Organizational

Behavior

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 Fundamentals of
Organizational Behavior
• Success of an Orgn depends on the ability to
understand, manage and combine humanity (people)
and technology ( science)
• Technology is rapidly changing, can be mastered
• Understanding & predicting human behavior is more
difficult as every individual is unique & different from
each other
• Study of OB to understand human behavior, improve
interpersonal skills, manage people in more efficient
manner
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 Fundamentals of
Organizational Behavior
DEFINITIONS
John Newstrom & Keith Davis – “study & application of
knowledge about how people, as individuals & as
groups, act within organizations”

Greenberg & Baron – “ field that seeks knowledge of

behavior in Orgnal settings by systematically studying
individuals, group and orgnal processes”

Stephen Robbins – “ a field of study that investigates the

impact of individuals, groups & structure have on
behavior within orgns for the purpose of applying such
knowledge towards improving an Orgn’s effectiveness” 3
 Fundamentals of
Organizational Behavior

• OB is an applied science
• Seeks to discover new ways of increasing
effectiveness of people’s behavior in orgns
• Continuous research & development of new
concepts
• OB can be applied to all types of orgns –
businesses, government, educational institutions

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 Fundamentals of
Organizational Behavior
OB studies behavior of people at different levels –
2. Individual – individual attitude, personality, motives
3. Interpersonal – interaction bet employees
4. Group – impact of formal & informal groups
5. Intergroup – coordinating efforts of different groups for
smooth attainment of objectives
6. Organizational – structure, culture, impact on
individuals & groups
7. Inter-organizational – impact of mergers, acquisitions,
joint ventures, external environment on people
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 Fundamentals of
Organizational Behavior
OB has 4 main objectives –
2. Describe behavior – gather info to describe human
behavior accurately & completely, how people behave
under different conditions, helps mgrs to describe &
communicate
3. Understand behavior – understand & explain causes of
behavior, find reasons behind actions, helps mgrs to
understand better & deal effectively with employees
4. Predict behavior – helps mgrs to identify productive/
unprod employees, sincere, dedicated/ disruptive
5. Control behavior – motivate, reduce stress & improve
team effort 6
 Fundamentals of
Organizational Behavior
FORCES AFFECTING OB
People
 Most vital aspect of an org

 Operate as individual / groups

 Groups – large/ small/ official/ unofficial and are dynamic

as they are formed, changed, disbanded
 Employees come from diverse backgrounds, differ in
education, talent, culture, lifestyle, values
 Orgn must focus on building rel-ships, show care
concern, attend to problems, build competence & sense
of pride, create an environment of openness &
confidence 7
 Fundamentals of
Organizational Behavior
Structure
 Number of people working at diff levels & performing diff
jobs
 Structure is the formal rel-ship & use of people in orgn

 Modern struc is flatter (fewer levels) & more complex

Technology
 Set of processes to transform resources into goods/
services
 Significant impact on working rel-ships

 Advantages & disadvantages of technology

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 Fundamentals of
Organizational Behavior

Environment
 Internal & external

 Family, government, economic factors, competitors

 Consumers have become more demanding expect more

in terms of products / services

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 Fundamentals of
Organizational Behavior
NATURE OF PEOPLE
 Individual Differences – every human is unique &
different from the other, on account of heredity (nature)
and environment (nurture), mgrs cannot deal with all
employees in the same way and each must be handled
differently

 Perception – way in which each person sees,

organizes and interprets things, perceptions differ in 2
individuals because of differences in their personality,
needs and values.
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 Fundamentals of
Organizational Behavior
Selective perception is tendency to interpret what one
sees on basis of their interests, backgrounds,
experiences and attitudes.

E.g. A mgr quickly notices mistake committed by a person

he dislikes but fails to spot a mistake by his favourite
subordinate

Individual behavior is based on perception of situation and

perception determines how people respond to situations
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 Fundamentals of
Organizational Behavior
 A Whole Person – impossible to separate home &
family life of a person from work life, or to separate
physical characteristics of an individual from his
emotional characteristics.
Employees play many more roles outside the work
place, what happens outside affects his performance at
work.

 Motivated Behavior – human actions are intentional &

purposeful, behavior has causes which may be related
to his needs or consequences
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 Fundamentals of
Organizational Behavior
2 basic ways in which mgrs can motivate
2. By showing employees how certain desirable behavior
will be rewarded
3. By threatening employees that undesirable actions will
be punished

 Desire for Involvement – employees have a strong

desire to contribute to their orgn, they seek
opportunities to utilise their knowledge, talents & skills
for success of orgn, they have a strong desire to share
ideas & be involved in decision making.
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 Fundamentals of
Organizational Behavior
Meaningful involvement of employees is possible through
Empowerment – passing of responsibility and
authority from mgrs to employees.
It provides greater autonomy to employees through sharing
of relevant information and is beneficial to both
Empowerment makes employees feel competent and
valued, their talents being used

 Value of Person (Human Dignity) – orgn must treat

their employees with care, respect & dignity, not as
mere economic tools, human beings need to be valued
for their skills & abilities
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 Fundamentals of
Organizational Behavior
NATURE OF ORGANIZATIONS
 Social Systems : People interact as individuals &
groups, 2 types of social systems exist together in orgn
- formal (official) & informal. Behavior is governed by
social laws & psychological laws

 Mutual Interest : Orgn needs people & people need

orgns, for achieving objectives fulfilling individual
needs

 Ethics : OB strongly advocates ethical practice, no

breaking rules under pressure 15
 Fundamentals of
Organizational Behavior
When Orgns engage in ethical practice, result is Triple
Reward System – objectives of people, orgn & society
are met, everyone benefits and gains
Individuals gain by better job satisfaction, spirit of
cooperation & teamwork develops
Orgns function more effectively & are successful, quality
improves & costs are reduced
Society gains as it gets better products/ services, more
capable citizens & faster progress
Orgns adopt ethical practices & take steps to promote high
standards of ethics
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 Fundamentals of
Organizational Behavior
APPROACHES TO STUDY OF OB

 HUMAN RESOURCES APPROACH : considers

people as most imp resource, primary focus is on
growth & developmt, making people competent,
creative & fulfilled, this approach is supportive & hence
also called Supportive Approach.

This approach aims at creating a work environmt that

provides employees with opportunities to develop their
abilities to maximum extent & thereby resulting in Work
Satisfaction & Greater Effectiveness
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 Fundamentals of
Organizational Behavior
 CONTINGENCY APPROACH : This approach
recognizes that each orgn is unique & so are its
problems, hence diff methods of behavioral practices
need to be adopted for diff situations.

This approach stress that mgrs must carefully analyse each

situation, identify imp variables/ factors & select the
method that is best suited for that situation

Orgns are affected by a large number of interacting factors

& the best way is contingent upon the situation &
circumstances
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 Fundamentals of
Organizational Behavior
 RESULTS ORIENTED APPROACH : Productivity is
ratio of output to input, it is greater if an orgn is able to
increase its output & reduce inputs, OB wants to
improve productivity & effectiveness, but OB also
takes into account human, social & economic inputs.
E.g. by improving employee job satisfaction, OB creates
positive human output, employee developmt programs
create better employee & better citizens which are a
valuable social output
A popular measure to attain triple objectives is Total
Quality Management or TQM, which aims at
continuous improvement of all orgn processes.
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 Fundamentals of
Organizational Behavior
 SYSTEMS APPROACH : All depts of an orgn are
interconnected and interdependent parts of a larger
system, this approach emphasizes that
orgn is a system of many variables,
each variable is affected by others,
there are many subsystems in a large system,
every subsystem requires some input & produces some
output,
systems have the ability to produce positive & negative
results/ consequences,
these consequences may be intended or unintended,
there are long term and short term effects of these
outcomes. 20
 Fundamentals of
Organizational Behavior
Managers in orgns, while taking decisions must look not
only at the immediate situation but also at the impact it
will have on the orgn as a whole

Managers need to carry out cost-benefit analysis to

determine the impact of their action

Eg to introduce a new snack item in the canteen of the

company

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 Fundamentals of
Organizational Behavior
LIMITATIONS OF OB
2. Behavioral Bias : Mgrs tend to overlook other imp
issues, they may develop a tunnel vision – looking at
problems from a narrow perspective & overlooking
much larger, broader picture
Mgrs must not only involve themselves in developing
satisfied work force but also think of customer
satisfaction
Behavioral bias may cause Dependence, Over
Contentment, Indiscipline & Irresponsible employees
Rather than taking responsibility & learning from failures,
employees may look for excuses to explain poor 22

performance
 Fundamentals of
Organizational Behavior
 Law of Diminishing Returns : Beyond a certain point, there
is decline in output with each additional unit of input, it may
decline to zero & may end up in negative
It implies that more of a good or positive factor is not
necessarily beneficial & will work only to a certain point
As per the law, for any situation there is an optimal level of a
desirable practice, beyond that optimal point results will
gradually decline. E.g. increasing pay may initially lead to
an improvement in performance but they will work only up
to a certain point, beyond this point there will no further
improvement in performance
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 Fundamentals of
Organizational Behavior
Mgrs must keep in mind this law before making imp
decisions
It is difficult to predict the exact point at which the law
comes into effect, point may vary with circumstances
There are several variables in a given situation, it is
possible that excess of one variable reduces benefits of
other variables
Orgnal effectiveness is attained by paying attention to all
variables in a situation or system, merely maximizing
one variable is no guarantee that it will increase orgnal
effectiveness
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 Fundamentals of
Organizational Behavior
UNETHICAL PRACTICES & MANIPULATION

Mgrs may use knowledge of OB for benefit of people and

society at large or for their own selfish means
Mgrs may use knowledge to manipulate people & exploit
people, use it to satisfy their selfish ends, such unethical
use will be a total violation of the philosophy of OB
Ethical leadership is based on the principles of Social
responsibility & obligations, open communication, cost-
benefit analysis of human & social costs, not just
economic costs
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 Fundamentals of
Organizational Behavior
NEW CHALLENGES FOR OB
 Need for Quick fix solutions : Extremely competitive
business environment, mgrs are under pressure to
deliver good results in shortest possible time, decisions
may be taken without deep thought & unrealistic
expectations
 Challenging Environments : how applicable are OB
methods & techniques in fast changing business
environment, good/ bad economic conditions
 OB needs clear definition : with regard to unit of
analysis- individual / group, whether OB is source of info
or only theory, whether to have micro / macro focus,
make a list of contributions in improving OB 26