a productive team environment, you can begin to expect positive results from your
team.

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Organizational Behavior

4.3

EVALUATE DOMINANCE OF IT ON VIRTUAL BUSINESS

Due to the increased popularity and availability of Internet access many traditional small
business are considering information technology as a valid and profitable sales channel.
However, ecommerce and traditional commerce are very different.
Direct Interaction
Traditional commerce is often based around face to face interaction. On the other hand,
ecommerce doesn't offer this benefit unless features such as related items or live chats are
implemented.
Lower Costs
Ecommerce is usually much cheaper than maintaining a physical store in an equally popular
location. This can prove invaluable for small business owners who don't have the startup
capital to rent prime retail space and staff it to be able to sell their goods.

Reach
With an online shop you can do business with anybody living on a country you are able and
willing to send mail to, unlike traditional commerce where you are restricted to people who
actually come to your shop.

One simple thing that certainly differ e-business from traditional business is the technology
that underpins the business itself.
E-business is built electronically on a network; therefore, without a network its completely
impossible for an e-business to survive .The use of technology will bring a huge impact on
the way of a business communicates with its customers. This business communication
models are categorized by Schneider into three different types

Personal contact (one to one)


In this type of communication model, the organization assigns its employees to
identify and reach the prospective customers.

Mass media (one to many)


The mass media approach allows the organization to broadcast advertising and
promotional materials on its products.
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Organizational Behavior

The web (many to one or many to many)


The internet is neither a mass media nor a personal contact device. It stands on the
middle of the fine line where mass media is allocated at the first side and personal
contact at the other side. The web provides more interactivity than mass media does
to its audience but less than personal contact could offer.

Activities using Information technology in e-Business tools include:

Trading of goods or services online, such as e-Procurement, primarily through websites

Electronic retailing (etailing)

Use of the Internet, intranets or extranets to conduct research and manage business
activities

Website marketing

Online communications, such as email

Online training for staff (elearning).

Information technology in e-Business tools include

Mobile phones

Personal digital assistants (pdas)

Electronic data interchange

File transfer

Facsimile

Video conferencing, Internet, intranets and extranets.

According to electronic bizniz, e - Business is more than having a website for your business.
Using information technology it can make your administrative and operational activities more
efficient through:

accessing the Internet to source information about your industry, suppliers and
products and for general research

the use of electronic transaction, for example online banking, financial management,
stock control and compliance reporting to regulatory bodies such as the Australian
Taxation Office

purchasing and selling without a web presence by using email or e - fax

human resources management, through the development of an intranet for news,


policies, staff movements and enabling staff to apply for leave and access their
personnel information online

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Organizational Behavior

customer relationship management, which integrates front and back office functions of
an organization through electronic capabilities

Using appropriate project management software.

Advantages

Quicker and easier communications

Strengthened marketing capabilities and reach

Increased hours of operation (a website provides 24 hour 7 day information to existing


and potential customers)

Access to broader information through research

Reducing the cost of doing business by lowering transaction costs and increasing
efficient methods for payment, such as using online banking and reducing stationery
and postage costs

The opportunities to adopt new business models and develop tailored customer
support.

According to Technology review (2013), Amazon.com, has a business model that leaves
many people scratching their heads. Amazon is on track to ring up $75 billion in worldwide
sales this year.
Look more closely at Bezoss company, though, and its strategy becomes clear. Amazon is
constantly plowing cash back into its business. Its secretive advanced-research division, Lab
126, works on next-generation Kindles and other mobile devices. More broadly, Amazon
spends heavily to create the most advanced warehouses, the smoothest customer-service
channels, and other features that help it grab an ever-larger share of the market. As former
Amazon manager Eugene Wei wrote in a recent blog post, Amazons core business model
does generate a profit with most every transaction The reason it isnt showing a profit is
because its undertaken a massive investment to support an even larger sales base. That is
in developing the IT field in which it works.

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Organizational Behavior

Figure 1 Amazon Revenue

Much of that investment goes straight into technology. To Amazon, retailing looks like a giant
engineering problem. Algorithms define everything from the best way to arrange a digital
storefront to the optimal way of shipping a package. Other big retailers spend heavily on
advertising and hire a few hundred engineers to keep systems running. Amazon prefers a
puny ad budget and a payroll packed with thousands of engineering graduates from the likes
of MIT, Carnegie Mellon, and Caltech.
Customer Relationship Management (CRM) and Information Management (IM) support
Amazons business strategy. The core technology that keeps Amazon running is Linuxbased. As of 2005, Amazon had the worlds three largest Linux databases, with capacities of
7.8 TB, 18.5 TB, and 24.7 TB. The central data warehouse of Amazon is made of 28 Hewlett
Packard servers with four CPUs per node running Oracle database software. Amazons
technology architecture handles millions of back-end operations every day, as well as
queries from more than half a million third-party sellers. With hundreds of thousands of
people sending their credit card numbers to Amazons servers every day, security becomes
a major concern. Amazon employs Netscape Secure Commerce Server using the Secure
Socket Layer protocol which stores all credit card details in a separate database. The
company also records data on customer buyer behavior which enables them to offer or
recommend to an individual specific item, or bundles of items based upon preferences
demonstrated through purchases or items visited.
Other big merchants are getting the message. Walmart, the worlds largest retailer, two
years ago opened an R&D center in Silicon Valley where it develops its own search engines
and looks for startups to buy. But competing on Amazons terms doesnt stop with putting up
a digital storefront or creating a mobile app. Walmart has gone as far as admitting that it may
have to rethink what its stores are for. To equal Amazons flawless delivery, this year it even
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Organizational Behavior
floated the idea of recruiting shoppers out of its aisles to play deliveryman, whisking goods to
customers whove ordered online.
Amazon is a tech innovator by necessity, too. The company lacks three of conventional
retailings most basic elements: a showroom where customers can touch the wares; on-thespot salespeople who can woo shoppers; and the means for customers to take possession
of their goods the instant a sale is complete. In one sense, everything that Amazons
engineers create is meant to make these fundamental deficits vanish from sight.
Amazons cunning can be seen in the companys growing patent portfolio. Since 1994,
Amazon.com and a subsidiary, Amazon Technologies, have won 1,263 patents. (By
contrast, Walmart has just 53.) Each Amazon invention is meant to make shopping on the
site a little easier, a little more seductive, or to trim away costs.
We constantly try to drive down the percentage of air that goes into a shipment, explains
Dave Clark, the Amazon vice president who oversees the companys nearly 100
warehouses, known as fulfillment centers. The idea of shipping goods in a needlessly bulky
box (and paying a few extra cents to United Parcel Service or other carriers) makes him
shudder. Ship nearly a billion packages a year, and those pennies add up. Amazon over the
years has created more than 40 sizes of boxes but even that isnt enough. Thats the glory
of Amazons packaging patent: when a customers odd pairing of items creates a one-of-akind shipment, Amazon now has systems that will compute the best way to pack that order
and create a perfect box for it within 30 minutes.
On May 5, 2014 Amazon unveiled a partnership with Twitter. Twitter users can link their
accounts to an Amazon account and automatically add items to their shopping carts by
responding to any tweet with an Amazon product link bearing the hash tag #AmazonCart.
Customers never leave the Twitter feed, and the product is waiting for them when they go to
the Amazon website.
Within this organization IT helps the staff to effectively communicate with themselves
through several means. One such important means at Amazon is their highly extensive
intranet service which their employees can use to interact among themselves for corporate
needs. Other means of virtual teaming include emails, VoIP, video conferencing, VPN and
lastly social networking to get people and business going at the organization.
Hence we can conclude that information technology is the backbone to such an organization
like Amazon.lk. It is noted that this organization puts in a lot of resources to back up and
strengthen its IT department that basically runs the entire show, unlike its competitors.

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Organizational Behavior
Through this report it is clear that even social media as part of IT play a vital role in
developing this industry to its maximum potential. Therefore we can say that IT has not just
helped to capture market share but also helped the organization above to expand
exponentially compared to its competitors.

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Organizational Behavior

ACTION PLAN
ACTIVITIES

WEEK 1

WEEK 2

WEEK 3

WEEK 4

Collection of
assignment
Background
study on the
subject
Begin gathering
data from
various source
Write up
findings from the
researched data
for LO1
Write up
findings from the
researched data
for LO2
Show case the
presentation
and collect
review sheet
Write up
findings from the
researched data
for LO3
Write up
findings from the
researched data
for LO4
Editing the work
Show final
review and
receive
assessors
signature
Final
submission

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Organizational Behavior

CONCLUSION
Through this module on Organizational behavior we are able to understand how people
behave both individually and within informal and formal groups. Also we come to a
conclusion that every organizations performance is ultimately dependent on the motivational
levels of its human resources and the willingness and ability of people to work harmoniously
and effectively towards the accomplishment of shared goals. In this course, we explored and
examined the interrelationships of individual personality and work, the characteristics of
organizations and their environments and the challenges presented by the ever-changing
combination of these factors.
Hence this module was also affective in bring out the key aspects of team work and how
modern technology that is in terms of information technology has kept the business world of
today from collapsing and giving rise to many new ventures.

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Organizational Behavior

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