61

Study Unit 2
Organisational Behaviour and its Importance to
Management

Contents Page

Introduction 62

A. What Is Organisational Behaviour? 62

A Behavioural Approach in a Dynamic Environment 63
The Interface with Management – Balancing Stakeholder Expectations 65

B. Human Relations School 65

Elton Mayo and the Hawthorne Studies 66
Key Insights of the Human Relations School 66

C. Organisational Structures and Culture 68

Characteristics of Organisational Culture 69
Classifications of Culture 69
Cultural Variance and Workplace Behaviour 75

D. Influencing Organisational Behaviour 77

Other Factors to be Considered 78
The Psychological Contract 79

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62 Organisational Behaviour and its Importance to Management

INTRODUCTION
As you learnt in the introductory unit, behavioural science uses theory and application from
sociology, psychology and anthropology to structure organisations and secure an optimum
working environment, i.e. reconciling the needs of the organisation with those of the
individual and group.

A. WHAT IS ORGANISATIONAL BEHAVIOUR?

We can summarise what we have meant by organisational behaviour so far, as follows:
Organisations of one kind or another are a necessary part of society and serve many
important needs. The decisions and actions of management in these organisations have an
increasing impact on individuals, other organisations and communities. It is, therefore,
important to understand how organisations function and the nature of their influence on the
behaviour of people.
Organisational behaviour is the study of people in an organisational setting and involves the
understanding and control of the behavioural factors that influence the performance of people
as members of an organisation. Apart from in small firms, though, it does not mean the
behaviour of the organisation as a whole; it means the behaviour of the individuals and
groups that make up the organisation, and the inter-relationships between them.
While the individual is the basic behavioural building block in organisations, most interact
with others in groups, teams and various interactive relationships. Indeed this is the very
basis of effective co-ordination. Group working is fundamental to most organisations and is
potentially a critical mechanism in adapting successfully to a changing world, with regard to
generating and implementing new ideas. The behavioural approach incorporates the study
of social psychology and sociology to help understand the nature of these social interactions.
Management must recognise that the behavioural dimension embodies patterns of
relationships between individuals and groups and this will produce different reactions,
responses and behaviours according to how management structures the organisation.
Organisational behaviour also means understanding how the behaviour of people,
management processes, the organisational context and environmental influences combine to
drive organisational processes and the execution of tasks.
Organisations consist of people, and to understand their behaviour requires a grasp of
psychology, to understand how they learn, how they process and communicate information,
how they perceive the world, and form attitudes and opinions. It also requires an
appreciation of how they interact with others, form groups and co-operate in pursuit of
organisational goals.
Organisational behaviour also considers both the formal aspects of organisation, and the
informal ones which may have powerful influence on the individual through the power of the
group and the need for affiliation. The behavioural approach in effect recognises that the
formal organisation is paralleled by the existence of an informal organisation with its own
leadership, norms of behaviour and communication networks which can work for or against
the aims of those with legitimate authority.
In this unit we will build on this understanding of organisational behaviour and look
specifically at the interface with management. We will also consider the human relations
school of thought since the work of Elton Mayo and others represented the starting point for
the study of behavioural science.

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This leads naturally into a consideration of the characteristics of organisational culture. We

will round off the unit by considering the ways in which behaviour is influenced in
organisations.

A Behavioural Approach in a Dynamic Environment

We saw in the last unit that the business world is dynamic and changing rapidly under the
influence of factors such as:
 the growth and development of multinationals
 advances in communication and information technologies
 the emergence of a global economy
 dynamic growth in China and India relative to the older economies of Europe and North
America.
In a dynamic and changing world, it is vital to adjust and adapt the organisation to changes
that impact on its internal and external environment. This can only be achieved if the people
within the organisation are prepared to change. The behavioural approach will facilitate
achievement of such change by providing management with an understanding of individual
psychology, such as:
 people's perceptions and how they interpret the world
 how they form different attitudes and opinions and the processes by which these may
be changed
 how they process information and learn new methods and techniques.
Managing organisations in a dynamic world requires leadership as well as efficient
management. The behavioural approach provides understanding of the nature of leadership
and its relevant traits, styles and power bases. It also recognises that different behaviours
will be required in different situations for leadership to be continuously effective.
The above developments also produce opportunities and threats for organisations, and the
key to meeting them successfully is a function of organisational behaviour. Improvements in
organisational performance and effectiveness are a direct function of this behaviour and
excellence in management processes. It is important, as we will see in more detail in later
units, for managers to understand behaviour in a number of areas:
Attitudes
 Dynamic change in the environment demands corresponding change from
organisations and this means their behaviour must change.
 Employees are often resistant to change, since people feel more secure with the
familiar and habitual. They are naturally apprehensive and fear that they may be
disadvantaged by change and that they may not be able to learn new skills.
 For managers to overcome this resistance, they must understand the attitudes and
perceptions of their employees and respond proactively to reduce resistance and/or
increase driving forces for change.
 This might involve open communication, participation in the change process and/or the
development of a new wage–work bargain.
Motivation
 This is of central importance to the organisation achieving its goals. Managers must
not only understand the needs that drive employee behaviour, they must appreciate the
processes involved in making motivation effective in improving performance.

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 Needs may vary with the individual's position in the organisational hierarchy; what is
effective with one individual might not be with another.
 Similarly managers must recognise that individuals will also be motivated by their
expectations that certain actions will achieve an outcome that they regard as desirable;
i.e. that individuals see a connection between effort, performance and reward.
 Having the right equipment, people, skills and organisational framework is not a
guarantee of excellent performance. Employees and managers must be motivated to
achieve organisational goals.
 The behavioural approach therefore provides insight into the means of improving the
management of human resources. This includes the achievement of maximum
motivation by achieving congruence between satisfying the needs of the individual and
the needs of the organisation.
Communication
 Organisations depend on receiving and transmitting information to achieve the co-
ordination necessary to achieve their goals.
 Individuals are central to this process and their behaviour clearly impacts on its
effectiveness.
 Managers must understand this behaviour if they are ensure a communication process
that allows a clear, understandable and fast transmission of information to support
decision-making without unnecessary distortion or noise.
 Individual perceptions, as well as the language itself, can cause problems, particularly
with information moving up and down the hierarchy.
 Human nature also leads to extensive informal communications that do not follow the
chain of command.
 The behavioural approach contributes to understanding of the scope and nature of
communication within and between organisations and the behavioural barriers that may
arise. Communication is central to recognition of a changing world and the effective
implementation of responses to it.
Conflict
 This can inhibit the achievement of organisational goals and adversely affect morale
and performance.
 Managers with an understanding of organisational behaviour will appreciate that
conflict can be positively correlated with goal achievement where it releases tensions,
stimulates ideas or challenges the status quo.
 Managers also need to recognise the behavioural signs of negative conflict and
understand the means by which this type of conflict may be resolved.
 They have considerable scope to alter the situational factors that might be engendering
conflict and to secure unity between the goals of the organisation and those of groups
and individuals.
 Organisation requires specialisation and co-ordination, both of which can produce
conflicts. The behavioural approach provides insight into such conflict, both positive
and negative. As with resistance to change, it also supplies the potential means of
successfully overcoming the negative aspects.
 However, securing change is not just a matter of influencing the people dimension. It
requires simultaneous achievement of the needs of management, the needs of task
fulfilment and the needs of the people involved.

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The Interface with Management – Balancing Stakeholder Expectations

Stakeholders include any group or individual that can affect or is affected by the achievement
of organisational goals. Management, itself an important internal stakeholder group, is
responsible for directing, co-ordinating and guiding others, both inside and outside the
organisation to achieve organisational goals. Can you think of other important stakeholder
groups that management must integrate into organisational activities if such effectiveness is
to be achieved?
You may have thought of yourself as a stakeholder. You contribute skills, effort and creativity
to the organisation and so affect the achievement of its goals. You may also contribute a
positive attitude and a willingness to change. Similarly you will be affected by the
organisation's policies and the quality of its management, not to mention the opportunities it
provides for your career development. Other stakeholder groups you may have thought of
might include workgroups, different departments, suppliers, distributors and of course
customers. Some would also include shareholders.
To be effective in achieving its objectives, any management must balance the expectations of
these different stakeholder groups and mobilise their productivity, commitment and
contribution to the organisation's success. Central to this is the manager's ability to manage
stakeholders effectively, for without them there can be no meaningful outcome. This means
reconciling any conflicts of interest between individuals and groups and creating an
organisational climate in which they can work willingly and effectively together. This is no
simple task, as patterns of behaviour are diverse and no individual is "owned" by the
organisation. They come with their own attitudes and perceptions that may be influenced by
a diverse range of social and cultural factors.
Most individuals and groups intend to perform effectively in organisations but this is not
always the case. When ineffective performance occurs, it is often the case that it is not what
management has done but rather how they have tried to implement it. A workgroup, for
example, may agree with the need for changes in working methods in order to stay
competitive but feel very unhappy at the lack of consultation or re-training that the
management has provided. Management is at the centre of everything that happens in
organisations and is, therefore, central to the outcome. It must, therefore, work on improving
its stakeholder relationships, seek to balance all the ingredients for organisational success
and create the necessary climate for the various individuals and groups to work together.
In the next section, we will consider the school of management thought we omitted in the last
unit. We did this because this school emerged as a reaction to the classical theorists and
focussed not on structure or scientific principles but on social factors at work and the
behaviour of individuals within the organisation. For this reason it is known as the human
relations approach to management and is primarily associated with the work of Elton Mayo
and the Hawthorne experiments.

B. HUMAN RELATIONS SCHOOL

The main feature of the classical school is its concentration on structure – rather as though
we tried to describe a person by stating her height and weight, then described her skeleton,
muscular system, circulatory system and so on; in short, it is as if we simply outlined
anatomical features with no regard to the mind, soul or personality. This view sees the
person virtually as a machine, and indeed another term for this view of organisations is
"mechanistic". (To complete our jargon, note that it is also called the "formal" organisation.)
Whenever we have looked at the implications of the classical theorists for management and
organisation in practice, we have noted that although the technical features are all there,
something is missing. We need to consider the human dimension – the people who fill the
posts in the organisation and their behaviour. Whilst there is some consideration of a need to

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take account of human factors, by and large the human dimension is not seen as important
to the form of organisation. This approach allows the theorists to propose ideal types of
organisation and management unencumbered by the problems that arise from actually
having people involved in them.
In the 1920s and 1930s, greater attention began to be paid to the way in which the human
dimension affected the operation of organisations and what this meant for management. The
basic idea underlying all the work considered in this section under the general heading of
"human relations" is that to understand and improve an organisation, you need to understand
the people who work for it, take account of their various needs, build on their strengths and
ensure their weaknesses are either overcome or prevented from having an adverse effect on
the organisation's working.
Note that, unlike the classical theorists, the writers of the human relations school are not
suggesting any organisational solutions as such. They are more concerned to shed light on
the way organisations work in practice and to identify possible organisational practices which
may bring the needs of the formal organisation in line with the reality of the way people
behave.

Elton Mayo and the Hawthorne Studies

The key work which defines the human relations approach comes from Elton Mayo's studies
at the Hawthorne Plant of the Western Electric Company between 1927 and 1932. Without
going into great detail about the studies, the background was that the researchers were
trying to find the optimum level of lighting in the plant in order to maximise productivity. As
such, it started out as a strictly scientific management approach. However, the surprising
finding was that productivity increased among the group of workers being studied both when
the level of illumination was increased and when it was decreased. Subsequent studies by
Mayo led to the conclusion that what was affecting performance was the special attention
being paid to the group of workers rather than any external physical factors. Their working
lives had suddenly become more interesting because of the experiments which were taking
place, they felt important and valued, and the result was increased enthusiasm for their jobs
and a higher output.
This phenomenon has become known as the "Hawthorne effect".
Having established from this that performance was related to psychological and sociological
factors as well as purely physical ones and the organisational structure, Mayo went on to
investigate what other forces were at play in the workplace. In summary, his findings were
that:
 workers are strongly motivated by social needs (for social interaction, self-esteem and
recognition, a sense of belonging and security) and seek satisfaction of those needs
over and above any others, including the need for money once a certain level of
remuneration as been achieved;
 individual workers belonged to groups at the workplace which had their own codes of
behaviour, leaders and means of enforcement of the group norms (which included
notions of what appropriate output standards were), constituting a whole "informal"
organisation within the formal one.
These startling discoveries shifted the entire emphasis in organisation and management
thinking. Mayo demonstrated that human attitudes and behaviour seem to be what govern
activity at the workplace, and what was required was to examine the needs and interaction of
individuals, the ways in which groups operate and what this means for management.

Key Insights of the Human Relations School

From the simple experiments of Elton Mayo, a vast body of work has now built up about the
nature of the human dimension to organisations. Most of this work, led mainly by

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sociologists and psychologists, continues to explore the elements identified by Mayo – the
nature of the informal organisation and the needs of individuals at work – and to develop
ideas on how these factors can be taken account of in management.
(a) The informal organisation
It must be recognised that the formal structure, organisation, values and goals of an
undertaking are by no means the only, or even the main, determinant of behaviour in
the workplace. There will always be an informal network of workgroups and
interactions which constitute an alternative form of organisation for the workers, and
one which is invariably far more important in their lives.
This "informal organisation" determines, to a large extent, workers' attitudes to the
formal organisation and, therefore, how they view the formal structure of authority. It is
workgroup norms which tend to set standards of performance, such as timekeeping,
output, quality, attitudes towards customers and clients and dress codes, and
management cannot impose standards which are not acceptable in this alternative
culture.
This is a major problem for management since managers themselves are party to the
informal organisation and culture as well. These patterns of relationships among
managers can be particularly complex as they cross the divide between identification
with their management peers and their subordinates (and especially so in cases of
internal promotion).
The notion of an alternative "culture" (see below), which operates against the interests
of the formal organisation, can be very damaging. It means that management has little
control over working practices and standards of performance, and there is often very
low morale among the workforce. Of course, management can always use sanctions
to force compliance with formal authority, but this is likely to cause resentment and lead
to conflict if the informal organisation does not accept the legitimacy of compulsion –
and there are many organisations where this is indeed the case.
The principle of the informal organisation and culture is easily observed in everyday
experience. Consider how difficult it can be to get certain things done in your
organisation which, on the face of it, should be easily achievable in terms of formal
rules and relationships. Consider as well how far your own view of the organisation
accords with the values and attitudes of your work colleagues, and how this affects the
manner and extent of your work. Who really sets the rules – the organisation itself or
you, the workers?
(b) Complexity of workers' needs
The second element identified by the human relations school is the extent to which
people come to work to gain satisfaction of needs other than that of simply earning
money. This is in stark contrast to the view of the classical school of management
theory.
People have a great variety of needs in life, and, if you think about it, it is clear that they
are likely to want to have many of those met in the place where they spend a
considerable amount of their time – the workplace. Obviously there is a need to make
a certain amount of money, but where this has been achieved (and in organisations
which offer secure employment with salaried posts, this is relatively certain) the
imperative of financial reward is considerably reduced. There is rather a need for
social interaction, self esteem and being valued, achievement, and many others, and
these needs can be manifested in all sorts of ways. (For example, a worker's
complaint may not necessarily be a recital of facts about a particular issue – it may be a
symptom of the need for recognition or a product of feelings about status. In many
cases, merely being able to voice the complaint may resolve the problem.) Managers
ignore these factors at their peril.

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The problem for management is to provide the conditions in the workplace for as many
of those needs to be met as possible. Thus, ensuring enthusiastic co-operation from
the workforce is likely to require good communications, recognition of effort (not just
effectiveness) and providing scope for achievement and advancement.
The experiments were subject to technical criticisms but it cannot be doubted that their
publication ignited interest in human relations and personnel management. The insight
they provided into organisational behaviour represented a step change in the
understanding of human needs at work. From this point, it became recognised that
individual employees viewed their organisation through the prism of their peers' values
and attitudes and this determined the extent of their drive and motivation at work.
However, the focus of this school on industrial sociology, and in particular the needs of
the individual and the group, meant that it tended to concentrate on people to the
exclusion of the organisation and its wider environment.
We shall return to this subject in detail later in the course when we look at people's
behaviour in organisations and, particularly, the topic of motivation. Writers such as
Maslow will be seen to provide a strong link to the human relations school in the
development of a hierarchy of needs and personal development. Others writers such
as McGregor, Herzberg, Likert and Argyris sought to validate and develop the findings
of Mayo and his research team.

C. ORGANISATIONAL STRUCTURES AND CULTURE

In organisations, there are deep-set beliefs about the way in which work should be
organised, the way in which authority should be exercised, people rewarded and punished,
etc. Culture embraces the influences that affect society's basic values, beliefs, perceptions
and behaviour. They are the characteristics of a particular society or sub-group within it. It
is, however, a difficult concept to describe since it is often not remarked on or recognised by
those most affected by it. Consider for a moment the following questions in relation to any
two organisations with which you are familiar:

 How formal is it?  Do work hours matter, or dress?

 Are there rules and procedures, or  Who is allowed to sign letters?
only results?
 Do committees control, or  Who do you have to go through to
individuals? see the boss?

It is likely that the answers to these questions will be different for each organisation.
These types of issue are encompassed in the structure and culture of the organisation.
These both have a very strong influence on the way staff behave and on way in which they
are managed.
 Organisational culture
The culture of an organisation refers to the deep-seated values underpinning the
organisation. It is manifested through a number of features (as discussed below) and it
is increasingly being recognised that the culture is fundamental to the success or
failure of organisations in meeting their goals.
Organisational culture is not something that is written down or, necessarily, is easily
stated. Rather, it is an intangible mixture of rules, relationships, values, customs,
values and attitudes which, taken together, describe the distinctive "feel" of the
organisation. It is within this culture that individuals work and from which they learn the
norms and values to which they are expected to subscribe.

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There is an associated term "organisational climate", which refers to the ways in

which people involved with the organisation (its stakeholders and its competitors)
perceive that organisation – for example, the degree to which it is friendly or
formal/distant, whether it is people oriented or task oriented, how concerned it is with
the welfare of its employees, or whether it is characterised by conflict or co-operation
between teams and departments.
 Organisational structure
This is the arrangement and inter-relationship of the component parts and positions of
an organisation. Whereas culture is hidden, structure can be seen and drawn in
organisation charts. Structure may reflect culture.

Characteristics of Organisational Culture

We can identify a number of characteristics from which it is possible to develop an
understanding of an organisation's culture.
 The organisation's goals – particularly its mission statement – and the extent to which
they are clear, communicated to and embraced by all levels of the organisation.
 The dominant behaviour patterns applying to the interaction within the organisation
and between the organisation and its stakeholders (its existing and potential
customers, investors, owners, etc.) – in respect of both what is expected and whether
actual behaviour lives up to these expectations.
 The distribution of authority and decision-making through the organisation –
basically along a continuum from being concentrated at the top to being spread
downwards to teams working close to customers by the empowerment of employees.
 The structure of the organisation is closely related to the distribution of authority and
may be easier to identify through the use of organisation charts, etc.
 The nature of leadership, which refers to the way in which power and authority are
exercised, again along a continuum from authoritarian to democratic.
 The values of the organisation in terms of its responsiveness to the needs and
aspirations of its own staff and to those of its stakeholders.
 The entrepreneurial spirit of the organisation, as revealed by the degree of
enterprise, innovation, competitiveness, flexibility and drive for excellence of the
organisation.
 Its receptiveness to embracing change, arising from changes in its environment –
particularly whether it is proactive (anticipating and planning for change) or reactive
(coping with change as and when it arises).

Classifications of Culture
A number of writers have analysed organisational culture and we shall consider two
approaches here.
(a) Handy's four cultural types
Handy's classification identifies four types of culture – power, role, task and person –
which are closely related to the organisational structure that is adopted by senior/top
management. He believes that organisations have a system of beliefs and values that
form the basis and foundation of their cultures.

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 Entrepreneurial structure and power culture

The first structure identified by Handy is the entrepreneurial structure. This
structure places an emphasis on centralisation and central power. Such power
exudes from the core of the business and the figurehead is seen as a very
powerful and influential individual, with the power and authority to allocate and
control resources and to do this based on the fact that their position gives them
carte blanche to do what they want.
Handy suggests that the culture dominant in this type of structure is the power
culture, and we can characterise such organisations as being like a web with a
ruling spider. Those in the web are dependent on a central power source.

Figure 2.1: Power Culture (the Spider's Web)

Rays of power and influence spread out from a central figure or group. There
may be a specialist or functional structure, but central control is exercised largely
through appointing, loyal key individuals and on interventionist behaviour from the
centre. Such control may be exercised on whim and through personal influence
rather than, necessarily, on procedures or purely logical factors.
Effectiveness is judged on results and, for the central figure, the ends can be held
to justify the means. Individuals succeed as long as they are power oriented,
politically minded and risk-taking with a low need for security. The power of
members is based on control over resources and personal influence with the
centre.
This type of structure can be found in small and medium-sized organisations that
are evolving (growing), are organic by nature and are responsive to change.
The main advantage of such organisations is that they are strong, proud and
dynamic, and are able to react quickly to external demands. However, power
cultures may suffer from staff disaffection – people in the middle layers may feel
they have insufficient scope, and the interventionist pressure and constant need
to refer to the centre may create dysfunctional competition and jostling for the
support of the boss. The organisation is also dependent on the ability and
judgement of the central power – if it is weak, then the organisation will struggle.
As the power organisation grows, the centrist culture breaks down if it becomes
impossible for the centre to keep up its interventionist, co-ordinating role. The
large organisation may need to divisionalise (create other spiders' webs linked to
the central web).
 Bureaucratic structure and role culture
The bureaucratic structure is based on logic and rationality. It places an
emphasis on roles within the organisation, rather than one central figure, and
relies heavily upon the distribution of power, authority, tasks and responsibilities.

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Handy indicated that the culture that is dominant in this structure is the role
culture.
Handy characterised such structures as being like a Greek temple (Figure 2.2).
The pillars of the bureaucracy represent functions and specialisms, usually
delineated as separate departments – for example, finance, design, marketing,
etc. Work within and between departments is controlled by procedures, role
descriptions and authority definitions. Communication takes place within well-
defined systems and structures (committee constitutions and reports, procedure
manuals, official memoranda, etc.). There are mechanisms and rules for
processing decisions and resolving conflicts. Matters are taken up the line to the
top of the structure where heads of functions can define a logical, rational and
corporate response. Co-ordination is implemented at the very top – by the senior
management group.

Figure 2.2: Role Culture (Greek Temple)

Efficiency stems from the rational allocation of work and conscientious

performance of defined responsibility. Job position is central to this, but not
necessarily the job-holder as a person. People are appointed to a role based on
their ability to carry out its functions – so effectiveness is seen in terms of
satisfactory performance of role. Indeed, performance over and above the role is
not expected and may disrupt.
Power is based on position, not personal expression, and the application of rules
and procedures are the major methods of influence.
Role cultures tend to develop in relatively stable environments and provide
predictability, standardisation, consistency and conformity. They tend to be
effective where economies of scale are more important than flexibility, or
technical expertise and specialisation are more important than product innovation
or product cost. However, role cultures may find it hard to adjust to change –
rules, procedures and tested ways of doing things may no longer fit the
circumstances.
Work in a role culture can be frustrating to someone who wants to exercise
discretion and the opportunity for innovation in his/her work. Those who are
ambitious will have to focus on exploiting existing procedures and methods, and
work within the committee structure. However, employees do benefit from
security and predictability in working patterns, can develop and apply specialist
skills without risk, and salary and career progression are predictable.
Examples of bureaucracies and role culture are local government and the civil
service, large insurance companies and IBM by the late 1980s. However, all
these organisations have undergone extensive change in response to the
pressures of market competitiveness and various forms of de-centralisation and

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de-regulation. Downsizing, de-layering and competitive tendering are examples

of how such organisations have restructured to become more flexible and
responsive.
 Matrix structure and task culture
The matrix structure places an emphasis on the completion of projects by means
of project teams or groups. Expertise is pooled in order to complete large
projects that, ordinarily, could not be achieved by one person. The emphasis is
on expertise and skill as opposed to power (in the entrepreneurial structure) and
role (in the bureaucratic structure). Handy identified the culture that dominates
the matrix structure as the task culture.
We can characterise this structure as a net with small teams of cells at the
interstices. It is very much a small team approach to organisations.

Figure 2.3: Task Culture (the Net)

As a culture, power and influence are distributed to the interstices of the net. The
emphasis is on results and getting things done. Resources are given to the right
people, at whatever level, who are brought together and given decision-making
power to get on with the task. Individuals are empowered with discretion and
control over their work. The task and results are the main focus, and team
composition and working relationships are founded on capability rather than
status.
Task culture is essentially flexible and adaptable, with teams being formed for
specific purposes and then moving on, and team composition possibly changing
according to the stage of the project. This allows flexibility and responsiveness to
both the environment and client needs. On the other hand, people in the team
who want to specialise may be sucked into general problem-solving; and when
the task changes, they must move with it rather than pursuing a particular
scientific or professional specialism. Project-based working often involves high
risk and ambiguity, which means far less security and certainty for employees
(particularly in comparison to bureaucracies).
Task culture is based on expert power with some personal and positional power.
Influence tends to be more widely dispersed, with team members feeling that
they each have more of it. In the team, status and individual style differences are
of less significance – the group achieves synergy to harness creativity, problem-
solving and thus gain efficiency. The aspirations of the individual are integrated
with the objectives of the organisation.
Organisational control is exercised through the allocation of projects and target-
setting, project budgets/resource allocation and monitoring/review by means of
progress reporting systems. Where resources become scarce, top management
may intervene more, and there may be competition between project leaders for
available resources. Morale may suffer and individual priorities and objectives

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take over, with the result that the task culture may become more like a power
culture.
We can see task cultures existing in arrangements such as network
organisations, where a large organisation effectively consists of small groups that
co-operate to deliver a project; and matrix organisations which are entirely project
oriented with ever-changing project or contract teams.
 Independence structure and person culture
The focus of the independence structure is on the individual. Individuals within
this structure are far more autonomous, but come together to make decisions that
affect them as a whole. This structure is present in small companies such as
consultancies, doctors' surgeries and law firms, where individuals have their own
objectives and skills and, in some cases, are largely responsible for their own
income-generation. Handy suggested that the culture that dominates the
independence structure is the person culture.

Figure 2.4: Person Culture (Cluster)

The structure exists only to serve the individuals within it – it has no

superordinate objective. Power and influence are shared, based on the fact that
individuals are seen to be equal. They will tend to have strong individual values
about how they will work and these will respected by others. Where individuals
from a person culture are working in other cultures, they will maintain their own
cultural values – for example, the consultant or specialist will do what is required
to retain his/her position in the organisation, but essentially sees the organisation
as a base on which he/she can build a career or carry out his/her own interests.
As such, they are very difficult for the organisation to manage.
This cultural type may be the only acceptable organisation to particular groups –
such as workers' co-operatives or where individuals basically work on their own
but find some back-up useful. It is becoming increasingly popular as the number
of consultancies increases.
It is possible that such organisations will only be effective for their original
members, or for small numbers of individuals. Where the organisation begins to
take on its own identity, it will start to impose on individuals, so moving towards
some of the other types of culture.
(b) Peters and Waterman – rational and excellence models
The management experts Peters and Waterman have provided a comparative
classification of what they see as the two main types of organisational structure and
cultures found in modern society. They term these the rational model and the

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excellence model. The rational model derives its structure and culture from the ideas
of classical and scientific management theory, whereas the excellence model is based
on Peters' own excellence theory, together with the work of Senge (on learning
organisations) and Deming (Japanese ideas).
The characteristics of the rational model are as follows:
 Organisations are large, so that they can reap the economies of scale.
 Low costs and cheapness of product or service are seen as the way to success.
 All activities are carefully analysed and controlled – for example, strict budgets
and cash flow analysis.
 All targets are firmly set in numerical terms.
 Low-range forecasts are produced in detail.
 Orthodox thinking is encouraged and rewarded.
 The manager's job is decision-making, and subordinates implement these
decisions.
 Organisational structures are complex, with detailed organisation charts and job
descriptions.
 People are treated as factors of production.
 Money is used as a motivator, and productivity is rewarded by bonuses.
 Staff who do not achieve performance targets are dismissed.
 Inspection is used to achieve quality control.
 Financial targets and their achievement are seen as the essence of business –
profits must be generated at once.
 The organisation must continue to grow.
A useful way to remember the cultural and structural values characterised by the
rational or traditional model of an organisation is to use the acronym THROB:
T Tall. This means there are many layers of management, ranging from junior
managers through middle management to top management. The many layers of
management and supervisors mean that there is a narrow span of control, i.e.
relatively few subordinates for each immediate superior. A tall organisation offers
a long ladder for promotion as individuals move up the structure.
H Hierarchic. This refers to clearly defined layers of power and authority, with
instructions flowing downward from top to bottom, and information and feedback
of results being reported upward through the layers of management.
R Rigid. The structure of the organisation is based on a clear set of principles
which can be applied to all organisations under all conditions.
O Organised. There is a strict division of labour: people are allocated to specific
jobs, which are organised into departments, each of which has a specific function
to perform and concentrate upon to the exclusion of anything else.
B Bureaucratic. The organisation is run by a strict set of rules, is formal and
impersonal, and work roles are clearly defined. There is a ladder of promotion
that may be climbed by gaining qualifications and by long service.
Peters and Waterman criticise the rational model for, in particular, its the emphasis on
numerical analysis, the orthodoxy of thought and the stress on cost reduction which

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gives such organisations a built in conservative bias. In place of the rational model,
they put forward their alternative model.
The excellence model is quite different from the rational model in that it has the
following characteristics:
 An emphasis on quality and value rather than purely on price.
 A search for new products or services.
 A distrust of over-reliance on numerical analysis, because it leads to a fixation
with costs. A belief in the innovative qualities of staff.
 The long view should replace short-termism in organisational decisions.
 The main assets of an organisation are the people who work in it.
 People should not be afraid of making mistakes as they strive to improve the
organisation.
 Management and organisational structures should be flexible.
 There is a stress on values instead of merely on profits.
 Parts of the organisation are encouraged to compete against each other.
 Management should have vision and motivate others to share this vision.
 Managers should realise that people are not always rational.
 Organisational structures should be as simple and "flat" as possible.
You can remember the excellent or flexible model of an organisation by using the
acronym FELT.
F Flat. This refers to there being few levels of management.
E Empowered. This means that workers have greater control over decisions which
affect their work, making the culture more democratic.
L Lean. This refers to keeping stock-holding to a minimum by having just-in-time
(JIT) deliveries and also to outsourcing all new core activities.
T Teams. This refers to the replacement of conventional departments with multi-
functional teams. Within the teams, work roles are flexible and individuals are
encouraged to learn and deploy new skills.

Cultural Variance and Workplace Behaviour

The above sections have been concerned with organisational culture but you will be aware
that national cultures also vary considerably and these will provide the more general cultural
context within which businesses operate. Trompenaars identified seven aspects where such
cultural variations may affect organisational behaviour:
 Universal societies are characterised by rigid rule-based behaviour. Examples would
include autocratic or totalitarian countries. At the opposite end of the continuum are
countries with so-called particular societies, where flexible interpretation of any rule or
situation is accepted (e.g. the USA).
 Societies may be individual or collective in form. So, for example, Italian society is
based on the extended family whereas Japanese society is relatively hierarchical and
dominated by very large corporations.
 Societies may also vary from the emotional (e.g. Italy and Spain) to the neutral (e.g.
Germany and the reserved (e.g. English).

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 Some societies are achievement based where success or a record of success is the
yardstick for measuring individual accomplishment. In contrast, there are more
traditional societies where status is ascribed by virtue of family, age, gender or record
of good works.
 Some societies have a very strong sense of the future, e.g. Hong Kong or California,
whilst others have a very strong sense of the past, e.g. Portugal or Greece.
 Some cultures are very specific, and business relationships are primarily contractual
and detached from other aspects of life. Others are referred to as "diffuse" as the
whole person is involved in the evolving relationships.
 Societies are also seen to vary according to their attitude towards the wider
environment. Some believe it can be controlled or manipulated to their will through
technology or pure effort, while others believe their fate is fundamentally sealed.

Review Points
1. Give a brief definition of organisational behaviour (in an examination you will be
expected to define all the key terms in a question; especially this one, since it is the
name of the unit you are studying).

2. List what you understand organisational behaviour to involve at the individual, group
and organisational levels.

3. Who are the internal stakeholders of an organisation?

4. Who are the most important stakeholders in your organisation: the customers, the
employees or the managers?

5. Define the meaning of organisational culture and explain how you would recognise it.

6. Think of an organisational example for each of Handy's four cultural types and explain
why you chose each one.

7. Of the rational and excellence models of organisational culture, which might perform
best in the following circumstances and why?
(i) A period of steady and sustained economic development;
(ii) A period of dynamic but uncertain change.

8. Compare the cultural characteristics of your own country with those of England or the
USA.

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D. INFLUENCING ORGANISATIONAL BEHAVIOUR

Influencing behaviour, whether at the individual, group or organisational level, is one of the
primary concerns of the rest of this study text. We have already considered some significant
influences. Can you think what these were?
The first was the mission and objectives set for the organisation. Senior management
formulate these and one of their major functions is to develop commitment from individuals
and groups towards the activities of the organisation. Goals are necessary for concerted
effort to be achieved and an organisation can only move forward effectively if all members
are pulling in the same direction. Whether mission statements and the goals derived from
them do influence behaviour may depend on how they are formulated and whose interests
they serve. If top management merely hand them down as if on tablets of stone and without
any form of consultation then it may be no surprise if many in the workforce are unaffected,
or if conflict results.
If, on the other hand, the goals do seek to reconcile the interests of the workforce with those
of management and the latter demonstrate a willingness to listen to or even involve the
workforce, then more influence on behaviour will result. As we will find in future units, those
who have contributed to the formulation of objectives often develop a strong commitment to
achieving them. Indeed, the development of high morale in a workforce is largely the product
of congruency in goals and effective leadership in achieving them.
A second influence on behaviour we have considered is that of ideas and, to a degree,
organisational values. We have traced the history of management ideology through scientific
management and structural analysis to the development of bureaucracy and its
impersonality. These approaches influenced the style and nature of management then and
we continue to feel influences today, despite considerable change in the social and economic
environment. You have also just studied the origins of the human relations school and the
influence of the likes of Mayo, Maslow and McGregor. Their ideas continue to influence the
behaviour of management and largely explain the current importance of human relations
departments. Modern ideas have moved on, with a greater stress on organisations that
match the situation they face. This has put a premium on flexible structures and adaptability
to change. Also, there is more concern with outcomes, effectiveness and performance, with
greater attention being given to the ingredients that produce excellence.
A third influence on behaviour is the atmosphere or feel of an organisation. Culture, as you
have just been considering, concerns the less-tangible aspects of organisational life. It is a
common frame of reference shared by most organisational members but largely taken for
granted. It is acquired through exposure to the organisation and forms a set of unwritten
rules that govern behaviour. Some refer to it as "the way we do things round here" and it is
learnt by all new recruits to an organisation. It is the customary way of behaving; reflecting
as it does the underlying values of the organisation, and it ensures you are accepted by both
individuals and the group.
Schein viewed culture as a series of overlapping layers. At its core are the fundamental
beliefs that are almost taken for granted by its members. These assumptions will vary by
type of organisation in that an environmental pressure group will believe in sustainability
whereas a firm may believe in the full force of market forces. Overlapping these will be
values and beliefs that flow directly from the assumptions and drive behaviour. The
environmental pressure group will believe in re-use, re-design and recycling and the firm will
value de-regulation and enterprise. The final layer is the most visible reflection of culture.
Can you think of the different ways in which cultural values are expressed in your
organisation whether by word or behaviour? Can you think of examples of the following in
your organisation?

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 Codes of behaviour – these are often called norms and reflect underlying values and
assumptions, e.g. managers must be the last to leave and be first to arrive if they are to
achieve promotion.
 Language – reflected in the way managers talk to subordinates or the jargon that is
used by those "in the loop".
 Rites – these are organisational habits and ceremonies that signal appropriate
behaviours, e.g. dress codes, after-work get-togethers.
 Symbols – these are things like office layout, the size of desks, and the number of
support staff, which are seen as demonstrating relative importance and authority.
 Organisational folklore – these are stories or anecdotes that convey the central values
of the organisation and underline what it views as desirable behaviour.
 Taboos – these signal the "don'ts" in terms of unacceptable behaviour, e.g. cheating in
examinations.

Other Factors to be Considered

Future units will consider a number of important factors that also influence behaviour. You
should be aware of these so you can appreciate the involved and inter-related nature of the
management task. If management wish to positively influence human behaviour then they
have a number of approaches at their disposal, although deciding on the optimum
combination of influences for maximum effect is the mark of the great leader. The following
is a summary of the main approaches yet to be considered:
 Personality and perception
These refer to the individual and their contribution to organisational behaviour.
Perception is a mental process involving the selection, organisation, structuring and
interpretation of information in order to make inferences and give meaning to it.
Personality, on the other hand, is those stable and enduring aspects of an individual
that distinguishes them from others and at the same time forms the basis for predicting
future behaviour. These both clearly affect individual behaviour but are less readily
influenced by management.
 Attitudes, learning and stress
Attitudes also refer to the individual and their contribution to behaviour. They are a
mental state of readiness, organised through experience to behave in a characteristic
way towards the object of the resistance. Attitudes drive behaviour and the more
strongly they are held, the more resistant they are to change. Learning is the
acquisition of skills that enables someone to do something. This changes behaviour
and is much more susceptible to managerial influence through training and
development. Stress is the degree of tension or anxiety experienced by a person.
Some stress may have a positive effect on performance but generally speaking it is
more likely to impact negatively on behaviour. Management will have more scope to
relieve the negative stressors and secure a positive behavioural response.
 Motivation
This is clearly one of the main means of influencing behaviour that we will consider.
Motivation is a state in which a person perceives that it is appropriate to pursue a
certain course of action, directed at achieving a specified outcome and in which the
person chooses to pursue that outcome with a degree of vigour and persistence. In
other words, behaviour is directed at achieving a goal and management will be very
interested in understanding how to influence such behaviour.

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 Job satisfaction and job re-design

This provides a fundamental means of influencing behaviour since job satisfaction is a
pleasurable and positive emotional state, resulting from a person's appraisal of their job
or job experience. So long as a happy worker is also a productive worker there is no
conflict of interest. Job design is the means by which management can manipulate the
nature and responsibilities of the job to create the satisfaction.
 Group working
This is the characteristic method of working in many organisations and group behaviour
has its own dynamic. Management are in a position to influence behaviour in formal
group but not directly in the informal group which often provides a buffer between the
individual and the organisation. Groups may be effective or ineffective according to
their characteristics, composition and development and it is up to management to
ensure they have the blended roles and skills to realise this.
 Leadership
Since leadership is the process by which individuals are influenced so that they are
prepared to participate in the achievement of organisational or group goals, this must
represent one of the main factors driving behaviour. We will look at nature of
leadership and in particular the exercise of power and authority. We will also recognise
that different styles of leadership are effective in different situations.
 Communication
This is a necessary process if any influence on behaviour is going to be achieved.
Management must be aware that it does not happen of its own accord, except perhaps
in the informal organisation, and barriers must be recognised and overcome if it is to be
effective. Failing to communicate will affect behaviour just as much as when
communication takes place and we will explore this in the final unit.
As you can see there are a number of ways in which behaviour is influenced in
organisations and you may need to draw on your understanding of these processes
across the syllabus in order to answer examination questions on this aspect.

The Psychological Contract

L J Mullins uses the above concept to define one significant aspect of the relationship
between the individual worker and the organisation. It forms an unwritten statement of the
mutual expectations they hold. It is a two-way process of give and take that covers a range
of considerations that do not normally form part of the contractual agreement but have
important effects on people's behaviour at work. The nature and extent of these
expectations, rights and duties vary by type of organisation and sector, and also change over
time. However, Mullins included the following as a representative list:
 Provide safe and hygienic working conditions;
 Make every reasonable effort to provide job security;
 Attempt to provide challenging and satisfying jobs and reduce alienating aspects of
work;
 Adopt equitable personnel policies and procedures;
 Allow staff genuine participation in decisions that affect them;
 Implement best practice in equal opportunity policies and procedures;
 Provide reasonable opportunities for personal development and career progression;
 Treat members of staff with respect;

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 Demonstrate an understanding and considerate attitude towards personal problems.

On the other hand, the organisation will also have expectations of its members which might
include:
 Accepting the values and ideology of the organisation;
 Working hard in pursuit of organisational objectives;
 Not abusing the goodwill shown by management;
 Showing loyalty to the organisation;
 Observing reasonable standards of personal behaviour and appearance.
You will not be surprised to learn that some of these expectations may conflict and that it is
unlikely that all of them will be achieved at one time. Management will, however, seek to
negotiate an on-going compromise between any competing demands. The fact that the
expectations are not precisely defined allows this process to proceed in this manner. The
experience of this contract will also have a significant impact on newly recruited staff and will
largely determine the willingness of staff to remain with the organisation over time.
In the next unit, we will turn our attention to the individual's contribution to our understanding
of organisational behaviour. You should be able to identify with the discussion of personality
at a personal level as well as apply the understanding of perception that will be provided.

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End of Unit Thinking Points

Having studied this unit on organisational behaviour and its importance to management, you
should be in a position to answer a range of examination-type questions. As part of your
reflection upon the content of this unit, make brief answer notes on the following questions?

1. Define the main characteristics of organisations and explain the behavioural approach
to managing organisations in a dynamic and changing world;

2. Distinguish between organisational culture and organisational climate. What factors

are relevant to an understanding of an organisation's culture?

3. Outline the strengths and weaknesses of the classical school of management and
compare this approach with one based on human relationships.

The initial part of the first question requires you to refer back to the opening unit of this Study
Manual to refresh your memory about organisational characteristics. Notice how
examination questions may draw on different parts of the syllabus. "Define" suggests that
you briefly list the main characteristics. The second part of the question requires an answer
set in the context of a dynamic and changing world as well as an explanation of the
behavioural approach as discussed in the first section of this unit.
The second question requires a distinction or comparison to be made between the two terms
once they have been defined. The following might form a good answer to this part of the
question:
Organisational culture refers to the deep-seated values, attitudes, perceptions and behaviour
underpinning the organisation. Organisational climate is a variable condition that reflects the
current state of the organisation as perceived by key stakeholders such as employees and
managers.
 Culture is recognised as a key success (or failure) factor in the achievement of the
organisational mission and goals. Whether an organisational is perceived as being
characterised by conflict or co-operation will reflect its climate.
 Culture tends to be an intangible that is not formally written down or even
acknowledged. Climate is also intangible but may be experienced in the degree to
which the organisation is seen as friendly or formal.
 Culture is a mixture of rules, accepted modes of conduct, values, customs and
relationships that together provide a unique and distinctive "feel" for an organisation.
Climate is important in terms of achieving goals or accepting necessary change.
 New recruits will be socialised by learning the norms and values to which they are
expected to adhere. Organisational climate will also be conditioned by the degree of
concern for the welfare of employees.
Since eight marks are likely to be available for an exam question of this type, this answer
provides more than enough comparison points to achieve full marks. The second part of the
question requires a statement of the characteristics listed in the section on culture. You will
achieve very good marks in an exam question like this if you show why the characteristics
are relevant.
The third question is straightforward so long as you draw on the strengths and weaknesses
of the classical school outlined in the last unit and compare them to the approach taken by
the human relations theorists.

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