What is Organizational Behaviour (OB)?

OB is the study of

• People/employees
• What people think, feel and do in and around organizations.
• It looks at employee behaviour, decisions, perceptions and emotional responses and examines
how individuals and teams in organizations relate to each other and their counterparts in other
organizations.

• Organizations
• How they interact with their external environments, especially in the context of employee
behaviour and decisions

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What are organizations?

Organizations are groups of people who work interdependently toward a common purpose.

They are not necessarily contained in buildings or government-registered entities. Many do not
have physical walls and are “virtual”.

A key feature is that they are collective entities consisting of people (not necessarily employees)
who interact with each other in an organized way. This organized relationship requires a minimal
level of communication, coordination and collaboration to achieve organizational objectives.

Another key feature is that its people have a collective sense of purpose. It may not always be
well defined or agreed on.

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 One
Why is it so important to learn about organizational behaviour? Mainly, by knowing why things happen in organizations, it can help us to predict
and be more proactive in guiding organizational events. By understanding both:
• How employees think and what makes them behave the way they do (personality, self-concept, attitudes, etc) AND
• How an organization’s structure and culture interact with its external environment.

Two Four All these elements are combined into an

There are four major societal At the end of the day, organizational integrative model of organizational
developments facing organizations: behaviour best practices are about behaviour, which acts as a road map for
• Technological change increasing an organization’s effectiveness the remainder of the course.
• Globalization – this is seen as the “ultimate dependent
• Emerging employment relationships variable” in organizational behaviour. But,
• Increasing workforce diversity how to measure this? Is it how well an
organization meets its stated objectives?
Three Not necessarily – an organization might
There are four anchors (set of beliefs or meet or exceed its own objectives but still
knowledge structures) that guide the be beaten by competitors. Therefore, a
development of organizational behaviour better approach is found by looking at four
knowledge: perspectives:
• Systematic research anchor • Open systems
• Multidisciplinary anchor • Organizational learning
• Contingency anchor • High performance work practices
• Multiple levels of analysis anchor • Stakeholders

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Why study OB? What’s in it for me personally?

OB is often cited by graduates as being one of their most valuable courses for giving them
the ability to:
• Influence organizational events
• Comprehend and predict work events
• Adopt more accurate personal theories

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The four contemporary developments facing
organizations

Emerging
Technological
Globalization employment Workforce diversity
change
relationships

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The four contemporary developments facing organizations cont’d
1. Technological change

• Over time, as one technology has replaced the other, old ways of doing
things have diminished and new improved ways have replaced them. For
example, communicating via telegraph was replaced by land-line based
telephones which were then replaced by smartphones and the Internet).

• Productivity may have improved, however it has also affected our

relationships and patterns of behaviour with co-workers, clients and
suppliers. People often feel unable to disconnect from their jobs during
their personal and vacation time as well as to maintain attention spans
while working. These have an impact on workplace stress.

• At the organizational level, entire organizations have been reconfigured by

integrating suppliers and other external entities. In addition, technology is
reshaping competition in various industries.

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The four contemporary developments facing organizations cont’d
2. Globalization

• The economic, social and cultural connectivity and interdependence with people in other
parts of the world, made even more intense as a result of information technology and
transportation systems

• Organizations seek to globalize because of access to larger markets, lower costs and more
access to knowledge and innovation

• However, its effects are not entirely positive, with questions on the impact on developing
nations as well as to what extent does it cause work intensification, reduced job security
and challenges to work-life balance in developed countries

• OB therefore looks at how best to lead and work effectively in this context, and explores
what additional knowledge and skills (eg emotional intelligence, a global mindsent,
nonverbal communication, conflict handling) could be helpful

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The four contemporary developments facing organizations cont’d
3. Emerging employment relationships

• Before the digital age, most employees would work eight or nine hours and could separate personal
time from their employment. Today, many are remaining connected to their work in some form on a
24/7 schedule. There is also the increasing trend towards remote work, where employees work way
from the traditional work site either at client sites (as in the case, for example, or repair technicians
and management consultants) or towards telework/telecommuting, where employees work from
their own homes.

• While this brings several benefits, such as increased productivity, less time spent commuting, etc,
there is often the challenge of maintaining a healthy work-life balance and avoiding social isolation,
among others.

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The four contemporary developments facing organizations cont’d
4. Improving workforce diversity

• Moving beyond “surface-level” diversity (ie observable demographic or other overt differences
among members of a group) to “deep’level” diversity (ie differences in personalities, values, attitudes
and skills, that cannot be seen).

• Teams with high informational diversity (members with different knowledge and skills) tend to be
more creative and make better decisions. A more diverse workforce also is more representative of
the society in which the organization operates.

• However to reap these benefits, there also needs to be processes to mitigate any hurdles along the
way – for example, teams with more diverse members may take longer to perform effectively
together because they tend to experience communication problems and gaps in informal group
dynamics.

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The four anchors of organizational behaviour knowledge

To help navigate through topics and trends such as those just discussed, Organizational Behaviour relies
on the following four conceptual “anchors” which act as basic sets of beliefs or knowledge structures:

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The four anchors of organizational behaviour knowledge cont’d
Systematic research anchor

It is important for decisions to be based on evidence as opposed to hunches or pet projects. OB experts have
proposed a few simple solutions to create a more evidence-based organization:
• Be skeptical of hype eg claims of an idea or solution being “new”, “revolutionary” or “proven”. In reality,
most management ideas are adaptations, evolutionary and never “proven”.

• Embrace collective expertise rather than rely on charismatic stars and management gurus.

• Avoid using stories as the main foundation for taking management action. Rely instead on more systematic
investigation with a larger sample.

• Develop a neutral mindset towards popular trends and ideologies. Executives tend to get distracted by what
their competitors are doing without checking first on how valid or relevant those trendy practices might be.

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The four anchors of organizational behaviour knowledge cont’d
Multidisciplinary anchor

According to this anchor, the OB field should welcome theories and knowledge from other disciplines, not
just from its own isolated research base.
For instance, the field has drawn a large body of insights from disciplines such as
• psychology (improving our understanding of individual and interpersonal behaviour),
• sociology (contributing to what we know about team dynamics, organizational socialization,
organizational power etc),
• communication
• marketing
• information systems.

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The four anchors of organizational behaviour knowledge cont’d
Contingency anchor
There is no “one best way” whereby a particular concept or practice has the same results in every situation.

Therefore we cannot count on having the same result in every situation where we apply an OB theory. A
particular action may have different conquences under different conditions.

Multiple levels of analysis anchor

The OB field tends to use three ‘buckets’ or levels of analysis when examining what goes on within
organizations:

• Individual
• Team/interpersonal
• Organization

However it is still worth thinking about each variable from the perspective of all the levels, not just one. For
instance, communication may primarily be thought of as an interpersonal or team process however it is also
useful to consider the individual and organization processes that are involved.
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Four perspectives of organizational effectiveness

As mentioned earlier, OB theories and • Good fit with • Are learning

tools are all geared towards increasing its external organizations
an organization’s effectiveness – this is environment
seen as the “ultimate dependent
variable” in organizational behaviour.
Open Organizationa
Two of the leading companies in the systems l learning
world today, Amazon and Apple, were
once struggling to succeed – Amazon
started selling books online after its
owner, Jeff Bezos, took a course on High
Stakeholder performance
how to run a bookstore and Apple was s work
barely achieving a few percentage practices
points of market share. • Satisfy needs • Adaptive and
of key efficient
They both managed to turn their stakeholders
situations around by adopting some
or all of the following four
perspectives:
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Perspectives of organizational effectiveness cont’d
Open systems perspective

According to this perspective, organizations are complex organisms that “live” within an external
environment (as opposed to closed systems which operate without any interactions with or dependence on
their external environment)

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Perspectives of organizational effectiveness cont’d
Open systems perspective – Organization-Environment Fit
Organization-Environment Fit – the open systems perspective states that organizations are effective when
they maintain a good “fit” with their environment, by aligning their inputs, processes and outputs with the
external environments needs, expectations and resources. This is done in three ways:

Moving to a
Adapting to the Influencing the more
environment environment favourable
environment

Closely monitoring for threats

Rather than just responding,
or opportunities and This might happen when
they try to influence their
reconfiguring their internal the current environment
environment. For example, by
subsystems accordingly. E.g.
changing the type or volume
gaining exclusive rights to becomes too challenging
particular resources or or if opportunities present
of items produced or
restricting competitor access themselves elsewhere.
designing better production
to valued resources.
processes.
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Perspectives of organizational effectiveness cont’d
Open systems perspective – Effective transformation processes
Effective organizations are also those that have a transformation process that does well at converting inputs
to outputs. Good indicators of an effective internal transformation process are:

Efficiency Adaptability Innovativeness

Adapting new Designing

Producing more
products, or products and
goods or services
ways of making work processes
with less labour,
products, to the that are superior
materials and
external to what
energy
environment competitors offer

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Perspectives of organizational effectiveness cont’d
Organizational learning perspective

In this view, organizations are effective when they find ways to acquire, share, use and store knowledge.
Knowledge is seen as a resource or asset called intellectual capital which is embodied in three forms:

Human capital The knowledge, skills and abilities that reside with employees. This is a
competitive advantage particularly when such talents are difficult to find, copy
or replace with technology.

Structural capital This includes the knowledge captured and retained in an organization’s systems
and structures, such as documented work procedures, physical layout of
production space and finished products that can be reverse engineered or
copied.
Relationship The value that resides with the organization’s relationships with customers,
capital suppliers and others. It also includes the organization’s goodwill and brand
image.

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Perspectives of organizational effectiveness cont’d
Organizational learning perspective – cont’d

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Perspectives of organizational effectiveness cont’d
High performance work practices perspective

This perspective, based on the belief that human capital is an important competitive advantage, provides
specific organizational practices to make the transformation process more effective. If employees are motivated
and skilled they will transform inputs to outputs better, be more sensitive to the external environment and have
better relations with key stakeholders.
The four primary work practices found to be highly effective in generating the most value from human capital
are:

Employee involvement in decision making

Job autonomy over work activities

Competency development through recruitment, selection and

training
Rewards – both financial and nonfinancial – linked to performance
and skills development
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Perspectives of organizational effectiveness cont’d
Stakeholders perspective

This perspective provides more guidance on how stakeholder relationships can help organizations be better
adapted to their external environment. Stakeholders include organizations, groups and other entities that
affect, or are affected by, the company’s objectives and actions.
There are several factors that influence how stakeholders could be prioritized by the organization:
• Its power and urgency for action
• Its legitimate claim to organizational resources
• How executives perceive the organization’s environment
• Its culture
• Personal values of the corporate board and CEO

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Perspectives of organizational effectiveness cont’d
Stakeholders perspective – values, ethics and CSR

Corporate Social
Values Ethics
Responsibility (CSR)

The organizational activities

The study of moral principles or
relatively stable beliefs that guide intended to benefit society and
values that determine whether
our preferences for outcomes or the environment. This goes
actions are right or wrong and if
courses of action. They guide us above and beyond the
outcomes are good or bad. Eg the
on what is right or wrong or good organization’s immediate
notion of what is “the right thing
or bad in the world. financial interest and legal
to do”
obligations

Many organizations have

Exist both within individuals and therefore adopted the “triple
among groups of people (eg Ethical behaviour is driven by the bottom line” philosophy which
teams, departments, moral principles that guide our goes beyond seeking only
organizations, professions, entire decisions. financial returns and aims also to
societies) have a social and environmental
impact

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