Organizational Behavior - MBA Exam Notes

1. Introduction to Organizational Behavior

- Definition: Organizational Behavior (OB) is the study of human behavior in organizations. It seeks

to understand how individuals and groups act, and how these behaviors influence the functioning of

the organization.

- Importance:

- It helps improve productivity, job satisfaction, and employee retention.

- Helps managers understand and manage workforce dynamics effectively.

- Enhances decision-making, leadership, and communication within the organization.

2. Individual Behavior

- Personality:

- The unique set of traits and characteristics that define an individual's behavior.

- Big Five Personality Traits:

- Openness: Creativity and willingness to try new things.

- Conscientiousness: Self-discipline, carefulness, and striving for achievement.

- Extraversion: Sociability, talkativeness, and assertiveness.

- Agreeableness: Compassion and cooperation with others.

- Neuroticism: Tendency to experience unpleasant emotions easily.

- Perception:

- Definition: The process by which individuals interpret and organize sensory information.
 - Factors Influencing Perception:

- Personal Factors: Attitudes, motives, interests, experiences, and expectations.

- Situational Factors: The setting, time, and context in which perception occurs.

- Attitudes:

- Components:

- Cognitive: Beliefs and knowledge about the object.

- Affective: Emotional reactions to the object.

- Behavioral: How we act towards the object.

- Job Satisfaction: A person's overall feeling about their job, which directly influences performance

and motivation.

3. Motivation

- Definition: Motivation refers to the internal and external factors that drive individuals to take action

and pursue goals.

- Key Motivation Theories:

- Maslow's Hierarchy of Needs:

- Physiological Needs: Basic survival needs (food, water, shelter).

- Safety Needs: Physical safety and job security.

- Social Needs: Love, friendship, and social belonging.

- Esteem Needs: Recognition, self-esteem, and achievement.

- Self-Actualization: Realizing one's full potential and personal growth.

- Herzberg's Two-Factor Theory:

- Motivators (Intrinsic): Achievement, recognition, the work itself.

- McClelland's Theory of Needs:

- Need for Achievement (nAch): Desire to accomplish challenging goals.

- Need for Affiliation (nAff): Desire for friendly and supportive relationships.

- Need for Power (nPow): Desire to influence others and control resources.

- Vroom's Expectancy Theory:

- Motivation is a result of the expected rewards from effort, where individuals are motivated by

expected outcomes of their actions.

- Equity Theory:

- Employees compare their job inputs (effort, skills) and outcomes (rewards) with others. When

they perceive inequality, motivation decreases.

4. Group Dynamics

- Definition: Group dynamics is the study of the behaviors and psychological processes that occur

within a group of people working together.

- Types of Groups:

- Formal Groups: Established by the organization (e.g., teams, committees).

- Informal Groups: Formed based on personal relationships or shared interests.

- Stages of Group Development:

- Forming: Group members get to know each other.

- Storming: Conflicts arise as members express differing views.

- Performing: The group becomes highly functional and focused on task completion.

- Adjourning: The group disbands after achieving its goals.

- Group Decision Making:

- Advantages: Diverse perspectives, better problem-solving.

- Disadvantages: Longer decision-making process, groupthink (tendency to conform and avoid

conflict).

5. Leadership

- Definition: Leadership is the ability to influence and motivate individuals to work towards achieving

organizational goals.

- Leadership Theories:

- Trait Theory: Leaders are born with certain inherent qualities (e.g., intelligence, charisma).

- Behavioral Theories:

- Ohio State Studies: Leadership behaviors fall into two categories:

- Consideration: Building relationships and showing concern for employees.

- Initiating Structure: Setting clear goals and expectations for employees.

- Contingency Theories:

- Fiedler's Contingency Theory: Leadership effectiveness depends on the situation. Leaders must

adapt to fit the environment and the task.

- Path-Goal Theory: Leaders motivate followers by clearing the path to their goals, providing

necessary resources.

- Transformational Leadership: Focuses on inspiring and motivating followers to exceed

expectations by creating a shared vision.

performance.

6. Communication

- Definition: Communication is the process of transferring information and meaning between

individuals or groups.

- Types of Communication:

- Verbal Communication: Spoken or written communication.

- Non-Verbal Communication: Includes body language, facial expressions, posture, and tone of

voice.

- Barriers to Communication:

- Physical Barriers: Environmental distractions, noise.

- Emotional Barriers: Prejudices, biases.

- Language Barriers: Differences in language, terminology.

- Cultural Barriers: Different cultural norms and values.

- Effective Communication:

- Active Listening: Fully concentrating, understanding, and responding thoughtfully.

- Feedback: Encouraging two-way communication and clarifying misunderstandings.

7. Conflict and Negotiation

- Conflict: A situation where one party perceives that its interests are being negatively affected by

another party.
 - Types of Conflict:

- Task Conflict: Disagreements about the work itself.

- Relationship Conflict: Personal conflicts between individuals.

- Process Conflict: Disagreements on how tasks should be performed.

- Conflict Resolution Styles:

- Avoiding: Ignoring the conflict.

- Accommodating: Giving in to the other party's demands.

- Competing: Assertively pursuing your own interests.

- Compromising: Finding a middle ground.

- Collaborating: Working together to find a solution that satisfies everyone.

- Negotiation:

- Distributive Negotiation: Win-lose approach (dividing limited resources).

- Integrative Negotiation: Win-win approach (focusing on mutual interests and creative solutions).

8. Organizational Culture

- Definition: Organizational culture refers to the shared values, beliefs, and norms that shape the

behavior of employees.

- Types of Organizational Culture:

- Clan Culture: Collaborative, people-oriented culture (focused on teamwork).

- Adhocracy Culture: Innovative, entrepreneurial culture (focused on risk-taking and innovation).

- Market Culture: Competitive culture (focused on results and meeting external demands).

- Hierarchy Culture: Controlled, structured culture (focused on stability, order, and efficiency).
- Changing Organizational Culture: Organizational culture can be changed by leadership, formal

policies, and employee behavior modifications. This is often a slow process but is crucial for

long-term success.

9. Decision Making

- Definition: The process of selecting the best course of action among available alternatives.

- Types of Decisions:

- Programmed Decisions: Routine, repetitive decisions that are made based on established

procedures.

- Non-Programmed Decisions: Complex, unique decisions that require custom solutions.

- Decision-Making Models:

- Rational Model: Involves a logical and systematic approach to decision-making.

- Bounded Rationality: Acknowledges that humans are limited by information and cognitive

capacity.

- Intuitive Decision Making: Decisions made based on instincts, experience, and gut feelings.

10. Organizational Stress

- Definition: Stress is a physiological and psychological response to demands that exceed an

individual's capacity to cope.

- Sources of Stress:

- Workload: Excessive task demands.

- Role Ambiguity: Uncertainty about job expectations.

- Lack of Control: Feeling powerless to influence outcomes.

- Managing Stress:

- Time management techniques.

- Relaxation and mindfulness practices.

- Building a social support system.