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Chapter 1 Orgnizational Behaviour

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Chapter 1

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

The Meaning of Organization

Before defining Organizational Behaviour, an attempt is made to define what the word
„organization‟ means. The term „organization‟ is a noun that is indeed ambiguous as it can
be understood in more than one way. The Collins Birmingham University English Language
Dictionary (1987, p. 1015) presents five meanings to „organization‟:

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

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

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):

 To increase net assets of owners.

 To enhance employee development and satisfaction.
 To maximize customer satisfaction.
 To achieve cooperate growth.
 To increase market share.
 To fulfil social responsibility.
 To achieve financial stability.
 To increase quality of the product.

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

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.

Definitions of Organization Behaviour

Various specialised academics in OB have presented various definitions about what OB
means. Some of them are presented below.

1. “OB is the systematic study of behaviors and attitudes in organizations.”-

Dunham (1984, p.5)

2. “Organizational behavior is the study of the human aspects of organizations,

including individual behavior, group behaviour, and their interaction with
organizational structure, culture, and processes; with the goal of improving
organizational effectiveness.”- Umstot (1984, p. 5)

3. “Organisational behaviour is concerned with the study of the behaviour of

people within an organisational setting.”- Mullins (1989, p. 2)

4. “OB involves with the understanding, prediction and control of human

behaviour and the factors which influence the performance of people as
members of an organization.” Luthans (1985 as in Mullins, 1989, p.2)

5. “Organizational behavior is the study of individual behavior and group

dynamics in organizational settings.” Nelson and Quick (1997, p. 6)

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)

8. “Organizational behavior is the study and careful application of knowledge

about how people-as individuals and as groups-act within organizations.”
Newstrom (2007, p. 3)

9. “Organizational behavior is the field that seeks increased knowledge of all

aspects of behavior in organizational settings through the use of the scientific
method.” Greenberg and Baron (2007, p. 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)

11. “OB can be defined as the understanding, prediction, and management of

human behaviour in organizations.” Luthans (2008, p. 19)

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)

Viewing from the above definitions, OB is:

a) a systematic study of human attitudes and human behaviour in organizations.

b) the study of human aspects of an organization for the purpose of improving
organizational effectiveness.
c) involves with understanding, prediction, and management of human behaviour in
d) concerned with factors which affect human performance in an organization.
e) the study of group dynamics in organizational settings.
f) the study and careful application of knowledge about how employees act individually
and collectively within organizations.
g) the field that investigates employees, groups of employees and organization itself
through the use of the scientific method.
h) the study of how employees think, feel, and act in an organization and similarly, how
employees are affected by the organizational activities.

Thus, Organizational Behaviour is defined as the systematic study of individuals,

groups and organizational processes in an organization in order to improve
organizational effectiveness.

Systematic means methodological or organized. Also it involves the scientific method

which is critical and analytical in nature (a rigorous and probing process to identify problems
and the methods to arrive at their solutions) and logical (conclusions rationally follow from
available evidence) and empirical (grounded in reality) too. Study is the activity of learning.
It involves careful investigation of various relevant phenomena.

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

Individuals in an organization have to work as members of one, two or more groups. A

typical manager is indeed a member of many groups some of which are formal (official) and
others are informal (non-official). There are forces such as norms and roles operating within
a group (group dynamics). The study of OB is primarily concerned with individual behaviour
and group dynamics in organizational settings. In other words, the psychosocial,
interpersonal and behavioural dynamics within an organization are the main concern of OB.

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).

Organizational effectiveness is the extent to which organizational goals have been

accomplished. It involves optimizing outcomes such as productivity, employee presence,
employee retention, financial performance, survival and stakeholder satisfaction including
owners, employees, suppliers and customers.

Characteristics of the Field of OB

Literature on OB reveals several characteristics of OB. Major characteristics are presented

1. Application of the Scientific Method to Managerial Problems

There can be many problems relating to managing organizations. Some of the
problems (which are indeed a partial sample of questions considered in OB field) are:

i. How to enhance individual job performance?

ii. How to retain high performing employees?
iii. Why are some employees high performers and others are not?
iv. Why is it not possible for a manager to gain acceptance of his or
her subordinates?
v. How can a leader enhance his or her team‟s effectiveness?
vi. What should be taken to minimise employee stress?
vii. Why are some conflicts not dysfunctional?
viii. What can we do to minimise dysfunctional conflicts?

ix. Can managers be taught to lead?
x. What is the impact of organizational culture on its employees and

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)
“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.”

Thus, OB is a specialized field that studies scientifically human behaviour in

organiations which provides some practical solutions or suggestions for improved
people management.

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.

Exhibit 1-1: The Multidisciplinary Roots of The Field of OB

Key Field Aspect of OB Level of Analysis
Psychology (discipline of Personality Individual
scientific study of human mind Values Individual
and human behaviour) Perception Individual
Attitudes Individual
Motivation Individual
Communication Group
Sociology (discipline of Group Dynamics Group
systematic study of society) Roles Group
Norms Group
Status Group
Group Cohesiveness Group
Socialization Group
Authority Group

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

Management (discipline of Authority delegation Organization

systematic study of overseeing Coordination Organization
functions and supervising Span of Control Organization
personnel in organizations)

Medicine (applied science of Stress Individual

healing of diseases for
enhancement and maintenance of
an individual health)

3. Improvement of Organizational Effectiveness and the Quality of Work Life

OB attempts to understand, explain and control human behaviour in organizational
setting for the purpose of improving organizational effectiveness and the quality of
life at work. Organizational effectiveness and the quality of work life are the
outcomes of the OB field. Quality of work life means concern for individual well-
being at work.

4. Exciting and Complex Nature

OB is a multidisciplinary subject and it is indeed a behavioural science. OB seeks
knowledge of human attitudes and human behaviour in organizational settings
through the use of the scientific method. Myriad variables affect human behaviour
(the way personnel in an organization act in relation to the situation they are in or the
people they are with). Hence interdisciplinary influences and myriad factors make a
manager‟s ability to understand, explain and control humans and groups in the
organization complicate. Also these provide unique and important opportunities to
enhance manager‟s personal effectiveness and organizational effectiveness. Thus, OB
is exciting though it is complex.

5. Not a Defined Business Function

Organizations have managers designated as Human Resource Manager, Finance
Manager, Marketing Manager, and Operations Manager. But organizations have not a
job called “Organizational Behaviour Manager”. The reason for this is that OB is not
a defined business function or area of responsibility in the same way as finance or
marketing (Moorhead and Griffin, 2009).

6. Three Main Assumptions

There are three fundamental assumptions of the field of OB. The field of OB
assumes (1) that organizations can be made more productive while also improving
the quality of people‟s work life, (2) that there is no one best approach to studying
behaviour in organizations, and (3) that organizations are dynamic and ever changing
(Greenberg and Baron, 2007).

7. Three Levels of Analysis: Individuals, Groups and Orgnizations

There are three main levels on which OB focuses. Individuals, groups and
organizations are the levels of analysis in OB. If an OB specialist focuses on
exclusively individuals acting alone, it is not possible to understand behaviour in
organizations thoroughly. A full understanding of OB is impossible without a
thorough examination of the factors that affect behaviour at each level (George and
Jones, 2005). See Figure 1-1. These levels include various processes which need to be

Figure 1-1: Three Levels of Analysis in OB

Organizational Level (Organizational Processes

such as structure)

Group Level (Group processes

such as leadership)

Individual Level
processes such as

The Importance of OB
Let me ask the following questions:

1. Are most people born in organizations?

2. Are most people educated in organizations?
3. Do almost all people acquire goods and services from organizations?
4. Do most people spend a major part of their life time working in organizations?
5. Does our government affect every citizen in the country?
6. Is a person a member of several organizations?
7. Do some people build illustrious careers in orgnizations?
8. Do some people become sick or stressful because of organizations?
9. Do most people die as members of organizations?
10. Are there people who want to work for organizations?

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

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

future to become a successful manager or a successful professional in the field of your
interest or specialization?

Figure 1-2: The Importance of OB

People to understand, analyze,

and describe behaviour in
OB provides a set of
theories, guidelines
and tools that allow:
Managers to change or improve
work behaviours so that
individuals, groups and the whole
organization can achieve their

Source: Adapted from George and Jones (2005)

Figure 1-3: Goals of OB and Their Roles

Describe how people

To communicate about human behaviour at work by
behave under a variety
using a common language
of condition

Understand why people

behave as they do To ascertain reasons for human actions at work

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

Source: Developed by the Author from material written by Newstrom (2007)

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:

1. A person who can understand individual differences of people in terms of

personality, abilities and values. Consequently this understanding is useful to build
and develop virtues such as patience, tolerance, respect, caring while minimizing or
eradicating vices such as anger, retaliation, reprobation, and hostility which will lead
to development of good relationships with people,
2. A person who possesses right attitudes such as job satisfaction, organizational
commitment, job involvement and citizenship behaviour and who can contribute
positively to develop such right attitudes within subordinates,
3. A person who has right perceptual skills in order to see the reality and make
appropriate decisions,
4. A person who has the ability to motivate subordinates to work hard, to sustain a
pace of hard work, and to direct their behaviour toward important goals,
5. A person who is good at interpersonal communication,
6. A person who can minimize the occurrence of dysfunctional conflicts at work and
has ability to settle conflicts,
7. A person who has right negotiation skills for mutual gain,
8. A person who can be a right leader,
9. A person who can understand group dynamics, work as a good team member, and
manage formal and informal teams effectively,
10. A person who can improve power base and manage political behaviour,
11. A person who can develop a right organizational structure and work with it,
12. A person who can understand organization culture and can develop a high
performance and ethical culture, and
13. A person who can engage in change management successfully.

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

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

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

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.

From traditional perspective and modern perspective as well Organisational Management

consists of several functional fields including Production Management (new label is
Operations Management), Marketing Management, Financial Management, and Personnel
Management (new popular label is Human Resource Management). Hence HRM is one of
the most important functional fields of Organisational Management. OB is not a functional
field of Organizational Management.

Alternative terms such as Personnel Management, People Management, Staff Management,

Man Power Management, and Human Talent Management are being used for HRM. There
are no popular alternative terms to OB. If given, Organizational Psychology may be used.

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.

OB does not have particular OB functions to be carried out in sequence and/or

continuously. Traditionally there are 18 HRM functions including job design, job analysis,
human resource planning, recruitment, selection, hiring, induction, performance evaluation,
training and development, career management, pay management, incentives management,
welfare management, management of employee movements, discipline management, health
and safety management, grievance management and labour relations. These functions are to
be performed by HR Manager and other managers in the organization. In case of an
organization which does not have a separate department called Department of Human
Resources Chief Executive Officer or owner manager performs the HRM functions with the
support of other managers. Responsibility of HRM functions rests with every manager in the

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.

Figure 1-4: Contribution of OB to 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.

Figure 1-5: Management Functions, HRM and OB


Staffing HRM
Performance evaluation, training and development etc.

Directing OB
Individual differences, attitudes, perceptions etc.


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.

The Human Resources Approach

This is an OB perspective which supports employee growth and development. It is
developmental and is concerned with the growth and development of people toward higher
levels of competence, creativity, and fulfillment, because people are the central resource in
any organization and any society (Newstrom and Davis, 1997). This approach is different
from another approach which can be called Traditional Management Approach. Traditional
Management Approach is a perspective which controls employees closely toward job
performance. Exhibit 1-2 presents a comparison between these two approaches.

Exhibit 1-2: A Comparison between Human Resources Approach and Traditional

Management Approach
Base Human Resources Traditonal Management
Approach Approach
Definition a perspective that supports a perspective that controls
employee growth and employees to ensure job
development performance
Alternative Term Supportive Approach Autocratic Approach
Managers become supportive and become directive and
developers; managerial controlling; managerial
orientation is support orientation is authority

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
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 Contingency Approach

This is an OB perspective which suggests that solutions to problems depend on elements of
the situation. It means that different situations require different behavioural practices for
effectiveness (Newstrom and Davis, 1997). An alternative term for this approach is
Situational Approach. This approach is different from another approach which can be
called Universal Approach. Universal Approach is a perspective which suggests that there
is „one best way‟ of managing. It believes in that there is „one best way‟ that can be used for
solving problems or reacting to situations in any organization under any conditions. For
example, take the problem-how to lead subordinates? According to the universal approach,
employee-oriented leadership is the solution. The belief is that employee-oriented leadership
will consistently be better than task-oriented leadership under any conditions. Another
example is that a manager who encounters the problem of motivating his or her
subordinates to work harder should use „increasing pay‟ which is the best way. However, the
more accepted view now is that there are few across-the-board concepts that apply in all
instances; situations are much more complex than first perceived; and the different variables
may require different behavioural solutions (Newstrom and Davis, 1997).

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.

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).

Figure 1-6: Universal Versus Contingency Approach

Universal Approach

Organizational problems the one best way of

or situations can be dealt responding.
with by using…

Contingency Approach

Organizational problems elements of the situation, contingent or situational

or situations must be which then suggest…. ways of responding.
analysed in terms of

Source: Adapted from Moorhead and Griffin (2009)

The Systems Approach

This is an OB perspective which treats an organization as a system. A system is an
interrelated set of elements that function as a whole (Moorhead and Griffin, 2009). The
systems approach provides a useful general framework for viewing an organization as a
system. When viewed an organization as a system, it implies that many variables exist within
the organization and that each variable affects all the other variables in a relationship which
is complex. There are many subsystems in the organization and a change of one subsytem
has an impact (direct or indirect) on other subsystems in the organization. Alternatively this
approach is called Systems Theory. See Figure 1-7.

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

dividends paid to stockholders, taxes paid to government, and investments made. New
information about the performance of the organization is released into the environment.

Figure 1-7: The Systems Approach


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


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
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

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.

Figure 1-8: Subsystems of An Organization



Individual Department


Formal Group

The Interactionist Approach

This is an OB perspective which suggests that individual behaviour is a function of the
continuous interaction between individual and situation. This is also called interactionalism.
First presented in terms of interactional psychology, this view assumes that individual
behaviour results from a continuous and multidirectional interaction between characteristics
of the person and characteristics of the situation; more specifically, interactionalism attempts
to explain how people select, interpret, and change various situations (Moorhead and
Griffin, 2009). See Figure 1-9.

Under this approach, to understand organizational phenomena, it is not sufficient to

consider only direct or simple cause-effect relationship between two variables. When an
individual enters an organization as a new employee, his or her attitudes and behaviours can
shape job situations and the organization. Similarly, the organization itself can shape the
attitudes and behaviours of an individual. An example: an individual who enters, as a
divisional manager, an organization where subordinates are being closely supervised and
decisions are being made by superiors only can have an attitude that subordinates have great
potential, they seek responsibilities, and they can be trusted. This attitude leads to the
manager to delegate more authority to subordinates and require subordinates to participate
in decision-making. Consequently delegation of authority and decision-making in the
devision of the organization get shaped (changed). This can go vice versa also. An individual
who enters, as a divisional manager, an organization where subordinates are being loosely
supervised and decisions are being made by subordinates and superiors jointly can have an
attitude that subordinates have no potential, they do not seek responsibilities, and they can
not be trusted. This manager was used to follow boss-centered leadership. However, the
manager has to follow the existing organizational practices-delegating more authority to
subordinates and allowing subordinates to participate in decision-making (because the
organization requires him). Consequently the organization makes the individual (the
manager) changed or shaped. This approach is useful for explaining OB.

Figure 1-9: The Interactionist Approach

Individual’s Characteristics of the

Characteristics Situation


The Results-Oriented Approach

This is an OB perspective which requires to assess OB programmes in terms of their
efficiency and effectiveness. OB programmes need to be formulated and implemented in the
way that will accomplish goals of the organization. OB programmes exist to improve
employee motivation, potential human performance and finally organizational results such as
productivity, profits, retention, job satisfaction and other organizational results. These
organizational results can be termed as organizational effetiveness

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.”
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.

Exhibit 1-3: Equations Showing the Role of OB in Work Systems

1. Knowledge × skill = ability
2. Attitude × situation = motivation
3. Ability × motivation = potential human performance
4. Potential performance × resources × opportunity = organizational results

Source: Newstrom and Davis (1997)

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

Individual-level outcomes are outputs or results which are generated by an employee.

They include the following:

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

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

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

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.

Figure 1-10: Dimensions of Organizational Effectiveness


Individual-Level Group-Level Organization-

Outcomes Outcomes Level Outcomes

Employee Group Organizational

productivity productivity productivity
Job performance Group Overall employee
Timeliness performance attendance
Attendance Norms Employee retention
Retention Cohesiveness Financial performance
Attitudes Survival
Stress Stakeholder satisfaction

Challenges and Opportunities for OB

The world of work is changing. Change is inevitable. The changing world of work presents
many challenges and opportunities for managers. In this section, challenges and
opportunities managers have in applying OB concepts and theories are discussed briefly.

To develop organizational ethics and well-being

Nowadays it is common to observe very shocking and immoral behaviours of managers and
non-managers in public sector organizations as well as private sector organizations. Huge
scandalous actions done specially by top managers are being heard through various modes of
communication. Owing to unethical behaviour of decision-makers, well-being of
organizations, citizens, employees, and the entire nation is being threatened. The condition
of being happy and healthy is being damaged. Hence, there is a serious need of developing
organizational ethics within every member of an organization. Ethics are moral beliefs and
rules that need to be followed by employees to decide the appropriate way to behave. They
help managers establish the goals that organizations must pursue, decide the way of
achieving those goals, and define an organization‟s social responsibility.

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 improve productivity and quality

To meet increasing demand of customers an organization needs to improve its productivity.
Increased customer expectations of high quality and increased competition force the
organization to improve quality. Managers are forced to improve their organizations‟
productivity and the quality of the goods or services they offer while reducing costs at the
same time. Without employees‟ involvement and support it is not possible to achieve success
of any effort of improving productivity and quality. Improvement of productivity and quality
is dependent upon how employees behave at work.

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.

To face advancing technology and information technology

Technology refers to the methods used to create products, including both physical goods
and intangible services, and technological change has become a major driver for other forms
of organization change (Moorhead and Griffin, 2009). Organizations which combine and
transform resources into tangible products (goods) have manufacturing technology while
organizations which combine and transform resources into intangible products (services)
have service technology. Some firms use technology as the basis of competition. These firms
focus their efforts on being the low-cost producer or differentiated producer in terms of
technologically advanced features. Information Technology (IT) is a kind of technology
that is posing a major challenge for today‟s organizations. Advances in IT have a significant
impact on the way employees think and behave and the way organizations operate. IT
consists of the many different kinds of computer and communications hardware and
software, and the skills of their designers, programmers, managers, and technicians (George
and Jones, 2005). Owing to IT, there is information which is more accurate, plentiful and
freely available. This enables managers to exchange know-how in easy way and to make
decisions more efficiently. Computers take over routine works in an increasing way resulting
in that employees have more time to engage in developing new products, finding better ways
of doing work, and becoming more responsive to the needs of the customers.
Computerization, the Internet, and the ability to link computers within organizations and
between organizations have created a different workplace for many employees-a networked
organization (Robbins and Judge, 2013).

To enhance work-life balance

Increasingly employees encounter conflicts between their work life and non-work life. Work-
life conflicts may cause many consequences such as high stress, less concentration on
obligations towards family, high alcoholism, high drug addiction, high absenteeism, and high
rate of divorces. Dual-career couples are increasing. Owing to high competition number of
hours of working for employees tends to increase. A majority of college and university
students say that attaining a balance between personal life and work life is a primary career
goal, and they want „a life‟ as well as a job (Robbins and Judge, 2013). Organizations want to
attract and retain the most appropriate employees and therefore they have to assist
employees to achieve this balance.

To improve soft skills

Managers have to work with people such as subordinates, superiors, peers, customers,
suppliers, and various outside people including government officers and politicians.
Organizations are made of people. Without soft skills (people skills or interpersonal skills-
abilities for directing employees and developing good human relationships with parties under
the domain of interaction) it is hardly possible for managers and professionals to succeed in
managing organizations, others and self.

To make employees green

According to Opatha (2013) and Opatha and Arulrajah (2014) „Green‟ or „Greening‟ has at
least four meanings in the context of managing people at work/Human Resource
Management (HRM).

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.
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.

3. Avoidance or minimization of environmental pollution: to stop contaminating the water, air,

atmosphere, etc. through unpleasant and poisonous substances and wastes. To guard
against outcomes that will ultimately endanger the planet/earth where humans and
non-humans are living.

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.

A Conceptual Framework for the Study of OB

There can be some frameworks for studying the subject of OB. The conceptual framework
for understanding OB adopted for this book is shown in Figure 1-11. According to the
framework, there are three parts of the study of OB, i.e. individual processes, group
processes, and organizational processes. These three parts correspond to the three levels of
analysis. Individual processes include individual differences which are the topic of Chapter 2,
attitudes which are the topic of Chapter 3, perception (Chapter 4), and motivation (Chapter

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.

Figure 1-11: The Conceptual Framework for Study of OB

Individual Processes
 Individual
Differences Individual-Level
 Attitudes Outcomes
 Perception
 Motivation

Group Processes
 Interpersonal
 Conflict at Work
 Negotiation Group-Level Organizational
 Leadership Outcomes Effectiveness
 Groups and
 Power and

 Organizational
Structure Organization-
 Organizational Level Outcomes
 Organizational

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.

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
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.”

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?

Source: Mullins (1992)

Activity 3: A Skill Builder

Assume that you hear or get following comments from certain individuals who may be your
peers, subordinates, classmates or students (if you are a Lecturer):

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
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.”

What are your responses?

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.

1. When an employee is satisfied with life he or she is a happy employee.

2. Happy employees are more productive.
3. Employees need jobs which are exciting and challenging.
4. Employees want to participate in making decisions which significantly affect them.
5. Pay stimulates employees to work harder.
6. To be successful in leading, one has to be more concerned with his or her
7. Conflict at work is disruptive.
8. Use of multiple channels of communication adds clarity and accuracy.
9. Employees get bored soon when performing the same things. Hence they welcome
10. A group makes a better decision than an individual because “two heads are better
than one head.”

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?

Activity 5: A Skill Builder

Is OB right for you?
Read and think about each of the following statements. Then, being as honest as possible,
indicate the degree to which each one describes you. Use the following scale. Write your
answers on the line next to each statement.

1 = Doesn‟t describe me at all

2 = Describes me a little
3 = Describes me moderately well
4 = Describes me very well
5 = Describes me perfectly

______ 1. I do not want to hurt people.

______ 2. I enjoy classes that require me to do cases, critical incidents, and skill builders.
______ 3. I am much more interested in understanding specific issues than the „big picture‟.
______ 4. I like classes that deal with abstract concepts and theories.
______ 5. I generally do very well in qualitative courses like HRM and Management.
______ 6. I am eager to learn human behaviour.
______ 7. I cannot enjoy by dealing with money, machines and other things at the expense
of human well-being.

______ 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.

Scoring and Interpretation

Add the numbers corresponding to your responses. These will range from 10 to 50. Higher
scores reflect greater readiness for OB. Lower scores reflect lower readiness for OB.

Activity 6: A Skill Builder

Read carefully the following paragraph which was taken from Chapter 1 of an OB text
(Colquitt, Lepine, and Wesson, 2009) in respect of the findings of research (about 28
companies over the past 50 years) which are given in a bestselling book titled GOOD TO
GREAT by Jim Collins (New York: HarperCollins, 2001). What can you learn? Write your
learning as principles.

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.

Activity 7: A Critical Incident

Charming Accounting Clerk
Julie is 20 years old and works as an accounting clerk in a large accounting and auditing firm.
She started working in the firm four months ago and still on probation period that is one
year. Really she is a charmer. She worked very well for the first two months and then seemed
to be not concerned with duties as expected.

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

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

1. What problems is the firm facing now? What may be or are the reasons for those
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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