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Learning Objectives
After reading this lesson, you should be able to understand:

The major environmental challenges and the paradigm shift that the management
faces today
The management perspective of organizational behaviour
The historical background of modern organizational behaviour
The modern approach to organizational behaviour

The knowledge and information explosion, global competition, total quality and diversity are some of
the bitter realities that the managers are facing today. There are many solutions being offered to deal
with these complex challenges. Yet the simple but most profound solution may be found in the words
of Sam Walton, the richest person in the world and the founder of Wal-Mart. Sam was once asked the
key to successful organizations and management. Sam quickly replied, "People are the key".
The term paradigm comes from the Greek word 'paradigma', which means ''model, pattern or
example". First introduced over thirty years ago, by the philosophy and science historian Thomas
Khun, the term "paradigm" is now used as, a broad model, a framework, a way of thinking, and a
scheme for understanding reality. The impact of information technology, total quality and diversity
mentioned earlier has led to a paradigm shift.
The organizational behaviour has a goal lo help the managers make a transition to the new paradigm.
Some of the new paradigm characteristics include coverage of second-generation information
technology and total quality management such as empowerment, reengineering and benchmarking,
and learning organization for managing diversity of work. The new paradigm sets the stage for the
study, understanding, and application of the time-tested micro-variables, dynamics and macrovariables. One must know why management needs a new perspective to meet the environmental
challenges and to shift to a new paradigm.
Management is generally considered to have three major dimensionstechnical, conceptual and
human. The technical dimension consists of the manager's expertise in particular functional areas.
They know the requirements of the jobs and have the functional knowledge to get the job done. But
the practicing managers ignore the conceptual and human dimensions of their jobs.
Most managers think that their employees are lazy, and are interested only in money, and that
if you could make them happy in terms of money, they would be productive. If such assumptions are
accepted, the human problems that the management is facing are relatively easy to solve.
But human behaviour at work is much more complicated and diverse. The new perspective
assumes that employees are extremely complex and that there is a need for theoretical understanding
given by empirical research before applications can be made for managing people effectively.
The modern approach to organizational behaviour is the search for the truth of why people behave the
way they do. The organizational behaviour is a delicate and complex process. If one aims to manage
an organization, it is necessary to understand its operation. Organization is the combination of
science and people. While science and technology is predictable, the human behaviour in
organization is rather unpredictable. This is because it arises from deep needs and value systems of
Scientific Management Approach
Scientific management approach was developed by F.W. Taylor at the beginning of the 20th century.
This theory supported the use of certain steps in scientifically studying each element of a job,
selecting and training the best workers for the job arid making sure that the workers follow the

prescribed method of doing the job. It provided a scientific rationale for job specialization and mass
production. His assumption was that employees are motivated largely by money. To increase the
output, Taylor advised managers to pay monetary incentives to efficient workers.
Yet, his theory was criticized by many employers and workers. Workers objected to the
pressure of work as being harder and faster. Critics worried that the methods took the humanity out of
labor, reducing workers to machines responding to management incentives. Therefore, Taylor's view
is now considered inadequate and narrow due to the points given by the critics.
Bureaucratic Approach
While scientific management was focusing on the interaction between workers and the task, me
researchers were studying how to structure the organization more effectively. Instead of trying to
make each worker more efficient, classical organization theory sought the most effective overall
organizational structure for workers and managers.
The theory's most prominent advocate, Max Weber, proposed a 'bureaucratic form' of
structure, which he thought would work for all organizations. Weber's idea! bureaucracy was , logical,
rational and efficient. He made the naive assumption that one structure would work best for all
Henry Ford, Henry Fayol and Frederick W. Taylor, the early management pioneers,
recognized the behavioral side of management. However, they did not emphasize the human
dimensions. Although there were varied and complex reasons for the emerging importance of
behavioral approach to management, it is generally recognized that the Hawthorne studies mark the
historical roots for the field of organizational behaviour.
Hawthorne Studies
Even, as Taylor and Weber brought attention with their rational, logical approaches to more efficient
productivity, their views were criticized on the ground that both approaches ignored worker's humanity.
The real beginning of applied research in the area of organizational behaviour started with
Hawthorne Experiments. In 1924, a group of professors began an enquiry into the human aspects of
work and working conditions at the Hawthorne plant of Western Electric Company, Chicago. The
findings of these studies were given a new name 'human relations' the studies brought out a number
of findings relevant to understanding human behaviour at work. The Human element in the workplace
was considerably more important. The workers are influenced by social factors and the behaviour of
the individual worker is determined by the group.
Hawthorne studies have been criticized for their research methods and conclusions drawn.
But their impact on the emerging field of organizational behaviour was dramatic. They helped usher in
a more humanity centered approach to work.
There are mainly four approaches to organizational behaviour. They are:
Human resources approach '
Contingency approach
Productivity approach
Systems approach
Human Resources Approach
The human resources approach is concerned with the growth and development of people towards
higher levels of competency, creativity and fulfillment, because people are the central resource in any
organization. This approach help employees become better in terms of work and responsibility and
then it tries to create a climate in which they can contribute to the best of their improved abilities. This
approach is also known as 'supportive approach' because the manager's primary role changes from
control of employees to providing an active support for their growth and performance.
A Contingency Approach
A contingency approach to organizational behaviour implies that different situations require different
behavioral practices for effectiveness instead of following a traditional approach for all situations.
Each situation must be analyzed carefully to determine the significant variables that exist in order to
establish the more effective practices. The strength of this approach is that it encourages analysis of

each situation prior to action. Thus, it helps to use all the current knowledge about people in the
organization in the most appropriate manner.
Productivity Approach
Productivity is a ratio that compares units of output with units of input. It is often measured in terms of
economic inputs and outputs. Productivity is considered to be improved, if more outputs can be
produced from the same amount of inputs. But besides economic inputs and outputs, human and
social inputs and outputs also arc important.
Systems Approach
A system is an interrelated part of an organization or a society that interacts with everyone related to
that organization or society and functions as a whole. Within the organization 'people' employ
'technology' in performing the 'task' that they are responsible for, while the 'structure' of the
organization serves as a basis for co-ordinating all their different activities. The systems view
emphasizes the interdependence of each of these elements within the organization, if the organization
as a whole is to function effectively. The other key aspect of the systems view of organization is its
emphasis on the interaction between the organization and its broader environment,, which consists of
social, economic, cultural and political environment within which they operate.
Organizations arc dependent upon their surrounding environment in two main ways: First, the
organization requires 'inputs' from the environment in the form of raw material, people, money, ideas
and so on. The organization itself can be thought of as performing certain 'transformation' processes,
on its inputs in order to create outputs in the form of products or services. Secondly, the organization
depends on environment such as, public to accept its output. The systems view of organization thus
emphasizes on the key interdependencies that organizations must manage. Within themselves the
organizations must trade off the interdependencies among people, tasks, technology and structure in
order to perform their transformation processes effectively and efficiently. Organizations must also
recognize their interdependence with the broader environments within which they exist.


A Separate Field of Study
Organizational behaviour can be treated as a distinct field of study. It is yet to become a science. Now
efforts are being made to synthesize principles, concepts and processes in this field of study.
Interdisciplinary Approach
Organizational behaviour is basically an interdisciplinary approach. It draws heavily from other
disciplines like psychology, sociology and anthropology. Besides, it also takes relevant things from
economics, political science, law and history. Organizational behaviour integrates the relevant
contents of these disciplines to make them applicable for organizational analysis. e.g. it addresses
issues, which may be relevant to the case, such as the following:
What facilitates accurate perception and attribution?
What influences individual, group and organizational learning and the development of
individual attitudes toward .work?
How do individual differences in personality, personal development, and career development
affect individual's behaviours and attitudes?
What motivates people to work, and how. does the organizational reward system influence
worker's behaviour and attitudes?
How do managers build effective teams?
What contributes to effective decision-making?
What are the constituents of effective communication?
What are the characteristics of effective communication?
How can power be secured and used productively?
What factors contribute to effective negotiations?
How can conflict (between groups or between a manager and subordinates) be resolved or
How can jobs and organizations be effectively designed?
How can managers help workers deal effectively with change?
An Applied Science

The basic objective of organizational behaviour is to make application of various researches to solve
the organizational problems, particularly related to the human behavioral aspect.
Normative and Value Centered
Organizational behaviour is a normative science. A normative science prescribes how the various
findings of researches can be applied to get organizational results, which are acceptable to the
society. Thus, what is acceptable by the society or individuals engaged in an organization is a matter
of values of the society and people concerned.
Humanistic and Optimistic
Organizational behaviour focuses the attention on people from humanistic point of view. It is based on
the belief that needs and motivation of people are of high' concern. Further, there is optimism about
the innate potential of man to be independent, creative, predictive and capable of contributing
positively to the objectives of the organization.
Oriented towards Organizational Objectives
Organizational behaviour is oriented towards organizational objectives. In fact, organizational
behaviour tries to integrate both individual and organizational objectives so that both are achieved
A Total System Approach
An individual's behaviour can be analyzed keeping in view his psychological framework,
interpersonal-orientation, group influence and social and cultural factors; Thus, individual's nature is
quite complex and organizational behaviour by applying systems approach tries to find solutions for
this complexity.

Learning Objectives
After reading this lesson, you should be able to:

Define and explain the meaning of organizational behaviour

Understand the nature and importance of organizational behaviour
Relate the organizational behaviour to managers job

Management is commonly defined as "Getting work done through other people". This simple definition
explains the significance of the role of people. The work will not be done unless "people" want to do
the work and if the work is not done then there will be no organisation. Hence, the cooperation of the
workers is crucial to the success or failure of the organisation.
According to Gary Johns, "Organisations are social inventions for accomplishing goals through group
efforts". This definition covers wide variety-of groups such as businesses, schools, hospitals, fraternal
groups, religious bodies, government agencies and so on. There are three significant aspects in the
above definition, which require further analysis. They are as follows:
Social Inventions: The word "social" as a derivative of society basically means gathering of
people. It is the people that primarily make up an organisation.
Accomplishing Goals: All organisations have reasons for their existence. These reasons are
the goals towards which all organisational efforts are directed. While the primary goal .of any
commercial organisation is to make money for its owners, this goal is inter-related with many

other goals. Accordingly, any organisational goal must integrate in itself the personal goals of
all individuals associated with the organisation.
Group Effort: People, both as members of the society at large and as a part of an
organisation interact with each other and are inter-dependent. Individuals in themselves have
physical and intellectual limitations and these limitations can only be overcome by group


Organisational behaviour is concerned with people's thoughts, feelings, emotions and actions in
setting up a work. Understanding an individual behaviour is in itself a challenge, but understanding
group behaviour in an organisational environment is a monumental managerial task.
As Nadler and Tushman put it, "Understanding one individual's behaviour is challenging in
and of itself; understanding a group that is made up of different individuals and comprehending the
many relationships among those individuals is even more complex. Ultimately, the organisation's work
gets done through people, individually or collectively, on their, own or in collaboration with technology.
Therefore, the management of organisational behaviour is central to the management taska task
that involves the capacity to "understand" the behaviour patterns of individuals, groups and
organisations, to ''predict'" what behavioural responses will be elicited by various managerial actions
and finally to use this understanding and these predictions to achieve "control".
Organisational behaviour can then be defined as: "The study of human behaviour in
organisational settings, the interface between human behaviour and the organisational context, and
the organisation itself."
The above definition has three partsthe individual behaviour, the organisation and the
(interface between the two. Each individual brings to an organisation a unique set of beliefs, values,
attitudes and other personal characteristics and these characteristics of all individuals must interact
with each other in order to create organisational settings. The organisational behaviour is specifically
concerned with work-related behaviour, which takes place in organisations.
In addition to understanding; the on-going behavioural processes involved, in 'their own jobs,
managers must understand the basic human element of their work. Organisational behaviour offers
three major ways of understanding this context; people as organisations, people as resources and
people as people.
Above all, organisations are people; and without people there would be no organisations.
Thus, if managers are to understand the organisations in which they work, they must first understand
the people who make up the organisations.
As resources, people are one of the organisation's most valuable assets. People create the
organisation, guide and direct its course, and vitalise and revitalise it. People make the decisions,
solve the problems, and answer the questions. As managers increasingly recognise the value of
potential contributions by their employees, it will become more and more important for managers and
employees to grasp the complexities of organisational behaviour.
Finally, there is people as people - an argument derived from the simple notion of humanistic
management. People spend a large part of their lives in ; organisational settings, mostly as employees.
They have a right to expect something in return beyond wages and benefits. They have a right to
expect satisfaction and to learn new skills. An understanding of organisational behaviour can help the
manager better appreciate the variety of individual needs and' expectations.
Organisational behaviour is concerned with the characteristics and behaviours of employees
in isolation; the characteristics and processes that are part of the organisation itself; 'and the
characteristics and behaviours directly resulting from people with their individual needs and
motivations working within the structure of the organisation. One cannot understand an individuals
behaviour completely without learning something about that individual's organisation. Similarly, he
cannot understand how the organisation operates without; studying the people who-make it up. Thus,
the organisation influences and is influenced by individuals.


The key elements in the organisational behaviour are people,, structure, technology and the
environment in which the organisation operates.
People: People make up the internal and social system of the organisation. They consist of
individuals and groups. The groups may be big or small; formal or informal; official or
unofficial. Groups are dynamic and they work in the organisation to achieve their objectives.
Structure: Structure defines the formal relationships of the people in organisations. Different
people in the organisation are performing different type of jobs and they need to be (elated in
some structural way so that their work can be effectively co-ordinated.
Technology: Technology such as machines and work processes provide the resources with
which people work and affects the tasks that they perform. The technology used has a
significant influence on working relationships. It allows people to do more and work better but
it also restricts' people in various ways.
Environment: All organisations operate within an external environment. It is the part of a
larger system that contains many other elements such as government, family and other
organisations. All of these mutually influence each other in a complex system that creates a
context for a group of people.
Each individual brings to an organisation a unique set of personal characteristics, experiences from
other organisation, the environment surrounding the organisation and 1 they also posses a personal
background. In considering the people working in an organisation, organisational behaviour must look
at the unique perspective that each individual brings to the work setting.
But individuals do not work in isolation. They come in contact with other individuals and the
organisation in a variety of ways. Points of contact include managers, co-workers, formal policies and
procedures of the organisation, and various changes implemented by the organisation. Over time, the
individual, too, changes, as a function of both the personal experiences and the organisation. The
organisation is also affected by the presence and eventual absence of the individual. Clearly, the
study of organisational behaviour must consider the ways in which the individual and the organisation
An organisation, characteristically, exists before a particular person joins it and continues to
exist after he leaves it. Thus, the organisation itself represents a crucial third perspective from which
to view organisational behaviour.