Summary1

Organisational behaviour defined

Organisational behaviour is the study of individuals and groups in work organisations.
This body of knowledge assists managers to interact effectively with their employees
and improve organisational performance. Effective managers need to understand the
people that they rely on for the performance of their unit. An
individuals, teams/groups or organisations performance depends on their capacity to
work, willingness to work and opportunity to work. This concept can be summarised
by the performance equation, which views performance as the result of the personal
and/or group attributes, the work effort they make and the organisational support they
receive.
Why organisations exist
Organisations are collections of individuals working together to achieve a common
purpose or goal. Organisations exist because individuals are limited in their physical
and mental capabilities. By working together in organisations, collections of
individuals are able to achieve more than any individual could by working alone. The
purpose of an organisation is to produce a product or to provide a service. To produce
such outputs, organisations divide work into required tasks to organise the efforts of
people to their best advantage. This process is termed division of labour.
Organisations can be portrayed as open systems in that they obtain human and
material inputs from their external environment, then transform these inputs into
product outputs in the form of finished goods or services, which they then offer back to
the external environment for consumption. If the environment values these
outputs, then the organisation will continue to survive; if not, then it may fail to obtain
subsequent inputs for future production and it may cease to operate.
The role of managers
A manager is responsible for work that is accomplished through the performance
contributions of one or more other people. The management process involves
planning, organising, leading and controlling. Managers should seek two key results for
a work unit or work team: task performance, which is the quality and quantity of the
work produced or the services provided by the work unit; and human resource
maintenance, which is the attraction and continuation of a capable workforce over time.
An effective managers work unit achieves high levels of productivity and maintains
itself as a capable workforce over time by keeping the psychological contract in balance.
The psychological contract is individuals expectations regarding what they and the
organisation expect to give and receive from each other as an exchange of values. In
a healthy psychological contract, the contributions made to the organisation are
believed to be in balance with the inducements received in return. The insights provided
through the study of organisational behaviour can help managers help others maintain
healthy psychological contracts with their employers. They can also help managers
build and maintain work environments that offer their members a high quality of work
life, which is marked by participation,independence, equity and responsiveness.

Key issues affecting organisations

Globalisation is the process of becoming increasingly international in character. A
managerial career in todays work environment will sooner or later bring contact with
international issues and considerations. Managing to perform effectively in a globalised
marketplace requires many new skills and competencies.
Changes to the nature of work are largely due to globalisation, advances in
technology, the growth in the services sector and, especially, an increasing reliance on
knowledge to generate new products and services. Increasingly, the environmental
impacts associated with the production and use of these products and services are
coming under greater scrutiny by consumers. These changes to the nature of work
require workers and managers with new skills and abilities.
The workforce is becoming diverse: more multicultural, older, and there are more
women working than ever before. There are, however, remaining challenges for women
and equity in the workplace and these issues demand change in organisational
behaviour and practice. Managing such a workforce requires new approaches.
Workers are seeking greater worklife balance. They are also seeking a greater variety
of incentives for their work contribution. More workers expect to have a series of jobs
or careers over their lifetime. Employers should not expect the same degree of loyalty
as in the past. Employers are seeking a more flexible, adaptable workforce that can keep
pace with the ever-increasing speed of change in the marketplace. Outsourcing and the
use of casual workers are among the ways organisations are responding to this need.
Organisations are under increasing pressure to conduct themselves in an ethical manner
and to acknowledge that they have a responsibility to the society that sustains them.
The need to understand organisational behaviour
Learning about organisational behaviour is both a personal responsibility and a
prerequisite to long-term career success. The field of organisational behaviour helps
managers both deal with and learn from their workplace experiences. Managers who
understand organisational behaviour are better prepared to know what to look for in
work situations, to understand what they find and to take (or help others to take) the
required action.
Summary2
The individual performance equation
The individual performance equation views performance as the result of the personal
attributes of individuals, the work efforts they put forth and the organisational support
they receive. Individual performance factors are highlighted in the equation:
performance=individual attributeswork effortorganisational support. Individual
attributes consist of demographic, competency and personality characteristics. Work

effort is reflected in the motivation to work. Organisational support consists of a wide

range of organisational support mechanisms, such as tools, resources, instructions and
other educational strategies, which provide the opportunity for an individual to perform
if they have the capacity and willingness.
Demographic characteristics of individuals
Demographic characteristics of individuals are background variables that help shape
what a person has become. Some demographic characteristics are current (for
example, a workers current health status); others are historical (for example, length of
service).
Competency characteristics of individuals
Competency characteristics among individuals consist of aptitude (the capability to
learn something) and ability (the existing capacity to do something). Aptitudes are
potential abilities. Abilities can be classified as cognitive abilities, physical abilities and
emotional intelligence.
Personality characteristics of individuals
Personality captures the overall profile or combination of characteristics that represent
the unique nature of a person as that person reacts and interacts with others. We expect
there to be a predictable interplay between an individuals personality and a tendency
to behave in certain ways. Personality traits important in organisational behaviour are
locus of control, authoritarianism/dogmatism, Machiavellianism, and the big
five personality dimensions.
Capitalising on workplace diversity
Increasing diversity is creating workplace challenges. Significant variations are
occurring
in
skill
levels, education, physical
abilities, cultural
backgrounds, lifestyles,personal values, individual needs, and ethnic and social
differences. Workplaces that are open to diversity create a diversity management plan.
Values and attitudes
Values are global concepts that guide actions and judgements across a variety of
situations. Values are especially important in organisational behaviour because they can
directly influence outcomes such as performance or human resource maintenance; they
can also have an indirect influence on behaviour by means of attitudes and perceptions.
While treated as characteristics of individuals in this chapter, values can also reflect
differences among various societal and organisational cultures. Attitudes are influenced
by values but focus on specific people or objects; in contrast, values have a more global
focus. Attitudes are predispositions to respond in a positive or negative way to someone
or something in ones environment. They operate through intended behaviour to
influence actual behaviour or other variables.
Job satisfaction

Job satisfaction is a specific attitude that indicates the degree to which individuals feel
positively or negatively about their jobs. It is an emotional response to ones tasks as
well as to the physical and social conditions of the workplace. Often, job satisfaction is
measured in terms of feelings about various job facets, including the
work, pay, promotion, coworkers and supervision. Job satisfaction is related to
employee absenteeism and turnover, but the relationship to performance is
controversial. Current organisational behaviour thinking rejects the notion that
satisfaction causes performance, and instead argues that rewards influence both
satisfaction and performance.
The perceptual process
Individuals use the perceptual process to select, organise, interpret and retrieve
information from their environment. Perceptions are influenced by a variety of
factors, including social and physical aspects of the situation as well as personal factors
such as needs, experience, values, attitudes and personality. A manager who is skilled
in influencing the perceptual process will be able to see a situation as it is perceived by
other people and avoid common perceptual distortions that may bias his or her views
of people and situations. In addition, managers must avoid stereotyping as this can have
social and legal implications.
Summary3
Motivating and empowering todays workforce
In the contemporary world, a key challenge is to motivate and empower workers
towards productive performance. With an ageing population, when there are labour
shortages and with mobile workforces, organisations need to understand how to
motivate and empower employees in order to attract and retain them and to enhance
performance.
Difference between content and process motivation theories
There are two main types of motivational theories content and process. Content
theories examine the needs that individuals have. Their efforts to satisfy those needs
are what drive their behaviour. Process theories examine the thought processes that
people have in relation to motivating their behaviour.
Content theories of motivation
The content theories of Maslow, Alderfer, McClelland and Herzberg emphasise needs
or motives. They are often criticised for being culturally biased, and caution should be
exercised when applying these theories in non-Western cultures.
Maslows hierarchy of needs theory arranges human needs into a five-step hierarchy:
physiological, safety, social (the three lower-order needs), esteem and selfactualisation (the two higher-order needs). Satisfaction of any need activates the need
at the next higher level, and people are presumed to move step by step up the hierarchy.
Alderfers ERG theory has modified this theory by collapsing the five needs into three:

existence, relatedness and growth. Alderfer also allows for more than one need to be
activated at a time and for a frustrationregression response. McClellands acquired
needs theory focuses on the needs for achievement(nAch), affiliation (nAff) and
power (nPower). The theory argues that these needs can be developed through
experience and training. Persons high in nAch prefer jobs with individual
responsibility, performance feedback and moderately challenging goals. Successful
executives typically have a high nPower that is greater than their nAff. Herzbergs twofactor theory treats job satisfaction and job dissatisfaction as two separate issues.
Satisfiers, or motivator factors such as achievement,responsibility and recognition, are
associated with job content. An improvement in job content is expected to increase
satisfaction and motivation to perform well. In contrast, dissatisfiers, or hygiene factors
such as working conditions, relations with coworkers and salary, are associated with
the job context. Improving job context does not lead to more satisfaction but is expected
to reduce dissatisfaction.
Process theories of motivation
Process theories emphasise the thought processes concerning how and why people
choose one action over another in the workplace. Process theories focus on
understanding the cognitive processes that act to influence behaviour. Although process
theories can be very useful in explaining work motivation in cross-cultural settings, the
values that drive such theories may vary substantially across cultures and the outcomes
may differ considerably.
Equity theory points out that people compare their rewards (and inputs) with those of
others. The individual is then motivated to engage in behaviour to correct any perceived
inequity. At the extreme, feelings of inequity may lead to reduced performance or job
turnover. Expectancy theory argues that work motivation is determined by an
individuals beliefs concerning effortperformance relationships (expectancy), work
outcome relationships (instrumentality) and the desirability of various work
outcomes (valence).
Managers, therefore, must
build
positive
expectancies, demonstrate performance-reward instrumentalities, and use rewards with
high positive valences in their motivational strategies.
Integrating content and process motivation theories
The content theories can be compared, with some overlap identified. An integrated
model of motivation builds from the individual performance equation developed in
chapter 2 and combines the content and process theories to show how well-managed
rewards can lead to high levels of both individual performance and satisfaction.
Other perspectives on motivation
Other theories go beyond content and process theories to draw links with personality
theory, leadership, individual values, self-concept and self-efficacy. Such theories tend
to place a lot of emphasis on leader responsibility for motivation and on the complexity
of motivation. Theories that focus on self-concept and personal values seek to describe

motivation as a desire that is derived from a persons self-concept. This self-concept

guides individual behaviour.
Empowerment and the empowerment process
Empowerment is the process by which managers delegate power to employees to
motivate greater responsibility in balancing the achievement of personal and
organisational goals. For employees who experience low self-efficacy, managers can
implement strategies to improve the employees feelings of self-worth and their
capacity to improve their performance.
Summary4
Four general approaches to learning
Learning is a relatively permanent change in behaviour resulting from experience. It is
an important part of rewards management. The four general approaches to learning are
classical conditioning, operant conditioning, cognitive learning and social learning.
Modern managers need to understand the principles of cognitive learning, which relate
to the motivational theories discussed in chapter 5; operant conditioning, which is
achieved when the consequences of behaviour lead to changes in the probability of its
occurrence; and social learning.
Organisational behaviour modification and reinforcement strategies
Reinforcement is the means through which operant conditioning takes place. Its
foundation is the law of effect, which states behaviour will be repeated or
extinguished, depending on whether the consequences are positive or negative.
Reinforcement is related to extrinsic rewards (valued outcomes that are given to the
individual by some other person) because these rewards serve as environmental
consequences that can influence peoples work behaviours through the law of effect.
Organisational behaviour modification uses four reinforcement strategies to change
behaviour: positive reinforcement, negative reinforcement (avoidance),punishment
and extinction. Positive reinforcement is used to encourage desirable behaviour; the
administration of positive consequences tends to increase the likelihood of a person
repeating a behaviour in similar settings. Positive reinforcement should be
contingent (administered only if the desired behaviour is exhibited)and immediate (as
close in time to the desired behaviour as possible).
Negative reinforcement, or avoidance, is used to encourage desirable behaviour; the
withdrawal of negative consequences tends to increase the likelihood a person will
repeat a desirable behaviour in similar settings.
Punishment is the administration of negative consequences or the withdrawal of
positive consequences, which tends to reduce the likelihood of a given behaviour being
repeated in similar settings. Punishment is used to weaken or eliminate undesirable
behaviour, but problems can occur. So, one must be especially careful to follow

appropriate reinforcement guidelines (including the laws of contingent and immediate

reinforcement) when using it. Punishment is likely to be more effective if combined
with positive reinforcement.
Extinction is the withdrawal of the reinforcing consequences for a given behaviour. It
is often used to withhold reinforcement for a behaviour that has previously been
reinforced. This is done to weaken or eliminate the undesirable behaviour. It is an
especially powerful strategy when combined with positive reinforcement.
Social learning theory and behavioural self-management
Social learning theory advocates learning through the reciprocal interactions among
people, behaviour and environment. Therefore, it combines operant and cognitive
learning approaches. Behavioural self-management builds on social learning theory to
emphasise both behavioural and cognitive foci with a special emphasis on enhancing a
workers self-efficacy and feeling of self-control. Self-management is useful in treating
workers both as individuals and as part of self-managed teams.
Managing pay as an extrinsic reward
Managing pay as an extrinsic reward is particularly important because pay has multiple
meanings some positive and some negative. As a major and highly visible extrinsic
reward, pay plays a role in reinforcement and in the motivation theories discussed. Its
reward implications are especially important in terms of merit pay. Other pay practices
that are important and offer creative reward opportunities are skill-based pay, gainsharing plans, lump-sum pay increases and flexible benefit plans.
Learning organisations and teaching organisations
A learning organisation is one in which members recognise the importance of
communicating new knowledge for the benefit of the organisation. Such an
environment can be encouraged if trust, commitment and a perception of organisational
support exist. A teaching organisation is highly similar to a learning organisation; the
difference lies in the focus on continuity in the passing on of necessary knowledge
and know-how from leaders to other members of the organisation. This ensures a
teaching organisation is always agile and able to maintain its success.
Summary 5
Intrinsic motivation and intrinsic rewards
Intrinsic motivation is the desire to work hard solely for the pleasant experience of task
accomplishment. It builds upon intrinsic work rewards, or those rewards that an
individual receives directly as a result of task performance. They are self-motivating
and do not require external reinforcement. Together these can be important components
of job design.
Job design strategies and intrinsic work rewards
In theory, job design involves the planning and specification of job tasks and the work

setting in which they are to be accomplished. The managers responsibility is to fit

individual needs with task attributes and the work setting so both performance and
human resource maintenance are facilitated. Job design strategies include four broad
alternatives. Job simplification standardises work procedures and employs people in
clearly defined and specialised tasks. Job enlargement increases task variety by
combining two or more tasks previously assigned to separate workers. Job rotation
increases task variety by periodically rotating employees among jobs involving
different tasks. Job enrichment builds motivating factors into job content by adding
planning and evaluating duties. The intrinsic work rewards made available by these
strategies range on a continuum from low (job simplification) to high (job enrichment).
The job characteristics model and the diagnostic approach to job enrichment
The job characteristics model and the diagnostic approach to job enrichment recognise
that not everyone wants an enriched job. Rather, they consider those with high and low
growth needs and related concerns. They then look at the effect of five core job
characteristics (ranging from skill variety to feedback from the job itself)on intervening
critical psychological states that influence motivation, performance and satisfaction.
The socio-technical approach to job design is also known as the semi-autonomous work
group. The impact and role of technology is viewed as a factor in designing jobs, and
steps are taken to optimise the relationship between technology and the social system
to which employees belong. The social information-processing model argues that
individual needs, tasks perceptions and reactions are a result of social constructions of
reality. Multiskilling promotes the learning of a wide array of skills needed to perform
multiple tasks within a company. Employees who are multiskilled are better equipped
to shoulder greater responsibilities, and to take over when another employee is absent.
Goal-setting theory and job design, motivation and performance
Goal setting is the process of developing, negotiating and formalising the targets or
objectives that an employee is responsible for accomplishing. It includes predictions
that link it to job design and that serve as the basis for goal-setting theory. These
predictions emphasise challenging and specific goals; knowledge of results; ability and
a feeling of self-efficacy to accomplish the goals; and goal commitment or acceptance.
A managerial technique that applies goal-setting theory is management by
objectives (MBO). A manager and subordinate mutually agree on individual goals that
are consistent with higher-level ones. A process is then implemented to monitor and
assist the subordinate in task accomplishment, and the subordinates performance is
evaluated in terms of accomplished results. If implemented well, many positive aspects
of goal-setting theory can be realised from MBO, but effective MBO systems are
difficult to establish and maintain. Key performance indicators (KPIs) provide a
benchmark against which employees goals can be measured.
Flexible work arrangements and individual satisfaction
There are a number of flexible work arrangements that are increasingly important as a
result of various drivers such as worklife balance, labour shortages and occupational

stress. The compressed work week allows full-time work to be completed in less than
five days. Flexible working hours allow employees a daily choice in timing work and
non-work activities. Job sharing occurs when two or more people divide one full-time
job according to an agreement among themselves and the employer. Flexiyear, annual
hours, job sharing and V-Time are all designed to enable workers to balance the
competing demands on their time of work, leisure and education. These flexible work
arrangements are becoming more important as a way of obtaining the services of an
increasingly diverse workforce requiring a family-friendly workplace in our rapidly
changing society. Information and communication technologies have had a significant
impact on organisational design. The capabilities of this technology and lessening costs
mean that the technology can often be taken with the worker, or to the worker. This
enables workers to work remotely when they are travelling to and from their homes.
Such teleworking allows work to be conducted remotely from the central organisation
using information technology. These methods have several potential
benefits, especially for those with child-care or other care duties, or for those with
physical disabilities. For all employees it can involve reductions in employee
expenditure on travel to work, lunches and work clothes, as well as saving on time. The
potential costs are increased isolation of employees, and poorer communication and
knowledge sharing, as well as costs like insurance and establishment of home offices.
Data confidentiality and security and local government zoning laws can also present
potential problems.
Summary
Groups and types of groups
A group is formally defined as a collection of people who interact with one another
regularly to attain common goals. Groups in organisations fall into two major categories.
Formal groups are official groups work units, task forces, committees and so on
that are created by a formal authority to achieve a specific purpose. Many such groups
can be identified on organisation charts. Informal groups are unofficial. They emerge
spontaneously and are not designated by the organisation to serve any purpose. They
may work for or against organisational needs, but tend to satisfy important individual
needs.
How groups meet individual and organisational needs
One way to view an organisation is as an interlocking network of groups. From this
perspective, the results accomplished by each group should add up in building-block
fashion to fulfil organisational needs for task accomplishment. Any group offers the
potential to satisfy important individual needs for social interaction, security and so on.
Managing for group effectiveness
Group effectiveness occurs when groups are able to achieve high levels of both task
performance and human resource maintenance. Within groups, synergy occurs when a
group is able to accomplish more than its members would accomplish individually.
However, disruptive or negative behaviours such as social loafing (when individual

members do not work as hard as they might otherwise) sometimes occur. Groups can
be viewed as open systems interacting with their environments. Group effectiveness
involves success in transforming a variety of inputs to the group (such as organisational
setting, nature of the task, group membership characteristics and size) into group
outputs (task performance and human resource maintenance) through the group process.
The group processes or group dynamics represent the internal processes of the group.
Group inputs and effectiveness
The foundations of group effectiveness begin with the presence of the right inputs.
Group input factors set the stage for group action. Among the inputs of special
managerial significance is the organisational setting, including available operating
resources, spatial arrangements, technologies, rewards and goal systems,cultures and
structures. Other important inputs are the nature of the task; general membership
characteristics such as member compatibilities and homogeneity or
heterogeneity; status; and group size. Optimum group size depends on the context and
group goals. Highly effective groups use their inputs fully to achieve success.
Group processes and group dynamics
Group dynamics are the forces operating within groups that affect task performance and
human resource maintenance. They are the internal processes through which members
work together to accomplish the transformation of group inputs into group outputs. The
terms group dynamics and group processes are often used interchangeably. The
behaviours within groups may be required or they may be emergent, additional
behaviours. All groups pass through various stages in their life cycles. Five different
stages of group development pose somewhat distinct management problems. Groups in
the forming stage have problems managing individual entry. The storming stage
introduces problems of managing expectations and status. Groups in the initial
integration stage have problems managing member relations and task efforts. Groups
in the total integration stage encounter problems managing continual improvement and
self-renewal. Groups in the adjourning stage have problems managing task completion
and the process of disbanding. Group norms or standards of behaviour will impact upon
the behaviour of all group members. Group roles relating to particular positions in the
group describe the expected behaviours for individuals in those roles. Emotions and
patterns of communication and decision making are also elements of group dynamics.
Groups task and maintenance outputs
Groups have two broad sets of needs that must be met if they are to operate successfully.
First, group members contribute a variety of task activities, such as initiating and
summarising, that make direct contributions to the groups task performance.
Second, group members must contribute to the fulfilment of maintenance needs. These
include other activities, such as encouraging and gatekeeping, that specifically help to
maintain the social fabric of the group over time. Both task activities and maintenance
activities must be accomplished in any group. The principle of distributed leadership
points out these activities can and should be provided, as needed, by all group

members, not just by those formally designated as leaders. Groups are capable of
providing many advantages to organisations but can also result in disadvantages.
Intergroup dynamics
Intergroup dynamics are the forces that operate between two or more groups. Although
groups are supposed to cooperate in organisations, things do not always work this way.
Groups can become involved in dysfunctional conflicts and competition.
Sometimes, the origins of these conflicts lie in work flow interdependencies; at other
times, the origins can be traced to differing group characteristics. Variables including
status, time and goal orientations, reward systems and resource availabilities can all
make a difference in the way groups work together. Managers must be aware of the
potential for problems in intergroup relations and know how to deal with them, even as
they recognise some competition can be good. The disadvantages of intergroup
competition can be reduced through management strategies to direct, train and reinforce
groups to pursue cooperative actions instead of purely competitive actions.