Paper: 13, Organization Behaviour

Module: 1, Organisational Behaviour: Meaning and concept

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Prof. A. K. Saihjpal
Paper Coordinator School of Management,
Maharaja Agrasen University, Baddi, H.P.
Dr. Harpreet Singh Chahal
Department of Business Management
Content Writer Guru Nanak Dev University, Regional Campus,
Gurdaspur
 Items Description of Module
Subject Name Management
Paper Name Organization Behaviour
Module Title Organisational Behaviour: Meaning and concept
Module Id Module no.-1
Pre- Requisites Knowledge of basic concepts of Management and Organisation
Objectives To understand the meaning and concept of organisational behaviour
Keywords Organisational behaviour, Key elements of OB, Approaches of OB

QUADRANT-I

Module 1: Organisational behaviour: Meaning and concept

1. Learning Outcome
2. Introduction
3. Meaning and Definitions of OB
4. Fundamental concepts of OB
5. Scope of OB
6. Key elements of OB
7. Approaches of OB
8. Summary

1. Learning Outcome:
After completing this module the students will be able to:
 Define organisational behaviour.
 Describe the scope of OB.
 List the key elements of OB.
 Discuss about the approaches of OB.
2. Introduction
Today’s business is preoccupied with the human resources. Human beings play a very vital role
in the growth of the organisations individually as well as in the groups. Though history of
management depicts that in the earlier times organisations used to consider non human
resources such as money, machinery, methods and material more important than human
resources but, now this philosophy has been changed. Organisations have started realising the
 importance of human resources. Organisations also understand that it is only human resources
which possess physical strength, administrative skills, decision making skills, executive skills
and also organising abilities. Such qualities must be optimally utilised and harnessed if
organisational objectives are to be achieved. Therefore, OB has evolved as a relevant field of
study. The organizational behaviour focuses on all aspects of human nature and deals with
human emotions i.e. how to motivate employees to increase performance, productivity,
satisfaction, loyalty, and employee engagement. Also, it provides the methods to resolve
conflicts. OB provides a common platform to work with peace and cooperation for the
employees from different backgrounds, education and perception. It also helps to manage the
cultural diversity at work. An organization is an entity where various members work together to
establish and achieve the common goals and objectives. Organizational behaviour has been
widely accepted as the area of study which is related with understanding, predicting and
controlling human behaviour in organizations.
Organizational behaviour is a field of study which helps in understanding human behaviour in
an organisational context and also the interconnection between human behaviour and growth of
the organization. Scope of organizational behaviour is very broad which opens the door to
many other concepts like importance of OB and other fields of study, role and skills of
managers, challenges in organisational behaviour, understanding people at work:
individual, groups and systems as building blocks, organisational behaviour models,
evolution of organisational behaviour, researches in organisational behaviour and
organisational behaviour in international context etc. All above variables will be
discussed in detail, one by one in next modules

OB PLATFORMS

MICRO MACRO

Deals with Deals with

individuals organization
and groups s at large

Source: Author

3. Meaning and Definitions of OB

Organizational behaviour is the study of individuals, groups and organizational systems.
Organisational behaviour examines how human beings behave and interact with each other in
the organisations. OB is considered as an art of applied science which deals with the emotions,
 feelings, believes, perceptions, intellectuality and mentality of people working in an
organisation. As human resource is a crucial factor which effects the growth of any
organisation, it becomes utmost important to understand how the behaviour of people working
in an organisation can help it to grow.
Organisational behaviour studies an individual’s capabilities in all aspects of work. It is the
study of human behaviour in organisations; the interface between human behaviour and the
organisations and the organisation itself. Understanding of the subject is absolutely imperfect
without studying these three aspects carefully. OB establishes the linkages between human
behaviour in the organisational settings, individual-organisational interface and the
environment surrounding the business.

Nature of OB can be well understood with the following definitions:

 “Organisation behaviour is the study which is used to evaluate overall recourses (Physical
resources and human recourse) and helps to enhance the productivity of the organisation.”
 “Organization behaviour is a systematic study to examine the knowledge of individual at work
and their act within the organisation.”
 V.G. Kondalkar defined ‘it is the study to investigate the impact of behaviour on an individual,
group of individuals and organisational structure within the organisation. The focus is given to
enhance and apply such knowledge to gain organisational effectiveness.

Further he has divided the definition in three key elements:

a. Organizational behaviour is an investigative study of an individual or groups of

individuals.
b. The impact of organisational behaviour studies on human behaviour.
c. The proper utilization of knowledge to achieve organisational goal effectively.

 LM Prasad also defined organisational behaviour “it is the study of human knowledge related
to elements of an organisation such as internal and external environment or social system,
superior in technology and their flexibility to fit in the organisation”
 According to Stephen P Robins “it is a systematic study within organisation which is use to
exhibit people attitude and their actions towards the work.”
 Robbins further elaborated his definition by saying “it studies the impact on behaviour of an
individual or groups of individuals within the organisation for the purpose to use the
knowledge for the improvement of an organisational effectiveness.”
 According to Clark “Organisational behaviour study means how an individual or a group of
individual act in the organisation”
 Davis has defined organisational behaviour as the overall study of human behaviour, structure
of organisation and their key elements i.e. technology, environment and shape.
 Luthans defines “OB is the combination of total interaction and their interdependency between
both of them”

After concluding all the definitions, it can be said that that OB covers all three areas of human
behaviour in the organisation: individuals, group of individuals and organisation as a whole
(fig. 1)

ORGANIZATION

GROUP OF
INDIVIDUAL

INDIVIDUAL

Source: Author
4. Fundamental Concepts of OB
Organisational behaviour is based on fundamental concepts which involve the nature of people and
nature of the organisations. The basic assumptions underlying the concept of OB are given as
below:
 Individual differences- Every individual is different from another individual in terms of
his/her intelligence, personality, physique etc. The concept of individual differences is evolved
from the field of psychology. It is assumed that every individual differs from another individual
from the very first day of his/her birth. But, unique experiences which the individual face
during different stages of life make him/her even more different. The concept of individual
differences has motivated management to treat employees differently and find broad ways of
dealing with employees.
 Good human relations- Organizational behaviour has attempts to maintain interpersonal
relationships between employers and employees. It provides directions regarding how to
maintain good relation with employees and how to solve their problem.
 Effective Organizational climate- OB stresses upon maintaining a good climate by
developing sound interpersonal relations, hygienic working conditions, fair and adequate
 compensation, better and safe operation equipment, effective leadership, employee
participation etc.
 Motivation of Human Resources- Field of OB has motivated managers to motivate the
employees by giving them various kinds of rewards and appreciate them on the basis of quality
of work.
 Perception- Perceptions of people differ when they see an object. In the similar way, in
organizations, employees see and perceive work differently. This is primarily because of their
different personalities, needs, demographics factors, past experiences and social surroundings.
 Desire for involvement- Every employee is actively seeking opportunities so as to involve
him/her in decision-making problems and to share what they know and to learn from the new
experiences. Therefore, organizations should provide employees a chance to express their
opinions, ideas and suggestions for decision-making problems. A meaningful involvement can
bring mutual benefit to both parties.
 A whole person- When an organisation recruits a new employee, only skills and qualities of
that employee is not hired but, his/her social background, like and dislikes, needs, motives,
pride, motivations and prejudices are also hired. Organisations accept the employees along with
their personal lives and attempt to create home away from home.
 Caused behaviour- Human beings are rational beings and therefore the behaviour expressed
by the employees in the organisation is also caused and not random. Behaviour of employees is
always directed towards some goals or ends which suits their interest. The challenge for OB
managers is to understand the cause behind a particular behaviour of an employee and the ways
to modify the behaviour.
 Human dignity- The concept of human dignity is driven by ethical philosophy rather than the
scientific principles of management. The concept guides that every individual should be treated
with dignity and respect. The concepts also suggests that human beings are of higher order than
other factors of production and therefore any comparison between human beings and non
human factors of production is not fair. This philosophy rejects the old philosophy of
considering human resources as an economic tool.
 Organisations are social systems- Organisations are social systems and therefore their
activities, policies and procedures are governed by the social as well as psychological laws.
Like individuals, organisations also have social norms and status. Growth and performance of
the organisations are influenced by the behaviour of groups and individual drives of people
working in it. In every organisation, two types of social systems run in parallel: formal system
and informal social system.
 Mutuality of interest- This is represented by the fact that organisations need people and
people needs organisations. Both benefit each other in or another way. People find
organisations as a platform where they can find the channels to grow and reach their life and
career goals. In the same way, organisations need people to achieve the organisational goals.

5. Scope of organizational behaviour

Organizational behaviour encompasses the study of human behaviour. The scope of OB
includes the study of individual behaviour, interpersonal behaviour and behaviour of the
organizations themselves.

Scope of Organizational Behavior

INTRA-PERSONAL INTER-PERSONAL
BEHAVIOUR BEHAVIOUR
(PERSONALITY, (GROUP DYNAMICS,
ATTITUDE, INTER-GROUP
PERCEPTION, CONFLICT,
LEARNING, OPINION, LEADERSHIP,
MOTIVATION AND JOB COMMUNICATIO,
SATISFACTION) TRANSATIONAL
ANALYSIS)
.

ORGANISATIONS

(FORMATION, STRUCTURES,
EFFECTIVENESS AND FORMAL AND
INFORMAL ORGANISATIONS)

Source: Author
6. Key Elements of OB

Organisation is a group of people who work together to achieve a common goal by using their
skills (managerial, task management and interpersonal skills) and resources (physical resource
as well as human resource). The term organisation does not mean only by structure, design and
shape, it also includes the group of individuals which works independently to achieve
organizational objectives effectively. To study deeply the concept of organisation, it is
necessary to understand the following key elements.

1) People: Individuals working in an organisation form the social system which is internal to
the organisation. Social system of the organisation is comprised of individuals and groups
(large groups as well as small groups). Individuals are the building blocks of the
organisations and play a vital role in achieving the goals and objectives of the
organisation. Therefore, it is very important to understand, predict and control the
behaviour of individuals working in the organisations.
2) Structure and design of organisation: Structure of an organisation defines workflow and
the relationship between people in the organisation, interconnection of authority and
responsibility and division of work in an organisation. Some important concepts of
structure are given as below:
a) Hierarchy of authority: It describes the distribution of authority among the different
organisational positions. It also states the rights and responsibilities of a position
holder.
b) Division of Labour: Division of labour describes the breakup of work into small tasks
and assigning the tasks to the various members of the organisation according to their
abilities.
c) Span of control: It refers to the optimum number of workers to be managed by a
supervisor.
d) Specialization: It refers to the idea of assigning the task to the concerned staff on the
basis of the qualifications.
e) Standardization: It refers to following a set of rules or methods for routine activities.

Organisations can be structured and designed as formalised and rigid systems or relatively
flexible or loose systems. Structure of an organisation can be of two types:

 Formal structure
 Informal structure

Formal organisation: - Formal organisations means formally organised enterprise where

structure of role, authority, responsibility and workflow is properly defined. Formal
organisations are hierarchical in nature. Top managers can organise the organisation well
by inducing the congenial environment which calls for individual performance, provides
the opportunity for career growth and contribute most effectively to the group goals.

Informal organisation: -Those organisations have neither any framed or specific

structure nor hierarchical levels like formal organisations. Informal organisation
represents the network of interpersonal relationships that emerge when people associate
 with each other. Therefore, informal organisations depict the relationships which do not
appear on organisational charts.

It does not matter what kind of organisation an individual working for, if there is free flow of
information, effective communication system (verbal as well as written), authorities are well
defined and given to responsible persons who can direct it in proper manner, objectives can
be achieved in an effective and convenient way. Hence, it is necessary that people on higher
levels should be open minded while dealing with their subordinates.

3) Technology: - Organisations use technology to convert their inputs into outputs. These
technologies include knowledge of technical knowhow, machinery, processes and
everything that is used in the transformation process. Managing technology to gain
competitive advantages with global market and to maintain position in the local market is
the biggest challenge for any organisation. So it is the duty of managers to enhance its
equipment to innovative technology and should make up-to-date machines by upgrading
and by procuring those time to time. There are drastic changes happening in the
technology day by day, so organisation has to be flexible enough to adopt quickly and
mould accordingly to survive in the market.
According to Thomson, technology can be classified into three main categories:
a) Long linked technology: Such technology is used to divide tasks into a number of
chronological steps. In such processes output of one step becomes input for the next
step. Such type of technology requires high level of specialization and
standardization.
b) Mediating technology: Mediating technologies bring together different parties
together in a direct or indirect way. e.g Banks use to technology to install their ATM
machines. For this they may sign a contract with ATM manufacturing vendors.
c) Intensive technology: Such technology is used when a group of specialised people is
brought together to solve a complex problem.

4) Work environment: - Every organisation operates with in an external environment

which has a strong bearing on the decision making and growth of the organisations.
External environment is a blend of number of variables which mutually influence each
other and the business as a whole. Work environment can be further divided into two
categories viz. internal environment and external environment. Both the environments
play vital role in the business processes.

a) Internal environment: -Internal environment is the combination of the factors which

are internal to the business and are under the control of the management. Such factors
primarily depict strengths and weaknesses of a business organization. Internal
environment is comprised of organisational culture, vision, mission, objectives, top
management, internal connections, ambience and technology, human resources and
leadership style.
 b) External environment: - Outer or external environment is comprised of all other
factors which are external to the business and which are beyond the control of
management. Such factors significantly influence the inner environment and decision
making of the business. External environment is made up of competitors, customers,
suppliers, buyer and involvement of governments, legal system, prevailing technology
and influence of political parties. All above variables can affect the performance of
internal culture of the organisation.

7. Approaches
Four approaches of OB viz. human resources approach, productivity approach, contingency
approach and system approach will be discussed in this section. Approaches of organizational
behaviour are the result of the researches done by the experts in this field. These experts
studied and attempted to quantify research done about actions and reactions of employees,
with regard to their work environments. These approaches are discussed in detail in the
following paragraphs, it may be stated that all these approaches are interwoven.
a) Human Resources Approach: This approach is also called supportive approach. This

approach recognises human resources as crucial factor in the organisations and suggests the
development of human resources towards the higher levels of their competency, creativity
and fulfilment. It is believed that developed people will contribute in the success of the
organisation. According to this approach the role of managers is not controlling the
employees but actively supporting them for their growth and performance. Human resources
approach discards the traditional approach of management which believes in close
monitoring of the employees to ensure task accomplishment.
b) Contingency Approach: Contingency approach of OB advocates that there are no
uniform set of rules and methods for managing the behaviour in the organisations. This
means that there is no “best way” of managing people. But, the best way can be identified on
the basis of prevailing situations and circumstances. Each situation has its own implications
and should be handled accordingly. Therefore, the methods or behaviours which prove
effective in one type of situation may fail in the other type of situation. In light of this, all the
factors of the situation should be carefully analysed and then management style should be
adopted. The main advantage of this approach is that it encourages a deep analysis of each
situation before taking any decision and discourages the habitual practices. This approach is
highly flexible and provides broad latitude to accept the differences in the situation.
c) Productivity Approach: Productivity describes the output to input ratio of employee’s
performance. This ratio is treated as a measure of an organization’s effectiveness. It also tells
 about the manager’s efficiency utilising organizational resources optimally. The higher the
numerical value of this ratio, the greater is the efficiency. Productivity is generally measured
in terms of economic inputs and outputs, but human and social inputs and outputs also are
important. For example, when employee development programmes lead to the making of
better citizens in a community, a valuable social output occurs. Organizational behaviour
decisions usually involve human, social, and / or economic issues, and so productivity usually
a significant part of these decisions is recognized and discusses extensively in the literature
on OB.
d) Systems Approach: Systems approach to OB considers the organization as a whole. This
means that organisation is a united, purposeful system composed of various interrelated sub-
systems. This approach provides a way of looking at the organization, a person, a group and
the social system as a whole. Systems approach tells us that the working of one part of the
system affects the working of other parts of the system in varying degrees. Therefore, every
person working in the organisation should be viewed as part of the system. The clerk at a
service counter, the machinist, and the manager all work with the people and thereby
influence the quality of life in an organization and its inputs. In this case managers have to
take the larger responsibility, because they are the ones who make majority of decisions
affecting human concerns. The role of managers, then, is to use organizational behaviour to
help build an organization culture in which talents are utilized and further developed, people
are motivated, teams become productive, organizations achieve their goals and society reaps
the reward.
8. Summary
Organizational behaviour is a field of study which helps in understanding human behaviour in
an organisational context and also the interconnection between human behaviour and growth of
the organization. Organizational behaviour is the study of individuals, groups and
organizational systems. Organisational behaviour examines how human beings behave and
interact with each other in the organisations. OB is considered as an art of applied science
which deals with the emotions, feelings, believes, perceptions, intellectuality and mentality of
people working in an organisation. Key elements of OB are people, structure, technology and
environment. In this module four approaches of OB viz. human resources approach,
productivity approach, contingency approach and system approach have been discussed.