Organizational Behavior

What is an Organization?
An organization

is a collection of
people who
work together
to achieve
individual and
organizational
goals.

What is an Organization
A

consciously coordinated social

unit, composed of two or more
people,
relatively

that

functions

continuous

on

basis

to

achieve a common goal or set of

goals.

What is Organizational
Behavior?
Organizational behavior
(OB)

is

the

study

of

factors that affect how

individuals and groups act
in organizations and how
organizations

manage

their environments.

Levels of Analysis
Organizational Level
Group Level
Individual
Level

Components of Organizational
Behavior
Understanding
organizational behavior
requires studying
Individuals in Organizations
Group and Team Processes
Organizational Processes

Managerial Skills
Conceptual Skills:

The ability to analyze and

diagnose a situation and
distinguish between cause
and effect.
Human Skills:
The ability to understand,
work with, lead, and control
the behavior of other people
and groups.
Technical Skills:
Job-specific knowledge and
techniques.

Skills exhibited by Effective

Manager
Clarifies goals & objectives for everyone involved;
Encourages participation, upward communication,

& suggestions;
Plans & organizes for an orderly work flow;
Has technical & administrative expertise to

answer organization-related questions;

Facilitates work through team building, training,

coaching, & support;

Skills exhibited by Effective Manager (Cont.)

Provides feedback

honestly & constructively;

Keeps things moving

by relying on schedules, deadlines, &

helpful reminders;

Controls details
Applies reasonable

without being arrogant;

pressure for goal accomplishment;

Empowers & delegates key duties to others while

maintaining goal transparency & commitment;

Recognizes good performance

corroboration.

with rewards & positive

Organizational
Behavior
A field of study that investigates the impact that
individuals, groups, and structure have on behavior
within organizations, for the purpose of applying such
knowledge

toward

improving

an

organizations

effectiveness.
Gregory Moorhead :2007

Organizational
Behavior
The

field

of

OB

deals

with

human

behavior in organizations
OB is the multidisciplinary field that

seeks

knowledge

of

behavior

in

organizational settings by systematically

studying

individual,

groups,

and

organizational processes.
Jerald Greenberg:2008

Organizational
Behavior
This

knowledge

is

used

both

by

scientists interested in understanding

human behaviour & by practitioners
interested in enhancing organisational
effectiveness & individuals well being.
Robert A .Baron:2008

Organizational
Behavior
Organisation Behaviour is concerned
with the study of what people do in an
organisation and how that behaviour
affects

the

performance

of

the

organisation.
Robbins: 1998,9

Organizational Behavior
OB
highlights
four
characteristics of the field.

central

It is firmly grounded in the scientific method.

It studies individuals, groups & organisations.
It is interdisciplinary in nature.
It is used as the basis for enhancing organisational

effectiveness & individual well-being.

Organizational
Behavior
The study of Organisational Behaviour involves:
consideration of the interaction among the formal

structure (organisational context in which the process of

management takes place)
the technology employed and the methods of carrying

out work
the behaviour of people
the process of management
the external environment

Organizational
Behavior
Interrelated dimensions influencing behaviour:
The Individual - working environment should satisfy individual

needs as well as attainment of organisational goals.

The Group - formal and informal. Understanding of groups

complements a knowledge of individual behaviour.

The Organisation - impact of organisation structure and

design, and patterns of management, on behaviour.

The Environment - technological and scientific development,

economic activity, governmental actions.

Intuition and Systematic Study

Intuition
Gut feelings
Individual observation
Common sense

Systematic Study

Looks at relationships
Scientific evidence
Predicts behaviors

The two are complementary means of

predicting behavior.

An Outgrowth of Systematic Study

Evidence-Based Management
(EBM)
Basing managerial decisions on the best
available scientific evidence.
Must think like scientists:
Pose a managerial question
Search for best available evidence
Apply relevant information to case

Intuition and Systematic Study

The trick is to know when to go with your
gut.
Jack Welch
Intuition is often based on inaccurate
information
Faddism is prevalent in management
Systematic study can be time-consuming
Use evidence as much as possible to inform
your intuition and experience. That is the
promise of OB.
Managers Should Use All Approaches

Behavior
al
science

Psychology

Social
Social
psychology
psychology

Sociology

Contributions
Learning
Learning
Motivation
Motivation
Personality
Personality
Emotions
Emotions
Perception
Perception
Training
Training
Leadership
Leadership effectiveness
effectiveness
Job
Job satisfaction
satisfaction
Individual
Individual decision
decision making
making
Performance
Performance appraisal
appraisal
Attitude
Attitude measurement
measurement
Employee
Employee selection
selection
Wok
Wok design
design
Work
Work stress
stress

Output

Individual
Individual

Behavioral
Behavioral change
change
Attitude
Attitude change
change
Communication
Communication
Group
Group processes
processes
Group
Group decision
decision making
making
Communication
Communication
Power
Power
Conflict
Conflict
Intergroup
Intergroup behavior
behavior
Formal organization
organization theory
Formal
theory
Organizational
technology
Organizational technology
Organizational
Organizational change
change
Organizational
Organizational culture
culture
Comparative
Comparative values
values
Comparative
Comparative attitudes
attitudes
Cross-cultural
Cross-cultural analysis
analysis

Anthropology
Anthropology

Unit of
analysis

Organizational
Organizational environment
environment
power
power
Organizational
Organizational culture
culture

Group

Organizational
Organizational
system
system

Study of
organizational
behavior

Four Contributing
Disciplines
Psychology

The science that seeks to measure,

explain, and sometimes change the
behavior of humans and other animals.
Unit of Analysis:

Individual

Contributions to OB:
Learning, motivation, personality, emotions,
perception
Training, leadership effectiveness, job satisfaction
Individual decision making, performance
appraisal, attitude measurement
Employee selection, work design, and work stress

Four Contributing
Disciplines
Social Psychology
An area within psychology that blends concepts
from psychology and sociology and that focuses
on the influence of people on one another.
Unit of Analysis:

Group
Contributions to OB:
Behavioral change
Attitude change
Communication
Group processes
Group decision making

Four Contributing
Disciplines

Sociology

The study of people in relation to their fellow

human
beings.
Unit of
Analysis:

Organizational System

Group
Contributions
to OB:
Group dynamics
Work teams
Communication
Power
Conflict
Intergroup behavior

Formal organization

theory
Organizational
technology
Organizational
Organizational

change
culture
1-25

Four Contributing Disciplines

Anthropology
The study of societies to learn about
human beings and their activities.
Unit of Analysis:
Organizational System
---

Group
Group

Contributions to OB:
Organizational culture
Organizational

environment

Comparative values
Comparative attitudes
Cross-cultural analysis

SIGNIFICANCE OF OB
Road map to our lives in organizations
Helps us understand and predict organizational life
Influences events in organizations
Helps understand self and others better
Helps a manager get things done better
Helps maintain cordial relations
Highly useful in the field of marketing
Helps in career planning and development

Limitations of OB
Knowledge about OB does not help an individual

manage personal life better

Qualities of OB are mysterious
Has become a fad with managers
Is selfish and exploitative
Managers expect quick-fix solutions-not possible
Principles and practices may not work in the

events of declining fortunes

Cannot eliminate totally conflict and frustration

Challenges & Opportunities

for OB
Responding to Globalization

Managing Workforce Diversity

Improving Quality and Productivity
Improving Customer Service
Improving People Skills
Stimulating Innovation and Change
Coping with Temporariness
Working in Networked Organizations
Helping Employees Balance Work-Life Conflicts
Creating a Positive Work Environment
Improving Ethical Behavior

1-29

OB Challenges

Globalization
Refers to the economic, social and cultural

connectivity within people in other parts

of the world.
It is all about the ongoing process of
increasing interdependence with each
other around the planet, whether through
trading goods & services, sharing
knowledge or interacting with people from
different cultures & locations in the world.

Challenges and Opportunities for OB

Responding to Globalization
Increased foreign assignments
Working with people from different
cultures
Overseeing movement of jobs to countries
with low-cost labor
Managing people during the war on terror

1-32

Why Globalization?
Access to additional resources (including

skilled workforce)
Low cost
Economies of scale
Favorable regulations & tax systems
Direct access to new and growing
markets
Ability to customize products to local
tastes & styles

Workforce Diversity
Workforce diversity means that
organisations are becoming a more
heterogeneous mix of people in terms of
gender , age , race , physical ability etc .
A diversity workforce e.g. may include ,
Women

Color of people

The physically disabled

Senior citizens etc.

Workforce Diversity
in India
Indian organisations have accommodate
a very diverse social group of employees
based on socio-economic, cultural and
linguistic composition.

Scheduled castes & Scheduled tribes

Other Backward castes

Bonafide members of the state

Ex-defense & paramilitary personnel

Disabled persons

Gender issues

Diversity
Diversity enhances creativity and innovation

(Adler, 1997;Jackson et al., 1992), and

produces competitive advantages(Coleman,

2002; Jackson et al., 1992).

Diverse teams make it possible to enhance

flexibility (Fleury, 1999) and

Rapid response and adaptation to change

(Adler, 1997; Jackson et al., 1992.

The Four Layers of Diversity

OrganizFunctional
ational Dimens
Level/
ions
Classification

External Dimensions
*
Geographic Location

Mgmt.
Status

Marital
Income
mensions*
StatusInternal Di
Age

Parental
Status

Work
Content/
Field

Personal
Habits

Race

Personality
Recreational
Habits

Appearance

Union
Affiliation

Sexual
Orientation

Ethnicity

Work
Experience

Work
Location

Physical
Ability

Religion

Educational
Background
Seniority

Division/
Dept./
Unit/
Group

Challenges and
Opportunities for OB
Managing Workforce Diversity
The people in organizations are becoming

more heterogeneous demographically

(disability, gender, age, national origin,
non-Christian, race, and domestic
partners)
Embracing diversity
Changing demographics etc.

Primary and Secondary Dimensions of Diversity

Impact of Diversity
Organizational culture
Calls for diverse approaches to

managing people including training the

staff in desired skills
For example, people with adequate

programming skills are not available in US & UK

markets (HR Head, Infosys, Economic Times,
2009)

Prominent world level

companies
McDonald
Founded in 1967 in Canada
Operating income 50% earned from

outside US operations (2005)

Every three hrs. a new McDonald opens

somewhere on earth
2/3rd of its workforce non-US

Prominent world level companies

Coca-Cola
Operates in more than 200 countries
80% of its workforce are non- US citizens
Has 500 trained personnel to go anywhere in the

world to offer advice and expertise concerning

operational and customer service problems
70% of its operating income comes from

operations out side of US

Prominent world level companies

Nokia
the cell phone giant from Finland employs over
1000 foreign workers in Finland & over 60% of
its 53000 employees are non-fins
Philips
an electronic giant employs 83% of its
workforce outside of its headquarters in the
Netherlands
IBM
employ almost 80000 people in India (Eco.
Times, April, 2010)

Prominent world level companies

TCS
an Indian IT giant is planning to increase its
non-Indian workforce to 20000 from present
10000 over the next 5 years
Infosys & Wipro
could see non-Indians account for 10-15% of
their total employee base in next 3-5 years,
from around 5% presently
th April, 2009)
(Economic Times, 27th

Increased Workforce Diversity Women

Glass Ceiling
Invisible barrier blocking
women and minorities from top
management positions
Women CEOs (as of 2/2007):
10 of Fortune 500
23 of Fortune 1000

What helps break the ceiling?

Increased Workforce Diversity - Race

Racial

minorities
are growing
2006 1,016

race-based
charges of
discriminati
on to EEOC

Education and Personal Income

Increased Workforce Diversity - Age

Benefits from Managing Diversity

Xerox
plants using diverse work teams are now
30 per cent more productive than
conventional plants.
Procter & Gamble
achieves
30-40
per
cent
higher
productivity at its 18 diverse team-based
plants than at its non-diverse plants.
Motorola
beat its competition by producing the
worlds most efficient and high-quality
cellular phones which are produced
almost exclusively by diverse work
teams.

Benefits from Managing Diversity

GE

Power

productivity

Systems
gains

achieved

from

13

per

cent

cross-functional

and

multicultural teams versus homogeneous teams.

Numerous

empirical

studies

of

work

teams

demonstrate that when tasks are complex and not

clearly defined, heterogeneous teams outperform
homogeneous teams. Super teams, those that
were diverse in numerous respects and selected
because of their differences, outperformed those
that were homogeneous.

Benefits from Managing Diversity

Unlike

other

MNCs,

diversity

for

us

is

business

imperative and not an issue of legal compliance. We want

HLLs management to be representative of our diverse
customer base so that they understand the needs of the
customer better. If a manager understands the brand she
is handling, the learning curve is that much shorter. For
instance, in marketing, if the target audience is women, it
is an advantage if a woman is incharge of the brand. Says
Prem Kawath, HR Manager, HLL.4

Leaders in Diversity

Pepsis CEO & direct

reports are each

assigned different
employee group (e.g.,
GLT, Asian, women of
color)
Responsible for:
Understanding the

issues these employees

face
Facilitating their growth
and development
Hold themselves

accountable

Evolution of Organizational
Behaviour
Three significant Eras:

The Classical Era (1880-1930)

Administrative theory
Scientific Management

The Behavioural Era (1930-1960)

The Hawthorne Legacy

The Modern Era (1960 onwards)

Contingency Approach

A Brief History of OB
Classical approach to management (scientific

management and administrative management)

Hawthorne

studies

(workers

respond

to

attention)
Human

relations movement (treat workers

well to boost productivity)

contd.

A Brief History of OB
Contd.
The contingency approach (examine

individual and situational differences

before taking action)
Positive organizational behavior (focus

on measurable strengths of workers to

improve performance)

The classical approach

The focus of scientific management

was the application of scientific

methods
to
increase
individual
workers productivity.

According to the principles of

scientific management, there is a
division of work between managers
and workers.

The classical
approach
TAYLORS PRINCIPLES
the development of a true science for each
persons work
the scientific selection, training and
development of the workers
co-operation with the workers to ensure
work is carried out in the prescribed way
the division of work and responsibility
between management and the workers.

The classical
approach
Administrative

management
was
concerned
primarily
with
how
organizations should be managed and
structured.

The core of management knowledge

lies within the classical school,
including the framework of planning,
organizing, and controlling.

The classical approach

Henry Fayol classified all the business
activities into six functions:
Technical activities
Commercial activities
Financial activities
Security activities
Accounting activities
Managerial activities

The Hawthorne Studies

During the 1920s, attention began to focus on social factors

at work, groups, leadership, the informal organisation and

behaviour of people.
Behavioural and informal are alternative headings

sometimes given to this approach.

Turning point came with the famous Hawthorne experiments

at the Western Electric Company in America (1924-32)

One of the researchers (leader) was ELTON MAYO (1880-1949)

The Hawthorne Studies

Four Main Phases to the Hawthorne
Experiments
The Illumination Experiments - level of

production was influenced by factors other than

changes in physical conditions of work.
The Relay Assembly Test Room - attention

and interest by management reason for higher

productivity.

The Hawthorne Studies

The Interviewing Programme -20,000 interviews.

Gave impetus to present-day personnel management

and use of counselling interviews. Highlighted the
need for management to listen to workers.
The Bank Wiring Observation Room - Piecework

Incentive Scheme. Group pressures stronger than

financial incentives offered by management

The Hawthorne
Studies

A major conclusion from these studies

was the workers reacted positively
because management cared about them
(the Hawthorne effect).

The Hawthorne effect is the tendency of

people to behave differently when they

receive attention because they respond
to the demands of the situation.
contd.

The Hawthorne Studies

contd.

The Hawthorne studies also led to

many other conclusions, such as the fact
that
effective
communication
with
workers is critical to managerial success

The Human Relations

Movement
The

human relations movement was

based on the belief that an important
link exists among managerial practices,
morale, and productivity.

Key points of the movement are that

satisfied workers are more productive

and that, given the proper working
environment, virtually all workers would
be highly productive.

Contingency Approach
Writers in the 1950s and 1960s who adopted a more

psychological orientation.

Major focus was the personal adjustment of the

individual within the work organisation and the

effects of group relationships and leadership styles.

Main contributors: MASLOW, HERZBERG AND

McGREGOR.

Contingency Approach
MASLOWS HIERARCHY OF HUMAN NEEDS
General Examples
NEEDS
Organisational Examples
Achievement
SELF-ACTUALISATION Challenging Job
Status
ESTEEM
Job Title
Friendship
social
Friends in the
Work
Group
Stability
SECURITY
Pension Plan
Sustenance
PHYSIOLOGICAL
Base Salary

Contingency Approach
HERZBERG isolated two different sets of factors
affecting
motivation and satisfaction at work.
1. Hygiene or Maintenance Factors - concerned basically
with job environment. Extrinsic to the work itself.
2. Motivators or Growth Factors - concerned with job
content. Intrinsic to the work itself.
Goal of managers is to achieve a state of no dissatisfaction
by
addressing Hygiene Factors. Task of improving motivation is
then by addressing the Motivators.

Contingency Approach
McGREGOR argued that the style of Management
adopted is a
function of the managers attitudes towards human
nature and
behaviour at work.

He put forward two suppositions called Theory X and

Theory Y which are based on popular assumptions
about work and people.

Contingency Approach
THEORY X ASSUMPTIONS
People do not like work and try to avoid it.
People do not like work, so managers have to

control, direct, compel, and threaten employees to

get them to work toward organisational goals.
People prefer to be directed, to avoid responsibility,

to want security, and have little ambition.

Contingency Approach
THEORY

Y ASSUMPTIONS

People do not naturally dislike work; work is a natural

part of their lives.

People are internally motivated to reach goals to which

they are committed.

People are committed to goals to the degree that they

receive personal rewards when they reach their

objectives.
People will seek and accept responsibility under

favourable conditions.
People have the capacity to be innovative in solving

organisational problems.

Contingency Approach
A

cornerstone of the human relations

movement is Theory X and Theory Y of
Douglas McGregor.

Theory

X is the somewhat stern and

pessimistic traditional assumptions about
worker capabilities.

Theory Y is an alternative, and optimistic,

set of assumptions

The Contingency Approach

The contingency approach to management

emphasizes there is no one best way to

manage people or work.
The contingency approach is derived from

the study of leadership styles.

The strength of the contingency approach is

that
it
encourages
managers
and
professionals to examine individual and
situational differences before deciding on a
course of action.

Milestones in the History of Organization

Behaviour
Robert Owen, Andrew Ure and J.N. Tata

Industrial Revolution

Scientific Management

Human Relations
Movement

Contingency Approach

provided certain welfare facilities. The

ideas degenerated into paternalistic
approach.

Taylor
believed
in
rationalizing
production. He believed Early 20th
Century
that human behaviour was
based on rabble hypothesis.

Great Depression, labour movement

and during 1920s to 1940s Hawthorne
led to the movement. The movement
subsequently
became
a
fad
Organisational behaviour 1950s
The contingency approach is that it
encourages
managers
and