ORGANISZATION AND ORGANIZATIONAL

BEHAVIOUR

MODULE 1
 The field of Organisational Behaviour deals with human behaviour in organisation.

 It is the multidisciplinary field that seeks knowledge of behaviour in organisational

settings by objective based on studying individual, group and oganisational
processes.

 The study of Organizational Behavior (OB) is very interesting and challenging too.
It is related to individuals, group of people working together in teams. The study
becomes more challenging when situational factors interact.

 The study of organizational behavior relates to the expected behavior of an

individual in the organization.

 No two individuals are likely to behave in the same manner in a particular work
situation. It is the predictability of a manager about the expected behavior of an
individual.

 There are no absolutes in human behavior. It is the human factor that is

contributory to the productivity hence the study of human behavior is important.
 Organizational behavior (OB) is a field of study that investigates the impact
individuals, groups, and structure have on behavior within organizations, for the
purpose of applying such knowledge toward improving an organization’s
effectiveness.

 OB is a field of study, which studies three determinants of behavior within

organizations: individuals, groups, and structure.

 In addition, OB applies the knowledge gained about individuals, groups, and the
effect of structure on behavior in order to make organizations work more
effectively.

 OB is the study of what people do in an organization and the way their behavior
affects the organization’s performance. Because OB is concerned specifically with
employment-related situations, it examines behavior in the context of job
satisfaction, absenteeism, employment turnover, productivity, human
performance, and management.
 OB includes these core topics:
 Motivation

 Leader behaviour and power

 Interpersonal communication

 Group structure and processes

 Attitude development and perception

 Change processes

 Conflict and negotiation

 Work design
 Manager: An individual who achieves goals through other people.

 Organization: A consciously coordinated social unit, composed of two or more

people, that functions on a relatively continuous basis to achieve a common
goal or set of goals.

 Planning: A process that includes defining goals, establishing strategy, and

developing plans to coordinate activities.

 Organizing: Determining what tasks are to be done, who is to do them, how

the tasks are to be grouped, who reports to whom, and where decisions are to
be made.

 Leading: A function that includes motivating employees, directing others,

selecting the most effective communication channels, and resolving conflicts.

 Controlling: Monitoring activities to ensure they are being accomplished as

planned and correcting any significant deviations.
 Disciplines That Contribute to the OB Field
 Organizational behavior is an applied behavioral science built on contribution from a
number of behavioral disciplines, mainly psychology and social psychology, sociology,
and anthropology.

 Psychology’s contributions have been mainly at the individual or micro level of

analysis, while the other disciplines have contributed to our understanding of macro
concepts such as group processes and organization.

Psychology
 Psychology seeks to measure, explain, and sometimes change the behavior of humans
and other animals. Those who have contributed and continue to add to the knowledge
of OB are learning theorists, personality theorists, counseling psychologists, and, most
important, industrial and organizational psychologists.
 Early industrial/organizational psychologists studied the
problems of fatigue, boredom, and other working
conditions that could impede efficient work
performance.
 More recently, their contributions have expanded to
include learning, perception, personality, emotions,
training, leadership effectiveness, needs and
motivational forces, job satisfaction, decision-making
processes, performance appraisals, attitude
measurement, employee-selection techniques, work
design, and job stress.
Social Psychology
 Social psychology, generally considered a branch of
psychology, blends concepts from both psychology and
sociology to focus on peoples’ influence on one another.

 One major study area is change—how to implement it and how

to reduce barriers to its acceptance. Social psychologists also
contribute to measuring, understanding, and changing
attitudes; identifying communication patterns; and building
trust.

 Finally, they have made important contributions to our study

of group behavior, power, and conflict.
Sociology
 While psychology focuses on the individual, sociology
studies people in relation to their social environment or
culture. Sociologists have contributed to OB through their
study of group behavior in organizations, particularly
formal and complex organizations.

 Perhaps most important, sociologists have studied

organizational culture, formal organization theory and
structure, organizational technology, communications,
power, and conflict.
Anthropology
 Anthropology is the study of societies to learn about human beings and
their activities.

 Anthropologists’ work on cultures and environments has helped us

understand differences in fundamental values, attitudes, and behavior
between people in different countries and within different
organizations.

 Much of our current understanding of organizational culture,

organizational environments, and differences among national cultures
is a result of the work of anthropologists or those using their methods.
 Challenges and Opportunities for OB
 Understanding organizational behavior has never been more important for
managers.

 The typical employee is getting older; more women and people of color are in
the workplace; corporate downsizing and the heavy use of temporary workers
are severing the bonds of loyalty that tied many employees to their employers.

 The global competition requires employees to become more flexible and cope
with rapid change.

 The global recession has brought to the forefront the challenges of working with
and managing people during uncertain times.

 As a result of these changes and others such as the rising use of technology,
employment options have adapted to include new opportunities for workers.
Challenges and Opportunities for OB

Responding to Economic Pressures

Responding to Globalization

Managing Workforce Diversity

Improving Customer Service

Improving People Skills

Working in Networked Organizations

Enhancing Employee Well-Being at Work

Creating a Positive Work Environment

Improving Ethical Behavior

 Responding to Economic Pressures
 When the U.S. economy plunged into a deep and prolonged recession in 2008,
Layoffs and job losses were widespread, and those who survived the ax were
often asked to accept pay cuts.

 When times are bad, managers are on the front lines with employees who must
be fired, who are asked to make do with less, and who worry about their futures.

 The difference between good and bad management can be the difference
between profit and loss or, ultimately, between survival and failure.

 Managing employees well when times are tough is just as hard as when times are
good—if not harder.

 In good times, understanding how to reward, satisfy, and retain employees is at

a premium. In bad times, issues like stress, decision making, and coping come to
the fore.
 Responding to Globalization
 Organizations are no longer constrained by national borders. Burger King is owned by a
British firm, and McDonald’s sells hamburgers in more than 100 companies in six
continents.

 All major automobile makers now manufacture cars outside their borders; Honda builds
cars in Ohio, Ford in Brazil, Volkswagen in Mexico, and both Mercedes and BMW in South
Africa.

 The world has become a global village. In the process, the manager’s job has changed.

• Increased Foreign Assignments

• Working with People from Different Cultures

• Overseeing Movement of Jobs to Countries with Low-Cost Labor

• Adapting to Differing Cultural and Regulatory Norms

 Increased Foreign Assignments

 Increased Foreign Assignments If you’re a manager, you are increasingly likely to find yourself in a
foreign assignment—transferred to your employer’s operating division or subsidiary in another
country.

 Once there, you’ll have to manage a workforce very different in needs, aspirations, and attitudes
from those you are used to back home.

Working with People from Different Cultures

 Even in your own country, you’ll find yourself working with bosses, peers, and other employees born
and raised in different cultures. What motivates you may not motivate them. Or your communication
style may be straightforward and open, which others may find uncomfortable and threatening.

 To work effectively with people from different cultures, you need to understand how their culture,
geography, and religion have shaped them and how to adapt your management style to their
differences.

 Managers at global companies such as IBM, Disney, and Coca-Cola have come to realize that economic
values are not universally transferable. Management practices need to be modified to reflect the
values of the different countries in which an organization operates.
 Overseeing Movement of Jobs to Countries with Low-Cost Labor
 It is increasingly difficult for managers in advanced nations, where minimum
wages are typically $6 or more an hour, to compete against firms that rely on
workers from China and other developing nations where labor is available for
30 cents an hour.

 It’s not by chance that many in the Indians wear clothes made in Bangladesh,
work on computers whose microchips came from Taiwan, and use televisions
and electronic items from China.

 In a global economy, jobs tend to flow where lower costs give businesses a
comparative advantage, though labor groups, politicians, and local
community leaders see the exporting of jobs as undermining the job market
at home.

 Managers face the difficult task of balancing the interests of their

organizations with their responsibilities to the communities in which they
operate.
 Adapting to Differing Cultural and Regulatory Norms
 “Going global” for a business is not as simple as typing in an overseas e-mail address,
shipping goods off to a foreign port, or building facilities in other countries.

 To be successful, managers need to know the cultural practices of the workforce in

each country where they do business. For instance, in some countries a large
percentage of the workforce enjoys long holidays. There will be country and local
regulations to consider, too.

 Managers of subsidiaries abroad need to be aware of the unique financial and legal
regulations applying to “guest companies” or else risk violating them, which can
have economic and even political consequences.

 Such violations can have implications for their operations in that country and also for
political relations between countries. As well, managers need to be cognizant of
differences in regulations for their competitors in that country; many times, the laws
will give national companies significant financial advantages over foreign
subsidiaries.
 Managing Workforce Diversity
 One of the most important challenges for organizations is workforce diversity, the
concept that organizations are becoming more heterogeneous in terms of gender,
age, race, ethnicity, sexual orientation, and inclusion of other diverse groups.

 Whereas globalization focuses on differences among people from different

countries, workforce diversity addresses differences among people within given
countries.

 Workforce diversity acknowledges a workforce of women and men, many racial and
ethnic groups, individuals with a variety of physical or psychological abilities, and
people who differ in age and sexual orientation. Managing this diversity is a global
concern.

 For example, most European countries have experienced dramatic growth in

immigration from the Middle East. Argentina and Venezuela host a significant
number of migrants from other South American countries, and nations from India to
Iraq to Indonesia find great cultural diversity within their borders.
 Improving Customer Service
 Service employees include technical support representatives, fast-food
counter workers, sales clerks, nurses, automobile repair technicians,
consultants, financial planners, and flight attendants.

 The shared characteristic of their jobs is substantial interaction with an

organization’s customers. OB can help managers increase the success of these
interactions by showing how employee attitudes and behavior influence
customer satisfaction.

 Many an organization has failed because its employees failed to please

customers. Management needs to create a customer-responsive culture.

 OB can provide considerable guidance in helping managers create such

cultures—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
 Skills of people need to improved & upgraded as per the requirements from
time to time. In the business area, there are always lots of changes which
occur at a faster rate in terms of technology, environment & structure.

 These changes need to be addressed in order to achieve efficiency & increase

productivity. Employees & other executives of the organisation should possess
the required skills in order to easily adapt to these changes.

 Failure to adopt these changes will make it difficult to achieve targeted goals
timely. There are basically 2 sets of employee skills that are technical &
managerial skills.

 Managers should, therefore, focus on designing a proper performance appraisal

program consisting of various training & development programmes for their
employees. This will help them in improving their skills.
 Working in Networked Organizations
 Networked organizations allow people to communicate and work together
even though they may be thousands of miles apart. Independent contractors
can telecommute via computer to workplaces around the globe and change
employers as the demand for their services changes.

 Software programmers, graphic designers, systems analysts, technical writers,

photo researchers, book and media editors, and medical transcribers are just
a few examples of people who can work from home or other nonoffice
locations.

 The manager’s job is different in a networked organization. Motivating and

leading people and making collaborative decisions online requires different
techniques than when individuals are physically present in a single location.

 As more employees do their jobs by linking to others through networks,

managers must develop new skills. OB can provide valuable insights to help
with honing those skills.
 Enhancing Employee Well-Being at Work
 The typical employee in the 1960s or 1970s showed up at a specified workplace
Monday through Friday and worked for clearly defined 8- or 9-hour chunks of time.
That’s no longer true for a large segment of today’s workforce.
 Employees are increasingly complaining that the line between work and non-work time
has become blurred, creating personal conflicts and stress. At the same time, today’s
workplace presents opportunities for workers to create and structure their own roles.
 And even if employees work at home or from half a continent away, managers need to
consider their well-being at work. One of the biggest challenges to maintaining
employee well-being is the new reality that many workers never get away from the
virtual workplace.
 Communication technology allows many technical and professional employees to do
their work at home, in their cars, or on the beach —but it also means many feel like
they never really get a break. Another challenge is that organizations are asking
employees to put in longer hours.
 According to a recent study one in four employees show signs of burnout, partially as a
result of longer work hours, and two in three report high stress levels and fatigue. This
may actually be an underestimate because workers report maintaining “always on”
access for their managers through e-mail and texting.
 Finally, employee well-being is challenged by heavy outside commitments. Millions of
single-parent households and employees with dependent parents have even more
significant challenges in balancing work and family responsibilities.
 Creating a Positive Work Environment
 Although competitive pressures on most organizations are stronger than ever, some
organizations are trying to realize a competitive advantage by fostering a positive
work environment.

 Sometimes they do this by creating pleasing physical environments with attractive

modern workstations, workplace “perks” such as Google’s free lunches, or a shared
commitment to environmental sustainability initiatives such as recycling.

 But, more often, employees perceive a work environment as positive or negative in

terms of their work experiences with other employees, rather than in the quality of
its physical surroundings.

 A real growth area in OB research is positive organizational scholarship (also called

positive organizational behavior), which studies how organizations develop human
strengths, foster vitality and resilience, and unlock potential.
 Improving Ethical Behaviour
 In an organizational world characterized by cutbacks,
expectations of increasing productivity, and tough competition,
it’s not surprising many employees feel pressured to cut
corners, break rules, and engage in other questionable
practices.
 Increasingly they face ethical dilemmas and ethical choices, in
which they are required to identify right and wrong conduct.
 Should they “blow the whistle” if they uncover illegal activities
in their company? Do they follow orders with which they don’t
personally agree?
 Should they give an inflated performance evaluation to an
employee they like, knowing it could save that employee’s job?
Do they “play politics” to advance their career?
 Managers and their organizations are responding to the problem of unethical
behavior in a number of ways. They’re writing and distributing codes of ethics to
guide employees through dilemmas.

 They’re offering seminars, workshops, and other training programs to try to

improve ethical behaviors. They’re providing in-house advisors who can be
contacted, in many cases anonymously, for assistance in dealing with issues, and
they’re creating protection mechanisms for employees who reveal internal
unethical practices.

 Today’s manager must create an ethically healthy climate for his or her
employees, where they can do their work productively with minimal ambiguity
about right versus wrong behaviors.

 Companies that promote a strong ethical mission, encourage employees to

behave with integrity, and provide strong leadership can influence employee
decisions to behave ethically.
 An Organizational Structure defines the organization structure is the system which
describes the organizational hierarchy in terms of different functions, roles,
responsibilities, supervision, etc.

 It demonstrates different concerns including different roles of the employees, job

descriptions, job functions, decision-making authorities, reporting structure,
allocation of tasks in the department, individuals, project team, branch, etc.

 The organizational structure also defines the flow of information between different
levels of an organization, clarity of job of each employee, and its fitment in the
overall system which motivates the employees to work efficiently by keeping their
morale high; hence, increasing the overall productivity of an organization.

 Successful organizational structures define each employee’s job and how it fits
within the overall system.
 Common Organizational Designs
 Simple Structure: An organization structure characterized by a low degree
of departmentalization, wide spans of control, authority centralized in a single
person, and little formalization.
 This type of organizational structure is inexpensive to maintain and
accountability is very clear. However, it’s difficult to maintain this kind of
structure in any but a small organization.
 When this kind of organization structure increases in size, decision making
slows down and the manager becomes overly burdened as the go-to decision
maker for 50-100 people. It’s also risky – everything depends on one person,
and should that person become ill or die, it puts the business in jeopardy.
 The simple structure is often referred to as “pre-bureaucratic,” in that it lacks a
standardization of tasks.
 The strength of the simple structure lies in its simplicity. It’s fast, flexible,
inexpensive to operate, and accountability is clear.

 One major weakness is that it becomes increasingly inadequate as an

organization grows because its low formalization and high centralization tend
to create information overload at the top.

 As size increases, decision making typically becomes slower and can

eventually come to a standstill as the single executive tries to continue
making all the decisions. This proves the undoing of many small businesses.

 If the structure isn’t changed and made more elaborate, the firm often loses
momentum and can eventually fail. The simple structure’s other weakness is
that it’s risky— everything depends on one person. One illness can literally
destroy the organization’s information and decision-making center.
 The Bureaucracy : An organization structure with highly routine operating
tasks achieved through specialization, very formalized rules and regulations,
tasks that are grouped into functional departments, centralized authority,
narrow spans of control, and decision making that follows the chain of
command.

 Bureaucratic organizational structures are ideal for organizations that require

standardization (think banks, government offices). They’re ideal for
organizations looking for the ability to perform standard tasks highly efficiently.
Organizations with bureaucratic structures can get by with less talented people
at lower levels, because decision making almost always falls to senior leaders.

 The other major weakness of a bureaucracy is something we’ve all witnessed:

obsessive concern with following the rules. When cases don’t precisely fit the
rules, there is no room for modification. The bureaucracy is efficient only as
long as employees confront familiar problems with programmed decision rules.
 Matrix structure: An organization structure that creates dual lines of
authority and combines functional and product departmentalization.

 We can see the matrix structure in advertising agencies, aerospace firms,

research and development laboratories, construction companies, hospitals,
government agencies, universities, management consulting firms, and
entertainment companies.

 It combines two forms of departmentalization: functional and product. Companies

that use matrix-like structures include ABB, Boeing, BMW, IBM etc.

 The strength of functional departmentalization is putting like specialists together,

which minimizes the number necessary while allowing the pooling and sharing of
specialized resources across products. Its major disadvantage is the difficulty of
coordinating the tasks of diverse functional specialists on time and within budget.
 Product departmentalization has exactly the opposite benefits and
disadvantages. It facilitates coordination among specialties to achieve on-time
completion and meet budget targets. It provides clear responsibility for all
activities related to a product, but with duplication of activities and costs. The
matrix attempts to gain the strengths of each while avoiding their weaknesses.

 The strength of the matrix is its ability to facilitate coordination when the
organization has a number of complex and interdependent activities. Direct and
frequent contacts between different specialties in the matrix can let information
permeate the organization and more quickly reach the people who need it.

 The major disadvantages of the matrix lie in the confusion it creates, its
tendency to foster power struggles, and the stress it places on individuals.
Without the unity-of-command concept, ambiguity about who reports to who is
significantly increased and often leads to conflict.
 Virtual Organization: A small, core organization that outsources
major business functions. In structural terms, the virtual organization
is highly centralized, with little or no departmentalization.

 It minimizes bureaucratic overhead because there is no lasting

organization to maintain. And it lessens long-term risks and their costs
because there is no long term—a team is assembled for a finite period
and then disbanded.

 Virtual Organization outsources almost everything: manufacturing,

procurement, shipping, and quality control.

 The major advantage of the virtual organization is its flexibility, which

allows individuals with an innovative idea and little money to
successfully compete against larger, more established organizations.
 Virtual organizations also save a great deal of money by eliminating
permanent offices and hierarchical roles.

 Virtual organizations’ drawbacks have become increasingly clear as their

popularity has grown. They are in a state of perpetual flux and
reorganization, which means roles, goals, and responsibilities are unclear,
setting the stage for political behavior.

 Cultural alignment and shared goals can be lost because of the low degree of
interaction among members. Team members who are geographically
dispersed and communicate infrequently find it difficult to share
information and knowledge, which can limit innovation and slow response
time.
 Boundaryless Organization: An organization that seeks to eliminate
the chain of command, have limitless spans of control, and replace
departments with empowered teams.

 By removing vertical boundaries, management flattens the hierarchy and

minimizes status and rank.

 Cross-hierarchical teams (which include top executives, middle managers,

supervisors, and operative employees), participative decision- making
practices, and the use of 360-degree performance appraisals (in which peers
and others above and below the employee evaluate performance) are
examples of break down vertical boundaries.

 When fully operational, the boundaryless organization also breaks down

geographic barriers.
 The Leaner Organization: Downsizing - The goal of the new
organizational forms is to improve agility by creating a lean, focused,
and flexible organization.

 Downsizing is a systematic effort to make an organization leaner by

losing locations, reducing staff, or selling off business units that don’t
add value.

 Some companies focus on lean management techniques to reduce

bureaucracy and speed decision making.

 The impact of downsizing on organizational performance has been a

source of controversy. Reducing the size of the workforce has an
immediately positive outcome in the form of lower wage costs.

 Companies downsizing to improve strategic focus often see positive

effects on stock prices after the announcement.