Topic 1: Introduction to

the field of
Organizational Behavior
Special semester 2023/2024

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 1. Define organisational behaviour and
organisations, and discuss the
importance of this field of inquiry
2. Compare and contrast the four
current perspectives of organisational
Learning effectiveness
3. Debate the organisational
objectives opportunities and challenges of
globalisation, workforce diversity and
emerging employment relationships
4. Discuss the anchors on which
organisational behaviour knowledge
is based

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 1. Define organisational
behaviour and organisations,
and discuss the importance of
this field of inquiry

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 Organisational Behaviour
Organisational behaviour defined:
• The study of what people think, feel and do in and around organisations
• It looks at employee behavior, decisions, perceptions, and emotional
responses.
• It examines how individuals and teams in organizations relate to each
other and to their counterparts in other organizations.
• OB also encompasses the study of how organizations interact with their
external environments, particularly in the context of employee behavior
and decisions.
• OB researchers systematically study these topics at multiple levels of
analysis, namely, the individual, team (including interpersonal), and
organization.

High-performance work practices, Values-driven organization, Motivating jobs, and Inspirational leadership: these
are just a few of the organizational behaviour topics and practices.

Organizations need to employ skilled and motivated people who can be creative, work in teams, and maintain a
healthy lifestyle. They need leaders with foresight and vision, who support innovative work practices, and make
decisions that consider the interests of multiple stakeholders.

The purpose of learning OB is to help you understand what goes on in organizations. We examine the factors that
make companies effective, improve employee well-being, and drive successful collaboration among coworkers.
We look at organizations from numerous and diverse perspectives, from the deepest foundations of employee
thoughts and behaviour (personality, self-concept, attitudes, etc.) to the complex interplay between the
organization’s structure and culture and its external environment.

Organizational behaviour (OB) is the study of what people think, feel, and do in and around organizations. It
looks at employee behaviour, decisions, perceptions, and emotional responses. It examines how individuals and
teams in organizations relate to each other and to their counterparts in other organizations.

OB also encompasses the study of how organizations interact with their external environments, particularly in the
context of employee behaviour and decisions. OB researchers systematically study these topics at multiple levels
of analysis, namely, the individual, team (including interpersonal), and organization.

What are organizations? Organizations are groups of people who work interdependently toward some purpose.

One key feature of all organizations throughout history is that they are collective entities. They consist of human
beings—typically, but not necessarily, employees—who interact with each other in an organized way. This
organized relationship requires some minimal level of communication, coordination, and collaboration to achieve
organizational objectives. As such, all organizational members have degrees of interdependence; they
accomplish goals by sharing materials, information, or expertise with co-workers

Another key feature of organizations is that their members have a collective sense of purpose. This collective
purpose isn’t always well defined or agreed on. Most companies have vision and mission statements

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 Organisations
Organisations defined:
• Groups of people who work
interdependently toward some purpose
• One key feature of all organizations
throughout history is that they are
collective entities. A "collective entity" is
defined as "an organization which is
recognized as an independent entity apart
from. its individual members.". Examples of
collective entities include corporations,
partnerships, associations, and labor
unions.
• A second key feature of organizations is that
their members have a collective sense of
purpose.

High-performance work practices, Values-driven organization, Motivating jobs, and Inspirational leadership: these
are just a few of the organizational behaviour topics and practices.

Organizations need to employ skilled and motivated people who can be creative, work in teams, and maintain a
healthy lifestyle. They need leaders with foresight and vision, who support innovative work practices, and make
decisions that consider the interests of multiple stakeholders.

The purpose of learning OB is to help you understand what goes on in organizations. We examine the factors that
make companies effective, improve employee well-being, and drive successful collaboration among coworkers.
We look at organizations from numerous and diverse perspectives, from the deepest foundations of employee
thoughts and behaviour (personality, self-concept, attitudes, etc.) to the complex interplay between the
organization’s structure and culture and its external environment.

Organizational behaviour (OB) is the study of what people think, feel, and do in and around organizations. It
looks at employee behaviour, decisions, perceptions, and emotional responses. It examines how individuals and
teams in organizations relate to each other and to their counterparts in other organizations.

OB also encompasses the study of how organizations interact with their external environments, particularly in the
context of employee behaviour and decisions. OB researchers systematically study these topics at multiple levels
of analysis, namely, the individual, team (including interpersonal), and organization.

What are organizations? Organizations are groups of people who work interdependently toward some purpose.

One key feature of all organizations throughout history is that they are collective entities. They consist of human
beings—typically, but not necessarily, employees—who interact with each other in an organized way. This
organized relationship requires some minimal level of communication, coordination, and collaboration to achieve
organizational objectives. As such, all organizational members have degrees of interdependence; they
accomplish goals by sharing materials, information, or expertise with co-workers

Another key feature of organizations is that their members have a collective sense of purpose. This collective
purpose isn’t always well defined or agreed on. Most companies have vision and mission statements

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 • Importance of organizational behaviour are
as follows:
• 1. Developing interpersonal skills –
Organizational behaviour exposes managers
to highly needed interpersonal skills, such as
leading, motivating, analytical ability,
Why Study decision-making skills and many others.
• 2. Personal development and
OB? understanding others – Being able to
understand others lead to personal
development for the individual, and can
also lead to enhanced self-knowledge and
selfinsight. Understanding others will also
assist managers in making better decisions
and achieving outcomes

Survey findings indicated that students who have been in the workforce for some time typically point
to OB as one of their most valuable courses. Why?

There are three main reasons why OB theories and practices are important:

1.The field of organizational behaviour uses scientific research to discover systematic relationships,
which give us a valuable foundation for comprehending organizational life. This knowledge satisfies
our curiosity about why events occur and reduces our anxiety about circumstances that would
otherwise be unexpected and unexplained. Furthermore, it helps us predict and anticipate future
events so we can get along with others, achieve our goals, and minimize unnecessary career risks.

2.A frequent misunderstanding is that OB is common sense (develop through personal experience).
Personal theories (developed through personal experience) are not quite as precise and
comprehensive. OB knowledge you will gain here will help you challenge and refine your personal
theories, and give you more accurate and complete perspectives of organizational events.

3.Probably the greatest value of OB knowledge is that it helps us get things done in the workplace by
influencing organizational events. By definition, organizations are people who work together to
accomplish things, so we need a toolkit of knowledge and skills to work successfully with others.
Studies consistently observe that the most important knowledge and skills that employers desire in
employees are skills such as building teams, motivating co-workers, handling workplace conflicts,
making decisions, and changing employee behavior….the OB!

Organizational Behaviour is for everyone. Effective management does depend on OB concepts and
practices. OB knowledge is probably more valuable than ever before because employees increasingly
need to be proactive, self-motivated, and able to work effectively with coworkers without
management intervention. I

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 • 3. Achieving organizational and individual
effectiveness from inter-organization
relationships – Help managers in becoming
more people-oriented, enabling them to use
their wisdom and understanding to improve
interpersonal communication between
Why Study organization members, to resolve conflicts
OB? and to build effective teams in the
workplace.
• 4. Sharpening and refining our decisions
and actions – OB challenge us to revisit
generally accepted ideas that may actually
be only partially true.

Survey findings indicated that students who have been in the workforce for some time typically point
to OB as one of their most valuable courses. Why?

There are three main reasons why OB theories and practices are important:

1.The field of organizational behaviour uses scientific research to discover systematic relationships,
which give us a valuable foundation for comprehending organizational life. This knowledge satisfies
our curiosity about why events occur and reduces our anxiety about circumstances that would
otherwise be unexpected and unexplained. Furthermore, it helps us predict and anticipate future
events so we can get along with others, achieve our goals, and minimize unnecessary career risks.

2.A frequent misunderstanding is that OB is common sense (develop through personal experience).
Personal theories (developed through personal experience) are not quite as precise and
comprehensive. OB knowledge you will gain here will help you challenge and refine your personal
theories, and give you more accurate and complete perspectives of organizational events.

3.Probably the greatest value of OB knowledge is that it helps us get things done in the workplace by
influencing organizational events. By definition, organizations are people who work together to
accomplish things, so we need a toolkit of knowledge and skills to work successfully with others.
Studies consistently observe that the most important knowledge and skills that employers desire in
employees are skills such as building teams, motivating co-workers, handling workplace conflicts,
making decisions, and changing employee behavior….the OB!

Organizational Behaviour is for everyone. Effective management does depend on OB concepts and
practices. OB knowledge is probably more valuable than ever before because employees increasingly
need to be proactive, self-motivated, and able to work effectively with coworkers without
management intervention. I

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 2. Compare and contrast the
four current perspectives of
organisational effectiveness

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 Organisational
Effectiveness
• Organizational effectiveness is the outcome
that most OB theories are ultimately trying
to achieve.

Apple and Google (Alphabet) are the two most admired companies in the world,
according to Fortune magazine’s annual list. How did Apple and Google achieve their
incredible success? They have consistently applied the four perspectives of
organizational effectiveness that we will discuss from now.

Organizational effectiveness is considered the “ultimate dependent variable” in

organizational behavior. This means that organizational effectiveness is the outcome
that most OB theories are ultimately trying to achieve. Many years ago, OB experts
thought the best indicator of a company’s effectiveness was how well it achieved its
stated objectives (i.e. annual sales and profit targets).

Today, we know that this goal perspective might not indicate organizational
effectiveness at all. Worse still, some goals might ultimately put the company out of
business. For example, they may focus employees on reducing costs whereas success
may require more focus on product or service quality, that require more investment
in employee training.

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 Four Perspectives of
Organisational
Effectiveness
Need to consider all four perspectives when
assessing an organisation’s effectiveness:
• Open systems perspective
• Organisational learning perspective
• High performance work practices
perspective
• Stakeholder perspective

The best yardstick of organizational effectiveness is a composite of four perspectives:

open systems, organizational learning, high-performance work practices, and
stakeholders.

In other words, organizations are effective when they have a good fit with their
external environment, are learning organizations, have efficient and adaptive
internal subsystems (i.e., high-performance work practices), and satisfy the needs
of key stakeholders.

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 Open Systems
Perspective

• The open systems perspective states

that organizations are effective when
they maintain a good “fit” with their
external environment.
• Good fit exists when the organization’s
inputs, processes, and outputs are
aligned with the resources available in
the external environment as well as with
the needs and expectations of that
environment.
• Effective organizations - Adapt to the
environment, Influence the environment

The open systems perspective states that organizations are effective when they maintain a good “fit” with their external
environment. Good fit exists when the organization’s inputs, processes, and outputs are aligned with the resources available in
the external environment as well as with the needs and expectations of that environment. Organizations maintain a good
environmental fit in three ways:

Adapt to the environment: Effective organizations closely and continuously monitor the environment for emerging conditions
that pose a threat or opportunity. Then they reconfigure their internal subsystems to align more closely with that shifting
environment. There are many ways that companies are adaptive (called their dynamic capability), such as by changing the type
or volume of products produced, shifting to different input resources that are more plentiful or reliable, and designing better
production processes.

Influence the environment: Effective organizations don’t merely respond to emerging conditions; they actively try to influence
their environment. For instance, businesses rely on marketing to increase demand for their products or services. Some firms
gain exclusive rights to particular resources (e.g., sole provider of a popular brand) or restrict competitor access to valued
resources. Others lobby for legislation that strengthens their position in the marketplace or try to delay legislation that would
disrupt their business activities.

Move to a more favourable environment: Sometimes the current environment becomes so challenging that organizations
cannot adapt or influence it enough to survive. For instance, the current environment might have extreme resource scarcity, too
many competitors, too little demand for the firm’s products, or rules that make the transformation process too demanding or
expensive. Under these circumstances, organizations often move to a more benevolent environment that can support their
future.

In addition to maintaining a good fit with the external environment, effective organizations have a transformation process that
does well at converting inputs to outputs. The most common indicator of effective internal subsystems is their efficiency.
Efficient organizations produce more goods or services with less labor, materials, and energy. Another indicator is their
adaptability. A third indicator of an effective transformation process is innovativeness.

An important feature of an effective transformation process is how well the internal subsystems coordinate with each other.
Coordination is one of the most important OB concepts because organizations consist of people working together to achieve
collective goals.

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 Organisational Learning Perspective
• This perspective takes the view that organizations are effective when they find
ways to acquire, share, use, and store knowledge.
• Knowledge is a resource or asset, called intellectual capital, which exists in
three forms:
• Human capital: Human capital refers to the knowledge, skills, and abilities that
employees carry around in their heads - a huge risk for most organizations
because it literally leaves the organization every day when employees go home!
• Structural capital: Even if every employee left the organization, some
intellectual capital remains as structural capital. It includes the knowledge
captured and retained in an organization’s systems and structures such as the
documented work procedures, physical layout of production.
• Relationship capital: Relationship capital is the value derived from an
organization’s relationships with customers, suppliers, and others who provide
added mutual value for the organization.

The second perspective of organizational effectiveness is called organizational learning. This

perspective takes the view that organizations are effective when they find ways to acquire,
share, use, and store knowledge. Knowledge is a resource or asset, called intellectual
capital, which exists in three forms: human capital, structural capital, and relationship
capital.

Human capital: Human capital refers to the knowledge, skills, and abilities that employees
carry around in their heads. It is a competitive advantage because employees are essential
for the organization’s survival and success, and their talents are difficult to find, to copy, and
to replace with technology. Human capital is also a huge risk for most organizations because
it literally leaves the organization every day when employees go home!

Structural capital: Even if every employee left the organization, some intellectual capital
remains as structural capital. It includes the knowledge captured and retained in an
organization’s systems and structures, such as the documented work procedures, physical
layout of production and office space, and the finished products.

Relationship capital: Relationship capital is the value derived from an organization’s

relationships with customers, suppliers, and others who provide added mutual value for the
organization. It includes the organization’s goodwill, brand image, and combination of
relationships that organizational members have with people outside the organization.

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 Organisational
Learning
Perspective

• An organization’s intellectual capital develops

and is maintained through the four organizational
learning processes:

An organization’s intellectual capital develops and is maintained through the four organizational learning
processes: acquiring, sharing, using, and storing knowledge.

Acquiring knowledge refers to bringing in knowledge from the external environment as well as through
discovery. It occurs daily when employees casually observe changes in the external environment as well as when
they receive formal training from sources outside the organization. Knowledge acquisition also occurs through
environmental scanning, such as actively monitoring consumer trends, proposed government legislation, and
competitor activities. Then it could also happen through hiring of skilled staff. Finally, knowledge acquisition
occurs through experimentation—generating new ideas and products through creative discovery and testing.

Sharing knowledge refers to distributing knowledge throughout the organization. This mainly occurs through
formal and informal communication with co-workers, as well as through various forms of in-house learning
(training, observation, etc.).

Knowledge is a competitive advantage only when it is applied to improve organizational processes. To use
knowledge, employees need a mental map (sense making) so they are aware the knowledge exists and know
where to find it in the organization. Knowledge use also requires employees with sufficient prerequisite
knowledge and skills. For example, financial analysts need foundation knowledge in mathematics and financial
products to use new knowledge on asset valuation methods. Autonomy is another important condition for
knowledge use; employees must have enough freedom to try out new ideas. Knowledge use also developed
where workplace norms strongly support organizational learning.

Storing knowledge is the process of retaining knowledge, which is known as organizational memory. Some
memory is embedded in the organization’s systems and structures as structural capital. Effective organizations
also retain knowledge in human capital by motivating employees to stay with the company. Furthermore,
organizations encourage employees to share what they know so valuable knowledge is held by co-workers when
an employee does quit or retire. Another strategy is to actively document knowledge when it is created by
debriefing teams on details of their knowledge of clients or product development.

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 Organisational Learning Perspective

An organization’s intellectual capital develops and is maintained through the four organizational learning
processes: acquiring, sharing, using, and storing knowledge.

Acquiring knowledge refers to bringing in knowledge from the external environment as well as through
discovery. It occurs daily when employees casually observe changes in the external environment as well as when
they receive formal training from sources outside the organization. Knowledge acquisition also occurs through
environmental scanning, such as actively monitoring consumer trends, proposed government legislation, and
competitor activities. Then it could also happen through hiring of skilled staff. Finally, knowledge acquisition
occurs through experimentation—generating new ideas and products through creative discovery and testing.

Sharing knowledge refers to distributing knowledge throughout the organization. This mainly occurs through
formal and informal communication with co-workers, as well as through various forms of in-house learning
(training, observation, etc.).

Knowledge is a competitive advantage only when it is applied to improve organizational processes. To use
knowledge, employees need a mental map (sense making) so they are aware the knowledge exists and know
where to find it in the organization. Knowledge use also requires employees with sufficient prerequisite
knowledge and skills. For example, financial analysts need foundation knowledge in mathematics and financial
products to use new knowledge on asset valuation methods. Autonomy is another important condition for
knowledge use; employees must have enough freedom to try out new ideas. Knowledge use also developed
where workplace norms strongly support organizational learning.

Storing knowledge is the process of retaining knowledge, which is known as organizational memory. Some
memory is embedded in the organization’s systems and structures as structural capital. Effective organizations
also retain knowledge in human capital by motivating employees to stay with the company. Furthermore,
organizations encourage employees to share what they know so valuable knowledge is held by co-workers when
an employee does quit or retire. Another strategy is to actively document knowledge when it is created by
debriefing teams on details of their knowledge of clients or product development.

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 • The HPWP perspective states that
organizations become more effective
through workplace practices that enhance
human capital.
• Workplace practices that leverage the
High- potential of human capital

Performance • Four of the best-known high-performance

work practices:
Work • Employee involvement
• Job autonomy
Practices • Employee competence (training,
selection)
• Reward performance and competencies
• Need to ‘bundle’ practices because they
work best together

The HPWP perspective states that organizations become more effective through workplace practices that enhance human
capital.

Motivated and skilled employees offer competitive advantage by generating more efficient, adaptive, and innovative
transformation of inputs to outputs, by providing better sensitivity to the external environment, and by having better relations
with key stakeholders.

Company like InBev builds human capital through four of the best-known high-performance work practices: employee
involvement, job autonomy, competency development, and rewards for performance and competencies

Employee involvement and autonomy strengthen employee motivation, improve decision making, accelerate organizational
responsiveness, and increase employee commitment to change. In high-performance workplaces, employee involvement and
job autonomy are often assigned to self-directed teams (see Chapter 8).

Employee competency development refers to recruiting, selecting, and training employees so they have useful skills,
knowledge, and other personal characteristics. The fourth high-performance work practice is linking performance and skill
development to various financial and nonfinancial rewards valued by employees.

These four work practices individually improve organizational effectiveness, but studies suggest that they have a stronger effect
when applied together.

High-performance work practices improve an organization’s effectiveness in three ways:

• First, as mentioned earlier, the related activities develop employee skills and knowledge (human capital), which
directly improve individual behaviour and performance.
• Second, companies with superior human capital tend to adapt better to rapidly changing environments. This
adaptability occurs because employees are better at performing diverse tasks in unfamiliar situations when they
are highly skilled and have more freedom to perform their work.
• A third explanation is that HPWP strengthen employee motivation and positive attitudes toward the employer.
HPWPs represent the company’s investment in its workforce, which motivates employees to reciprocate through
greater effort in their jobs and assistance to co-workers

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 Stakeholder
Perspective

• Stakeholders include organizations, groups, and

other entities that affect, or are affected by, the
company’s objectives and actions.
• Challenges with stakeholder perspective:
• Stakeholders have conflicting interests
• Firms have limited resources to satisfy all
stakeholder needs

Stakeholders include organizations, groups, and other entities that affect, or are
affected by, the company’s objectives and actions.

The stakeholder perspective personalizes the open systems perspective; it identifies

specific social entities in the external environment as well as employees and others
within the organization (the internal environment). This perspective also recognizes
that stakeholder relations are dynamic; they can be negotiated and influenced, not
just taken as a fixed condition.

In general, the stakeholder perspective states that organizations are more effective
when they understand, manage, and satisfy stakeholder needs and expectations.

Understanding, managing, and satisfying the interests of stakeholders is challenging

because they have conflicting interests and organizations lack sufficient resources to
satisfy everyone. Therefore, organizational leaders need to decide how much priority
to give to each group.

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 Stakeholders: Values and Ethics

• The stakeholder perspective incorporates values, ethics, and corporate

social responsibility into the organizational effectiveness equation.
• Values
• Relatively stable, evaluative beliefs, guide preferences for outcomes or
courses of action in various situations
• Ethics
• Moral principles and values, determine whether actions are right or
wrong and outcomes are good or bad
• Corporate social responsibility (CSR)
• Consists of organizational activities intended to benefit society and the
environment beyond the firm’s immediate financial interests or legal
obligations.
• It is the view that companies have a contract with society, in which they
must serve stakeholders beyond stockholders and customers.

The stakeholder perspective incorporates values, ethics, and corporate social

responsibility into the organizational effectiveness equation. For example, personal
values influence how corporate boards and CEOs allocate organizational resources to
stakeholders.

Although values exist within individuals, groups of people often hold similar values,
so we tend to ascribe these shared values to the team, department, organization,
profession, or entire society.

Values in this context can be defined as a relatively stable, evaluative beliefs that
guide our preferences for outcomes or courses of action in a variety of situations.
Values help us know what is right or wrong, or good or bad, in the world. Detail about
value will be studied in Chapter 2.

Ethics refers to the study of moral principles or values that determine whether
actions are right or wrong and outcomes are good or bad. We rely on our ethical
values to determine “the right thing to do.” Ethical behaviour is driven by the moral
principles we use to make decisions. We will also explore more about ethical
decisions and behaviour in Chapter 2.

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 3. Debate the organisational
opportunities and challenges
of globalisation, workforce
diversity and emerging
employment relationships

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 Contemporary
INDIVIDUAL TASK:
NO. 1 Developments Facing
REFER TO THE
BRIGHTEN Organizations
Four major environmental developments facing
organizations:
1. Technological change
2. Globalization
3. Emerging employment relationships
4. Increasing workforce diversity.

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 4. Discuss the anchors on
which organisational
behaviour knowledge is based

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 Thank you!
Any question?

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