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Organizational Behavior

Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Name of Student Mr. Barhate Mangesh Tukaram

Roll No PG/509/MBA(I)/2009J
Institute Silver Bright Institute of Management (SBIM), Pune
Subject Organizational Behavior
Date 10 Jan 2010


Page 1
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J


- Preamble
- Functions of Managers
- Roles performed by managers
- Organization
- The Challenges of today’s organization
- The Changing Organization
- Organizational Behavior
- Organizations and human behavior
- Organizational structure
- Organizational culture
- Individual vs Group Behavior
- Motivation
- Leadership
- Money and other financial rewards
- Stress
- Conflict
- Communication
- Wrapping Up

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Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Organizational behavior is a relatively young field of inquiry that studies what people
think, feel, and do in and around organizations. Organizations are groups of people who work
interdependently toward some purpose. OB concepts help us to predict and understand
organizational events, adopt more accurate theories of reality, and influence organizational
events. This field of knowledge also improves the organizations financial health. There are
several trends in organizational behavior. Globalization requires corporate decision makers to
be more sensitive to cultural differences, and seems to be associated with the recent rise in job
insecurity, work intensification, and other sources of work-related stress. Information
technology blurs the temporal and spatial boundaries between individuals and the
organizations that employ them. It has contributed to the growth of telecommute -- an
alternative work arrangement where employees work at home or a remote site, usually with a
computer connection to the office. Information technology is also a vital ingredient in virtual
teams -- cross-functional groups that operate across space, time, and organizational
Another trend in organizations is the increasingly diverse workforce. Diversity
potentially improves decision making, team performance, and customer service, but it also
presents new challenges. A fourth trend is the employment relationships that have emerged
from the changing work force, information technology, and globalization forces. Employment
relationship trends include employability and contingent work. Values and ethics represent the
fifth trend. In particular, companies are learning to apply values in a global environment, and
are under pressure to abide by ethical values and higher standards of corporate social

Page 3
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Functions of Managers
A Manager is the person responsible for planning and directing the work of a group of
individuals, monitoring their work, and taking corrective action when necessary. For many
people, this is their first step into a management career. Managers may direct workers directly or
they may direct several supervisors who direct the workers. The manager must be familiar with
the work of all the groups he/she supervises, but does not need to be the best in any or all of the
areas. It is more important for the manager to know how to manage the workers than to know
how to do their work well. A manager may have the power to hire or fire employees or to
promote them. In larger companies, a manager may only recommend such action to the next
level of management. The manager has the authority to change the work assignments of team
members. A manager's title reflects what he/she is responsible for. An Accounting Manager
supervises the Accounting function. An Operations Manager is responsible for the operations of
the company. The Manager of Design Engineering supervises engineers and support staff
engaged in design of a product or service. A Night Manager is responsible for the activities that
take place at night. There are many management functions in business and, therefore, many
manager titles. Regardless of title, the manager is responsible for planning, directing, monitoring
and controlling the people and their work.

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Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Managers just don't go out and haphazardly perform their responsibilities. Good managers
discover how to master five basic functions: planning, organizing, staffing, leading, and
Planning: This step involves mapping out exactly how to achieve a particular goal. Say, for
example, that the organization's goal is to improve company sales. The manager first needs
to decide which steps are necessary to accomplish that goal. These steps may include
increasing advertising, inventory, and sales staff. These necessary steps are developed into a
plan. When the plan is in place, the manager can follow it to accomplish the goal of
improving company sales.

Page 5
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Organizing: After a plan is in place, a manager needs to organize her team and materials
according to her plan. Assigning work and granting authority are two important elements of
Staffing: After a manager discerns his area's needs, he may decide to beef up his staffing by
recruiting, selecting, training, and developing employees. A manager in a large organization
often works with the company's human resources department to accomplish this goal.
Leading: A manager needs to do more than just plan, organize, and staff her team to
achieve a goal. She must also lead. Leading involves motivating, communicating, guiding,
and encouraging. It requires the manager to coach, assist, and problem solve with
Controlling: After the other elements are in place, a manager's job is not finished. He needs
to continuously check results against goals and take any corrective actions necessary to
make sure that his area's plans remain on track.
All managers at all levels of every organization perform these functions, but the amount of
time a manager spends on each one depends on both the level of management and the
specific organization.

Roles performed by managers

A manager wears many hats. Not only is a manager a team leader, but he or she is
also a planner, organizer, cheerleader, coach, problem solver, and decision maker — all
rolled into one. And these are just a few of a manager's roles.
In addition, managers' schedules are usually jam-packed. Whether they're busy with
employee meetings, unexpected problems, or strategy sessions, managers often find little
spare time on their calendars. (And that doesn't even include responding to e-mail!)
In his classic book, The Nature of Managerial Work, Henry Mintzberg describes a set of ten
roles that a manager fills. These roles fall into three categories:

• Interpersonal: This role involves human interaction.

• Informational: This role involves the sharing and analyzing of information.
• Decisional: This role involves decision making.

Business and management educators are increasingly interested in helping people acquire
technical, human, and conceptual skills, and develop specific competencies, or specialized
skills that contribute to high performance in a management job. Following are some of the

Page 6
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

skills and personal characteristics that the American Assembly of Collegiate Schools of
Business (AACSB) is urging business schools to help their students develop.

• Leadership — ability to influence others to perform tasks

• Self-objectivity — ability to evaluate yourself realistically

• Analytic thinking — ability to interpret and explain patterns in information

• Behavioral flexibility — ability to modify personal behavior to react objectively

rather than subjectively to accomplish organizational goals

• Oral communication — ability to express ideas clearly in words

• Written communication — ability to express ideas clearly in writing

• Personal impact — ability to create a good impression and instill confidence

• Resistance to stress — ability to perform under stressful conditions

• Tolerance for uncertainty — ability to perform in ambiguous situations

Category Role Activity

Informational Monitor Seek and receive information; scan periodicals and reports;
maintain personal contact with stakeholders.
Disseminator Forward information to organization members via memos,
reports, and phone calls.
Spokesperson Transmit information to outsiders via reports, memos, and
Interpersonal Figurehead Perform ceremonial and symbolic duties, such as greeting
visitors and signing legal documents.
Leader Direct and motivate subordinates; counsel and communicate
with subordinates.
Liaison Maintain information links both inside and outside
organization via mail, phone calls, and meetings.
Decisional Entrepreneur Initiate improvement projects; identify new ideas and

Page 7
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

delegate idea responsibility to others.

Disturbance Take corrective action during disputes or crises; resolve
handler conflicts among subordinates; adapt to environments.
Resource Decide who gets resources; prepare budgets; set schedules
allocator and determine priorities.
Negotiator Represent department during negotiations of union contracts,
sales, purchases, and budgets.

Although all three categories contain skills essential for managers, their relative importance
tends to vary by level of managerial responsibility.
The Essentials of control activities are:

Setting performance standards.

Determining the yard-stick for measuring performance.
Measuring the actual performance.
Comparing actuals with the standard.
Taking corrective actions, if actual do not match with standards.

Middle Human
Managers Skills

The Levels of Management

Management can be classified into three levels. They are top management, middle
management and supervisory or first-level management. The number of managerial jobs in an
organization varies with the level of management.

Page 8
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Top management sets the goals of the organization, evaluates the overall performance
of various departments involved in selection of key personnel and consults
subordinate managers on subjects or problems of general scope.
Middle level management is responsible for developing departmental goals and initiate
actions that are required to achieve organizational objectives.
Supervisory management takes charge of day-to-day operations at the floor level and is
involved in preparing detailed short-range plans.


The manger of a small team has three major roles to play:


A Manager has to take a long-term view; indeed, the higher you rise, the further you will have to
look. While a team member will be working towards known and established goals, the manager
must look further ahead so that these goals are selected wisely. By thinking about the eventual
consequences of different plans, the manager selects the optimal plan for the team and
implements it. By taking account of the needs not only of the next project but the project after
that, the manager ensures that work is not repeated nor problems tackled too late, and that the
necessary resources are allocated and arranged.


The Manager has access to information and materials which the team needs. Often he/she has the
authority or influence to acquire things which no one else in the team could. This role for the
manager is important simply because no one else can do the job; there is some authority which
the manager holds uniquely within the team, and the manager must exercise this to help the team
to work.
The team needs security from the vagaries of less enlightened managers. In any company, there
are short-term excitements which can deflect the work-force from the important issues. The
manager should be there to guard against these and to protect the team. If a new project emerges
which is to be given to your team, you are responsible for costing it (especially in terms of time)
so that your team is not given an impossible deadline. If someone in your team brings forward a
good plan, you must ensure that it receives a fair hearing and that your team knows and
understands the outcome. If someone is in your team has a problem at work, you have to deal

Page 9
Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

with it. I believe anyone can be a good manager. It is as much trainable skill as it is inherent
ability; as much science as art. Here are some things that make you a better manager:

As a person:

• You have confidence in yourself and your abilities. You are happy with whom you are, but
you are still learning and getting better.
• You are something of an extrovert. You don’t have to be the life of the party, but you can’t be
a wallflower. Management is a people skill - it’s not the job for someone who doesn’t enjoy
• You are honest and straight forward. Your success depends heavily on the trust of others.
• You are an include not an excluder. You bring others into what you do. You don’t exclude
other because they lack certain attributes.
• You have a ‘presence’. Managers must lead. Effective leaders have a quality about them that
makes people notice when they enter a room.

On the job:

• You are consistent, but not rigid; dependable, but can change your mind. You make decisions,
but easily accept input from others.
• You are a little bit crazy. You think out-of-the box. You try new things and if they fail, you
admit the mistake, but don’t apologize for having tried.
• You are not afraid to “do the math”. You make plans and schedules and work toward them.
• You are nimble and can change plans quickly, but you are not flighty.
• You see information as a tool to be used, not as power to be hoarded.


An organization is not a random group of people who come together by chance. They
consciously and formally establish it to accomplish certain goals that its members would be
unable to reach individually. A Manager’s job is to achieve high performance relative to the
organization's objectives. For example, a business organization has objectives to (1) make a
profit (2) furnish its customers with goods and services; (3) provide an income for its employees;
and (4) increase the level of satisfaction for everyone involved. An organization is a social entity,
which is goal orients and deliberately structured. Organizations are not functioning in isolated
but are linked to external dynamic environment. Virtually all organization combines (1) Raw
material, (2) Capital and (3) labor & knowledge to produce Goods and Services.

Components of Organization

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

1. Task
2. People
3. Structure
4. Technology

1. Task: This component can be defined as a mission or purpose of the existence of organization.
Every organization is having a purpose of existence that is accomplished by producing certain
goods and services as an output, which is termed as task.
2. People: The workforce or human part of organization that performs different operations in the
3. Structure: Structure is the basic arrangement of people in the organization.
4. Technology: The intellectual and mechanical processes used by an organization to transform
inputs into products or services.

The Challenges of today’s organization

Organizations are facing different challenges in today’s environment like:


Only 20 years ago, few workers used fax machines or e-mail, and computers occupied entire
rooms, not desktops.
Advances in information and communication technology have permanently altered the
workplace by changing the way information is created, stored, used, and shared.

Diverse Workforce

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

A diverse workforce refers to two or more groups, each of whose members are identifiable and
distinguishable based on demographic or other characteristics like gender, age group, education
etc. Several barriers in dealing with
diversity include stereotyping, prejudice, ethnocentrism, discrimination, tokenism, and gender-
role stereotypes.

Multiple Stakeholders

Stakeholders are those who have interests in the organization. Multiple stakeholders for an
organization include
the customers, suppliers, consumers, investors, lenders, etc.

An organization has to be responsive to the challenges and threats that it faces from within the
internal or external environment. It requires quick responsiveness to meet the challenges and
opportunities arising out of these changes.

Rapid Changes
Due to changing internal and external environment, rapid changes in the organization occur.
Organization has to be flexible to adjust to those changes.

Managers are faced with a myriad of challenges due to an array of environmental factors when
doing business abroad. These managers must effectively plan, organize, lead, control, and
manage cultural differences to be successful globally.

The Changing Organization

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Organizational Behavior

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

OB is concerned specifically with the actions of people at work. Managers need to develop their
interpersonal or people skills if they are going to be effective in their jobs. Organizational
behavior (OB) is a field of study that investigates the impact that individuals, groups, and
structure have on behavior within an organization, and then applies that knowledge to make
organizations work more effectively. Specifically, OB focuses on how to improve productivity,
reduce absenteeism and turnover, and increase employee citizenship and job satisfaction. We all
hold generalizations about the behavior of people. Some of our generalizations may provide
valid insights into human behavior, but many are erroneous. Organizational behavior uses
systematic study to improve predictions of behavior that would be made from intuition alone.
Yet, because people are different, we need to look at OB in a contingency framework, using
situational variables to moderate cause-effect relationships.

OB addresses some issues that are not obvious, such as informal elements. It offers both
challenges and opportunities for managers. It recognizes differences and helps managers to see
the value of workforce diversity and practices that may need to change when managing in
different situation and countries. It can help improve quality and employee productivity by
showing managers how to empower their people as well as how to design and implement change
programs. It offers specific insights to improve a manager’s people skills. In times of rapid and
ongoing change, faced by most managers today, OB can help managers cope in a world of
“temporariness” and learn ways to stimulate innovation. Finally, OB can offer managers
guidance in creating an ethically healthy work environment.

Contribution of OB to effectiveness of Organization:

Wouldn’t a Manager’s job be easier if he or she could explain and predict behavior? This is the
focus of organizational behavior (OB), the study of the actions of people at work. The goal of
OB is to explain and predict behavior of employees at work. OB focuses on both individual
behavior and group behavior. Managers must understand behavior in both the formal and
informal components of an organization. Managers are particularly concerned with three types of
employee behaviors: productivity, absenteeism, and turnover. A fourth type of behavior,
organizational citizenship, is emerging as a vital concern. Managers must also be attentive to
employee attitudes. Attitudes are value statements, either favorable or unfavorable, concerning
people, events, or objects. Attitudes of special interest to managers pertain to those related to job
satisfaction, job involvement, and organizational commitment. Can you think of ways in
which your personal attitudes (values) have impact on your behavior at work? Sometimes an
individual experiences an inconsistency between two or more attitudes or between behavior and
attitudes. Are happy workers productive workers? The answer to this question is not as simple as
it might appear. Review the relationship between employee happiness and productivity and see
what you think. Many researchers now believe that managers should direct their attention
primarily to what might help employees become more productive. Five specific personality traits
have proven most powerful in explaining individual behavior in organizations. These are locus of
control, Machiavellians, self-esteem, self-monitoring, and risk propensity. Review these traits

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

so you can be prepared to predict practical work-related behaviors. Sometimes different people
will hear or witnesses the same situations yet interpret them differently. This happens because of
differences in perception. Perception is the process of organizing and interpreting sensory
impressions in order to give meaning to the environment. Managers need to recognize that
employees react to perceptions, not to reality (if there is such a thing as “reality”). Thus,
managers must pay close attention to how employees perceive both their jobs and management

Organizations and human behavior

Variables Influencing the Individual Human Behaviors:

In simple word behavior is the function of Person and Environment in which he/she is working.
The following two factors mainly influence the individual behaviors…

1. The Persons
2. The Environment of the Organization

The Persons No single measure of individual differences can provide a complete understanding
of an individual or predict all the behaviors of an individual. It is therefore more useful to
consider a variety of differences that explain aspects of employee behavior. These can be

• Skills & Abilities

• Personality
• Perceptions

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

• Attitudes
• Values
• Ethics

Skills & Abilities:

Mental and physical capacities to perform various tasks. This comes from knowledge, learning,
and experiences.

Research has shown five major dimensions to be consistent components of personality. The Big
Five personality dimensions are conscientiousness, extroversion/introversion, and openness to
experience, emotional stability, and agreeableness. Conscientiousness - defined as being reliable
and dependable, being careful and organized, and being a person who plans - is the dimension
most strongly correlated to job performance. Extroversion/introversion refers to the degree to
which a person is sociable, talkative, assertive, active, and ambitious. Openness to experience is
the degree to which someone is imaginative, broad-minded, curious, and seeks new experiences.
Emotional stability is the degree to which someone is anxious, depressed, angry, and insecure.
Agreeableness refers to the degree to which a person is courteous, likable, good-natured, and
flexible. Managers must remember that the relevance of any personality dimension depends on
the situation, the type of job, and the level at which a person is working.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Four personality traits that have been consistently related to work-related behavior are
locus of control, Type-A behavior, self-monitoring, and Machiavellianism. Locus of control
indicates an individual's sense of control over his/her life, the environment, and external events.
Those with an internal locus of control believe that their actions affect what happens to them,
while those with an external locus of control believe that outside factors affect what happens to
them. People who exhibit Type-A behavior try to do more in less and less time in an apparently
tireless pursuit of everything. Type-A people feel great time urgency, are very competitive, try to
do many things at once, and are hostile. Self-monitoring, the fourth personality trait is the degree
to which people are capable of reading and using cues from the environment to determine their
own behavior. Strong self-monitoring skills can help managers and employees read
environmental and individual cues quickly and accurately and adjust behavior accordingly.
People with elements of a Machiavellian personality put self-interest above the group's interests
and manipulate others for personal gain.

We use the mental process of perception to pay attention selectively to some stimuli and cues in
our environment. There are two types of perception. Social perception process is the process of
gathering, selecting, and interpreting information about how we view themselves and others. In
contrast, physical perception focuses on gathering and interpreting information about physical
objects rather than people. Closure permits us to interpret a stimulus by filling in missing
information based on our experiences and assumption.

Attitudes are comprised of feelings, beliefs, and behaviors. One important work-related attitude
is job satisfaction, the general attitude that people have toward their jobs. Main five factors
contribute to job satisfaction: pay; the job itself; promotion opportunities; the supervisor; and
relations with co-workers. The relationship between job satisfaction and work performance is
complex and influenced by multiple organizational and personal factors. Managers have more
influence over job satisfaction than any other individual.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Values are long-lasting beliefs about what is important, worthwhile, and desirable. A person's
value system is the way he/she organizes and prioritizes values. Terminal values are goals for
behavior or for a certain result that someone wants to achieve. Instrumental values are the
means—the instruments—that people believe they should use to attain their goals. Cultural
values can affect personal values

ETHICS: A key work-related value is the employee's ethics. Those who hold a relativist's view
of ethics believe that what is right or wrong depends on the situation or culture. Those with a
Universalist’s view believe that ethical standards should be applied consistently in all situations
and cultures. Value conflict occurs when there is disagreement among values that an individual
holds or between individual and organizational values. To avoid value conflict, managers should
work toward integrating and fitting the values of different employees with the values of the

The Environment Of Organization

• Work group
• Job
• Personal life

Inside the organization, the work group or the relationship between the group members can
affect the individual behavior. Organizational culture can also have impact on the individual
behavior. Cultural values indicate what a cultural group considers important, worthwhile, and
desirable. People share the values of their culture, which form the basis for individual value
systems composed of terminal values and instrumental values. A key work-related value is a
person's ethics. Value systems affect ethical behavior in organizations. Managers must be most
concerned with interpersonal and person-organization value conflicts. Interpersonal value
conflicts occur when two or more people have opposing values, which can prevent coworkers
from working together effectively. Person-organization value conflicts occur when someone's
values conflict with the organization's culture, causing frustration and possibly disrupting
personal performance. The factors that influence job satisfaction are pay; the job itself;
promotion opportunities; supervisors; and coworkers. The link between job satisfaction and work
performance is complex and influenced by multiple organizational and personal factors. The link
appears to be stronger for professionals than for employees at higher organizational levels.

The Basic OB Model

The basic OB model suggests study of the organization at following three levels:
1. Organization
2. Group
3. Individual

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

The purpose of understanding organizations from all three levels (individual, group, and
organization) is to develop a well-rounded view that will prepare us for the challenges that
managers face in today's business environment. Focusing on the individual level allows us to
understand individual differences, perception, motivation, and learning. Focusing on the group
level shows us how more than two people can work together in groups or teams within an
organization. Focusing on the organization level allows us to see the effects of the organizational
environment, technology, strategy, structure, and culture.

Organizational structure

Organizational structure refers to the division of labor as well as the patterns of

coordination, communication, work flow, and formal power that direct organizational activities.
All organizational structures divide labor into distinct tasks and coordinate that labor to
accomplish common goals. The primary means of coordination are informal communication,
formal hierarchy, and standardization.

The four basic elements of organizational structure include span of control,

centralization, formalization, and departmentalization. At one time, scholars suggested that firms
should have a tall hierarchy with a narrow span of control. Today, most organizations have the
opposite because they rely on informal communication and standardization, rather than direct
supervision, to coordinate work processes.

Centralization means that formal decision authority is held by a small group of people,
typically senior executives. Many companies decentralize as they become larger and more

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

complex because senior executives lack the necessary time and expertise to process all the
decisions that significantly influence the business. Companies also tend to become more
formalized over time because work activities become routinized. Formalization increases in
larger firms because standardization works more efficiently than informal communications and
direct supervision.

A functional structure organizes employees around specific knowledge or other

resources. This fosters greater specialization and improves direct supervision, but makes it more
difficult for people to see the organization‟s larger picture or to coordinate across departments.
A divisional structure groups employees around geographic areas, clients, or outputs. This
structure accommodates growth and focuses employee attention on products or customers rather
than tasks. However, this structure creates silos of knowledge and duplication of resources.
The matrix structure combines two structures to leverage the benefits of both types of structure.
However, this approach requires more coordination than functional or pure divisional structures,
may dilute accountability, and increases conflict. Team-based structures are very flat with low
formalization that organize self-directed teams around work processes rather than functional
specialties. A network structure is an alliance of several organizations for the purpose of creating
a product or serving a client. Virtual corporations are network structures that can quickly
reorganize themselves to suit the client's requirements.
The best organizational structure depends on the firm‟s size, technology, and
environment. Generally, larger organizations are decentralized and more formalized, with greater
job specialization and elaborate coordinating mechanisms. The work unit's technology---
including variety of work and analyzability of problems---influences whether to adopt an organic
or mechanistic structure. We need to consider whether the external environment is dynamic,
complex, diverse, and hostile.
Although size, technology, and environment influence the optimal organizational
structure, these contingencies do not necessarily determine structure. Rather, organizational
leaders formulate and implement strategies to define and manipulate their environments. These
strategies, rather than the other contingencies, directly shape the organization's structure.

Organizational culture

Organizational culture is the basic pattern of shared assumptions, values, and beliefs that
govern behavior within a particular organization. Assumptions are the shared mental models or
theories-in-use that people rely on to guide their perceptions and behaviors. Beliefs represent the
individuals perceptions of reality. Values are more stable, long-lasting beliefs about what is
important. They help us define what is right or wrong, or good or bad, in the world. Culture
content refers to the relative ordering of beliefs, values, and assumptions.

Organizations have subcultures as well as the dominant culture. Some subcultures

enhance the dominant culture, whereas countercultures have values that oppose the

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

organization's core values. Subcultures maintain the organization's standards of performance and
ethical behavior. They are also the source of emerging values that replace aging core values.
Artifacts are the observable symbols and signs of an organization's culture. Four broad categories
of artifacts include organizational stories and legends, rituals and ceremonies, language, physical
structures and symbols. Understanding an organization‟s culture requires painstaking assessment
of many artifacts because they are subtle and often ambiguous.

Organizational culture has three main functions. It is a deeply embedded form of social
control. It is also the “social glue” that bonds people together and makes them feel part of the
organizational experience. Third, corporate culture helps employees make sense of the

Companies with strong cultures are generally perform better than those with weak
cultures, but only when the cultural content is appropriate for the organization's environment.
Also, the culture should not be so strong that it drives out dissenting values which may form
emerging values for the future. Organizations should have adaptive cultures so that employees
focus on the need for change and support initiatives and leadership that keeps pace with these

Organizational culture relates to business ethics in two ways. First, corporate cultures can
support ethical values of society, thereby reinforcing ethical conduct. Second, some cultures are
so strong that they rob a person‟s individualism and discourage constructive controversy.
Mergers should include a bicultural audit to diagnose the compatibility of the organizational
cultures. The four main strategies for merging different corporate cultures are integration,
deculturation, assimilation, and separation.
Organizational culture is very difficult to change. However, this may be possible by
creating an urgency for change and replacing artifacts that support the old culture with artifacts
aligned more with the desired future culture. Organizational culture may be strengthened through
the actions of founders and leaders, introducing culturally consistent rewards, maintaining a
stable work force, managing the cultural network, and selecting and socializing employees.
Organizational socialization is the process by which individuals learn the values, expected
behaviors, and social knowledge necessary to assume their roles in the organization. It is a
process of both learning about the work context and adjusting to new work roles, team norms,
and behaviors.

Employees typically pass through three socialization stages. Pre-employment

socialization occurs before the first day and includes conflicts between the organization‟s and
applicant‟s need to collect information and attract the other party. Encounter begins on the first
day and typically involves adjusting to reality shock. Role management involves resolving work-
nonwork conflicts and settling in to the workplace. To manage the socialization process,
organizations should introduce realistic job previews (RJPs) and recognize the value of
socialization agents in the process. RJPs give job applicants a realistic balance of positive and

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

negative information about the job and work context. Socialization agents provide information
and social support during the socialization process.

Individual vs Group Behavior

After studying this chapter, you should be able to understand the concepts about…

A. Individuals
B. Groups
C. Teams

A group is defined as two or more interacting and interdependent individuals who come together
to achieve particular objectives.
Types of Groups
a. Formal groups are work groups established by the organization and have designated work
assignments and established tasks. The behaviors in which one should engage are stipulated by
and directed toward organizational goals.
b. Informal groups are of a social nature and are natural formations. They tend to form around
Friendships and common interests.
Group Roles

1. The concept of roles applies to all employees in organizations and to their life outside the
organization as well.
2. A role refers to a set of expected behavior patterns attributed to someone who occupies a given
position in a social unit.
3. Individuals play multiple roles.
4. Employees attempt to determine what behaviors are expected of them.
5. An individual who is confronted by divergent role expectations experiences role conflict.
6. Employees in organizations often face such role conflicts.

Characteristics of a well-functioning, effective group

A group is considered effective if it is having following characteristics.

1. Relaxed, comfortable, informal atmosphere
2. Task to be performed are well understood & accepted
3. Members listen well & participate in given assignments
4. Clear assignments made & accepted
5. Group aware of its operation & function
6. People express feelings & ideas
7. Consensus decision making

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J


Motivation refers to the forces within a person that affect his or her direction, intensity,
and persistence of voluntary behavior in the workplace. As a new generation of employees enters
the workplace and as globalization creates a more diverse workforce, companies need to rethink
their motivational practices.

Two motivation theories -- Maslow‟s needs hierarchy and Alderfer‟s ERG theory –
propose how employee needs change over time through a needs hierarchy. Maslow‟s theory
groups needs into a hierarchy of five levels and states that the lowest needs are initially most
important, but higher needs become more important as the lower ones are satisfied. Alderfer‟s
ERG theory groups needs into a hierarchy of three levels: existence, relatedness, and growth. It
also suggests that those who are unable to satisfy a higher need become frustrated and regress
back to the next lower need level. Both Maslow‟s and Alderfer‟s theories are popular, but many
scholars are now doubtful that people have an inherent hierarchy of needs.

Paul Lawrence and Nitkin Nohria proposed an evolutionary psychology theory involving
four innate drives – the drive to acquire, bond, learn, and defend. These drives create emotional
markers that indicate the relevance and strength of perceived information about our
environments and thereby motivate us to act on those conditions. McClelland‟s learned needs
theory argues that people have secondary needs or drives that are learned rather than instinctive,
including need for achievement, need for power, and need for affiliation.

The practical implications of needs-based motivation theories are that corporate leaders
need to balance the demands and influences of the different innate drives. They must also
recognize that different people have different needs at different times. These theories also warn
us against relying too heavily on financial rewards as a source of employee motivation.

Expectancy theory states that work effort is determined by the perception that effort will
result in a particular level of performance (E-->P expectancy), the perception that a specific
behavior or performance level will lead to specific outcomes (P-->O expectancy), and the
valences that the person feels for those outcomes. The E-->P expectancy increases by improving
the employee‟s ability and confidence to perform the job. The P-->O expectancy increases by
measuring performance accurately, distributing higher rewards to better performers, and showing
employees that rewards are performance-based. Outcome valences increase by finding out what
employees want and using these resources as rewards.

Goal setting is the process of motivating employees and clarifying their role perceptions
by establishing performance objectives. Goals are more effective when they are specific,
relevant, challenging, have employee commitment, and accompanied by meaningful feedback.
Participative goal setting is important in some situations. Effective feedback is specific, relevant,

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

timely, credible, and sufficient frequent (which depends on the employee’s

knowledge/experience with the task and the task cycle). Two increasingly popular forms of
feedback are multisource (360-degree) assessment and executive coaching. Feedback from non-
social sources is also beneficial.

Organizational justice consists of distributive justice (perceived fairness in the outcomes

we receive relative to our contributions and the outcomes and contributions of others) and
procedural justice (fairness of the procedures used to decide the distribution of resources). Equity
theory, which considers the most common principle applied in distributive justice, has four
elements: outcome/input ratio, comparison other, equity evaluation, and consequences of
inequity. The theory also explains what people are motivated to do when they feel inequitably
treated. Equity sensitivity is a personal characteristic that explains why people react differently to
varying degrees of inequity.

Procedural justice is influenced by both structural rules and social rules. Structural rules
represent the policies and practices that decision makers should follow; the most frequently
identified is giving employees “voice” in the decision process. Social rules refer to standards of
interpersonal conduct between employees and decision makers and are noted by showing respect
and providing accountability for decisions. Procedural justice is as important as distributive
justice, and influences organizational commitment, trust, and various withdrawal and aggression


Leadership is a complex concept that is defined as the ability to influence, motivates, and
enables others to contribute toward the effectiveness and success of the organizations of which
they are members. Leaders use influence to motivate followers, and arrange the work
environment so that they do the job more effectively. Leaders exist throughout the organization,
not just in the executive suite.

The competency perspective tries to identify the characteristics of effective leaders.

Recent writing suggests that leaders have emotional intelligence, integrity, drive, leadership
motivation, self-confidence, above-average intelligence, and knowledge of the business. The
behavioral perspective of leadership identified two clusters of leader behavior, people-oriented
and task-oriented. People-oriented behaviors include showing mutual trust and respect for
subordinates, demonstrating a genuine concern for their needs, and having a desire to look out
for their welfare. Task-oriented behaviors include assigning employees to specific tasks, clarify
their work duties and procedures, ensure that they follow company rules, and push them to reach
their performance capacity.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

The contingency perspective of leadership takes the view that effective leaders diagnose
the situation and adapt their style to fit that situation. The path-goal model is the prominent
contingency theory that identifies four leadership styles – directive, supportive, participative, and
achievement-oriented -- and several contingencies relating to the characteristics of the employee
and of the situation.

Two other contingency leadership theories include the situational leadership model and
Fiedler‟s contingency theory. Research support is quite weak for both theories. However, a
lasting element of Fiedler‟s theory is the idea that leaders have natural styles and, consequently,
companies need to change the leader‟s environment to suit their style. Leadership substitutes
identifies contingencies that either limit the leader‟s ability to influence subordinates or make
that particular leadership style unnecessary. This idea will become more important as
organizations remove supervisors and shift toward team-based structures.

Transformational leaders create a strategic vision, communicate that vision through

framing and use of metaphors, model the vision by „walking the talk‟ and acting consistently,
and build commitment toward the vision. This contrasts with transactional leadership, which
involves linking job performance to valued rewards and ensuring that employees have the
resources needed to get the job done. The contingency and behavioral perspectives adopt the
transactional view of leadership.

According to the implicit leadership perspective, people inflate the importance of

leadership through attribution, stereotyping, and fundamental needs for human control. Implicit
leadership theory is evident across cultures because cultural values shape the behaviors that
followers expect of their leaders. Cultural values also influence the leader‟s personal values
which, in turn, influence his or her leadership practices. The GLOBE Project data reveal that
there are similarities and differences in the concept and preferred practice of leadership across

Women generally do not differ from men in the degree of people-oriented or task-
oriented leadership. However, female leaders more often adopt a participative style. Research
also suggests that people evaluate female leaders based on gender stereotypes, which may result
in higher or lower ratings.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Money and other financial rewards

Money and other financial rewards are a fundamental part of the employment
relationship. They potentially fulfill existence, relatedness, and growth needs. Money generates
various emotions and attitudes, which vary across cultures. People (particularly men) also tend to
identify themselves in terms of their wealth.
Organizations reward employees for their membership and seniority, job status,
competencies, and performance. Membership-based rewards may attract job applicants and
seniority-based rewards reduce turnover, but these reward objectives tend to discourage turnover
among those with the lowest performance. Rewards based on job status try to maintain internal
equity and motivate employees to compete for promotions. However, job status-based rewards
are inconsistent with market-responsiveness, encourage employees to compete with each other,
and can lead to organizational politics. Competency-based rewards are becoming increasingly
popular because they improve workforce flexibility and are consistent with the emerging idea of
employability. But competency-based rewards tend to be subjectively measured and can result in
higher costs as employees spend more time learning new skills.

Awards/bonuses, commissions, and other individual performance-based rewards have

existed for centuries and are widely used. Many companies are shifting to team-based rewards
such as gainsharing plans, and to organizational rewards such as employee stock ownership plans
(ESOPs), stock options, profit sharing, and balanced scorecards. ESOPs and stock options create
a ownership culture, but employees often perceive a weak connection between individual
performance and the organizational reward.

Financial rewards have a number of limitations, but there are several ways to improve
reward effectiveness. Organizational leaders should ensure that rewards are linked to work
performance, rewards are aligned with performance within the employee‟s control, team rewards
are used where jobs are interdependent, rewards are valued by employees, and rewards do not
have unintended consequences.

Job design refers to the process of assigning tasks to a job, including the interdependency
of those tasks with other jobs. Job specialization subdivides work into separate jobs for different
people. This increases work efficiency because employees master the tasks quickly, spend less
time changing tasks, require less training, and can be matched more closely with the jobs best
suited to their skills. However, job specialization may reduce work motivation, create mental
health problems, lower product or service quality, and increase costs through discontentment
pay, absenteeism, and turnover.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J


Stress is an adaptive response to a situation that is perceived as challenging or threatening

to the person‟s well-being. Distress represents high stress levels that have negative
consequences, whereas eustress represents the moderately low stress levels needed to activate
people. The stress experience, called the general adaptation syndrome, involves moving through
three stages: alarm, resistance, and exhaustion. The stress model shows that stress is caused by
stressors. However, the effect of these stressors depends on individual characteristics. Stress
affects a person‟s physiological and psychological well-being, and is associated with several
work-related behaviors.

Stressors are the causes of stress and include any environmental conditions that place a physical
or emotional demand on the person. Stressors are found in the physical work environment, the
employee’s various life roles, interpersonal relations, and organizational activities and
conditions. Conflicts between work and network obligations represent a frequent source of
employee stress. Two people exposed to the same stressor may experience different stress levels
because they perceive the situation differently, they have different threshold stress levels, or they
use different coping strategies. Workaholics and employees with Type A behavior patterns tend
to experience more stress than do other employees.

High levels or prolonged stress can cause physiological symptoms, such as high blood
pressure, ulcers, sexual dysfunction, headaches, and coronary heart disease. Behavioral
symptoms of stress include lower job performance, poorer decisions, more workplace accidents,
higher absenteeism, and more workplace aggression. Psychologically, stress reduces job
satisfaction and increases moodiness, depression, and job burnout. Job burnout refers to the
process of emotional exhaustion, cynicism, and reduced efficacy resulting from prolonged
exposure to stress. It is mainly due to interpersonal and role-related stressors and is most
common in helping occupations.

Many interventions are available to manage work-related stress. Some directly remove
unnecessary stressors or remove employees from the stressful environment. Others help
employees alter their interpretation of the environment so that it is not viewed as a serious
stressor. Wellness programs encourage employees to build better physical defenses against stress
experiences. Social support provides emotional, informational, and material resource support to
buffer the stress experience.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J


Conflict is the process in which one party perceives that its interests are being opposed or
negatively affected by another party. The conflict process begins with the sources of conflict.
These sources lead one or both sides to perceive a conflict and to experience conflict emotions.
This, in turn, produces manifest conflict, such as behaviors toward the other side.

When conflict is constructive, the parties view the conflict experience as something
separate from them. Disputes are much more difficult to resolve when they produce
socioemotional conflict, where the parties perceive each other as the problem. The conflict
process often escalates through a series of episodes and shifts from constructive to

Conflict management maximizes the benefits and minimizes the dysfunctional

consequences of conflict. Conflict is beneficial in the form of constructive controversy because it
makes people think more fully about issues. Positive conflict also increases team cohesiveness
when conflict is with another group. The main problems with conflict are that it may lead to job
stress, dissatisfaction, and turnover. Dysfunctional intergroup conflict may undermine decision

Conflict tends to increase when people have incompatible goals, differentiation (different
values and beliefs), interdependent tasks, scarce resources, ambiguous rules, and problems
communicating with each other. Conflict is more common in a multicultural work force because
of greater differentiation and communication problems among employees.

People with a win-win orientation believe the parties will find a mutually beneficial
solution to their disagreement. Those with a win-lose orientation adopt the belief that the parties
are drawing from a fixed pie. The latter tends to escalate conflict. Among the five interpersonal
conflict management styles, only problem solving represents a purely win-win orientation. The
four other styles -- avoiding, forcing, yielding, and compromising -- adopt some variation of a
win-lose orientation. Women and people with high collectivism tend to use a problem solving or
avoidance style more than men and people with high individualism.

Structural approaches to conflict management include emphasizing superordinate goals,

reducing differentiation, improving communication and understanding, reducing task
interdependence, increasing resources, and clarifying rules and procedures. These elements can
also be altered to stimulate conflict.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Negotiation occurs whenever two or more conflicting parties attempt to resolve their
divergent goals by redefining the terms of their interdependence. Negotiations are influenced by
several situational factors, including location, physical setting, time passage and deadlines, and
audience. Important negotiator behaviors include preparation and goal setting, gathering
information, communicating effectively, and making concessions.

Third-party conflict resolution is any attempt by a relatively neutral person to help the
parties resolve their differences. The three main forms of third-party dispute resolution are
mediation, arbitration, and inquisition. Managers tend to use an inquisition approach, although
mediation and arbitration are more appropriate, depending on the situation. Alternative dispute
resolution applies mediation, but may also involve negotiation and eventually arbitration.


Communication refers to the process by which information is transmitted and understood

between two or more people. Communication supports work coordination, employee well-being,
knowledge management, and decision making,. The communication process involves forming,
encoding, and transmitting the intended message to a receiver, who then decodes the message
and provides feedback to the sender. Effective communication occurs when the sender‟s
thoughts are transmitted to and understood by the intended receiver.

Electronic mail (e-mail) is an increasingly popular way to communicate, and it has

changed communication patterns in organizational settings. However, e-mail also contributes to
information overload, is an ineffective channel for communicating emotions, tends to reduce
politeness and respect in the communication process, and lacks the warmth of human interaction.
Instant messaging is gaining popularity in organizations because it speeds up the communication

Nonverbal communication includes facial gestures, voice intonation, physical distance,

and even silence. Employees make extensive use of nonverbal cues when engaging in emotional
labor because these cues help to transmit prescribed feelings to customers, co-workers, and
others. Emotional contagion refers to the automatic and unconscious tendency to mimic and
synchronize our nonverbal behaviors with other people. The most appropriate communication
medium depends on its data-carrying capacity (media richness) and its symbolic meaning to the
receiver. Nonroutine and ambiguous situations require rich media.

Several barriers create noise in the communication process. People misinterpret messages
because of perceptual biases. Some information is filtered out as it gets passed up the hierarchy.
Jargon and ambiguous language are barriers when the sender and receiver have different
interpretations of the words and symbols used. People also screen out or misinterpret messages
due to information overload.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Globalization and workforce diversity have brought new communication challenges.

Words are easily misunderstood in verbal communication and employees are reluctant to
communicate across cultures. Voice intonation, silence, and other nonverbal cues have different
meaning and importance in other cultures. There are also some communication differences
between men and women, such as the tendency for men to exert status and engage in report talk
in conversations, whereas women use more rapport talk and are more sensitive than are men to
nonverbal cues.

To get a message across, the sender must learn to empathize with the receiver, repeat the
message, choose an appropriate time for the conversation, and be descriptive rather than
evaluative. Listening includes sensing, evaluating, and responding. Active listeners support these
processes by postponing evaluation, avoiding interruptions, maintaining interest, empathizing,
organizing information, showing interest, and clarifying the message.

Some companies try to encourage informal communication through workspace design,

although open offices run the risk of increasing stress and reducing the ability to concentrate on
work. Many organizations also rely on a combination of print newsletters and intranet-based e-
zines to communicate corporate news. Employee surveys are widely used to measure employee
attitudes or involve employees in corporate decisions. Some executives also meet directly with
employees, either through management by walking around or other arrangements, to facilitate
communication across the organization.

In any organization, employees rely on the grapevine, particularly during times of

uncertainty. The grapevine is an unstructured and informal network founded on social
relationships rather than organizational charts or job descriptions. Although early research
identified several unique features of the grapevine, some of these features may be changing as
the Internet plays an increasing role in grapevine communication.

Organizational Behavior
Barhate Mangesh
Roll No- PG/509/MBA (I)/2009J

Wrapping Up
Organizational Behavior is an important concept for any organization, since it deals with
the three determinants of behavior in organizations: Individuals, Groups and Structure.
Organizational Behavior then applies the knowledge gained about individuals, groups and the
effect of structure on behavior in order to make organizations work more effectively. In a nut
shell, OB is concerned with the study of what people do in an organization and how their
behavior affects the organizations performance. Seeing as OB is concerned with employee
related situations, it tends to emphasize behavior related to jobs, work, absenteeism,
employment turnover, human performance and management.

The organization's base rests on management's philosophy, values, vision and goals.
This in turn drives the organizational culture which is composed of the formal organization,
informal organization, and the social environment. The culture determines the type of
leadership, communication, and group dynamics within the organization. The workers perceive
this as the quality of work life which directs their degree of motivation. The final outcomes are
performance, individual satisfaction, and personal growth and development. All these elements
combine to build the model or framework that the organization operates from.