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Organizational Behaviour
This Chapter is the first Chapter of this book which is about an introduction to
Organizational Behaviour (OB). It presents an overview of this interesting subject.
Chapter Objectives
After studying this chapter successfully, you should be able to:
1. Define what organizational behaviour is.
2. Know seven characteristics of OB.
3. Develop a right attitude about OB by understanding its importance.
4. Ascertain the relatedness between OB and HRM.
5. List and describe five basic approaches of OB.
6. Know individual-level outcomes, group-level outcomes, and organization-level
outcomes of organizational effectiveness.
7. Understand challenges and opportunities for OB.
8. Ascertain a conceptual framework for the study of OB
1. A group, society, club, or business, especially a large one that has particular aims.
2. The structure of something, especially the way in which its different parts are related
and how they work together.
3. The act of making the arrangements for a particular activity in order to make sure
that everything happens as planned.
4. Efficiency and the ability to do things in a well-planned and ordered way.
5. The act of forming a group or society such as a trade union in order to have more
power to achieve something, or state of being formed into such a group or society.
In the context of this book, the first one of the above mentioned five meanings applies. An
organization means a formal group of two or more people who function in an official
structure that was set up purposefully to accomplish a certain common goal or common
1
goals (Opatha, 2009). If defined somewhat comprehensively, an organization is a collection
of certain individuals who work together formally and informally to achieve a certain
common goal such as generating a reasonable return on investment making owners and
employees satisfied through production and distribution of certain products needed by
certain customers to meet their certain needs, wants or desires. This organization may be a
profit organization (example: a firm manufacturing toys), non-profit organization (example: a
religious society), or not-for-profit organization (example: a university). It may belong to
public sector, private sector, or cooperative sector. It may be a small one run by less than ten
people, such as the hotelier who serves herbal drinks and indigenous meals for health
conscious customers or a large one employing more than a thousand people.
Umstot (1984) defines an organization as a system that coordinates people, jobs, technology, and
management practices to achieve goals. Sekaran (2004) defines an organization as a purposeful system
with several subsystems in which individuals are organized to achieve certain predetermined goals through the
division of labour and coordination of activities. Robbins and Judge (2013) define an organization as
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. Indeed it is possible to give many definitions of
organization given by various scholars in the field though it is not attempted. However, it is
evident that every definition has two major elements, i.e. people or individuals and goals or
aims.
People or individuals are basically managerial and non-managerial employees who are
human resources in the organization. To exist and move, every organization must need
various resources such as financial, physical, informational, and human resources. It is the
human resources that primarily make up an organization. An organization will cease to exist
if there are no people to run various affairs even if other resources remain. The
overwhelming importance of human resource is due to its unique characteristics, which are:
it is animate, active and living; it has the ability to think, feel and react; its value appreciates
with the passage of time (because of experience, training etc.); it has the ability to influence
on determining its cost (pay); it has the ability to organize (as unions, teams etc.); its
behaviour is complex and may be unpredictable; it has the ability of creativity and
innovation, which cannot be found in any other resources; and it makes decisions in respect
of all other resources (Opatha, 2013).
Goals or aims are desired targets to be achieved in future and the basic purpose of any
organization should ideally be to serve the society and the earth. Basic purpose of an
organization is to fulfil certain human needs and upgrade standard of living of certain people
as the fulfilment of all human needs is impossible for an organization. An example is: -To
upgrade the standard of living of Sri Lankan people through the production and distribution
of high quality dairy products. An organization may establish one or several or all of the
goals mentioned bellow or other ones not mentioned here (Opatha, 2013):
George and Jones (2005) believe that an effective organization is one that achieves both
individual and organizational goals. In fact employees in an organization work together to
achieve organizational goals while achieving their individual goals. According to George and
Jones (2005), police forces, for example, are formed to provide security for law-abiding
citizens and a secure, rewarding career for police personnel while they perform their valuable
service; and Paramount Pictures was formed to achieve the goal of providing people with
entertainment while making a profit, and in the process, actors, actresses, directors, writers,
and musicians are employed to do well-paid and interesting work.
Werther, Davis, Schwind, Das and Miner (1985) quote that organisations are the most
inventive social arrangements of our age and of civilization, and it is a marvel to know that
tens of thousands of people with highly individualized backgrounds, skills, and interests are
coordinated in various enterprises to pursue common institutionalized goals. Opatha (2009,
p. 3) writes:
“Organisations were created and will be created for the purpose of meeting needs and challenges of
people/nation. Most of the foods people consume, the clothes people wear, beverages people have, the vehicles
people use, computers people use, and books people read are products of organisations. A person who lives in
the modern civilization will become a member of various organisations (e.g. school, temple, workplace, death
donations society etc.) in order to achieve various purposes throughout his/her life, and also he/she will have
to deal with various organisations (e.g. hospital, police station, railway station, bank etc.) in order to meet
various needs though he/she is not a member of those organisations. Modern economy/nation is operated by a
group of various organisations that differ in terms of goals, size and complexity. What will happen if the
working of this group of organisations ceases, or is destroyed? Modern sophisticated society will become
destitute, confused, uncivilised, and even paralysed completely. For example, if organisations engaged in
distributing essential food items, providing electricity, exchanging information, transportation of goods and
people, caring health, and providing education stop their activities for several days, existence/living of everyone
will fall into a terrible plight within a short time.”
Thus, organizations are of utmost importance for us. One feature of organizations is that
generally organizations have a longer life. They are supposed to live far beyond the tenure
and even the life of each employee. If they are mismanaged severely they will not live longer.
Another feature is that organizations are not open for every individual in a society. There are
appointed personnel to perform various jobs within an organization and these personnel
have legal power to use organizational resources, give orders, obey others and make
decisions.
3
A feature of organizations is that products (goods or services) of organizations may be
available for all members of a society or only certain members of a society. For example, cars
being produced by an automobile manufacturer are available for any customer in the society
to purchase. However, higher education being provided by a state university is available for
only students who qualify to read for programs of studies.
6. “OB can be defined as the systematic study of the actions and reactions of
individuals, groups, and subsystems in an organization.” Sekaran (2004, p. 2)
7. “Organizational behavior is the study of factors that affect how individuals and
groups act in organizations and how organizations respond to their
environments.” George and Jones (2005, p. 4)
4
10. “OB is the study of how people think, feel, and act in organizations and
similarly, how they are affected by the activities within organizations.”
Thompson and Ponzer (2007, p. 927)
12. “OB is the study of what people think, feel, and do in and around organizations.”
McShane, Glinow, and Sharma (2008, p. 4)
13. “OB is the study of human behavior in organizational settings, the interface
between human behavior and the organization, and the organization itself.”
Moorhead and Griffin (2009, p. 24)
14. “Organizational behavior is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within organizations, for the
purpose of applying such knowledge toward improving an organization’s
effectiveness.” Robbins and Judge (2013, p. 10)
5
Individuals are employed in order to perform various jobs in organizational settings. Each
individual brings to an organization a unique set of traits, expectations, values, education,
experiences, and perceptions. Individuals do thinking, feeling and acting. They are the living
beings who work in the organization to achieve organizational objectives and their personal
objectives.
However, there are organizational variables which affect human beaviour at work and these
variables include jobs, design of work, organizational structure, organizational culture and
organizational change. These are organizational processes which are also relevant to the
study of OB. Although individual behaviour and goup dynamics are the primary concerns in
the study of OB, organizational variables are important as the context in which human
behaviour occurs (Nelson and Quick, 1997).
6
ix. Can managers be taught to lead?
x. What is the impact of organizational culture on its employees and
customers?
In order to find useful solutions for above mentioned practical managerial problems
OB applies the scientific method. It needs to do systematic observation and
measurement of the behaviour in organizations. Greenberg and Baron (2007, p. 4)
write:
“Although not as sophisticated as many scientific fields, such as physics or chemistry-nor as mature
as them-OB’s orientation is still scientific in nature. Thus, like other scientific fields, OB seeks to
develop a base of knowledge by using an empirical, research-based approach....Organizational
research is neither easy nor foolproof. Yet, it is widely agreed that the scientific method is the best way
to learn about behaviour in organizations. For this reason, the scientific orientation should be
acknowledged as a hallmark of the field of OB.”
2. Multidisciplinary Nature
OB is multidisciplinary because it takes a broad range of issues and approaches. OB
has evolved from the older social sciences of psychology, sociology, anthropology,
and political science. It draws on or makes use of some aspects of management, and
medicine as well. OB‟s interdisciplinary nature is similar to that of medicine, which
applies knowledge from the physical, biological, and social sciences into a workable
medical practice (Newstrom, 2007). Exhibit 1-1 provides a summary of the key fields
from which the field of OB has evolved, definitions, some relevant aspects of OB
and level of analysis.
7
Communication Group
Bureaucracy Organization
Organizational Structure Organization
Change Organization
Anthropology (discipline of Culture Organization
systematic study of the learned Leadership Organization
behaviour of humans)
Political Science (discipline of Power Organization
systematic study of power Conflict Group
acquisition and usuage of power Negotiation Group
by those who govern the country) Organizational politics Group
Individual Level
(individual
processes such as
perception)
9
The Importance of OB
Let me ask the following questions:
Definite answer for all the ten questions is „Yes‟. Thus organizations have a powerful effect
on you and others. Hence you needs to be concerned about how and why organizations
function. Success of an organization largely depends on the way personnel in that
organization act in relation to the situation they are in or the people they are with. This is not
anything other than human behaviour. OB is about the study of human behaviour of
organizations. OB is about the human side of work. OB is about understanding and
managing human behaviour in organizations.
George and Jones (2005, p. 4) write thus about the importance of OB:
“The study of OB provides a framework for understanding and appreciating the many factors that affect
behavior in organizations. It allows employees at all levels in an organization to make correct decisions about
how to behave and work with other people to achieve organizational goals. OB replaces intuition and gut
feeling with a well-researched body of theories and systematic guidelines for managing behavior in
organizations.”
In view of George and Jones (2005), OB is usefull for every employee in an organization.
Every employee has to know how to behave correctly. Also he or she must know how to
work with other people to achieve organizational goals. See Figure 1-2.
According to Newstrom (2007) most sciences share four goals-to describe, understand,
predict, and control some phenomena. Similarly OB has these four goals-to describe,
understand, predict, and control human behaviour at work. Goals and their roles are
presented in Figure 1-3. These goals indicate the importance of OB.
The reader of this book may be a manager or may want to develop right potential to become
a manager. Of course each manager needs to be an efficient and effective manager. In what
ways is studying OB useful for you? Or in what ways will studying OB be useful for you in
10
future to become a successful manager or a successful professional in the field of your
interest or specialization?
Predict future
employee behaviour To take actions to happen desirable behaviour and to
avoid undesirable behaviour through preventive actions
Control , at least
partially, and develop To make an impact on employee behaviour, skill
some human activity at development, team effort, and productivity
work
11
An understanding of OB is a perspective that provides a set of insights and tools that all
managers can use to carry out their jobs more effectively (Moorhead and Griffin, 2009). In
order to be a successful manager, one must be:
Sound study of OB will enable a person to acquire knowledge and skills in respect of the
above aspects (which are in bold). The knowledge and skills of those aspects can be referred
to as interpersonal skills, soft skills or human relations skills. OB does building and
enhancing interpersonal skills. Robbins and Judge (2008, p. 5) stress:
“Recognition of the importance of developing managers’ interpersonal skills is closely tied to the need for
organizations to get and keep high-performing employees. Regardless of labor market conditions, outstanding
employees are always in short supply….A national study of the U.S. workforce found that wages and fringe
benefits are not the main reasons people like their jobs or stay with an employer. Far more important is the
quality of the employee’s job and the supportiveness of the work environment. So having managers with good
interpersonal skills is likely to make the workplace more pleasant, which, in turn, makes it easier to hire and
keep qualified people. In addition, creating a pleasant workplace appears to make good economic sense. For
instance, companies with reputations as good places to work (such as the companies that are included among
the “100 Best Companies to Work for in America”) have been found to generate superior financial
performance.”
12
Thus, OB matters significantly. There is indeed a high value in reading for a course on OB,
other than fulfilling a certain requirement of your study programme.
Read the following vignette. Are there problems that can be solved by utilizing OB
competency?
After training, Kalyani started her first job as a Junior Nurse in a government
hospital located in a big city of one region in Sri Lanka. She really wants to be
a nurse who is admired and liked by patients, doctors, and superiors. But her
work life has been getting unpleasant since the second week. She found that
her peers were not cooperative and friendly as she had thought. There is only
one peer who is cooperative and friendly. Also she observed that there is no
cooperation among the members of the nursing staff. Doctors seem to have
distrusting attitude about nurses. Other personnel (attendants and cleaners)
do not really respect nurses.
Yes. There are problems which can be solved by utilizing OB competence. If Kalyani has
OB competence (knowledge and skills) she knows that there are different individuals in
terms of personality and ability; different employees have different values; why different
individuals (specially peers) act in different way; there are conflicts; and people have different
attitudes; and she also knows how to interact with others in a way that leads to develop
cooperation, change inappropriate attitude and minimize conflicts. Understanding of OB
enables Kalyani to understand the nature of human behaviour in the hospital and to manage
or interact with peers resulting in making her work life pleasant. If hospital administrators
have OB competence, they can formulate plans for how to improve attitudes and behaviour
of personnel in the hospital (because they know why employees act the way they do).
OB and HRM
Human Resource Management (HRM) is closely related to OB. HRM is a closely related
discipline to OB (Luthans, 2008). Generally HRM and OB are considered as two separate
distinct subjects. Universities teach HRM and OB as separate courses for students who read
for degrees in Management Studies or Business Administration. There are also universities
which teach a number of courses such as HRM I (Personnel Management), HRM II
(Organizational Behaviour), and HRM III (Strategic HRM), HRM IV (Contemporary Issues in HRM)
and HRM V (International HRM). OB may be taught as a specialized course in HRM.
Typically OB is considered as a part of HRM, not vice versa.
HRM is defined as the efficient and effective utilization of human resources to achieve goals
of an organisation. Its generic purpose is to generate and retain an appropriate and
13
contented human force, which gives the maximum individual contribution to organisational
success (Opatha, 2009). It is the right management of right people at work in an organization
for the purpose of that organization‟s success.
OB is more theoretical but HRM is more practical or pragmatic. OB is more pure while
HRM is more applied. HRM tends to have a more applied focus than OB (Luthans, 2008).
OB is viewed as a behavioural science. HRM is not generally viewed as a behavioural
science. Aspects of OB are softer (managing employees as per relationships or human
relations) but aspects of HRM are harder (managing employees as per formally developed
personnel systems or schemes). OB is the systematic study of individual processes, group
processes, and organization processes in an organization in order to improve organizational
effectiveness. HRM is the practice of various personnel systems (policies, procedures, rules
etc.) which are used to manage employees efficiently in order to achieve organizational goals.
Organizational behaviour is a field of study that investigates the impact that individuals,
groups, and structure have on behaviour within the organization, for the purpose of applying
such knowledge toward improving organizational effectiveness. OB is the study of factors
affecting the way of acting of individuals and groups in an organization and the way of their
responding to its environment. HRM is the recognition of the overwhelming importance of
an organization‟s work force as vital human resources and the utilization of certain functions
and activities to ensure that they are used effectively and legally for the benefit of the
employee, the organization and society.
14
OB has aspects such as individual differences, personality, ability, values, perception, groups
and teams, organization culture etc. Most of these aspects are not certain functions to be
carried out in sequence and/or continuously. OB aspects such as leadership, motivation and
communication can be considered as functions to be performed by every manager. Under
HRM, motivation is considered as an objective of HRM (Opatha, 2009) and HRM functions
attempt to create and enhance employee motivation (in addition to commitment, job
involvement etc.).
Indeed, competence of OB (knowledge and skills of OB) is very useful for successful
management of employees in the organization. Hence every manager must possess
competence of OB. See Figure 1-4.
HRM
OB Managers to generate, Effective and
Concepts, improve, and change efficient
theories, and appropriately work utilization of
tools allow behaviours personnel
through a set
of functions
Planning, organizing, staffing, directing and controlling are generally considered as traditional
functions of Management or Management Process. Planning is concerned with establishing
organizational goals, deciding steps to achieve those goals, and allocating and using resources
to achieve those goals. Organizing is concerned with designing jobs to be performed,
determining personnel to do jobs, departmentalizing, and delegating authority. Staffing is
concerned with acquiring and establishing right staff. Directing (also labelled as leading) is
concerned with influencing, stimulating, communicating, and coordinating individuals and
groups so that they work toward organizational goals. Controlling is concerned with how far
the organizational goals are being achieved and correcting significant deviations between
actual performance and planned performance. As far as the traditional functions of
Management are concerned, staffing is included in HRM (functions such as human resource
planning, recruitment, selection, hiring, and induction cover staffing). Directing is included
in OB (aspects such as interpersonal communication, leadership and motivation cover
almost directing). As a matter of fact HRM is more than staffing (though it has staffing) and
OB is more than directing (thought it has directing). See Figure 1-5.
15
Figure 1-5: Management Functions, HRM and OB
Management
Functions
Planning
Organizing
Staffing HRM
Performance evaluation, training and development etc.
Directing OB
Individual differences, attitudes, perceptions etc.
Controlling
Approaches of OB
An apporach means a particular way of thinking or dealing with something. There are five
basic approaches of OB and these appraoches are closely related and throughout this book,
they are considered.
16
Climate to create a climate where to create a climate where
employees contribute to the employees adhere to rules
limits of their improved and regulations
abilities
Employee orientation job performance obedience
Employees engage in participation; make depend on boss; they do
fuller use of their abilities to what managers decided
improve job performance
Employee needs attempted status and recognition subsistence
to meet
Under Human Resource approach, employees are trained for successful performance of
their current jobs and developed for future jobs of higher responsibility. They are allowed to
develop their competencies as much as possible and to participate in decision making.
Employees become better and then better employees produce better results.
The universal approach presumes a direct cause-and-effect linkage between two variables
while the contingency approach acknowledges that several other variables alter the direct
relationship between the two variables (independent variable and dependent variable). There
are moderators which cancel the previously assumed relationship between the two variables.
In other words, the appropriate managerial action or behaviour in any given situation
depends on elements of that situation (Moorhead and Griffin, 2009). Consequently, the
manager has to analyse carefully to determine the significant variables which exist in order to
provide the managerial action or behaviour that will be appropriate because there is no one
best way. See Figure 1-6.
17
The field of OB gradually has shifted from a universal approach in the 1950s and early 1960s
to a situational perspective which is especially strong in the areas of motivation, job design,
leadership, and organizational design, but it is becoming increasingly important throughout
the field (Moorhead and Griffin, 2009).
Universal Approach
Contingency Approach
According to the systems approach, an organization system receives different kinds of inputs
from its environment such as humans, materials, machines, financial inputs, information and
time. The managers in the organization combine these inputs and then transform these
inputs into outputs such as goods or services, profits or losses, new information, employee
behaviours, and employee satisfaction. Then the system receives feedback from the
environment regarding these outputs. Good feedback causes to continue receiving inputs,
and transforming them into outputs. Profits are fed back into the environment through
18
dividends paid to stockholders, taxes paid to government, and investments made. New
information about the performance of the organization is released into the environment.
Feedback
Inputs Outputs
Humans Transformation Goods or Services
Materials Process Profits or losses
Machines (managerial New information
Financial inputs and Employee behaviours
Information technological) Employee satisfaction
Time
Environment
Some of the key concepts of the system theory (adapting from Hodgetts, 1985) are:
1. Organization system is more than the sum of its parts. It needs to be viewed as a
whole.
2. Organization system is an open system because it is continually being influenced by
outside environment and it adjusts to new conditions.
3. In responding to the external environment, the organization must contend with two
kinds of forces. One kind encourages the organization to continue doing what it has
been doing. The other encourages the organization to change. Effective organizations
try to balance the two in order to make necessary changes without creating chaos or
uncertainty by changing too rapidly.
4. An organization is a subsystem of the entire industry. Meanwhile, within the
organization there are such subsystems as divisions, departments, units, groups, and
individuals (See Figure 1-8).
5. An open system tends to become more specialized as it grows larger. For example, as
an organization increases in size, specialized departments will spring up, the
organization will expand its product line, and new offices or districts will be created.
The manager in an organization is not supposed to forget or ignore that the organization has
an internal environment and an external environment and each affects the other. The
manager should understand interrelations among inputs, transformation process, outputs
19
and environment. It is essential to avoid the manager‟s tendency to ignore the environment
or overlook important interrelationships within the organization. The manager should
analyse issues in terms of the total situation (holistic view) affecting him or her rather than in
terms of an isolated event or problem.
Organization
Division
Individual Department
Unit
Formal Group
Behaviour
(shaped/changed)
Newstrom and Davis (1997, p.17) write: “result orientation is a common thread woven through
organizational behavior....Productivity often is measured in terms of economic inputs and outputs, but human
and social inputs and outputs also are important. For example, if better organizational behavior can improve
job satisfaction, a human output or result occurs. In the same manner, when employee development programs
lead to a by-product of better citizens in a community, a valuable social result occurs....The role that
organizational behavior plays in creating organizational results is illustrated by a set of factors and the
relationships between the factors.”
21
According to Newstrom and Davis (1997) there are four equations which show the role of
OB in work systems. These equations are given in the following Exhibit.
Results are outcomes which are goals in a way. Moorhead and Griffin (2009, p. 38) write:
“Goals or outcomes exist at three specific levels in an organization: individual-level outcomes, group-level
outcomes, and organizational-level outcomes. Of course, it may sometimes be neccessary to make tradeoffs
among these different kinds of outcomes, but, in general, each is seen as a critical component of organizational
effectiveness.”
1. Employee Productivity
An employee‟s productivity is an indicator of his or her efficiency. It is measured in
terms of the goods or services created per unit of input. Productivity is the output of
the individual and the economic value of it.
2. Job Performance
An employee‟s job performance is the extent to which duties and responsibilities
have been carried out. Two major criteria of measuring job performance are quantity
of work and quality of work.
3. Timeliness
This is a kind of employee participation behaviours. An employee‟s participation is
the degree to which that employee actually participates in events of the organization.
Timeliness is defined as the degree to which the employee arrives at work on time
(the right time he or she is expected to be). The opposite of timeliness is tardiness
(lateness).
4. Attendance
This is also a kind of employee participation behaviours. Attendance is the degree to
which the employee comes to work as scheduled. The opposite of attendance is
absenteeism.
22
5. Retention
This is also a kind of employee participation behavours. Retention occurs when an
employee keeps a job with the organization without resigning. The opposite of
retention is turnover.
6. Attitudes
Attitudes are a person‟s general nature of beliefs, feelings, and intentions of behaving
about specific things, ideas, situations, or other people. Paricular types of attitudes are
job satisfaction, job involvement and organizational commitment.
7. Stress
It is the pressure or strain an employee feels in life. Stress is what an employee
experiences internally in response to an event, a situation or a thing he/she finds
difficult to deal with.
Group-level outcomes are outputs or results which are generated by a certain group of
employees. They are results of collective efforts and hence they are collective outputs rather
than individual outputs. They include group productivity, group performance, norms and
cohesiveness.
Organization-level outcomes are outputs or results which are generated by the entire
organization. As a whole what are the results or outputs which have been generated within a
particular period of time organizationwise? They include organizational productivity, overall
employee attendance, employee retention, financial performance, survival and stakeholder
satisfaction. Moorhead and Griffin (2009, p. 39) write:
“Clearly, the manager must balance different outcomes across all three levels of analysis. In many cases, these
outcomes appear to contradict one another. For example, paying workers high salaries can enhance
satisfaction and reduce turnover, but it also may detract from bottom-line performance. Similarly, exerting
strong pressure to increase individual performance may boost short-term profitability but increase turnover and
job stress. Thus, the manager must look at the full array of outcomes and attempt to balance them in an
optimal fashion. The manager’s ability to do this is a major determinant of the organization’s success.”
All the outcomes mentioned above under the individual-level, group-level and organization-
level are indicators of organizational effectiveness. OB is indeed for enhancement of
organizational effectiveness. Business performance and organizational performance are two
alternative or associated terms to organizational effectiveness which is multifaceted (Ali and
Opatha, 2008). See Figure 1-10.
23
Figure 1-10: Dimensions of Organizational Effectiveness
Organizational
Effectiveness
24
To deal with a diverse workforce
This is a social and cultural challenge. Workforce diversity is owing to differences which
result from gender, race, religion, age, ethnicity, sexual orientation, and socioeconimic
background. Increasingly workforce of organizations is becoming more heterogeneous.
When employees in an organization differ in terms of gender, race, religion etc their attitudes
and behaviours are likely to differ as well. Many women come to work and a considerable
amount of women is moving into managerial jobs. Retired employees work and the number
of minority employees who enter and get promoted has increased. These changes challenge
managers to allocate jobs, promotions, pay raises, benefits and other rewards in a fair and
equitable way. Also the manager has to choose either assimilation or valuing diversity.
Assimilation is the process through which members of a minority group are forced to learn
the ways of the majority group and valuing diversity means putting an end to the
assumption that everyone who is not a member of the dominant group must assimilate
(Moorhead and Griffin, 2009).
To respond to globalization
The world is becoming a global village. The number of global organizations is getting
increased. A global organization produces or markets its products in countries and regions
throughout the world. Globalization is the internationalization of business activities and the
shift toward an integrated global economy; and improved communication and transportation
facilities, larger potential market, lower costs of production and distribution, and response to
international activity of competitors are four forces that have increased international
business (Moorhead and Griffin, 2009). Globalization results in increased foreign
assignments to managers, working with people from different cultures, overseeing
movement of jobs to countries with low-cost labour, and managing people during the war
on terror (Robbins and Judge, 2013). Managers of the global organizations are required to
understand global differences through global learning, and then to benefit from this
knowledge to improve attitudes and behaviours of their own and their subordinates.
1. Preservation of the natural environment: all the things in the world which are neither caused
nor controlled by human beings including land, forests, plants, animals, and other
natural phenomena are referred to as the natural environment. To keep it in its
original form and protect it from harm, loss, or negative change.
26
2. Conservation of the natural environment: to be very careful in the way of using it in order to
let it last as long as possible, to use it at the minimum level so that future generations
will be able to utilize it.
4. Generation of gardens and looking-like natural places: to create parks and places which have
plants, trees, and grass.
It has generally been observed that the organizational activities have contributed to the
current environmental problems being faced by each nation in the world. According to
Rugman and Verbeke (1998), environmental issues are some of the most complex and
significant managerial challenges of twenty-first century. Environmental sustainability is now
a serious concern at the organizational level as well as the national level. An employee who
may be a manager or a non-manager is required to perform four roles for the purpose of
becoming a green employee. They are preservationist, conservationist, non-polluter, and maker
(Opatha and Arulrajah, 2014). Hence, every organization is in need of making all its
employees green.
The above mentioned challenges and opportunities are major ones and there are other
challeges and opportunities in today‟s business world. A few of them are unionization,
politicisation, deteriorating personal character, demand for giving the authority to make
important decisions to employees (empowerment) using people employed for temporary
periods who are not eligible to receive health insurance and other important benefits
(Contingent workers), creating a customer-responsive culture, fostering innovation and
mastering the art of change (stimulating employees to be creative and to be tolerant for
change), and practice of laying off managers and workers to reduce costs (downsizing).
Indeed, OB has a wealth of ideas, concepts, theories and techniques to offer solutions or
useful insights toward solutions in respect of the critical issues reflected by the challenges
and opportunities.
27
5). These processes result in individual-level outcomes. Group processes include
interpersonal communication which is the topic of Chapter 6, conflict at work which is the
topic of Chapter 7, negotiation (Chapter 8), leadership (Chapter 9), group and teams
(Chapter 10) and power and politics (Chapter 11). These processes result in group-level
outcomes. Organizational processes include three kinds such as organizational structure
which is dealt with in Chapter 12, organizational culture which is in Chapter 13, and
organizational change which is the topic of Chapter 14. These processes result in
organization-level outcomes. These three-level outcomes are the components of
organizational effectiveness.
Individual Processes
Individual
Differences Individual-Level
Attitudes Outcomes
Perception
Motivation
Group Processes
Interpersonal
Communication
Conflict at Work
Negotiation Group-Level Organizational
Leadership Outcomes Effectiveness
Groups and
Teams
Power and
Politics
Organizational
Processes
Organizational
Structure Organization-
Organizational Level Outcomes
Culture
Organizational
Change
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Summary
An organization means a formal group of two or more people who function in an official
structure that was set up purposefully to accomplish a certain common goal or common
goals. Organizational Behaviour as a subject arises owing to existence of organizations. OB
is defined as the systematic study of individuals, groups and organizational processes in an
organization in order to improve organizational effectiveness. Characteristics of OB include
application of the scientific method to managerial problems, multidisciplinary nature,
improvement of organizational effectiveness and the quality of work life, exciting and
complex nature, not a defined business function, three main assumptions and three levels of
analysis: individuals, groups and organizations. OB provides a set of concepts, theories,
guidelines and tools which can be used by managers to change or improve human behaviour
so as to achieve goals of the organization. OB allows us to describe, understand, predict and
control human behaviour at work. OB does building and enhancing your interpersonal skills
to become a successful manager or professional. Hence OB is of very importance.
Though HRM is closely related to OB, there are dissimilarities between OB and HRM. As
far as the traditional functions of Management are concerned, staffing is included in HRM.
Directing is included in OB. In fact OB is more than directing (thought it has directing). The
human resources approach, the contingency approach, the systems approach, the
interactionist approach, and the results-oriented approach are five approaches of OB. There
are challenges and opportunities for OB including developing ethics and well-being, dealing
with a diverse workforce, improving productivity and quality, responding to globalization,
facing advancing technology and information technology, enhancing work-life balance,
improving soft skills, and making employees green. Finally a conceptual framework for the
study of OB was presented.
Review Questions
1. Define OB. What are its major characteristics?
2. “OB is very useful for managers and people.” Discuss.
3. “OB is not HRM though both are closely related.” Substantiate.
4. Describe in detail five approaches of OB.
5. Do you agree or not with that the contingency approach is becoming increasingly
important throughout the field of OB? Why?
6. “The system approach of OB provides some useful concepts.” Discuss.
7. What is the OB perspective which suggests that individual behaviour is a function of
the continuous interaction between individual and situation? Explain the perspective
by using examples.
8. What is organizational effectiveness? What are its dimensions? What is its relevance
to OB?
9. Assume that you are a manager in a large organization. Describe and explain
challenges and opportunities you have in the context of OB.
10. Present a conceptual framework for the study of OB.
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Activity 1: Incidents in OB
Following is seven incidents in OB (developed from the material by Umstot, 1984). You are
required to find out OB problems raised in each incident.
1. Suhani Rajini, supervisor: “It really makes me mad. No matter what I do my people
only produce at their own leisurely pace. I know we could easily do one third more
work if only my people were stimulated. What can I do?”
2. Janak Kumara, supervisor (to another supervisor): “I just don‟t understand these new
workers that HR department sent us. They were hired under our program to give
disadvantaged workers an opportunity. The problem is that they just can‟t seem to get
to work on time. I‟ ve started giving them a day off without pay as punishment, but
things have gotten worse instead of better.” Is a day off without pay a punishment or
a reward for these workers?
3. Wasantha Perera, management trainee: “But Mr. Jothipala, I thought you said you
wanted the reports by the end of the month, not the end of the week. I must have
misunderstood.”
4. Marlini Margret, supervisor of the word processing department of a large printing
firm: “It is too bad Amanda quit. She was one of the best and fastest typists we have
hired in a long time. Why she would put out almost twice the work of the other
typists. But for some reason the others just didn‟t like her. I think they may have
driven her off because she‟s so good.”
5. Lasadha Kumari, chief of nursing for KK Hospital: “We really have a serious
problem here between the doctors and nurses. There always seems to be hard feelings
between them and I‟m afraid the patients suffer. The doctors complain that the
nurses won‟t do what they are told and the nurses say the doctors act like „little tin
gods‟ and treat the nurses more like janitors than professionals.”
6. Tony Ranage, fast-rising top manager for a larger firm: “The way I get things done is
through others. One strategy is to do favours for people. That not only makes them
friends, but when I need something done I can always cash in a „chit‟.”
7. Chandana Hari, chief of the planning division of a state ministry, was standing at the
main entrance to the planning building at 8.00 a.m. just waiting for someone to come
in late. Sure enough, several did. He took their names and when he got back to his
office he called their bosses and asked for a written explanation about why the people
were late.
8. Jaliya Ranage, chief of a large cooperation, is discussing the results of his
reorganization plan: “It was a disaster! No sooner had we announced the plan when
we had almost a hundred grievances. In addition, several key managers said that they
opposed the plan and would back the workers. I don‟t understand…the plan was so
logical and such an improvement.”
30
Activity 2: A Critical Incident
John Adams was on duty as a member of the night service staff with ABC Hotel. After an
overseas guest clicked her fingers and whistled for service Adams lost his temper. „You‟re
not the only guest in this hotel.‟ He then warned the guest that if she did not stop her
obnoxious behaviour no one would provide her or anyone else with service. Next day the
guest complained to a chambermaid. Adams was reprimanded by the personnel manager of
the hotel and threatened with dismissal. In his defence Adams admitted that heated words
were exchanged with the guest when she left the lounge late that night to go to her room. „I
did not swear at her but I did allow her to rile me. She started causing trouble as soon as she
came into the lounge after the bar had closed. The day staff warned me about her when they
went off duty. She was clicking her fingers and whistling for service all night. She threw the
tray at me when I took food to her room at 3 o‟clock in the morning. I told her it was about
time she stopped behaving like that. I just had enough of everything. I told her she would
not get any more service if she treated people like that.‟
(i) Analyse the main issue(s) of management and organizational behaviour identified
in this situation.
(ii) Suggest how the issue(s) might best be resolved. Assuming you are the general
manager of ABC Hotel, what action would you propose to take?
Individual 1: “OB has so many abstract concepts and theories that I am really confused. I
had better ignore it.”
Individual 2: “I have learnt HRM from a well-known academic in the country. OB is more
similar to HRM. Also OB is more pure and is not a functonal field of
Organizational Management. Hence why should I be concerned with study of
OB?”
Individual 3: “People can never be understood. They can never get satisfied. They are very
complex. I can control them from the competence I get from actual hand-on-
experience in dealing with people. Hence there is no need of learning about
human behaviour from an OB course.”
31
Activity 4: A Skill Builder
Following is a list of statements about human behaviour in organizations. Based on your
common sense decide whether each statement is true or false.
Compare your responses with the responses of your peers who are sitting on your left side
and right side. Listen to the teacher to get his or her comments. What did you learn?
32
______ 8. I am highly concerned with the quality of work life.
______ 9. I want to be a successful motivator of people.
_____ 10. I believe that an organization can‟t work more than its employees do.
It turned out that the 11 “good to great” transformations were not the product
of some big decision. As Collins puts it, “There was no single defining action, no
grand program, no one killer innovation, no solitary lucky break, no miracle
moment.” Instead, the transformation resulted from a commitment to hiring
the right people –emphasizing character, work ethic, intelligence, values, and
commitment-and refusing to hire when such people were unavailable. The
transformations also resulted from leaders who understood their workforce-
focusing the company on what it was good at and what it was passionate about.
Once the right people were in place, their “numerous small decisions” created
the step-by-step, action-by-action movements that eventually resulted in a
transformative momentum.
Her supervisor, Mrs. Damayanthi who is a fully qualified accountant noticed her coming late
for two days and leaving work earlier for two days (short leave). Also she observed that
Julie‟s quality of output has many mistakes and miscoding during the last two months. Mrs.
Damayanthi checked her attendance and found that she had been absent from work an
33
average of three days a month for the past two months but not been absent from work for a
single day for the first two months.
Yesterday, at about 3.p.m. Mrs. Damayanthi asked Julie to come to her office to talk about
her work and behaviour. Julie came in and stood before her boss.
“Ah…Oh. Julie.” Said Mrs. Damayanthi.
Julie sat without thanking or saying anything and started looking down the floor.
“Julie, look at me. What is happening to you? Your performance is very bad. I noticed you
coming late many times and many short leaves.”
Julie was silent and no reply came from her. Consequently Mrs. Damayanthi repeated the
same. Then, Julie slammed her palm down on the desk. She shouted and heaped abuse upon
Mrs. Damayanthi.
“You are not fair. You play favourites. You expect too much of work from me. If you want
me to stop my job why don‟t you tell me directly? Why can‟t you understand my situation?”
Mrs. Damayanthi controlled herself and commanded her to “get out”. Julie went out. Mrs.
Damayanthi thought “After few weeks I will have to do her performance evaluation which
will be unsatisfactory. At the end of her probationary period I will recommend Julie‟s
termination”.
Questions:
1. What problems is the firm facing now? What may be or are the reasons for those
problems?
2. If you were Mrs. Damayanthi, how would you activate now? Justify.
3. What suggestions do you like to give to this firm to face the problems successfully?
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