Chapter Outline

Introduction, Definition
Historical Development
Fundamental Principles
Of OB
Contributing Disciplines
Challenges And
Opportunities

Till Now you have studied

What Managers Do
Management Functions
Mintzbergs Managerial
Roles
Management Skills

What are organizations

Organizations are social groups or
gatherings whose purpose is to
accomplish a common goal.
The goals of some organizations may be
to raise money for themselves and the
goals of other organizations may be to
raise money for a non-profit foundation.
It can be said that organizations vary in
sizes, locations, and goals.

In short
A socialunitof people that
isstructuredand managed to meet
aneedor to pursue collectivegoals.
All organizations have
amanagementstructurethat
determinesrelationshipsbetween the
differentactivitiesand themembers, and
subdivides
andassignsroles,responsibilities,
andauthorityto carry out differenttasks.
Organizations areopensystems--they
affect and are affected by

DEPENDS ON PEOPLE
Success

Inputs
Outputs
Men
Money
Machinery
Material
Manageme
nt

Organization
Transforming
Inputs to outputs

Goods
Services
Profit
Goal
Satisfactio
n

It means that the functioning of

an organization depends upon
how people work or behave

in the organization.
Therefore, understanding human behaviour
has assumed great significance for the
managers for managing people effectively.

How Companies are Changing

CoolCompanies

Believe casual days are

progressive
Believe titles are
obsolete
Don't impose on
employees' personal
time
Allow staff to come and
go as they please
Offer all employees stock
options
Let employees make
decisions that affect their
work
Offer assistance with
childcare

OldCompanies

Think casual Fridays are

pitiful
Charge employees for
perks and incentives
Have flex time: but only
between 7:30 a.m. and
6:30 p.m.
Hide financial results
from their employees
Encourage employee
input -- but rarely act
on it
Employ rigid hierarchies
(chain of command)
Stop at open door
policies

. . . 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 towards
improving
organization
The studyan
of people
at work

Definition
According to Luthans
OB is directly concerned with the
Understanding, Prediction and Control of
human behavior in organizations.

Davis and Newstrom

The Study and Application of knowledge
how people act or behave within organization.
It is human tool for human benefit. It applies
broadly to the behavior of people in all types of
organizations such as business, government,
schools and service organizations.

 The study of people at work is generally referred

to as the study of organizational behavior. This
chapter will start by defining the term
organizational behavior and briefly reviewing its
origins. Organizational behavior is the systematic
study of the actions and attitudes that people
exhibit within organizations.
Each person regularly uses intuition or our "gut
feelings" in trying to explain phenomena. For
example, a friend catches a cold and were quick
to remind him that he "didnt take his vitamins".
The field of organizational behavior seeks to
replace intuitive explanations such as this
example with systematic study. The objective, of
course, is to draw more accurate conclusions

ORGANIZATIONAL BEHAVIOUR
Key forces affecting Organizational Behavior
People
Individuals
Groups
Environment
Government
Competition
Societal pressure

Structure
Jobs
Organizational Behavior
Relationships

Technology
Machinery
Computer hardware ,software

Studying OB
Organizational behavior is about studying and
understanding people and human nature. Do
employee ever make efforts on behalf of their
employing organizations interests or fellow
employees interest when it is not in their direct
self-interest to do so?
This question exists in any organization must be
address. The problem addressed here is a conflict
of self-interest.
The question here should be very interesting to
people in organization. People should try to
understand and address counterintuitive behavior
in certain situation (Young 1998). For instance, why
does moral hazard exists in organization?

 Organizationalbehaviorstudiesorganizationsfro
m multiple viewpoints, including behavior within
the organization and in relation to other
organizations.
Micro organizational behavior refers to individual
andgroupdynamics in an organizational setting.
Macro organizationaltheorystudies whole
organizations and industries, including how they
adapt, and thestrategies, structures,
andcontingenciesthat guide them.
Concepts such
asleadership,decisionmaking,teambuilding,m
otivation, andjob satisfactionare all facets of
organizational behavior
andresponsibilitiesofmanagement.
Organizational behavior also deals heavily
inculture. Company or corporate culture is
difficult to define but is extremely relevant to how

Why it is important for managers to

have an understanding of
organizational behavior
Managers need an understanding of organizational

behavior because a large part of their job has to do with

exactly that. Organizational behavior is the study of
how people behave while in groups and as individuals.
Much of what a manager does has to do with trying to
get people to work as effectively as possible.
It can involve trying to motivate an individual worker or
it can involve trying to understand how to get workers
who are part of a team to interact with one another in
such a way that they are able to work more efficiently
and effectively.
Much of management has to do with understanding
people and how they work. Therefore, having an
understanding of organizational behavior is vital to
managers.

Why Do We Study OB?

To learn about yourself and others
To understand how the many
organizations you encounter work.
To become familiar with team work
To help you think about the people
issues faced by managers and
entrepreneurs

Goals of OB
Describe
how people behave under a variety of conditions.
Understand
Why people behave as they do.
Probe for underlying explanations
Predict
Predict future employee behavior (tardiness,
productive & unproductive etc.)
Provide preventive actions
Control
At least partially and develop some human activity
at work. Managers need to remember that
organizational behavior is a tool for human
benefit

Benefits of Studying
Organizational Behavior
1. Develop skills to function
effectively in the workplace.
2. Grow personally through insight
into human behavior.
3. Enhance overall organizational
effectiveness
4. Sharpen and refine common
sense

Nature of PEOPLE

Perception
A Whole
person
Motivated
Behavior
Desire for
involvement
Value of
Person

Nature of
ORGANISATION

Social
Systems
Mutual
Interest
Ethics

Fundamental Concepts of
Organizational Behaviour
In every field of social science, or
even physical science, has a
philosophical foundation of basic
concepts that guide its development.
There are some certain philosophical
concepts in organizational behaviour
also. The concepts are-

 Individual differences:
Every individual in the world is different
from others. This idea is supported by
science (DNA).
The idea of individual difference comes
originally from psychology. From the day of
birth, each person is unique, and individual
experiences after birth tend to make people
even more different.
Motivated behaviour:
An employee has so many needs inside him.
So, they want to fulfil those needs. That's
why; they had to perform well in the
organization. A path toward increased need
fulfilment is the better way of enriches the
quality of work.

 Perception: Peoples perceptions are

also differ when they see an object. Two
people can differently present a same
object.
A person always organizes and interprets
what he sees according to his lifetime of
experience and accumulated value.
Employees also see work differently for
differ in their personalities, needs,
demographics factors, past experiences
and social surrounding.

 A whole person:
An employee's personal life is not
detached from his working life. As an
example, A women who attend the office
at 8:30 AM is always anxious for her
children's school time (if her children able
to attend the school or not).
As a result, its impact falls on her
concentration that means her working
life. For this reason, we cannot separate
it. So manager should treat an employee
as a whole person.

 Desire for involvement:

Every employee is actively seeking
opportunities at work to involve in decisionmaking problems, share what they know
and to learn from the experience. So,
organization should provide them a chance
to express their opinions, ideas and
suggestion for decision-making problem.
Value of the person: An employee wants
to be treated separately from other factor
of production (land, capital, labour). So,
they have to be treated with carrying
respect, dignity and etc.. from their
employers and society.

Nature of organization
1. Social systems or social structure in general
refer to entities or groups in definite relation
to each other, to relatively enduring patterns
of behavior and relationship within social
systems, or to social institutions and norms
becoming embedded into social systems in
such a way that they shape the behavior of
actors within those social systems.
Social systems can be said to be the patterns
of behavior of a group of people possessing
similar characteristics due to their existence
in same society

2.Mutual interest Symbiotic relationship

between organizations and people Provides a
super ordinate goal one that can attained
only through the integral effort of individuals
and their employers.
3.Ethics Treatment of employees in an ethical
fashion Establish code of ethics, publicized
statements of ethical values, provide ethics
trainings, reward employees for notable ethical
behaviors, set up internal procedure to handle
misconduct.

historical development
Greek philosopher Plato wrote about the
essence of leadership.
Aristotle addressed the topic of persuasive
communication.
writings of the Chinese philosopher
Confucius in 500 BC are beginning to
influence contemporary thinking about
ethics and leadership.
writings of 16th century Italian
philosopher Niccol Machiavelli laid the
foundation for contemporary work on
organizational power and politics

 1776, Adam Smith advocated a new

form of organizational structure
based on the division of labour.
100 years later, German sociologist
Max Weber wrote about rational
organizations and initiated
discussion of charismatic leadership

 Soon after, Frederick Winslow Taylor

introduced the systematic use of goal
setting and rewards to motivate
employees.
In the 1920s, Australian-born Harvard
professor Elton Mayo and his colleagues
conducted productivity studies at
Western Electric's Hawthorne plant in
the United States.
They discovered the importance of formal
and informal group dynamics in the work
place, resulting in a dramatic shift towards
the human relations school of thought.

 After the First World War, the focus of

organizational studies shifted to
analysis of how human factors and
psychology affected
organizations, a transformation
propelled by the identification of the
Hawthorne Effect.
This Human Relations Movement
focused on teams, motivation, and
the actualization of the goals of
individuals within organizations.
Prominent early scholars included
Chester Barnard, Henri Fayol,

 Second World War further shifted

the field, as the invention of largescale logistics and operations
research led to a renewed interest in
rationalist approaches to the study
of organizations.
Interest grew in theory and methods
native to the sciences, including
systems theory, the study of
organizations with a complexity
theory perspective and complexity
strategy.

Approaches to Organizational
Behavior
Human Resources Approach

Human Resources
Approach
This approach recognizes the fact that people are the
central resource in any organisation and that they should
be developed towards higher levels of competency,
creativity and fulfillment. People thus developed will
contribute to the success of the organisation.
The human resources approach is also called as the
supportive approach in the sense that he managers role
changes from control of employee to active support of their
growth and performance.
The supportive approach contrasts with the traditional
management approach. In the traditional approach
managers decided what employees should do and closely
monitored their performance to ensure task
accomplishment. In the human resources approach, role of
managers changes, as was stated above, from structuring
and controlling to supporting.

Contingency
Approach
The contingency approach (sometimes called the
situational approach) is based on the premise that
methods or behaviours which work effectively in
one situation fail in another. OD programmes, for
example, way work brilliantly in one situation but
fail miserably in another situation.
Results differ because situations differ, the
managers task, therefore, is to identity which
method will, in a particular situation, under
particular circumstances, and at a particular time,
best contribute to the attainment of organisations
goals.

Systems Approach
Systems approach to OB views the

organisation as a united, purposeful system

composed of interrelated parts. This approach
gives managers a way of looking at the
organisation as a whole, whole person, whole
group, and the whole social system.
In so doing, systems approach tells us that the
activity of any segment of an organisation
affects, in varying degrees the activity of
every other segment. A systems view should
be the concern of every person in an
organisation.

Human Relations
Approach
The classical school did not give importance to

the human aspects of the workers. Therefore,

they did not achieve a high level of production
efficiency and co-operation between
themanagementand workers.
The failure of the classical approach led to
thehuman relationsmovement.
The human relations experts tried to integrate
(combine) Psychology and Sociology with
Management. According to them, organisation is
a social system of interpersonal and inter group
relationships. They gave importance to the
management of people.
They felt that management can get the work

Personality
Perception
Learning
Attitudes
Motivation
Group Dynamics
Team Work
Communication
Leadership
Power & Politics
Decision-making
Organization Theory
Organization design &
Structure
Organizational Culture
Organizational
Effectiveness

INDIVIDUAL
BEHAVIOUR

GROUP
BEHAVIOUR

ORGANIZATION

OB Model

Organization
al
Effectiveness

Challenges and Opportunities

1.
2.
3.
4.
5.
6.
7.
8.
9.

Improving People Skills

Improving Quality and Productivity
Managing Workforce Diversity
Responding to Globalization
Empowering People
Coping with Temporariness
Stimulating Innovation and Change
Emergence of the e-organization
Improving Ethical Behavior

 Improving People Skills:

Technological changes, structural changes, environmental changes
are accelerated at a faster rate in business field. Unless employees
and executives are equipped to possess the required skills to adapt
those changes, the achievement of the targeted goals cannot be
achieved in time.
Improving Quality and Productivity:
Quality is the extent to which the customers or users believe the
product or service surpasses their needs and expectations. For
example, a customer who purchases an automobile has certain
expectation, one of which is that the automobile engine will start
when it is turned on. If the engine fails to start, the customers
expectations will not have been met and the customer will perceive
the quality of the car as poor.
Managing Workforce Diversity:
This refers to employing different categories of employees who are
heterogeneous in terms of gender, race, ethnicity, relation,
community, physically disadvantaged, homosexuals, elderly people
etc. The primary reason to employ heterogeneous category of
employees is to tap the talents and potentialities, harnessing the
innovativeness, obtaining synergetic effect among the divorce
workforce.
Responding to Globalization:

 Empowering People
The main issue is delegating more power and responsibility to the lower level
cadre of employees and assigning more freedom to make choices about their
schedules, operations, procedures and the method of solving their workrelated problems. Encouraging the employees to participate in work related
decision will sizably enhance their commitment at work.
Coping with Temporariness
In recent times, the Product life cycles are slimming, the methods of
operations are improving, and fashions are changing very fast. In those days,
the managers needed to introduce major change programs once or twice a
decade.
Stimulating Innovation and Change
Todays successful organizations must foster innovation and be proficient in
the art of change; otherwise they will become candidates for extinction in due
course of time and vanished from their field of business
Emergence of E-Organization
E- Commerce:It refers to the business operations involving electronic mode
of transactions. It encompasses presenting products on websites and filling
order. The vast majority of articles and media attention given to using the
Internet in business are directed at on-line shopping.
Improving Ethical behavior:
The complexity in business operations is forcing the workforce to face ethical
dilemmas, where they are required to define right and wrong conduct in order
to complete their assigned activities. For example, Should the employees of
chemical company blow the whistle if they uncover the discharging its
untreated effluents into the river are polluting its water resources?

Summary and Implications for

Managers
Managers need to develop their interpersonal, or
people, skills to be effective in their jobs.
OB is a field of study that investigates the impact
that individuals, groups, and structure have on
behavior within an organization.
OB focuses on improving productivity, employee job
satisfaction, and reducing absenteeism and turnover.
OB uses systematic study to improve predictions of
behavior.
OB recognizes and helps managers to see the value
of workforce diversity and practices.

Bottom Line: OB Is For Everyone

Organizational behaviour is not just
for managers.
OB applies equally well to all
situations in which you interact with
others: on the basketball court, at the
grocery store, in school, or in church.

Summary and
Implications
OB is a field of study that investigates the
impact that individuals, groups, and
structure have on behavior within an
organization.
OB focuses on improving productivity,
reducing absenteeism and turnover, and
increasing employee job satisfaction and
organizational commitment.
OB uses systematic study to improve
predictions of behavior.