Chapter 1

Working With People

Organizations are social systems. They combine science and people
technology and humanity. Technology is difficult enough by itself, but when you add
people, you get an immensely complex social system that almost defies understanding.
However, society must understand organizations and use them well because they are
necessary to achieve the benefits that technology makes possible. Modern society
depends on organizations for its survival.

Human behavior in organizations is rather unpredictable because it arises from deep-

seated needs and nebulous value systems of individually different people. However, it
can be partially understood in terms of the frameworks of behavioral science,
management and other disciplines.

Case Study #1

John Doe, age about 50, worked as an assistant manager of a branch

bank in a large banking system. He had been an assistant manager for
11 years. His work was so ordinary that no branch manager wanted him.
Usually, his current manager arranged to move him out of the way by
transferring him to a new branch that was just opening; so, John worked
in 8 branches in 11 years. When he became assistant manager at his 9 th
branch, his manager soon learned of his record. Although tempted to
transfer John, the manager decided to try to motivate him. The manager
learned that John had no economic needs because he had a
comfortable inheritance and owned several apartment houses. His wife
managed the apartments. His two children were college graduates and
had good incomes. John was contented.

The manager made little headway with John and twice considered trying
to fire him. Occasionally, John developed drive for a few weeks, but
then, he lapsed into his old ways again. After a careful analysis of John
situation, the manager concluded that although Johns needs for tangible
goods were satisfied, he might respond to some recognition; so the
manager started working in that discipline. For example, on the branchs
first birthday, the manager held a party for all employees before the bank
opened. He had a caterer prepare a large cake and write on top an
important financial ratio which was under Johns jurisdiction and which
happened to be favourable at that moment. John was greatly moved by
the recognition and the kidding which his associates gave him about
the ratio. His behaviour substantially changed thereafter, and within two
years, he became a successful manager of another branch.

In this instance, Johns performance was improved because his manager

carefully analyzed the situation and used behavioural skills to achieve a
result beneficial to both parties. That is the essence of organization
behavior.

The term organizational behaviour applies broadly to the interaction of people within
all types of organizations, such as business, government, schools and service
organizations. Whenever people join together in some sort of formal structure to
achieve an objective, an organization has been created. Organizations have three
elements: people, technology and structure. All these three elements are influenced by
the external social system and they in turn influence it. Most people tend to give more
emphasis to the internal organizational elements, but the external social system cannot
be ignored because it influences peoples values and contains other influential
organizations, such as labor unions and minority groups.

The people constitute the internal social system of the organization. They consist of
the individuals and groups and large groups as well as small ones. There may be
unofficial, informal groups or more official, formal ones. Groups are dynamic. They
form, change and disband. Organizations exist to serve people, rather than people
existing to serve organizations.

Structure defines the role relationships of people in organizations. Different role

relationships are required because labor must be divided so that people can perform
different kinds of work. The main structure relates to power and to duties. For example,
one person may have authority to make decisions that affect the work of other people.

Technology provides the physical and economic conditions within which people work.
They cannot accomplish much with their bare hands, so they build buildings, design
machines, create work processes and assemble resources. The nature of technology
that results has a significant influence on the working relationships of people. The great
benefit of technology is that it allows people to work more effectively, but technology
also restricts people in various ways, so it has costs as well as benefits.

The social system provides the external environment within which an organization
operates. A single organization does not exist alone. It is part of a larger social system
that contains thousands of other organizations. All these organizations mutually
influence each other in a complex system that becomes the life style of the people.

Organizational behavior is the study and application of knowledge about human

behaviour in organizations as it relates to other system elements such as structure,
technology and the external social system to improve relationships of people between
these elements for better human results. It seeks to help people and organizations
relate more effectively to each other and is a human tool for human benefit.

The Administrative Point of View

Essentially, managers represent the administrative system, and in an organizational
behavior, it is their role to integrate the social system with the technical system in order
to improve people-organization relationships. From the administrative point of view,
organizational behaviour seeks to improve the people-organization relationship is such
a way that people are motivated to develop teamwork that effectively fulfils their needs
and achieves organizational objectives.
The administrative view of organizational behaviour contains a number of ideas:

1. Organizational behaviour focuses primarily on people. Technical, economic,

structural and other elements are considered only as they relate to people.
2. These people are in an organizational environment, rather than in unorganized
social contract. The principal focus of organizational behaviour is to improve
people-organization relationship.
3. A key activity in organizational behaviour is developing an environment in which
people are motivated. Managers are not trying to push or rive employees; rather
they are trying to release inner drives that employees already have.
4. The direction of motivation is toward teamwork, which requires both coordination
of the work and cooperation of the persons involved. Coordination refers to the
effective time and sequence in performing activities, while cooperation indicates
the willingness of persons to work together toward the same objectives.
5. Organizational behaviour seeks to fulfil both employee needs and organizational
objectives. The organizations responsibility is to provide a behavioural climate in
which people can gain the needed satisfaction while helping the organization
reach its objectives. The desired goal is organizational success and employee
satisfaction, not one or the other.
6. Both employees and the organization seek results effectively. Organizational
behaviour seeks to pay for itself both economically and psychologically by
reducing wasteful activities and increasing effectiveness. It should reduce
behavioural pollutants in the work environment and improves the quality of life.

Theory X and Theory Y

This theory was developed by Douglas McGregor. These two theories clearly
distinguished traditional autocratic assumptions about people (Theory X) from more
behaviourally based assumptions about people (Theory Y).

Theory X implies an autocratic approach to managing. It assumes that most people

dislike work and will try to avoid it if possible. They engage in various work restrictions
because they are lazy and indolent. They have very little ambition and will avoid
responsibility if at all possible. They are self-centered, indifferent to organizational
needs and are resistant to change. The common rewards given by organizations are
not enough to overcome their dislike for work, so the only way that management can
secure high employment performance is to coerce, control and threaten them.

Theory Y implies a humanistic and supportive approach to managing people. IT

assumes that people are not lazy and indolent. Any appearance they have of being that
way is the result of their experiences with organizations, but if management will provide
the proper environment to release their potential, work will become as natural to them
as play or rest. They will exercise self-direction and self-control in the service of
objectives to which they are committed. Managements role is to provide an
environment in which the potential of people can be released at work.
 Theory X
The typical person dislikes work and will avoid it if it Work is as natural as play or rest
is possible
The typical person lacks responsibility, has little
ambition and seeks security above all
Most people must be coerced, controlled and
threatened with punishment to get them to work
Theory Y
People are not inherently lazy. They have become
that way as a result of experience.
People will exercise self-direction and self-control
in the service of objectives to which they are
committed
People have the potential. Under proper
conditions, they learn to accept and seek
responsibility. They have imagination, ingenuity,
and creativity that can be applied to work.

With these assumptions, the managerial role is to With these assumptions, the managerial roles is to
coerce and control employees develop the potential in employees and help them
release that potential toward common objectives

The Nature of People

With regard to people, there are four basic assumptions:

1. Individual differences. People have much in common, but each person in the
world is also individually different. The idea of individually differences comes
originally from psychology. From the day of birth, each person is unique, and
individually experiences after birth make people even more difference. Individual
differences mean that management can get the greater motivation among
employees by treating them differently.
2. A whole person. Although some organizations may occasionally wish they could
employ only a persons skills or brain, all that can employed is a whole person,
rather than certain separate characteristics. When management practices
organizational behaviour, it is trying to develop a better employee, but also it
wants to develop a better person in terms of growth and fulfilment.
3. Caused behaviour (motivation). From psychology, we learn that normal
behaviour is caused by certain actions. People are motivated not by what we
think they ought to have, but by what they themselves want. Motivation is
essential to the operation of organizations. No matter how much machinery and
equipment an organization has, these things cannot be put to use until they are
released and guided by people who have been motivated.
4. Value of the person (human dignity). This confirms that people are to be treated
differently from other factors of production because they are of a higher order in
the universe. It recognizes that because people are of a higher order, they want
to be treated with respect and dignity and should be treated this way. Ethical
philosophy is reflected in the conscience of humankind confirmed by the
experience of people in all ages. It has to do with the consequences of our acts
upon ourselves and others.
The Nature of Organizations
From sociology, we learn that organizations are social systems; consequently, activities
therein are governed by social laws as well as psychological laws.

Mutual interest is represented by the statement, Organizations need people, but people
also need organizations. Organization theory explains that organizations are formed
and maintained on the basis of some mutuality of interest among their participants.
People perceive organizations as a means to help them reach their goals, while at the
same time, organizations need people to help reach organization objectives. If
mutuality is totally lacking, it makes no sense to try to assemble a group and develop
cooperation because there is no base on which to build.