Organisational behavior

Human being is a social animal and there is a natural instinct that exists in him to
work and live together with others in social groupings as a family, a clan,
community or friendship group or organization. The individuals are bound together
in a network of stable social relationships.

Hence, our society is organizational with large and complex organizations that
exist in every sphere of human activity.

Organisations play an important role in the quality of human life. Hence, the study
of organizations has become imperative.

Organisations are usually studied from two perspectives –

• Micro

• Macro

Micro perspective focuses on human beings in the organization. It studies human

beings as individuals – an individual’s psychological make-up, his interaction with
other individuals and groups, variables determining his behavior in the
organization and the strategies that can be adopted to govern his behavior as a
desirable one in the organization.
The micro perspective of organizational study is taken care of in “OB”.

Macro perspective considers organization as a unit of analysis. It emphasizes on

the study of human behavior as a collectivity of people, how organizations are
structured, how technology affects people in the organization and how organization
interacts with the environment.
The macro aspect of organizational study is taken care of in “Oganisational
Theory”.

Any definition of OB should put emphasis on 3 features –

• Organisational Behaviour is the study of human behavior.

• The study is about behavior in organizations.

• Knowledge about human behavior would be useful in improving an

organisation’s effectiveness.
Definitions
• “Organisational Behaviour” is the study and application of knowledge about
how people – as individual and as groups – act within organizations.

• It is 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 towards improving an organisation’s effectiveness.

• Organisational Behaviour means the study of behavior of individuals, and

groups in organizations and organizations themselves, as they act and
interact to attain desired outcomes.

OB is a scientific study in which a number of research studies and conceptual

developments are taking place.

It is also an applied science wherein information about effective practices in

one organization is being extended to many others.

OB provides a useful set of tools at many levels of analysis – It helps managers

to understand the behavior of individuals within an organization; understand
the interpersonal relationships, when two people (coworkers or a superior –
subordinate pair) interact; to understand the dynamics or relationships within
small groups, both formal teams and informal groups; to understand the
intergroup relationships; and finally understand the organizations as whole
systems that have interorganisational relationships (Eg – Mergers and Joint
ventures).

Goals of OB
• To describe – The first objective is to describe – how people behave
under a variety of conditions.

• To understand – as to why people behave as they do.

• To predict – Predicting future employee behavior is another goal of OB.

Managers would have the capacity to predict which employees may be
dedicated and productive or which ones might be absent or disruptive on
a certain day so that the manager could take preventive actions.
 • To control – The final goal of OB is to control and develop some human
activity at work. Managers also want to make an impact on employee
behavior, skill development, team effort and productivity.

Managers should be able to improve the results through their own and their
employee’s actions.

Features of Organisational Behaviour

The essential characteristics of organisational behaviour are as follows:

(i) An Integral Part of Management. OB is a part of general management

and not the whole of management. It represents behaviour approach to
management. It is significant to note that because of the importance of
human behaviour in organisations, OB has assumed the status of a
distinct field of study.
(ii) A Field of Study. OB is a field of study backed by a body of theory,
research and application associated with a growing concern for people at
the workplace. Its study helps in understanding the human behaviour in
work organizations. It includes creative thinking among the managers to
solve human problems in organisations.
(iii) Inter-disciplinary Approach. The field of organisational behaviour is
heavily influenced by several other behavioural sciences and social
sciences. The prominent among these are psychology, sociology and
anthropology. Organisational behaviour draws a rich array of research
from these disciplines. What makes it a field in its own right is the
attempt to integrate various aspects and levels of behaviour.
(iv) Levels of Analysis. OB involves three levels of analysis of behaviour –
individual behaviour, group behaviour and behaviour of the organisation
itself. It helps in demolishing ‘incorrect’ assumptions one may hold about
behaviour. It provides a rational thinking about people.
(v) Goal-Oriented. OB is an action – oriented and goal-directed discipline.
The major goals of organisational behaviour are to understand, explain
and predict human behaviour in the organisational context so that it may
be moulded into result-yielding situations. It provides a rational thinking
about people and their behaviour.
(vi) Human Tool. OB is a human tool for human benefit. It helps in
understanding and predicting the behaviour of individuals. It provides
 generalisations that managers can use to anticipate the effects of certain
actions on human behaviour.
(vii) Science and Art. OB is both a science as well as an art. The systematic
knowledge about human behaviour is a science. The application of
behaviour knowledge and skills clearly leans towards being an art.
However, organisation behaviour is not an exact science like physics or
chemistry. It cannot provide specific answers to all organisational
problems. The exact prediction of behavior of people in organisations is
also not possible. It is possible to predict relationships between variables
on a broad scale, but it is difficult to apply predictive models in all
situations.
(viii) Satisfaction of Employees’ Needs. OB seeks to fulfill employees’ need
and aspirations. Every employee in the organisation wants to fulfill his
needs through organisational activities. It is the organisation’s
responsibility to provide congenial climate in the organisation so that
people may get need satisfaction and the organisation may attain its
objectives. Thus, both organisation and individuals can be benefited by
each other.
 Levels of Analysis of OB
Organisational Behaviour focuses on three levels of analysis, viz.,(i) Individual
(ii) Group, and (iii) Organisation.

The performance of individuals, groups (say class or section) and the institute as a
whole – are all important and outstanding performance of each individual and
group is recognized and highlighted. Behaviour at all three levels is interdependent
and interrelated.
 PSYCHOLOGY

Individual Level:
Personality, Perception
Attitudes and Values INDIVIDUAL
Individual Decision-making
Learning
Motivation, Job-satisfaction
Social, Cultural and Other Factors
Work Stress

SOCIOLOGY
Organisational
Group Level : GROUP Behaviour
Groups and Teams
Leadership
Communication
Conflict, Dynamics of Change
Formal and Informal Organisation
Status and Roles

SOCIAL PSYCHOLOGY

Change in Attitude and Behaviour

Group Processes : Norms
Communication
Group Decision-making

ANTHROPOLOGY

Organisation System Level :

Organisational Culture
Stress Management ORGANISATION
Organisational Change and Development
Morale and Productivity
Cross-cultural Analysis

POLITICAL SCIENCE

Organisational Power
Politics
Conflicts
Coalitions
1.) Behaviour at the Individual Level - Organisations are made up of their
individual members. The individual is a central feature of organisational
behaviour, whether acting in isolation or as part of a group, in response to
expectations of the organisation, or as a result of influence of the external
environment.

The behaviour of individuals is a complex phenomenon and is affected by a

large number of factors such as personality, attitudes, perception, learning,
motivation, social, cultural and other factors. The study of behaviour of an
individual working in the organisation is also known as micro-
organisational behaviour.

2.) Behaviour at the Group Level - Behaviour pattern of individuals is also

influenced by the groups to which they belong. Research studies have
shown people behave differently in groups than as individuals. Several
factors influence the behaviour of groups such as group goals, norms,
communication, leadership, cohesiveness, etc. Understanding of group
dynamics is essential to reduce conflicts and improve morale and
productivity. Understanding the effect of group relationships is important
for managers in today’s organisations. Inter group relationships may be in
the form of cooperations or competition. The co-operative relationships
help the organisation in achieving its objectives.

3.) Behaviour at the Organisation Level - An organisation is a system

composed of several interdependent individuals and groups. Individuals and
groups operate within the structure of formal organisation. They particapte
in shaping the culture of the organisation and also in organisation
development. At times, they may resist change, while they may fight for
change in certain situations. Stress caused by the activities of individuals
and groups has to be managed at the organisational , group and individual
levels. The study of behaviour from the perspective of the whole
organisation is also referred to as macro organisational behaviour.
 IMPORTANCE OF OB
1) OB helps an individual to understand himself and others better. This
will improve interpersonal relations considerably. Attitudes,
perception, leaderships, communication, transactional analysis and
conflicts can also be understood better with the study of OB.

2) A manager in a business establishment is concerned with getting

things done through others. He will be successful in his job when he
can motivate his subordinates to work for better results. OB will help
the manager understand the basis of motivation and what he should
do to motivate his subordinates.

3) The field of OB will be successful in maintaining cordial industrial

relations. If an employee is slow in his work, or if his productivity is
readily declining, the basic issue may not be demand for more wages,
higher bonus, a better canteen etc. This can be due to any other
reasons like the indifferent attitude of the boss towards the worker
which in turn can lead to the worker loosing interest in his work
gradually. Similarly, reluctance of the management to talk to union
leaders may provoke them to give a strike. Hence the relations
between the management and the employees are often strained for
reasons which are personal but not technical.

4) OB helps in the field of marketing. In the dynamic mechanism of the

flow of goods and services from producer to consumer, the awareness
of the nature of individual and social process has an immediate or
long term contribution to the success or the failure of the enterprise.

5) OB helps in predicting the behaviour of individual and thus help the

organization to be effective having good ‘people skills’ which
includes the ability to understand one’s employees and to use this
knowledge to make them work efficiently is a vital requirement if a
person has to succeed as a manager.

6) Effective management means competent utilization of technical and

financial resources. OB is a discipline which enables a manager to
motivate his subordinates towards higher productivity and better
results.
 Forces Affecting Organizational Behaviour
The four key forces that affects Organization Behaviour

1. People
2. Structure
3. Technology
4. Environment

1. People- People make up the internal social system of the organization. That
system consists of individuals & group & large groups as well as small ones. There
are unofficial informal groups & official formal groups. Groups are dynamic in the
sense that they form, change & disband.

People work in the organization to achieve their objectives. The workforce of an

organization, however is very diverse in terms of their educational backgrounds,
talents & perspectives to their jobs. The managements’ leadership practices have to
be tuned to the diverse workforce. Some companies have developed a sense of
caring, really listening to the employees, developing the competence level of the
employees, building pride without devaluing others, empowering some without
exploiting others, demonstrating openness, confidence, authentic compassion and
vulnerability.

2. Structure - Structure defines the formal relationship and use of people in

organization. It defines the roles & relationship of people in an organization.
Different jobs are performed by different people in an organization & these people
are related to each other in some structural way so as to coordinate their work
effectively. The structure defines the authority-responsibility relationship. One has
the authority & the others have a duty to obey him. Some organization have
resorted to a flatter structure (containing fewer levels, a goal attained by cutting
middle management position), other have a complex structure as a result of
mergers, acquisitions & new ventures. Some organizations have hired contingent
workforces (tempory, part-time or contract employees), some firms have
developed a team-based structure.

3. Technology- Technology provides the resources with which people work &
affects e task that they perform. The people are given the assistance of machines,
methods & resources. Technology allows people to do more & better work but it
adds to the cost for examples- Increasing use of robots & automated control
systems in assembly lines, the dramatic shift from a manufacturing to a service
economy, advances in computer hardware & software capabilities, use of internet
& improved quality of goods & services at acceptable prices.

All these technical advancements exerts an increased pressure on OB to maintain a

delicate balance b/w technical & social systems.

4. Environment- Organisations are influenced by external environment which

include socio-cultural, economic, politico-legal, geographical forces. All
organisations operate within an internal & external environment. An organisation
is always a part of a larger system with elements like government, the family &
other organizations. Any change in the environment creates demands on
organizations. Citizens expect organisations to be socially responsible; there are
new products & competition for customers. Any organization is influenced by its
external environment. It influences the attitudes of people, affects working
conditions & provides competition for resources & power.

People

Environment Environment

ORGANISATION

Structure Technology

Environment

Disciplines contributing to OB
OB is not a discipline in itself but it uses knowledge concepts & principles from
the other relevant disciplines. It draws concepts & principles from behavioural. It
draws concepts & principles from behavioural sciences & the core disciplines of
behavioural sciences are-
1. Psychology
2. Sociology
3. Anthropology

OB draws concepts from social sciences also-

1. Economics
2. History
3. Political Science

Contributions of core disciplines of behavioural sciences to OB

1. Psychology- The term “psychology comes from the Greek word “psyche”
meaning soul or spirit. Psychology is a science of behaviour, the term
behaviour. Psychology studies behaviour in various conditions- normal,
abnormal, social, industrial, legal, childhood, adolescence, old age etc. It
also studies process of human behaviour like learning, thinking, memory,
sensation, perception, emotion, feeling & personality.

Its contributions to behavioural science are in the field of learning, perception,

motivation, individual & group decision making, pattern of influence, and
change in organization group process, vocational choice and satisfaction,
communication, personnel selection & training.

There is also a separate branch of industrial psychology which deals with the
application of psychological facts & principles to the problem concerning
human relations in organization.

2. Sociology – It uses the scientific method in accumulating knowledge about

man’s social behaviour. It studies the shared human behaviour, the way in
which people act towards one another. It studies social groups, social
behaviour, society, customs, institutions, social class, status, social mobility and
prestige. Its subfields are-
1. Political sociology
2. Industrial sociology
3. Family sociology
4. Sociology lf Law
5. Educational sociology
6. Sociology of religion
 To the managerial practice, its contribution is in the field of bureaucracy, role
structures social system theory, grp dynamics effect of industrialsation on the
social behaviour etc.

3. Anthropology- “Anthropology” combines the Greek stem ‘anthropo”

meaning man & “Logy” meaning science. Hence, Anthropology is the sciences
of man. It studies civilization, forms of cultures & their impact on individual &
grps, biological factures of man and evolutionary pattern, speech and
relationship among languages.
Anthropology contributes in understanding the cultural effects on organization
behaviour, effects of value systems, norms, sentiments, cohesion and
interaction.

OTHER DISCIPLINES

1) ECONOMICS: Economics contributes in understanding the decision

process, and methods of allocating scarce resources in organizations and the
impact of economic policy on organizations.
2) POLITICAL SCIENCE: It provides the basis for the conflicts in
organisation, power and authority structure and overall administrative
process.

UNDERSTANDING HUMAN BEHAVIOUR

OB helps to understand human behavior in the organisation – at the individual
level, interpersonal level, group level and inter group level.

i) Individual Level: OB helps to understand why and how an individual

behaves in a particular way. Human behaviour is a complex phenomenon
and is affected by a number of factors like psychological, social, cultural
etc. OB integrates these factors in order to understand human behaviour.

ii) Interpersonal Level : Human behaviour has to be understood in terms

interpersonal interactions because human beings have a natural tendency
to socialize. OB helps to understand relationships in terms of superior
 subordinates relationships, peer relationships, role analysis, transactional
analysis etc.

iii) Group Level: Individuals are times modified by group pressures. Hence
it becomes important to study groups and group dynamics with special
reference to norms, cohesion, goals, communication pattern, leadership
and membership. An understanding of group behaviour is important
organizational moral and productivity.

iv) Inter Group Level: Inter group relationships may be in the form
cooperation or competition. OB helps to understand and achevie cooperative
group relationships through interaction, rotation of members among groups,
avoidance of win-loose situation and focuses on total group objectives.

MODELS OF OB

AUTOCRATIC MODEL- In an autocratic model, managerial orientation is

towards power. Managers see authority as the only means to get the things
done, & employees are expected to follow orders. So there is a high dependence
on boss. This dependence is possible: employees live on the subsistence level.
The organizational process is formal. The Management decides what is the best
action for the people. The model is largely based on the theory x assumptions of
McGregor wherein the human beings are distasteful to work & try to avoid
respeonsiblity. A strict supervision is read to obtain a desirable performance
from them.

Likert’s Management system can be compared with a model of OB. His system
(exploitative authoritative) in which motivation depends on physical security &
some use of desire for status & better performance is ensured through jear,
threats punishment & occasional rewards; communic” is mostly one. Way. i.e
downward. There is little interaction s/w mangers & employees.

The autocratic model represents traditional thinking which is based on the

economic concept of the man. However, with changing times, its acceptability
is to a limited extent. But t is still a useful way to accomplish performance.
Particularly where the employees can be motivated by physiological needs.

This usually happens at lower strata of the organization.

 CUSTODIAL MODEL - In this model, the managerial orientation is towards
the use of money to pay for employee benefits. The model depends on the
economic resources of the organization & its ability to pay for the benefits. The
employees are highly dependent on the organization. An organizational
dependence reduces personal dependence on boss. The employees are able to
satisfy their security needs (Maintenance factors in case of herzberg’s theory).
These maintenance factor provide security but do not provide strong motivation
the employees working under custodial model feel happy get adequate rewards
& organization security but their performance level is not high as are not given
any authority to decide what benefits / rewards they should get.

This approach is quite similar to patrimonial approach where the Management

decides what benefits are best suited for the employees. Hence not a suitable model
for matured employees.

SUPPORTIVE MODEL – This model depends on managerial leadership rather

than on the use of power or money. The aim of managers is to support employees
in their achievement of results. The focus is on employee participation in
managerial decision making process.

The model is based on “Principles of Supportive relationships” of Likert, which is

the basic ingredient of his system 4(participative).

It is similar to the assumptions of Mc Gregor’s Theory Y. The supportyive model

is based on the assumptions that human beings move to the maturity level and they
expect the organizational climate which supports this expectation.

The organizational processes like communication, leacdership, decision making,

interaction, control and influence help employees to fulfill their higher order needs
like self-actualisation and esteem.

The supportive model is best suited when employees are self motivated. Hence, the
focus is not on the economic resources of the organization but its human aspect.

Manager’s role is to help employees achieve their work rather than supervising
them closely. This model is specially effective with nations with affluence and
complex technology because it caters to higher-order needs and provides intrinsic
motivational factors.
It is more suitable for employees at managerial levels rather than on operative
levels.

COLLEGIAL MODEL – This model is an extension of supportive model. The

term “Collegial” refers to a body of people having a common purpose. It is based
on the team concept in which employee develops a high degree of understanding
towards others and shares common goals.

“Responsibility” is expected out of the employees. Employees need a little

direction and control from the management. Control is through self disciple from
the team members.

The collegial model is conducive to self fulfillment & self-actualisation. It can be

more beneficial with unprogrammed work requiring behavioural flexibility and
intellectual environment and job freedom.

SYSTEM MODEL – It is one of the emerging models of OB. Herein, there is a

strong search for a higher meaning at work by the employees; they want more than
a pay check & job security from their jobs. They look for a work that is ethical,
enfused with integrity & trust and provides an opportunity to experience a growing
sense of community among co-workers. To accomplish this, the managers
demonstrate caring and a compassionate attitude and are sensitive to the needs of a
diverse workforce. The role of a manager is to facilitate employee
accomplishments through a variety of actions.

In turn, the employees realize and recognize the mutuality of company-employee

obligations in a system model. There is a sense of psychological ownership for the
organization and its products / services. The employees take a responsibility for
their own goals and actions, hence are self motivated. Hence, the employees needs
are higher-order needs (social, status, esteem, autonomy, self-actualisation).

The various models (Autocratic, Custodial, Supportive, Collegial and System

Model) of OB are based on the assumption of the human characteristics and how
they can work best. They are basically constructed around need hierarchy. As the
need hierarchy differs for different people, the same model cannot be used for all
of them.
The need hierarchy changes with the level of a person, level of his education,
maturity level, personality factors and the type of work environment.

Challenges and Opportunities for OB

• Responding to Globalisation – Organisations are no longer limited by
national borders. Managers have to be capable enough to work with
people across cultures. Being a manager, one needs to manage a
workforce which is different in needs, aspirations and attitudes. To work
effectively with these people, one needs to understand their culture, how
it has shaped them and how can the management style be adapted to suit
their differences.

• Managing workforce diversity – While globalization focuses on

differences between people from different countries, workforce diversity
focuses on differences among people with given countries. Workforce
diversity means that organizations are heterogenous in terms of gender,
race and ethnicity. The challenge for organizations, thus, is to make
themselves more accommodating to diverse groups of people by focusing
on their different lifestyles, family needs and workstyles, while at the
same time not discriminating. This involves providing diversity training,
and revamping benefit programs to accommodate the different needs of
different employees. Diversity, if properly managed, can increase
creativity and innovation in organizations as well as improve decision
making by providing different perspectives on problems. If diversity is
not properly managed, it leads to a higher turnover, more difficult
communication and more interpersonal conflicts.

• Improving Quality and Productivity – The managers often confront

challenges to improve their organization’s productivity and the quality of
products and services they offer. For this, they often have to implement
programs of Quality management and Process Reengineering.

Quality Management – (i) Constant attainment of customer satisfaction

through the continuous improvement of all organizational processes.
(ii) Improvement in the quality of everything that the organization does –
how the organization handles deliveries, how rapidly it responds to
complaints etc.
(iii) Accurate measurement – Quality Management uses statistical
techniques to measure the performance variables and then compare them
with the standards / benchmarks.
(iv) Empowerment of employees – Quality management involves the people
in the improvement process. Teams are used in QM programs as
empowerment vehicles for finding and solving problems.
Process Reengineering – helps managers to reconsider how work would be
done and the organization restructured if they were starting over from the
scratch.
• Responding to the labour shortage – Economic ups and downs are
difficult to predict. In 1990s, the labour markets were tight as the world
economy was robust. It was difficult to fill vacancies with skilled workers.
In 2001, there was an economic recession – lot of layoffs took place and
hence the skilled workers were in plenty.

It is also predicted that there will be a labour shortage for atleast 10-15
years. In the latter part of the 20th century, there was a huge increase in the
number of women entering the workforce which was a new supply of
talented and skilled workforce. Also, the older workforce seem to be less
interested to work which can be attributed to improved pension plans,
expanded social security benefits and a healthy stock market.
During labour shortage, good wages and benefits are not the only means to
get and keep skilled employees. Newer recruitment and retention strategies
have to be developed with the help of OB.
• Improving customer service – OB can contribute to improving an
organisation’s by showing managers how employee attitudes and behavior
are associated with customer satisfaction.

The management should focus on creating a customer – responsive culture

– a culture in which employees are friendly and courteous, accessible,
knowledgeable, prompt in responding to customer needs and willing to do
what’s necessary to please the customer.
• Improving people skills – Techniques should be developed to design
motivating jobs, to improve upon the listening skills and to create
effective teams.
 • Empowering people – There has been a complete change in the
relationship between managers and the employees. Decision making now
happens at the operating level. Employees have started having a full
control of their work. There is also a concept of self-managed teams
wherein workers operate largely without bosses. By empowering
employees, managers are learning how to give up control, and employees
know how to take responsibility for their work and make appropriate
decisions.

• Coping with “Temporariness” – Unlike yesteryears, “managing” today

includes long periods of ongoing change, interrupted occasionally by
short periods of stability. The workers need to update their knowledge
and skills continually to perform new job requirements. Work groups are
also in a state of flux. Earlier, employees were assigned to a specific work
group which was permanent. So there was security in working with the
same people. But now, work groups are temporary wherein members are
from different departments and members keep changing and employee
rotation is practiced to fill constantly changing work assignments.

Organisations also continuously reorganize their divisions, sell-off poor

performing businesses, subcontract non-critical services and operations to
other organisations and replace permanent employees with temporary
workers.
The managers and employees should know to cope with temporariness, to
live with flexibility, spontaneity and unpredictability.
• Stimulating Innovation and Change – The organizations should foster
innovation, continuously improve their quality in order to beat competition.
Example, The services of Dominos has brought an end to a number of pizza
parlours in the city. The challenge for managers is to stimulate the
employees’ creativity.

• Helping employees balance work / life conflicts – The line between the
work and non work time of employees has become blurred, creating
personal conflicts and stress. This can be due to the following reasons –

 Creation of global organizations – Employees are required to work

24*7.
  Communication technology – People do their work from any place at
any time.

 Longer hours put in by the employees.

 Dual-career couples – as a result married couples have lesser time to

fulfill commitments back home.

So, managers should help in making their workplace and jobs such that it
helps the employee deal with work / life conflicts.
• Improving ethical behavior – Employees at times, face ethical
dilemmas i.e. situations in which individuals are required to define right and
wrong conduct. For example, Should they follow orders with which they
don’t personally agree? Should they uncover illegal activities taking place in
the company?

Managers and organizations are trying to tackle this problem by –

o Writing and distributing codes of ethics to guide the employees.

o Seminars, workshops, similar training programs to try and improve

ethical behavior.

o Provision for an in-house advisor who can be contacted

(anonymously) for assistance in dealing with an ethical issue. Also,
they provide with protection mechanisms for employees who reveal
internal unethical practices.

Limitations of OB

• Behavioural bias – Behavioral bias gives a narrow viewpoint to the employees

that emphasizes satisfying employee experiences while overlooking the broader
system of the organization. It is more like a tunnel vision in which people have
narrow viewpoints as if they were looking through a tunnel. The concern for
employees can be so greatly overdone that the original purpose of bringing
people together- productive organizational outputs is lost. It is wrong to assume
that the objective of OB is simply to create a satisfied workforce without
worrying about customer service and productivity. Equally, if a person is
 continuously concerned with production outputs without regard for employee
needs is misapplying OB.

Behavioural bias can harm the employees as well as the organizations.Too much
of care can make the employees dependent and unproductive. They may find
excuses for failure and avoid taking responsibility for progress. They lack self
discipline and self respect.

• The Law of Diminshing Returns – The Law of diminishing Returns is a

limiting factor in OB as in Economics which produces negative results. In OB,
this law states that at some point, increases of a desirable practice produce
declining returns, eventually zero returns, and then negative returns asmore
increases are added. For any situation, there is an optimum amount of a desirable
practice, such as recognition or participation. When that point is exceeded, there
is a decline in returns. For example, too much security may lead to less
employee initiate and growth.

Hence, organizational effectiveness is achieved not by maximizing one

human variable but by working all system variables together in a balanced
way.

• Unethical manipulation of people – The knowledge and techniques of OB are

at times used to manipulate people unethically as well as to help them develop
their potential. People who lack respect for the basic dignity of the human being
could use OB for selfish ends and use people in unethical ways.