Organizational Behaviour

UNIT- I: Introduction to OB - Definition, Nature and Scope – Environmental and organizational context
– Impact of IT, globalization, Diversity, Ethics, culture, reward systems and organizational design on
Organizational Behaviour. Cognitive Processes-I: Perception and Attribution: Nature and importance of
Perception – Perceptual selectivity and organization – Social perception – Attribution Theories – Locus of
control –Attribution Errors –Impression Management.
Organizations are complex systems. Human behaviour in organizations is sometimes unpredictable.
The behaviour of her colleagues, manager, and customers arises from their deep-seated needs, lifetime
experiences, and personal value systems. However, human behaviour in an organization can be
partially understood by studying and applying the frameworks of behavioural science, management,
and other disciplines; exploring the various facets of such behaviour is the objective of OB. To provide
an understanding of what goes on at the workplace, it is useful to begin with the definition, goals,
forces, and major characteristics of organizational behaviour (OB).
The high degree of complexity and rapid changes managers face today, personal and organizational
success can be elusive. Unforeseen economic, political, social, or technological changes can render
even the best-laid plans useless. More oft en than not, the success of individual managers and
organizations pivots on such human factors as commitment, motivation, communication, leadership,
and trust. The people component plays a very vital role in managerial and organizational success.
OB, is an interdisciplinary field dedicated to the better understanding and managing of people at work.
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.
 An organization is a group of people with a defined relationship in which they work together to
achieve the goals of that 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.
 “Organization can be defined as the process of identifying and grouping the work to be performed,
defining and delegating responsibility and authority and establishing relationships for the purpose
of enabling people to work most effectively together in accomplishing objectives.”- Louis A. Allen

Management functions are as follows:

a) Planning: A process that includes defining goals, establishing strategy, and developing plans to
coordinate activities.

b) 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.

c) Leading: A function that includes motivating employees, directing others, selecting the most
effective communication channels, and resolving conflicts.
d) Controlling: Monitoring activities to ensure they are being accomplished as planned and correcting
any significant deviations.

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Organizational Behaviour

1.1 Introduction to Organizational Behaviour:

 Incorporating OB principles into the workplace can yield many important organizational
outcomes.
 Organizational behaviour is the systematic study and careful application of knowledge about how
people-as individuals and as groups-act within organizations. It strives to identify ways in which
people can act more effectively.

 OB’s goal is to understand and predict human behaviour in organizations. The complexities of
human behaviour are not easy to predict, but neither are they random-certain fundamental
consistencies underlie the behaviour of all individuals.

Four goals of OB are: to describe, understand, predict, and control human behaviour at work.
a. First objective is to describe, systematically, how people behave under a variety of conditions.
Achieving this goal allows managers to communicate about human behaviour at work.

b. A second goal is to understand why people behave as they do. Managers would be highly
frustrated if they could only talk about behaviours of their employees, but not understand the
reasons behind those actions.

c. Predicting future employee behaviour is another goal of organizational

behaviour.Ideally,managers would have the capacity to predict which employees might be
dedicated and productive or which ones might be absent, tardy, or disruptive on a certain day (so
that managers could take preventive actions).

d. Control, at least partially, and develop some human activity at work. Since managers are held
responsible for performance outcomes, they are vitally interested in being able to make an impact
on employee behaviour, skill development, team effort, and productivity. Managers need to be able
to improve results through the actions they and their employees take, and organizational behaviour
can aid them in their pursuit of this goal.

Figure1.1 Key Forces Affecting Organizational Behaviour

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Organizational Behaviour

Four key forces: A complex set of forces affects the nature of organizations today. A wide array of
issues and trends in these forces can be classified into four areas-people, structure, technology, and the
environment in which the organization operates
a. People: People make up the internal social system of the organization. That system consists of
individuals and groups, and large groups as well as small ones. There are informal groups and
formal ones.

b. Structure: Structure defines the formal relationship and use of people in organizations. Different
jobs are required to accomplish all of an organization’s activities. There are managers and
employees .These people have to be related in some structural way so that their work can be
effectively coordinated. These relationships create complex problems of cooperation, negotiation,
and decision making.

c. Technology: Technology provides the resources with which people work and affects the tasks that
they perform. They cannot accomplish much with their bare hands, so they construct buildings,
design machines, create work processes, and assemble resources. The technology used has a
significant influence on working relationships.
d. Environment: All organizations operate within an internal and an external environment. A single
organization does not exist alone. It is part of a larger system that contains many other elements,
such as government and other organizations.

 Organizational Behaviour: A Framework:

The framework for understanding the behaviour of employees in organizations consists of fi ve basic
components:
1. The environment
2. Individual processes
3. Interpersonal and group processes
4. Organizational processes
5. Change processes

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1.2 Definitions:
 Organizational behaviour focuses on the behaviour, attitudes, and performance of people in
organizations. Organizational theory focuses on the design and structure of organizations.

 Organizational behaviour is the study of human behaviour, attitudes, and performance in

organizations. It is the study of what people think, feel and do, in and around organizations.

 Organizational Behaviour (OB) can be defined as the understanding, prediction and management
of human behaviour both individually or in a group that occur within an organization. Internal and
external perspectives are the two theories of how organizational behaviour can be viewed from an
organization’s point of view.

 Organizational behaviour (OB) is a field of study that investigates the impact individuals, groups,
and structure have on behaviour within organizations, for the purpose of applying such knowledge
toward improving an organization’s effectiveness.

 It studies three determinants of behaviour in organizations: individuals, groups, and structure.

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Organizational Behaviour

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

 OB is the study of what people do in an organization and how their behaviour affects the
organization’s performance. OB is concerned specifically with employment-related situations; it
emphasizes behaviour as related to concerns such as jobs, work, absenteeism, employment
turnover, productivity, human performance, and management.

 Organizational behaviour is the study of human behaviour, attitudes, and performance in

organizations. It is the study of what people think, feel and do, in and around organizations.

 “Organizational behaviour is directly concerned with the understanding, prediction, and control of
human behaviour in organizations.” Fred Luthans.

 “Organizational behaviour studies the impact that individuals, groups and structure have on
behaviour within organization for the purpose applying such knowledge towards improving
Organizational effectiveness.” Stephen P. Robbins.

 “Organizational Behaviour is the study and application of knowledge about how people act within
organization.” Keith Davis ,

 “Organizational Behaviour is a branch of the Social Sciences that seeks to build theories that can
be applied to predicting, understanding and controlling behaviour in work organizations.” Raman
J. Aldag

 “Organizational Behaviour is a subset of management activities concerned with understanding,

predicting and influencing individual behaviour in Organizational setting.” Callahan, Fleenor and
Kudson.

 In words of K Aswathappa, “OB is the study of human behaviour in organizational setting, of the
interface between human behaviour and organization and of the organisation itself.”

 According to L. M. Prasad, “Organizational behaviour can be defined as the study and application
of knowledge about human behaviour related to other elements of an organization such as
structure, technology and social systems.”

 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

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Organizational Behaviour

 Importance of Organization Behaviour/ Why to Study OB:

1. It builds better relationship by achieving, people, organizational, and social objectives.
2. It covers a wide array of human resource like Behaviour, training and development, change
management, leadership, teams etc.
3. It brings coordination which is the essence of management.
4. It improves goodwill of the organization.
5. It helps to achieve objectives quickly.
6. It makes optimum utilization of resources.
7. It facilitates motivation.
8. It leads to higher efficiency.
9. It improves relations in the organization.
10. It is multidisciplinary in the sense that applies different techniques, methods, and theories to
evaluate the performances.

 Significance Organizational Behaviour:

OB is a study involving the analysis of an organization's persons, community and structure or actions,
and this analysis has significant significance in an organization's successful working.. It is a kind of
study pertaining to “what people do within an organization” and “how their behaviour affects the
performance of an organization”. Organizational conduct relates primarily to job-related concerns such
as jobs, work, leaves, turnover, efficiency, human resources, and management.
Organizational behaviour study provides a comprehensive set of concepts and theories dealing with
commonly accepted 'facts' about a person's behaviour and organizations acquired over the years. Study
of “organization behaviour does offer challenges and opportunities for managers since it focuses on
ways and means to improve productivity, minimize absenteeism, increase employee job satisfaction,
etc”. A Study Organization Behaviour provides a basis for managers to develop and create an ethical
culture and climate of work. Also, good prediction of human and Organizational behaviour is helpful.
OB is the study of individual behaviour in isolation, when in group and as a part of an organization.
The study of individual behaviour only, would be incomplete because behaviour is affected by the
people surrounding us as well as by the organization, in which we work. Studying only individuals or
only organizations would be of no use. It is essential to study both simultaneously.
Personality, perception, learning, attitude, family background, training, motivation, job satisfaction,
performance appraisal, leadership effectiveness, norms, values and ethics are the factors which affect
the individual behaviour. Group dynamics, communication, organizational environment, individual
and organizational culture affect group behaviour. Organizational structure, power & politics, status,
relation with juniors & seniors, conflicts and culture affect the individual behaviour in the
organization.

 Study of organizational behaviour helps in studying:

i. Why people behave in a particular way?
ii. Why one person is more effective than the other?
iii. Why one group is more effective than the other?
iv. Why one person is more effective in one organization as compared to the other organisations?
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The study of above things gives sound knowledge about human behaviour and this knowledge can be
applied in shaping the behaviour and taking various decisions related to policy making in human
resource management.

1.3 Nature and Scope of Organizational Behaviour:

On the basis of above mentioned definitions and different views, features of Organizational Behaviour
can be defined in the following manner:

Figure.1.3 Features of OB

Nature of Organizational behaviour:

 Integral part of Management  Science and Art
 Field of study  Fulfillment of Employees need
 Inter Disciplinary Approvals  Humanistic and Optimistic
 Analysis of Behaviour  Oriented towards Organizational goals
 Goal Oriented  Total System Approach
 Human Tool

The nature/ characteristics of OB are as given below:

a. OB is a part of general management and not the whole of management. It represents behavioural
approach to management.

b. OB contains a body of theory, research and application associated with a growing concern for
people at the work place. It helps in understanding human behaviour in work organizations.

c. Organizational Behaviour applies humanistic approach towards people working in the

organization. It, deals with the thinking and feeling of human beings.OB is a human tool for
human benefit. It helps in predicting the behaviour of individuals.

d. OB is inter-disciplinary field of study. It tries to synthesize knowledge drawn from various

behavioural and social sciences such as Psychology, Sociology, Anthropology, Political-science,
Economics, etc. In fact, OB is applied behavioural sciences.

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e. OB involves three levels of analysis of behaviour-individual behaviour, group behaviour and

behaviour of the organization itself.

f. OB is an Applied Science. O.B. basically does is the application of various researches to solve
the organizational problems related to human behaviour. The basic line of difference between
pure science and O.B.

g. Organizational Behaviour is a normative science also. While the positive science discusses only
cause effect relationship, O.B. prescribes how the findings of applied researches can be applied
to socially accept organizational goals.

h. OB is an action-oriented and goal-directed discipline. It provides a rational thinking about

people and their behaviour

i. OB is both a science and an art. The systematic knowledge about human behaviour is a science.
The application of behavioural knowledge and skills clearly leans towards being an art.

j. OB seeks to fulfill both employees’ needs and organizational objectives.

k. OB is a Total System Approach. The system approach is one that integrates all the variables,
affecting organizational functioning. The systems approach has been developed by the
behavioural scientists to analyze human behaviour in view of his/her socio-psychological
framework.

 Scope of Organizational Behaviour:

“OB is a field of study that investigates the impact those individuals, groups, and structure has on
behaviour within organizations, for the purpose of applying such knowledge towards improving an
organization’s effectiveness”.
The scope of OB involves three levels of behaviour in organizations: individuals, groups and
structure

Individual Behavior Group Behavior

 Personality  Work groups and group dynamics
 Perception  Dynamics of conflict
 Communication
 Values and
Attitudes  Leadership
 Learning  Morale
 Motivation

Organization: Structure, Process and

Application
 Organizational Climate
 Organizational Culture
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 Organizational Change
 Organizational Effectiveness
 Organizational Development
Organizational Behaviour

 The scope of the organizational behaviour is as under:

 Impact of personality on performance  Impact of culture on organizational
 Employee motivation behaviour
 Leadership  Management of change
 How to create effective teams and groups  Management of conflict and stress
 Study of different organizational structures  Organizational development
 Individual behaviour, attitude and learning  Organizational culture
 Perception  Transactional analysis
 Design and development of effective  Group behaviour, power and politics
organization  Job design
 Job design  Study of emotions

 Organizational behaviour is Multi-displinary:

These various/different disciplines including psychology, sociology, social psychology, political
science, anthropology, etc.

Organizational behaviour is an applied behavioural science built on contributions from a number of

behavioural disciplines, mainly psychology and social psychology, sociology, anthropology, and,
increasingly, political science and neuroscience. Psychology’s contributions have been principally
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. Neuroscience has
contributed to our understanding at the individual and group level of analysis.

 Psychology: The term 'psychology' originates from the Greek language 'Psyche' meaning 'soul'
or 'heart' Psychology seeks to measure, explain, and sometimes change the behaviour of
humans and other animals. Contributors who add to the knowledge of OB are learning
theorists, personality theorists, counseling psychologists, and, most importantly, industrial and
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organizational psychologists. Early industrial/organizational psychologists studied the

problems of fatigue, boredom, and other working conditions that might 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. They have made important
contributions to our study of group behaviour, 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 behaviour in organizations, particularly formal and complex organizations. Perhaps most
importantly, 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 behaviour 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.

 Political Science: Political science is the study of systems of government but also political
behaviours and activities. As such, it provides insight into the distribution of power and
resources, and how those distribution decisions are influenced. Political scientists contribute to
our understanding of the government regulation of industry, strategic mergers and acquisitions,
group behaviour and decision making, public relations, and the use of personal-influence
tactics and power plays within organizations.

 Neuroscience: Neuroscience is the study of the structure and function of the nervous system
and brain. Neuroscientists have recently begun contributing to OB by studying topics such as
the impact of hormone levels on risk-taking in business contexts, the influence of pheromones
on team behaviours, and the underlying cognitive structures and neural processes that
contribute to inadvertent prejudice and associated skill discounting and underutilization of
workers.

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1.4 Environmental and organizational context:

'Organizational Context' is important in studying environmental management system standards.
Context is a thorough determination and understanding of the internal and external issues that can
impact an organization and its objectives.
Organizational environment is defined as a set of characteristics which describe the organization
and distinguish it from other organizations within a given time period affecting behaviour of the
employees.
Environmental factors belong to the environment external to the organization. They are represented
by the factors which are present in the surrounding of the organization and affecting the
organization. These factors include political and regulatory (P), economical (E), social (S), technical
and technological (T), and ecological (E). These factors are parts of macro-environment and
sometimes called PESTE (or sometimes due to the changed order of items STEP analysis) factors.

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Organizational Behaviour

The study of environmental factors for organizational environment makes possible the interpretation
of many phenomena as well as control over many situations within the orga-nization. These factors
affect the organizational policies and decision making. They also have influence on the long-run
objectives of the organization.
An organization must understand the basic elements of environment to perform efficiently. There
are two types of environments to understand:
a) Micro environment /Internal
b) Macro environment/External
a) Micro environment /Internal: The events that occur within the organization are called as
Financial resources (such as, funding, Investment, Income etc.), Physical resources (such as
location, equipment, facilities etc), Human (Such as employees etc.)

b) Macro environment./External: The events or factors apart of the organization are of two
types.
 General environment: Economic, Socio-Cultural, Political & Technology.
 Task Environment: Customers, Suppliers, Competitors, Financial institutions, Government,
Media etc.
Environmental context for organizational behaviour is markedly different from past. Management is
forced to rethink approaches to operations and human resources because of: –Information
technology, globalization, diversity, and ethics. Organizations are now more responsive to both
external and internal environments.

Environmental Context of Organizational Behaviour:

Globalization, diversity, and ethics have forced management of all types of organizations to totally
rethink their approach to both operations and human resources. Because of the paradigm shi ft,
organizations are now more responsive to both their external and internal environments.
a) Globalization
b) Diversity
c) Ethics

1.5 Impact of IT, globalization, Diversity, Ethics, culture, reward systems and organizational
design on Organizational Behaviour.
The pace of change is accelerating and most of the transformation is occurring in the workplace.
Globalization, diversity, and ethics serve as very important environmental or contextual dimensions
for organizational behaviour. The new workplace, environmental changes such as globalization and
recognition and management of diversity and ethics represent a paradigm shift. This shift is
characterized by new rules, new boundaries, and, importantly, new thinking and behaviours that are
essential for organizations and managers to be successful or even survive.

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 Role of Information Technology:

Information technology (IT) is "the study, design, development, implementation, support or
management of computer-based information systems, particularly software applications, computer
hardware and mobile devices."IT deals with the use of electronic computers and computer software
to convert, store, protect, process.
Increasing of IT is a basis for economic development. Modern technologies enhance productivity
with quality at low prices.
IT helps the organization to improve such as communicating and sharing of information, to
discover and provide better employment opportunities, reduces manual work procedures, online-
training & assessment, Networked work systems or hybrid work process, Gig-working
opportunies,E-commerce,Digital platforms etc.
New Technology aim to reduce costs, increases productivity & quality; reduce dependence on
skilled labour, provides scope to up to date; Competitor organizations are also introducing new
technology etc. Advances in technology that have accompanied globalization lead us to a new type
of working relationship such as global virtual teams.
 E-business: Still portrayed as a recent phenomenon and is almost equated with today’s Internet.
 Knowledge management: Tangible knowledge assets captured and retained in organization
structures and systems.
 Newer types of IT such as electronic-mail and groupware (app. Software to help people in
achieving their common goals) are creating significant changes in the way that information
flows around groupware, and between them and their customers and suppliers.

 It provides more effective ways of accessing information from multiple sources, including use
of external information on databases and on the Internet.

 Group decision support systems that operate in a meeting room environment can help enhance
decision making, but it does need someone who is an expert facilitator to help the group master
the technique of structured discussion.

 Intense competition is forcing the organization to become more efficient and effective. One way
to increase efficiency and effectiveness is the use of information technology.

 As the industry becomes more global in its procurement, manufacturing and marketing
operations, it requires greater use of information technology to reduce time and space barriers.

 With constant reorganization as well as increased mergers and acquisitions, top management
recognizes the need for flexibility through compatible information technologies. (BPR)

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 Impact of Globalization:
Globalization term is the used to describe the growing interdependence of the world's economies,
cultures, and populations, brought about by cross-border trade in goods and services, technology,
and flows of investment, people, and information. It is the integration of any market with the global
economy. Globalization refers to the complex economic networks of international competition,
resource suppliers, and product markets. It has fostered the thought of multiculturalism, the
relationship between culture and organizational behaviour has become increasingly valued.
Globalization means to increase their base of operations, expand their workforce with minimal
investments, and provide new services to a broad range of consumers. It is process of increasing the
connectivity and interdependence of the worlds markets and businesses.
Globalization is the process that integrates people from different society, culture, politics, and
business across world. A border less world with free movement of goods & services across the
boundaries. It can be described as the movement of organizational behaviours across international
borders.
Expansion of global market improves the efficiency and living standards of organization.
Organization can use adequate rational decision making to resolve the increasing
internationalization problems. Multinational firms contribute to global inequality.
Major environmental context impacting organizational behaviour is globalization. The advances
made in IT people to travel and communicate have truly made the world a smaller place.
Globalization, expanded capacity, and advances in technology have required organizations to be
fast and flexible if they are to survive. Economic globalization continues to expand, the very idea of
diversity management must expand to include a diversity of cultures and situations.

Effects of Globalization:
 Industrial - Emergence of worldwide production markets and broader access to a range of
foreign products for consumers and companies.

 Financial - Emergence of worldwide financial markets and better access to external financing
for borrowers.
 Economical - Realization of a global common market, based on the freedom of exchange of
goods and capital.

 Political - Politically, the United States has enjoyed a position of power among the world
powers; in part because of its strong and wealthy economy. With the influence of globalization
and with the help of The United States’ own economy, the People's Republic of China has
experienced some tremendous growth within the past decade.

 Competition – To survive in the new global business, market calls for improved productivity
and increased competition. Industries have to upgrade their products and use technology
skillfully for facing the competition and increasing their competitive.
 Cultural - Growth of cross-cultural contacts; advent of new categories of consciousness and
identities embodies cultural diffusion.
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Organizational Behaviour

 Informational - Increase in information flows between geographically remote locations. This is

a technological change with the advent of fiber optic communications, satellites, and increased
availability of telephony and Internet.
Threats of Globalization: Opportunities:
 Increase of unemployment  Growth & development
 Diversity  Push the exports abroad and foreign
 The multinational have only handful investment is much more convenient.
of shareholders  Increase trend of outsourcing HR
 Health sector functions
 Free Trade

Advanced Globalization: Sourcing resources, Delivering & Information exchange

 Impact of Diversity on Organizational Behaviour or Managing Workforce Diversity:
Diversity can be defined as a mixture of people who vary by age, gender, race, religion, and
lifestyle. One management challenge is to help people understand diversity so that they can
establish productive relationships with people at work. Effectively managing diverse workforce
means adopting practices that recognize all aspects of diversity. Perhaps nothing has greater
implications for managing diversity than the changing characteristics of the workforce. Th e
composition of the workforce is changing at a very high pace. Most multinational organizations
have a highly diverse workforce. Whereas globalization focuses on differences among people from
different countries, workforce diversity addresses differences among people within given countries.
“Diversity is being different or diverse variety.”“Diversity in the workplace is
defined as a trait of company culture wherein the workforce composition includes employees of
different genders, age, sexual orientation, religions, languages, abilities, professional backgrounds,
socioeconomic backgrounds, and educational backgrounds.

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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.
Organizations like Hewlett-Packard conduct workshops for all employees during which the
emphasis is on educating and encouraging managers to understand culturally different employees
and to create an environment that fosters productivity.
Workforces in Asia, Western Europe, Latin America, and North America are growing more
complex and diverse. Thus, managers need to recognize differences resulting from this diversity,
particularly in terms of what employees want from their jobs.
Some of the challenges that organizations face with a diverse workforce is listed here are Language
differences, National ethnic groupings, Attitude and cultural differences.
The diversity in the Indian population can be seen in terms of region, religion, caste,
language, education, gender, social, financial, age and other related factors. A diverse workforce in
Indian business organizations is an outgrowth of many related factors, such as increased educational
level of employees, initiatives of the government to uplift socially disadvantaged groups,
heightened awareness about the rights and empowerment of women, organizational issues,
increased rate of immigration from rural India to the more developed urban areas, and increase in
the age level of employees entering the corporate world. Diversity has found to be to be
advantageous to organizations in achieving innovation & competitive advantage.
Characteristics of diversity are Gender identity, Age, Race, Cultural/Ethics, Religion, Others:
Causes for emergence of diversity are Changing demographics, political & legal systems,
Competition, growth of international business etc.

 Ethics:
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, employees face ethical dilemmas and
ethical choices, in which they are required to identify right and wrong conduct.
Ethics refers to the study of moral principles or values that determine whether actions are right or
wrong and outcomes are good or bad.
Ethics are generally accepted and practiced standards expected from business managers. These
ethics are influenced by the expectations of society, employees, government etc. from the business.
The word “ethics” is taken from the Greek word ethikos which means “relating to one’s character”
or “moral nature”. In an organization, ethics means various rules, guidelines and principles which
direct the way an employee should behave at workplace. It also refers to the “code of conduct”
which one should follow while working in an organization.
Code of ethics is a document describing what the organization stands for and the general rules of
conducts expected of employees.
Organizational ethics also known as business ethics are the values, principles, and standards that
guide the individual and group behaviour of the people in an organization.
Today’s manager must create an ethically healthy climate for employees in which they can do their
work productively with minimal ambiguity about right versus wrong behaviours. Companies that
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promote a strong ethical mission, encourage employees to behave with integrity, and provide strong
leadership can influence employee decisions to behave ethically.
Ethical behaviour not only builds trust but also enhances employee engagement. The best
companies value integrity, transparency, and trust.

 Organizational Culture:
Organizational culture refers to “a system of shared meaning held by members that distinguishes the
organization from other organizations.”
Organizational culture is defined as a “set of basic assumptions that a given group has invented,
discovered, or developed in learning to cope with its problems of external adaptation and internal
integration that have worked well enough to be considered valid, and therefore, to be taught to new
members as a correct way to perceive, think and feel in relation to these problems.”
Organizational culture as a “set of customs and typical patterns of ways of doing things. Th e force,
pervasiveness, and nature of such model, beliefs, and values vary considerably from organization to
organization.
Organizational culture refers to a system of shared meaning held by members that distinguishes the
organization from other organizations.
There are even primary characteristics seem to capture the essence of an organization’s culture:
1. Innovation and risk taking: The degree to which employees are encouraged to be innovative
and take risks. The extent to which people are expected to be creative and generate new ideas.
2. Attention to detail: The degree to which employees are expected to exhibit precision, analysis,
and attention to detail. Concern for being analytical and precise.
3. Outcome orientation: The degree to which management focuses on results or outcomes rather
than on the techniques and processes used to achieve them. The strength of its concern for achieving
desired results.
4. People orientation: The degree to which management decisions take into consideration the
effect of outcomes on people within the organization. Orientation towards people-being fair,
supportive, and sharing respect for individuals’ rights.
5. Team orientation. The degree to which work activities are organized around teams rather than
individuals. Collaborative orientation-emphasis on working in teams, as opposed to individually.
6. Aggressiveness: The degree to which people are aggressive and competitive rather than
easygoing.
7. Stability: The degree to which organizational activities emphasize maintaining the status quo in
contrast to growth. Valuing a stable, predictable rule-oriented environment.
8. Easygoingness-the extent to which the work atmosphere is relaxed and laid back.

 Reward systems:
Reward systems are now recognized as being a vital dimension of the organizational environment.
Organizations provide rewards to their personnel in order to try to motivate their performance and
encourage their loyalty and retention. Organizational rewards take a number of different forms
including money (salary, bonuses, and incentive pay), recognition, and benefits.
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Organizational Behaviour

Reward system refers to all the monetary, non-monetary and psychological payments that an
organization provides for its employees in exchange for the work they perform. Rewards schemes
may include extrinsic and intrinsic rewards.
reward for employment in the form of pay, salary, or wage, including allowances, benefits (such as
company car, medical plan, and pension plan) to motivate the employees for best performance.
Forms of rewards are money/pay, recognition & benefits etc.
The organization’s reward system influences decision makers by suggesting which choices have
better personal payoffs. If the organization rewards risk aversion, managers are more likely to make
conservative decisions.
Organizational reward system is concerned with selection of types of rewards to be offered by
organization It rewards includes all types of rewards, both intrinsic and extrinsic.
 Extrinsic: A tangible reward that comes from an external source, such as an employer.
Typically related to employee performance, these might be a financial bonus, company car,
discount scheme or similar physical reward.
 Intrinsic: These are non-physical rewards that relate to the emotional response the employee
receives upon completing the job. This could be a sense of achievement when meeting a
deadline or finishing a project or it might be receiving recognition for a job well done.

Benefits of a reward system: Increase productivity, staff morale, high-quality staff and lower levels
of turnover etc. Rewarding employee performance is an essential aspect of creating a motivated and
high-performing workforce. By acknowledging and incentivizing exceptional performance,
organizations can boost employee morale, increase engagement, and drive productivity.
 Monetary Rewards: Monetary benefits refer to financial incentives offered by employers to
their employees. These rewards, including salary, bonuses, gratuity, commissions, and
allowances.
 Non-monetary rewards: Non-monetary rewards are those that do not involve money. They
include praise, thanks, recognition, and awards. They are intrinsic or internal benefits that can
be gained from an employee's work. They help employees to feel valued and motivated.

Types of rewards:
1. Traditional methods of pay:
a) Base pay: Base pay is the hourly rate or salary that an employee earns before any additional
payments are added.
b) Merit pay: Merit pay is a type of compensation an organization or a business provides to its
employees as a reward for their high performance. Merit pay is common in sales jobs, where
performance
c) Pay-performance: performance-related pay, refers to company programs that pay
employees based on how they perform their job.
 Individual Incentive pay plans: Bonuses, Stock options
 Group incentives

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Organizational Behaviour

2. Modern methods of admistering pay:

 Reward for leadership
 Reward for contribution for goals
 Pay for knowledge
 Skill pay
 Competency pay

 Financial Incentives
Financial Incentives are those incentives that can be calculated in terms of money. Money plays a
great role in satisfying the needs of a person to obtain a social position and power. It not only
satisfies lower level needs but also satisfies the higher level needs, such as social status, power, etc.
These monetary incentives are provided to motivate people for better performance. These incentives
can be provided to both individuals and groups such as Pay& allowances, productivity linked
allowances, bonus, profit sharing, stock options, retirement benefits, & perks etc

Some of the common financial incentives are as follows:

 Pay and allowance: Salary is the basic monetary incentive for every employee. It includes
basic pay, dearness, allowances, house rents, conveyance, etc. In some business organizations,
pay hikes and increments may be linked to performance.

 Productivity-linked wage incentives: Some companies have adopted wage plans according to
their performance. The main aim of this incentive is to improve the productivity of the
employees by paying higher wages to efficient workers compared to inefficient workers.

 Bonus: Bonus is a one-time reward offered to the employees for achieving higher performance.
It is generally paid during the festival season or after achieving the target.

 Profit Sharing: Profit sharing means sharing of profit earned by a company with employees.
Profit sharing is an arrangement between employees in which they are given a part of the share
of profits.

 Stock options: Under this scheme, employees are given an option to purchase shares at a price
less than the market price. The allotment of shares creates a feeling of awareness that he is also
a part of the owner of the organization.

 Retirement benefits: Some companies offer various retirement benefits, such as pension,
provident fund, gratuity, etc., for employees to motivate them towards the achievement of
organizations.

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Organizational Behaviour

 Perks: Many companies offer additional benefits other than the salary, known as perks.
Examples, medical facilities, free education for the children of the employees, free housing
facilities, etc.

 Non-Financial Incentives:
Non-financial incentives refer to incentives or rewards which cannot be measured in terms of
money. All the needs of individuals are not satisfied by money only. Psychological, social, and
emotional factors also play an important role in providing motivation.

Some of the common non-financial incentives are:

 Status: Status refers to reducing the position and prestige associated with a job in the
organization. Higher status helps to satisfy safety and social need, esteem needs, and self-
actualization needs. Management provides status symbol facilities to its employees to motivate
them. For example, costly furniture, well-furnished AC cabins, a car, etc.

 Organizational climate: It refers to the characteristics which describe an organization and

distinguish one organization from the other. Characteristics include individual autonomy,
reward orientation, open communication, etc., which directly influence individual behaviour in a
positive direction. Management helps to create an organizational climate and tries to motivate
employees in this healthy working organizational climate.

 Career advancement opportunity: Every individual wants growth and development in his life.
When employees are provided opportunities to grow, then they feel more satisfied and become
more committed to organizational goals. For example, the opportunity for promotion works as a
tonic in encouraging employees to improve their performance.

 Job Enrichment: It is concerned with designing jobs that include a great variety of work.
Varieties of work make the work more challenging and interesting. Instead of doing routine
jobs, enriched jobs offer opportunities for recognition and growth. It also improves job
satisfaction and motivates employees.

 Employees Recognition Program: When an employee performs well, then he wants to be

praised by his superiors and fellow employees. When such appreciation is given to the
employee, then he feels motivated to perform better in the future. Employees are rewarded in
the form of congratulations and through the distribution of certificates and mementos,
displaying employee’s achievements, etc.

 Job Security: Employees want their job to be secured. They do not want to remain under a
constant threat of loss of employment. Job security means the stability of jobs. Security of job
improves the performance of employees, due to this reason, some people’s government service
as compared to private jobs.

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Organizational Behaviour

 Employee Participation: Participation has been considered a good technique for motivation. It
implies the physical and mental involvement of employees in the decision-making process.
Employees feel important when they are asked to suggest their field of activities. It provides
psychological satisfaction to the employees.

1.6 Organizational design:

Organizational design is the process of structuring organizational activities so that the structure is
compatible with other organizational components as well as the external environment.
An organizational structure outlines how responsibilities and roles are assigned and grouped
throughout an organization.
Organization design is also about designing a structure that aligns with a company’s mission,
encourages collaboration, unlocks adaptability and enables efficient achievement of goals.
“The objective of organization design is to ensure organizations have the right people, with the right
skills, doing the right work in the right way in the right numbers with real alignment to achieve
strategic objectives”
Organizational architecture, also known as organizational design, is a field concerned with the
creation of roles, processes, and formal reporting relationships in an organization.
Organizational structure is a system that outlines how certain activities are directed in order to
achieve the goals of an organization. These activities can include rules, roles, and responsibilities.
The organizational structure also determines how information flows between levels within the
organization.
Important Functions of Organizational Design:
• It helps to focus on the organizational objectives.
• It helps to divide the organizational activities into various groups.
• It helps to provide a system of coordination.

Types of Organization and their Structure:

There are two broad categories of organization, which are:
1. Formal Organization
2. Informal Organization
a. Formal Organization: Formal organization is that type of organization structure where the
authority and responsibility are clearly defined. The organization structure has a defined delegation
of authority and roles and responsibilities for the members.
The formal organization has predefined policies, rules, schedules, procedures and programs. The
decision making activity in a formal organization is mostly based on predefined policies.
Formal organization structure is created by the management with the objective of attaining the
organizational goals.

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Organizational Behaviour

There are several types of formal organization based on their structure, which are discussed as
follows:
1. Line Organization structure
2. Line and Staff Organization structure
3. Functional Organization structure
4. Project Organization structure
5. Matrix Organization structure

1. Line Organization: Line organization is the simplest organization structure and it also happens
to be the oldest organization structure. It is also known as Scalar or military or departmental type of
organization.
In this type of organizational structure, the authority is well defined and it flows vertically from
the top to the hierarchy level to the managerial level and subordinates at the bottom and continues
further to the workers till the end.
There is a clear division of accountability, authority and responsibility in the line organization
structure.

Advantages of Line organization: Disadvantages of Line organization:

1. Simple structure and easy to run 1. It is rigid in nature
2. Instructions and hierarchy clearly defined 2. It has a tendency to become dictatorial.
3. Rapid decision making 3. Each department will be busy with their work
4. Responsibility fixed at each level of the instead of focusing on the overall development
organization. of the organization.

2. Line and Staff Organization: Line and staff organization is an improved version of the line
organization. In line and staff organization, the functional specialists are added in line. The staff is
for assisting the line members in achieving the target effectively.
Advantages of Line and Staff organization Disadvantages of Line and Staff organization
1. Easy decision making as work is divided. 1. Conflict may arise between line and staff
2. Greater coordination between line and staff members due to the improper distribution of
workers. authority.
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Organizational Behaviour

3. Provides workers the opportunity for growth. 2. Staff members provide suggestions to the line
members and decision is taken by line members,
it makes the staff members feel ignored.

3. Functional Organization structure: Functional organization structure is the type of

organization where the task of managing and directing the employees is arranged as per the
function they specialize. In a functional organization, there are three types of members, line
members, staff members and functional members.

Advantages of Functional organization:

1. Manager has to perform a limited number of tasks which improves the accuracy of the work.
2. Improvement in product quality due to involvement of specialists.
Disadvantages of Functional organization:
1. It is difficult to achieve coordination among workers as there is no one to manage them directly.
2. Conflicts may arise due to the members having equal positions.
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Organizational Behaviour

4. Project Organization structure: A project organization is a temporary form of organization

structure that is formed to manage projects for a specific period of time. This form of
organization has specialists from different departments who are brought together for developing
a new product.

Advantages of Project organization:

1. The presence of many specialists from different departments increases the coordination among
the members.
2. Each individual has a different set of responsibilities which improves control of the process.

Disadvantages of Project Organization:

1. There can be a delay in completion of the project.
2. Project managers may find it difficult to judge the performance of different specialists.

5. Matrix Organization: An organization structure that creates dual lines of authority and
combines functional and product departmentalization. It is the latest form of organization that is
a combination of functional and project organization. In such organizations there are two lines
of authority, the functional part of the organization and project management part of the
organization and they have vertical and horizontal flow of authority, respectively.

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Organizational Behaviour

Advantages of Matrix Organization:

1. Since the matrix organization is a combination of functional and project management teams,
there is an improved coordination between the vertical and horizontal functions.
2. Employees are motivated as everyone will be working towards one project.

Disadvantages of Matrix Organization:

1. Due to the presence of vertical and horizontal communication, there will be increased cost and
paperwork.
2. Having multiple supervisors for the workers leads to confusion and difficulty in control.

1.6 Organizational Behaviour Models:

There are four major models or frameworks that organizations operate out of-
1. Autocratic
2. Custodial,
3. Supportive, and
4. Collegial.

1. Autocratic: The basis of this model is power with a managerial orientation of authority. The
employees in turn are oriented towards obedience and dependence on the boss. The employee need
that is met is subsistence. The performance result is minimal.

2. Custodial: The basis of this model is economic resources with a managerial orientation of
money. The employees in turn are oriented towards security and benefits and dependence on the
organization. The employee need that is met is security. The performance result is passive
cooperation.

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Organizational Behaviour

3. Supportive: The basis of this model is leadership with a managerial orientation of support. The
employees in turn are oriented towards job performance and participation. The employee need that
is met is status and recognition. The performance result is awakened drives.
4. Collegial: The basis of this model is partnership with a managerial orientation of teamwork. The
employees in turn are oriented towards responsible behaviour and self-discipline. The employee
need that is met is self-actualization. The performance result is moderate enthusiasm.
Although there are four separate models, almost no organization operates exclusively in one. There
will usually be a predominate one, with one or more areas over-lapping in the other models.
The first model, autocratic, has its roots in the industrial revolution. The managers of this type of
organization operate mostly out of McGregor’s Theory X. The next three models begin to build on
McGregor’s Theory Y. They have each evolved over a period of time and there is no one best
model. In addition, the collegial model should not be thought as the last or best model, but the
beginning of a new model or paradigm.

1.7 Cognitive Processes:

Cognitive process involves obtaining information, processing it, and storing it in the memory to be
accessed again. Cognition is similar to learning because it is acquiring knowledge through direct
experiences. Cognition is a term for the mental processes that take place in the brain, including
thinking, attention, language, learning, memory and perception
Cognition refers to the mental processes dealing with acquiring, processing and storing information.
Cognitive skills include various kind of abilities like auditory and visual processing, staying focused
on a given task, processing speed, recalling information, making associations, problem solving.
Cognitive psychology is the branch of psychology it studies mental processes including how people
think, perceive, remember, and learn. As part of the larger field of cognitive science, this branch of
psychology is related to other disciplines including neuroscience, philosophy, and linguistics.
Cognitive comes from the Latin ‘cognito,’ meaning to Apprehend or understand.
Cognition-A general term including all mental processes by which people become aware of and
understand the world.
Cognition is the process by which the sensory input is transformed, reduced, elaborated, stored,
recovered, and used.
In science, cognition is the mental processing that includes the attention of working memory,
comprehending and producing language, calculating, reasoning, problem solving, and decision
making.

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Organizational Behaviour

Steps involved in cognitive processing include attention, language, memory, perception, and thought.

 Types of Cognitive Processes:

Cognitive processes refer to the mental activities that enable us to acquire, process, and store
information. Here are some of the types of cognitive processes:
1. Perception: Perception is the process of interpreting sensory information from the environment.
It involves taking in information through the senses and organizing it into meaningful patterns.

2. Attention: Attention is the ability to focus on specific information while ignoring distractions. It
is a selective process that allows us to allocate our cognitive resources to the most important
information.

3. Memory: Memory is the process of encoding, storing, and retrieving information. It involves
three stages: sensory memory, short-term memory, and long-term memory.

4. Language: Language is a complex cognitive process that involves the acquisition and use of
symbols, such as words and grammar, to communicate meaning.

5. Reasoning: Reasoning is the process of using logic to draw conclusions from available
information. It involves making deductions, inferences, and judgments.

6. Problem-solving: Problem-solving is the process of finding a solution to a problem. It involves

identifying the problem, generating possible solutions, evaluating those solutions, and selecting
the best one.

7. Decision-making: Decision-making is the process of choosing between different options. It

involves evaluating the pros and cons of each option and selecting the best one based on
personal preferences and goals.

These cognitive processes work together to enable us to process and understand the world around
us, and to make decisions and solve problems.

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Organizational Behaviour

1.8 Perception:
Perception in Organizational Behaviour is defined as the process by which an individual selects,
organizes and interprets stimuli into a meaningful and coherent picture of the world.
Perception is an intellectual process of transforming sensory stimuli to meaningful information. It
involves both recognizing environmental stimuli and actions in response to these stimuli. It is a
cognitive process by which people attend to incoming stimuli, organize and interpret such stimuli
into behaviour.
A process by which individuals organize and interpret their sensory impressions in order to give
meaning to their environment.
A process by which one screens, selects, organizes, and interprets stimuli to give them meaning. It
is a process of making sense out of the environment in order to make an appropriate behavioural
response.
Perception refers to the cognitive process through which individuals select, organize, interpret, and
give meaning to the vast array of stimuli in their work environment.
Perception can be defined as our recognition and interpretation of sensory information.
Perception refers to how your employees are seen, and how they see each other. It is how people
tend to operate and behave in the world, based on what they believe to be true. It's important to
remember everybody has their own beliefs and unique mix of traits, preferences and perceptions.
Perception refers to our sensory experience of the world. It is the process of using our senses to
become aware of objects, relationships. It is through this experience that we gain information about
the environment around us.

Definitions:
Stephen P. Robbins: “Perception may be defined as a process by which individuals organize and
interpret their sensory impressions in order to give meaning to their environment.”
Joseph Reitz: “Perception includes all those processes by which an individual receives information
about his environment — seeing, hearing, feeling, tasting and smelling.”
Fred Luthans : “Perception is an important meditative cognitive process through which persons
make interpretations of the stimuli or situation they are faced with”
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Organizational Behaviour

Perception is simply defined as how a person perceives the world around them and interprets that
information. It is a subconscious thing that the mind does and is dependent on your ability to pay
attention to your surroundings and your existing knowledge.

Factors That Influence Perception:

A number of factors operate to shape and sometimes distort perception. These factors can reside in
the perceiver; in the object, or target, being perceived; or in the context of the situation in which the
perception is made (see Exhibit 6-1)

When you look at a target and attempt to interpret what you see, your interpretation is heavily
influenced by your personal characteristics-your attitudes, personality, motives, interests, past
experiences, and expectations.

Factors Influencing Perception:

The factors that influence perceptions are of three categories, namely;
i. Factors in the perceiver: These are attitudes, expectations, experience, interest and motives.
ii. Factors in the target: They are proximity, motion, novelty, similarity, size, etc.
iii. Factors situationally: Social setting, time and work setting.
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Organizational Behaviour

When an individual looks at a target and attempts to interpret what he or she sees, that interpretation
is heavily influenced by personal characteristics of the individual perceiver. The more relevant
personal characteristics affecting perception of the perceiver are attitudes, motives, interests, past
experiences, and expectations. Characteristics of the target can also affect what is being perceived.
This would include attractiveness, gregariousness, and our tendency to group similar things
together. For example, members of a group with clearly distinguishable features or color are often
perceived as alike in other, unrelated characteristics as well.
The context in which we see objects or events also influences our attention. This could include time,
heat, light, or other situational factors.

 Nature of perception organizational behaviour is as follows:

 Intellectual Process  Socially Connected
 Psychological Process  Culturally Influenced
 Subjective Process  Self-Fulfilling
 Lens Providing Worldview

 Characteristics of perception are given as follows:

1. Perception is a process through which an individual selects data from the environment, after
selecting the data he organizes it and then obtains meaning from it.

2. Perceptions correlate, integrate, and comprehend diverse sensations and information from
many organs of the body using which a person identifies things and objects.

3. Perception is the basic cognitive or psychological process, a manner in which a person

perceives the environment that affects his behaviour. Thus people’s actions, emotions, thoughts
or feelings are triggered by the perception of their surroundings.

4. Perception is the phase of the operation that takes place after the information is received but
one that is well-nigh indistinguishable from it.

 Barriers to Perception:
Various barriers involved in perception are as follows:
 Selective Perception  Attributional Bias
 Halo Effect  Impression
 Contrast Effect  Inference
 Projection  Self-Fulfilling Prophecy
 Stereotyping  Pygmalion effect

1. Selective Perception: People are prone to describe a situation based on their interests,
background, experiences, and attitude. On the road, people tend to notice automobiles that
resemble their own. Similarly, in the office, some employees receive appreciation for their good
performance, while the same function performed by another employee may be overlooked. This

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Organizational Behaviour

is because people cannot observe every time and everything happening around them, so they
perceive things selectively.

2. Halo Effect: Many times we tend to form judgments about individuals solely based on one
particular characteristic. This is known as the halo effect. Under the influence of a halo, a perceiver
cannot judge an individual properly because he does not consider all his traits.

For example, if an employee is always the first one to reach the office and the last one to leave the
office, he is considered to be very industrious and creative.

On the other hand, an employee with a relaxed body language and casual attitude might not be
relied upon and may not be taken seriously. These two judgments made by a manager are based on
the halo effect and may not be accurate, as the manager has considered only a single obvious
characteristic of the employees. Such judgments should be carefully examined as a single trait
cannot define the nature and performance of an employee.

3. Contrast Effect: The contrast effect states that something dramatically different will overstate
the contrast between itself and other elements.

For example, in an interview when there are huge numbers of job applications, distortion in the
evaluation of any candidate may occur based on the place of his application. If his application is
placed after a relatively weak candidate, it may immediately grab the attention of the interviewer
whereas it may lose its charm if it is placed after a very strong candidate.

Another example of the contrast effect is that after evaluating an excellent performer, the
interviewer proceeds to rate other candidates’ performances. However, due to contrasting effects,
the supervisor will observe significant differences in their performances, productivity, and
aptitudes, leading to rating the initially excellent performer as an average performer. Therefore, the
contrast effect negatively influences the supervisor’s decision making.

4. Projection: Connecting one’s characteristics to other people. If a person is respectable and

trustworthy, he takes it for granted that other people are also honest and trustworthy.
People who engage in projection tend to perceive others based on their characteristics rather than
the actual attributes of the person being observed. When observing others who are similar to them,
these observers are quite accurate-not because they are conscious, but because they tend to judge
people as being similar to themselves. Therefore, when people do find someone who is like them,
they are naturally correct.

5. Stereotyping: Stereotyping refers to creating a general image of the characteristics often

incorrectly, of all members of a group. This type of perception hampers a manager’s ability to make
correct decisions.

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Organizational Behaviour

For example, Suresh is an introvert but an excellent salesman. However, his manager underrates his
performance compared to other salespersons because he does not fit in with them. The manager
here ignored his performance due to stereotyping and made an inaccurate judgment.

At certain levels, stereotyping can help in evaluating the environment. However, its negative
consequences can result in enduring inaccuracies. It creates social biasness and erroneous decisions
that hamper innovation and infect the utilization of human resources, futility, and incompetence.

For example, a study based on female and male executives stated that females with less power ha d
to face more obstacles and had to do more assignments for promotion as compared to men.

6. Attributional Bias: Attribution is the method that helps an individual determine the causes
behind his behaviour. In an organization, people are not only concerned about an individual’s
behaviour but also about the reason behind that behaviour.

For example, if the productivity of a plant increases after the installation of new machines, then the
credit would be given to the newly installed machines rather than to the manager and his employee-
handling ability.

7. Impression: The first impression of a person has a powerful impact on others. How an individual
communicates, behaves or remains quiet has an influential effect. This initial impression determines
what kind of relationship the two people will share in the future. Errors because of impression occur
when for some reason the person formulates a negative image of the other person and then refuses
to change it.

For example, If a manager observes that an employee is not performing adequately, it may be due to
personal circumstances. For example, the employee may have recently experienced the tragic loss
of his wife in an accident. However, after a few days, the employee regained his composure and
started giving a high-level performance. Unfortunately, the manager’s perception remains
unchanged, as he was negatively influenced by the first impression of that particular employee.

8. Inference: Some individuals possess the impulse to pass judgment on others without possessing
adequate knowledge.
For example, an employee might sit at his workstation throughout the entire day, and do nothing.
Still, he might be considered committed to his work.
Therefore, before conducting a performance appraisal, it is important to collect complete
information about the employee. This includes evaluating their behaviour with colleagues and
customers, while also considering their productivity, along with other relevant factors.

9. Self-Fulfilling Prophecy: Prejudiced perceptions may arise based on expectations. Many times
people try to justify their perceptions of reality although they are inaccurate. Things that are
acceptable in one culture might be considered inappropriate in another culture.

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Organizational Behaviour

Hence, in business, managers must gather information about cultural norms to avoid any awkward
situations or hurt feelings of others.
For example, an American manager employed in Japan should be aware of the fact that while
frequent smiling in America is considered polite, it would be considered foolish in Japan.

9. Pygmalion Effect: The Pygmalion effect is a psychological phenomenon in which high

expectations lead to improved performance in a given area and low expectations lead to
worsened performance.
For example, if a manager believes an employee has leadership potential, they may give that
employee more responsibilities and opportunities to develop their skills. This, in turn, can lead
to the employee becoming a better leader.

1.9 Perception process:

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Organizational Behaviour

1.10 Perceptual Selectivity:

Perceptual selection is the process by which people fi lter out most stimuli so that they can deal with
the most important ones. Perceptual selection depends on several factors, some of which are in the
external environment and some of which are internal to the perceiver.

A) External Factors Affecting Selection: External factors are in the form of perceptual inputs or
characteristics of stimuli. The influence of external factors on perceptual selectivity.
 Size: The larger the size of an external factor, the more likely it is to be perceived. A relatively
taller person is more likely to be noticed as compared to a person with average height. Similarly,
it has been observed that if we increase the size of an advertisement, it generally results in an
increase in its readership. If we increase the print size of the advertisement, the odds ofit
capturing the attention of the consumer will increase.

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Organizational Behaviour

 Intensity: The more intense an external factor, the more likely it is to be perceived (bright
lights, loud noises, and the like). For example, a loud noise on the road while students are
attending a lecture diverts their attention towards the intense stimulus.

 Contrast: External factors that stand out against the background or that are not what people
expect are the most likely to be perceived. In addition, the contrast of objects with others or with
their backgrounds may influence how they are perceived. For example, something written in
colour on the whiteboard is likely to catch people’s attention.

 Motion: Movement or an illusion of movement also tends to receive more attention. A moving
factor is more likely to be perceived when compared to a stationary factor. People are attracted by
neon lighting and by billboards with rotating bars that carry a different message on each surface.

 Repetition: A repeated factor is more likely to be perceived than a single factor. Marketing
managers use this principle in trying to get the attention of prospective customers. This is an
important factor aimed at increasing the readership of an advertisement. An advertisement may
repeat key ideas, and the advertisement itself may be presented many times for greater
effectiveness.

 Novelty and Familiarity: Either a familiar or a novel factor in the environment can attract
attention, depending on circumstances. People quickly notice an elephant walking along a city
street. Both novelty and size increase the probability of perception. You are likely to first
perceive the face of a close friend among a group of people walking towards you.

A combination of these or similar factors may be operating at any time to affect perception. In
combination with certain internal factors of the person doing the perceiving, these external factors
determine whether any particular stimulus is more or less likely to be noticed.

B) Internal Factors Affecting Selection:

• Personality: Personality is related to perception. In part, perceptions shape personality, which in
turn affects what and how people perceive.
• Learning: A perceptual set is an expectation of a perception based on past experience with the
same or similar stimuli.
• Motivation: A person’s most urgent needs and desires at any particular time can influence
Perception.

 Perceptual organization: Perceptual organization is the process by which people group

environmental stimuli into recognizable patterns.

Factors Influencing Perceptual Organization:

• Continuity: It is the tendency to perceive objects as continuous patterns.
• Closure: It is the tendency to complete an object and perceive it as a constant, overall form.

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• Proximity: This principle states that a group of objects may be perceived as related because of
their nearness to each other.
• Similarity: This principle states that the more alike objects (or ideas) are, the greater is the
tendency to perceive them as a common group.

 Perceptual Interpretation: An assessment of the information collected for the purpose of

making interpretation or judgment.

Types of Judgmental Errors:

• Similarity error: The tendency to see others having characteristics more like our own.
• Contrast error: The tendency of some interviewers to compare job candidates to other
candidates interviewed at the same time.

 Errors of Perception:
The main sources of errors in perception include the following:
 Central Tendency: Appraising everyone at the middle of the rating scale.
 Contrast Error: Basing an appraisal on comparison with other employees rather than on
established performance criteria.
 Different from me: Giving a poor appraisal because the person has qualities or characteristics
not possessed by the appraiser.
 Halo Effect: Appraising an employee undeservedly on one quality (performance, for example)
because s/he is perceived highly by the appraiser on another quality (attractiveness).
 Horn Effect: The opposite of the halo effect. Giving someone a poor appraisal on one quality
(attractiveness) influences poor rating on other qualities. (Performance)
 Initial Impression: Basing an appraisal on first impressions rather than on how the person has
behaved throughout the period to which appraisal relates.
 Latest Behaviour: Basing an appraisal on the person’s recent behaviour.
 Lenient or Generous Rating: Perhaps the most common error, being consistently generous in
appraisal mostly to avoid conflict.
 Performance Dimension Error: Giving someone a similar appraisal on two distinct but similar
qualities, because they happen to follow each other on the appraisal form.
 Spillover Effect: Basing this appraisal, good or bad, on the results of the previous appraisal
rather than on how the person has behaved during the appraisal period.
 Status Effect: Giving those in higher level positions consistently better appraisals than those in
lower level jobs.
 Strict Rating: Being consistently harsh in appraising performance.

1.11 Social perception:

Social perception occurs is when someone formally evaluates the job performance of another.
A process in which social perception occurs when someone formally evaluates the job performance
of another. Social Perception refers to how we perceive other people in our environment are also
shaped by our values, emotions, feelings, and personality.
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It is the process in which the perceiver interprets the information about another person.
Social perception refers to identifying and utilizing social cues to make judgments about social
roles, rules, relationships, context, or the characteristics (e.g., trustworthiness) of others.
In organization managers evaluate performance of an employee based on the perception.

Factors influencing social perception:

1. Characteristics of ourselves.
 Familiarity with the target /knowledge
 Attitudes
 Mood
 Self-concept
 Cognitive structure

2. Characteristics of target person, we are perceiving.

 Physical appearance
 Verbal communication
 Non-verbal communication
 Intentions

3. Characteristics of the situation:

 Content of interaction
 Strength of the situation

1.12 Attribution theory:

Pioneers of Attribution Theory: Heider, Kelley, and Weiner.
Attribution theory has been proposed to develop explanations for how we judge people differently
depending on the meaning we attribute to given behaviour. Another variation of the attribution
model, called inference model, examines the attributions based on internal causes.It refers simply to
how people explain the cause of another’s or their own behaviour.
When attributions are used, we analyze our own or others’ present behaviours and ascribe reasons
for those behaviours. The interpretation we make when attributing events, then influences our future
behaviour.
Attribution theory tries to explain the ways in which we judge people differently, depending on the
meaning we attribute to a given behaviour. It suggests that when we observe an individual’s
behaviour, we attempt to determine whether it was internally or externally caused.
The attribution process refers to the ways in which people come to understand the cause of others
(and their own) behaviour.Attributing behaviour of others to either internal disposition or external
situations
Attribution theory is concerned with the relationship between personal social perception (covered in
the last chapter) and interpersonal behaviour.
There are a number of attribution theories, but they share the following assumptions:
1. We seek to make sense of our world.
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2. We often attribute people’s actions either to internal or external causes.

3. We do so in fairly logical ways.
There are two general types of attributions that people make: dispositional attributions, which
ascribe a person’s behaviour to internal factors such as personality traits, motivation, or ability, and
situational attributions, which attribute a person’s behaviour to external factors such as equipment
or social influence from others.
a) Internally caused behaviours are those we believe to be under the personal control of the
individual. Dispositional Attribution-Based on a person’s personality or characteristics.

b) Externally caused behaviour is what we imagine the situation forced the individual to do.
Situational Attribution- Based on a person’s situation or environment.

 A dispositional factor is one that is internal to a person: something about their personality, their
motivation, their level of effort, etc.
 A situational factor is one that is external to a person, like social factors, natural events, or
happenstance.
If one of your employees is late for work, you might attribute that to his partying into the wee hours
and then oversleeping. This is an internal attribution. But if you attribute lateness to an automobile
accident that tied up traffic, you are making an external attribution.

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Stable vs. Unstable:

Stable factors are those that are unlikely to change anytime soon, whereas unstable factors are the
opposite.
 When people make a stable attribution, they infer that an event or behaviour is due to stable,
unchanging factors.
 When making an unstable attribution, they infer that an event or behaviour is Attribution.

Kelly’s has suggested that while attributing any outcomes. We need to consider or choose the
external forces or internal forces to be responsible for the outcome. He further explained that the
choice between internal or external is based on three criteria i.e.; Distinctiveness Consensus &
Consistency.

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1) Distinctiveness refers to whether an individual displays different behaviours in different

situations. It refers to how different was the behaviour of an individual, when compared to
his/her behaviour in other situations/tasks.

Is the employee who arrives late today also one who regularly “blows off” commitments?
What we want to know is whether this behaviour is unusual. If it is, we are likely to give it
an external attribution. If it’s not, we will probably judge the behaviour to be internal.

2) If everyone who faces a similar situation responds in the same way, we can say the
behaviour shows consensus. It refers to the behaviour of an individual as compared to the
behaviour of other people under similar situations. The behaviour of our tardy employee
meets this criterion if all employees who took the same route were also late. From an
attribution perspective, if consensus is high, you would probably give an external attribution
to the employee’s tardiness, whereas if other employees who took the same route made it to
work on time, you would attribute his lateness to an internal cause.

3) Finally, an observer looks for consistency in a person’s actions. The continuity of a

behaviour over a long periodic. Something that is not just in one situation. Does the person
respond the same way over time? Coming in 10 minutes late for work is not perceived in the
same way for an employee who hasn’t been late for several months as it is for an employee
who is late two or three times a week. The more consistent the behaviour, the more we are
inclined to attribute it to internal causes.

Distortion of Attributes:
One of the most interesting findings from attribution theory research is that errors or biases distort
attributions. When we make judgments about the behaviour of other people, we tend to
underestimate the influence of external factors and overestimate the influence of internal or personal
factors. The attributions are distorted due to the errors or biases.
For example: While judging others behaviour, people over estimate the effect of internal or
personal factors and under estimate the effect of external factors.

1.13 Locus of control:

Locus of control is a concept created by psychologist Julian Rotter (1954). Locus of control refers
to a person's beliefs about how much control they have over what happens to them in their life and
how much influence they have over what happens in the world around them.
It is a psychological concept that refers to how strongly people believe they have control over the
situations and experiences that affect their lives.
Locus of control is a personality characteristic which explains the degree to which individuals
perceive themselves as accountable for the events taking place in their lives.
It is a dimension of personality that explains the degree to which people believe that they, rather
than external forces, determine their own lives.

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Locus of control is divided into two types:

a) Internal locus of control
b) External locus of control
Using locus of control, work behaviour may be explained by whether employees perceive their
outcomes as controlled internally or externally.

a) Internal locus of control: Employees who perceive internal control feel that they personally can
influence their outcomes through their own ability, skills, or effort. Persons with individual
locus of control assume that they can manage the circumstances with their conduct. Individuals
with internal locus of control consider themselves as responsible for the events taking place in
their lives and depend highly on their own internal standards to judge what is right and wrong.

Example: When given a promotion, someone with an internal locus of control will think that
the promotion was entirely deserved strictly for their hard work with the company

b) External locus of control: Employees who perceive external control feel that their outcomes are
beyond their own control; they feel that external forces such as luck or task difficulty control
their outcomes. Persons with external locus of control assume that they cannot manage the
circumstances with their efforts or conduct.
As individuals with external locus of control, do not consider themselves responsible for the
events taking place in their lives instead they consider occurrence of events as luck or chance.
They are influenced by external factors. An external locus of control is often described as
attributing outcomes to such things as luck, fate, or chance
Individuals having external locus of control are less satisfied with their jobs, are more absent
and alienated from work settings and are less involved in their jobs than those have internal
locus of control. The people having internal locus of control are more active in seeking
information to make decisions and are socially active.

Example: A student with an external locus of control might believe they failed a test because they
were sick that day, because the test was too hard, or because a teacher does not like them.

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1.13 Attribution errors:

Attribution errors proposed by Heider.When we incorrectly attribute a behaviour based on
situational/dispositional factors. An attribution bias or attributional errors is a cognitive bias that
refers to the systematic errors made when people evaluate or try to find reasons for their own and
others' behaviours. It refers to the systematic patterns of deviation from norm or rationality in
judgment, often leading to perceptual distortions, inaccurate assessments, or illogical interpretations
of events and behaviours.
Attribution bias is the tendency to explain a person's behaviour by referring to their character rather
than any situational factor.

According to social psychology, Attribution errors are two types:

a) Fundamental attribution error (FAE): The tendency to underestimate the influence of
external factors and overestimate the influence of internal factors when making judgments about
the behaviour of others. FEA error occurs when someone incorrectly attributes the actions of
person to their personality or character. They explain the others behaviour by ignoring the
powerful situational forces (dispositional attributions) .
The fundamental attribution error is the tendency to place more emphasis on internal
characteristics to explain someone's bad behaviour.
An example of this is thinking that a person who didn't answer your call is rude (internal), but in
reality, they may not have received your message (external).

b) Self-serving bias: The tendency for individuals to attribute their own successes to internal
factors and put the blame for failures on external factors. Self-serving attribution is typical
behaviour of individuals taking credit for positive outcomes but finding faults in external
circumstances for negative ones. Also, the term can indicate relating successes to personal skills
and failures to issues beyond a person's control.

Example: Self-serving bias Α student who performs well on an exam may ascribe their success
to their excellent preparation and intelligence. In the case of a poor performance, the same
student would likely think that the exam was too difficult or that the questions did not
correspond to the material taught.

1.14 Impression Management:

Impression management is the process of controlling the way in which an individual is
perceived by others through social interaction. In an organization, few people act in a controlled
manner by increasing their visibility, blaming others for their mistakes, creating interpersonal
relationships etc. These actions are controlled for creating a good image among others. In
addition to this, it helps in influencing other people and obtaining self benefits.
Impression management is the subconscious or conscious act of controlling or influencing
another person's perception.

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In sociology, the attempt to manipulate the thoughts of others is known as impression management.
Impression management is defined as the act of controlling or influencing another person's
perception. Impression management may occur subconsciously or consciously and is used to
influence a person's perception of another person, an event, or material possession. Often, a person's
agenda or personal goals are the cause of impression management.
Impression management is the act of managing how other people perceive you. It is a social strategy
that we employ in order to make a good impression on others and to control what they think about
us. Also called self-presentation involves the processes by which people control how they are
perceived by others.
Examples of impression management in the workplace include dressing professionally, using
appropriate language and tone, and displaying positive body language.

Various impression management techniques, which include:

There are various impression management strategies that one might engage in when trying to
influence the views of others. The most common impression management strategies include
conformity, ingratiation, intimidation, flattery/acclaim/appreciation, self-promotion, association,
supplication, Excuses/Apology, Favors and being consistency

 Conformity aligning one's behaviour or image with their environment.

 Ingratiation influencing others' perceptions by complimenting them for one to appear likable.

 Intimidation getting what one wants by using aggression to control another person.

 Flattery/Acclaim/Appreciation excessively complimenting someone or acknowledging them for

doing their job correctly.

 Self-Promotion exaggerating one's strengths or characteristics to cause someone else to think

highly of them.

 Association surrounding oneself with a particular social group to protect or promote one's self-
image

Examples of impression management are:

 A person who only tells others of their achievements to appear successful.
 A person who only speaks highly of their significant other to persuade their parents to like
them.
 A company that uses attractive models in their advertisements to persuade the audience to
purchase the product to look like the models.
 A boss who tells their employees they will not receive a bonus if they do not increase their
sales.

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