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DEPARTMENT OF ……………………………

SEMESTER ……………3rd/ 4th …….…………

SUBJECT NAME …Organizational Behaviour

SUBJECT CODE ………………………………


MR. S.Kameswar Rao

Lecturer, Dept. of Management.

MODULE – I (Pages 1 to 26)

1. OB meaning and definition, why do organizations exists, Importance, nature & scope of OB.
2. Foundations of OB, Disciplines contributing to OB, OB model, Approaches to the study of OB.
3. Challenges to OB specialist, Learning and how learning occurs.
4. Principles of learning

MODULE – 2 (Pages 27 to 57)

1. Personality, Theories of personality, Determinants of personality, How personality develops.
2. Personality traits, The ‘Big Five’ personality traits, Personality and OB.
3. Perception, Perceptual process, Perception and OB.
4. Motivation, Importance and theories of motivation.

MODULE – 3 (Pages 58 to 104)

1. Communication, Its importance and types, Process of communication, Communication
2. Barriers of communication, Groups in organizations, Types of groups, why people join groups.
3. Group cohesiveness, Group decision making, Techniques in decision making, Effective team
4. Leadership,Styles and theories of leadership, Conflict and its management, Manager’s role,

MODULE – 4 ( Pages 105 to 124)

1. Organisational culture, Introduction to HRM.
2. Recruitment, Selection, Orientation, Placement, Training and development.
3. Performance appraisal, Organisational change, Types of changes, Resistance to change.
4. International OB, Cultural differences & similarities, Individual and group behaviour in the

OB-Meaning and definition:-

Organizations are groups of people who work together to achieve a set of goals.
Behaviour is the way of treating others.
Organizational behaviour is the study and application of knowledge about how people as
individuals and as groups behave or act in organizations.
Luthans defined OB as, “it is concerned with the understanding, prediction and control of human
behaviour in organizations”.
Robbins, “OB 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 towards
improving an organization’s effectiveness”.
So OB is the study of human behaviour in organizational settings.

The following three features need to be emphasized in any definition-

(a) OB is the study of human behaviour.
(b) The study is about behaviour in organizations and
(c) Knowledge about human behaviour would be useful in improving an organization’s
OB obviously comprises individual behaviour, group behaviour and of the organization itself.

Organizational effectiveness:- Organizations are said to be effective when they produce quality
goods and services at reasonable cost without compromising on profit making. The other
requirement is to satisfy their diverse stakeholders
OB helps firms achieve effectiveness in their activities.
Stakeholders are all the people and groups affected by or that can affect an organizations
decisions, policies and operations.
Primary stakeholders :- Customers, suppliers, employees and investors.
Secondary stakeholders :- Local communities, government departments, foreign governments,
social activist groups, media and the general public.
Why do organizations exist: - An organization allows people to jointly increase specializations and
division of labour, use large scale technology, mange the external environment, economize on
transaction costs and exert power and control.

> (a) increased specialization and division of labour

> (b) Use of large scale technology
Organisation allows > © Manage the external environment > (which increases
People jointly to: > (d)Economise on transaction costs the value that an
> (e)Exert power and control organization can
(a) To increase specialization and the division of labour:- People who work in organizations
may become more productive and efficient at what they do than people who work alone. For many
kinds of productive work, organization allows the development of specialization and division of
Firms such as WIPRO have provided enabling environments for individuals to enhance their
skills for organization and individual growth.
(b) To use large scale technology:- Organizations are able to take advantage of the economies of
scale and scope that result from the use of modern automated computerized technology.
Economies of scale-are the cost savings that results when goods and services are produced in large
Economies of scope are the cost savings that result when an organization is able to use
under utilized resources more effectively.
© To manage the external environment:- An organization’s environment includes not only
economic, social and political factors but also the resources from which it obtains inputs and the
market place into which it releases its outputs. Managing complex environments is a task beyond
the abilities of most individuals, but and organization has the resources to develop specialists to
anticipate or attempt to influence the many demands from the environment.
(d) To economize on transaction cost:- When people cooperate to produce goods and services,
they have to jointly decide who will do which tasks, who will get paid what amounts and how to
decide if each worker is doing his or her share of the work. The costs associated with negotiating,
monitoring and governing exchanges between people are called transaction costs. Organizations
reduce the transaction costs associated with the exchanges.
(e) To exert power and control:- Organizations can exert great pressure on individuals to
increase production efficiency. When individuals work for an organization, however, they must
pay attention to the organization’s needs as well as their own. Organizations can discipline or fire
workers who fail to confirm and can reward good performance with promotion and increased
Employment, promotion and increased rewards are important and often scarce,
organizations can use them to exert power over individuals.
Example- Infosys for creating an organizational setting in which people are given the freedom to
develop their skills and capabilities to create valuable new products.


Importance of OB / why study of OB/ Need for OB

(1) OB helps us to understand ourselves and others in a better way. This helps greatly in improving
our inter personal relations in the organizations. Friendly and cordial relations between employees
and management and also among the employees create a congenial (friendly) work environment in
organizations. Understanding of topics such as attitude, perception, communication, conflict will
change the very style of talking and functioning of an individual.
(2) The knowledge of OB helps managers know individual employees better and motivate
employees to work for better results. A manager in a business establishment is concerned with
things done through delegation. He or she will be successful when he or she can motivate
subordinates to work for better results.
(3) OB tackles human problems humanly. It helps understand the cause of the problem, predicts its
future course of action and controls its evil consequences. It is helpful in maintaining cordial
industrial relations. If an employee is slow in his work or his productivity is steadily declining, it is
not always because of denial of promotion or a poor work environment. Similarly, if the union of
workers gives a strike call, the basic issue may not be a demand for more wages, higher bonus, a
better canteen often the attitude of the boss makes the worker lazy. Similarly, reluctance of the
management to talk to union leaders about issues might provoke them to give a strike call.
Relations between management and employees are often strained for reasons which are personnel
issues, not technical.
(4) The most popular reason for studying OB is to learn how to predict human behaviour and then
apply it in some useful way to make the organization more effective.
(5) Organisations are run by man and man working in the organizations makes all the difference.
The effective utilization of people working in the organization guarantees success of the
organization. OB helps managers how to manage human resources efficiently in the organization.
It helps in inspiring and motivating employees towards higher productivity and better results.
(6) OB theories and concepts help us influence organizational events. OB helps to communicate
effectively with others, manage conflicts, make better decisions, help work teams operate more
(7) OB help us make sense of the workplace and to some extent predict what people will do under
various conditions.
(8) OB provides a road map to our lives in the organization.
(9) OB uses scientific research to help us understand and predict organizational life.

Managers are individuals who plan, organize, lead and control the organizational resources
for attainment of its goals.

Managers are individuals who achieve goals through other people.

Managers get things done through other people. They make decisions, allocate resources and direct
the activities of others to attain goals. Success or failure of an organization is squarely (directly)
depends on these people.
Functions of Management:-
(a) Planning:- The planning function refers to define an organization’s goals, establish an
overall strategy for achieving those goals. All managers engage in planning. Plans give
them the goal and the actions needed to reach the objective.
(b) Organizing:- Managers are responsible for designing and developing an organization’s
structure. It includes the determination of what tasks are to be done, who is to do them,
how the tasks are to be grouped, who reports to whom and where decisions are to be made.
(c) Leading:- Every organization contains people and it is the job of the management to direct
and coordinate those people. This is leading function. Managers have to motivate
employees, direct the activities of others, select the most effective communication
channels, or resolve conflicts among members.
(d) Controlling:- Management must monitor the organization’s performance. Actual
performance must be compared with the set goals. If there are any significant deviations, it
is management’s job to get the organization back on track. This monitoring, comparing and
correcting is meant by the controlling function.

Management skills:-

(i) Technical skills:- Technical skill refers to the ability to apply specialized knowledge or
expertise. Vocational and on-the-job training programmes largely do a good job in
developing this skill. All jobs require some specialized expertise and many develop
their skills on the job.
(ii) Human skills:- Human skills refers to the ability to work with, understand and
motivate other people, both individually and in groups. Many people may be
technically proficient but interpersonally incompetent. They might be poor listeners,
unable to understand the needs of others or have difficulty in managing conflicts. Since
managers get things done through other people, they must have good human skills to
communicate, motivate and delegate.
(iii) Conceptual skills:-Managers must have the mental ability to analyse and diagnose
complex situations. These tasks require conceptual skills. For example decision making
requires managers to spot problems, identify alternatives that can correct them, evaluate
those alternatives and select the best one. Managers can be technically and
interpersonally competent yet still fail because of an inability to rationally process and
interpret information.

Role of a manager:-

According to Henry Mintzberg a manager has 10 roles, broadly categorized under 3 heads.
(A) Interpersonal Roles :- (i) Figure head:- As a figure head, the manager performs ceremonial
and symbolic activities for the organization. He outlines the organisation’s goals, guidelines and
the principles to employees and how to behave with customers and suppliers.

(ii) Leader:- As a leader, the manager’s role is to motivate subordinate for better performance.
Give direct commands and orders to subordinates, make decisions concerning the use of human
and technical resources.

(iii) Liasion:- Coordinate the work in different departments and establish alliances between
different organizations and develops information sources both inside and outside the organization.

(B) Informational Roles:- (iv) Monitor:- Evaluate the performance of managers in different
functions, and take corrective action to improve their performance and keep watching for changes
occurring in the internal and external environment that may affect the organization in future.

(v) Disseminator:- Informs employees about changes taking place in the external and internal
environment that will affect them and the organization and about the organization’s vision and

(vi) Spokesperson:- As a spokesperson, give a speech to inform the stakeholders about the
organisation’s future intentions and to promote new goods and services.

© Decisional Roles:- (vii) Entrepreneur:- the manager must decide which programmes and
projects to initiate and how to invest resources on them.

(viii) Disturbance Handler:- As a disturbance handler, the manager assumes responsibility for
handling crisis from the internal and external environment. Move quickly to take corrective action.

(ix) Resource Allocator:- Manager allocates the orgnisational resources to various departments
and functions and will decide how best the people and other resources can be used to increase the
organizational effectiveness. He will set budgets and salaries.

(x) Negotiator:- As a negotiator the manager negotiates with suppliers, distributors and labour
unions to reach agreements.

Scope of OB:-
OB is the study of human behaviour at work in organizations. Accordingly, the scope of OB
includes the study of individuals, groups and organization / structure.
(a) Individuals:- Individuals differ in many respects. The study of individuals therefore, includes
aspects such as personality, perception, attitudes, values, job satisfaction, learning and motivation.
(b) Groups:- include group dynamics, group conflicts, communication, leadership, power and
politics and the like.
© Organisation / structure:- study of organization / structure includes aspects such as formation of
organizational structure, culture and change and development.
In a nutshell, OB studies how organisations influence people or how people
influence organizations.

Nature of OB:- The nature of OB is identified as –

(a) A separate field of study and not a discipline only:- OB has a multidisciplinary orientation.
Therefore it is better reasonable to call a separate field of study rather than a discipline only.
(b) An interdisciplinary approach:- For studying OB, it has drawn knowledge from related
disciplines like psychology, sociology and anthropology.
(c) An applied science:- The very nature of OB is applied. OB basically applies various
researches to solve the organizational problem related to human behaviour.
(d) A normative science:- OB deals with what is accepted by individuals and society engaged in
an organization.
(e) A humanistic and optimistic approach:- OB realizes that people working in the organization
have a desire to be independent, creative and productive, if they are given proper conditions and
(f) A total system approach:- The systems approach is one that integrates all the variables
affecting organisational functioning.
Foundations of OB:-
The subject OB is based on a few fundamental concepts which revolve around the nature
of people and organizations.
(a) Individual differences:- Each person in the world is different from others in several ways.
Whether it is intelligence, physique, personality, diction (projection) or any such trait, one can find
striking differences. It is because of individual differences that OB begins with the individual.
(b) A whole person:- When an individual is appointed, his/her skill alone is not hired, his/her
social background, likes and dislikes, pride and prejudices (discrimination) are also hired. A
person’s family life cannot be separated from his or her work life.
(c) Caused behaviour:- The behaviour of the employee is caused and not random. When a
worker comes late to his or her work, pelts stones at a running bus, or abuses the supervisor there
is a cause behind it.
(d) Human dignity:- It confirms that people are to be treated differently from other factors of
production because they are of a higher order in the Universe. It recognizes that people want to be
treated with respect and dignity and rejects old idea of using employees as economic tools.
(e) Organisations are social systems:- From sociology we learn that organizations are social
systems and the activities are governed by social as well as psychological laws. The behaviour is
influenced by their group as well as by their individual drives.
(f) Mutuality of interest:- Organisations need people and people also need organizations.
Organizations have human purpose. People see organizations as a means to help them reach their
goals, while at the same time, organization need people to help attain organizations objectives.
(g) Holistic concept:- When the above six fundamental concepts of OB are placed together, a
holistic concept emerges. This concept interprets people-organisation relationships.

Major disciplines and their contribution to OB
OB has drawn many concepts from a number of applied behavioural sciences such as psychology,
sociology and anthropology. It has also drawn from subjects such as economics, history, political
science, engineering and medicine.
Psychology:- It is the science of behaviour and includes animal as well as human behaviour.
Psychology has contributed greatly to the intra individual dynamics of human behaviour, intra-
personal aspects of OB like motivation, perception, attitude, opinion and learning owe their study
to psychology.
Sociology :- It studies the behaviour of people in relation to their fellow human beings. It is the
study of group behaviour. It has contributed to the study of interpersonal dynamics like leadership,
group-dynamics, communication, formal and informal organizations.
Anthropology:- It is the study of the human race, in particular its culture. Culture has significant
influence on human behaviour and dictates what people learn and how they behave. The culture of
the organization will have an influence on the employee.
Political science:- Contributions from political science such as conflict resolution, group coalition,
allocation of power and how people manipulate power in their self-interest are significant for
better understanding of OB.
Social psychology:- It is the study of both psychology and sociology. Social psychology is useful
in measuring, understanding and changing attitudes, communication patterns, the ways in which
group activities can satisfy individual needs and in group decision-making process.
Engineering:- Industrial engineering in particular has concerned with work measurement,
productivity measurement, workflow analysis and design and labour relations.
Medicine:- Medicine has also come into play in connection with the study of OB, specially in the
area of stress. It is important to control the stress for the well being of the individual and

OB Model
Learning Individual behaviour
Attitudes and attribution

Group dynamics
Team dynamics
Leadership Organisational
Power and politics Group behaviour effectiveness.

Organisational culture
Human resource policies &
practices Organisation
Work stress
Organisational change
and development

Individual behaviour will influence and is influenced by group behaviour,

which inturn has impact on behaviour of organization. The cumulative effect of all these
behaviours is felt on organizational effectiveness which in turn has impact on individual, group
and organizational behaviour.


Approaches to the study of OB

HR Approach Contingency Approach Productivity Approach


Systems Approach Interactionalism Approach

HR approach:- According to this approach, people are the central resource in any organization and
they should be developed towards higher levels of competency, creativity and fulfillment. People
thus developed will contribute to the success of the organization. This approach is also called as
supportive approach.
Contingency approach:- This is another useful way of looking OB and assumes that there is no “
one best way” available in the organization. It suggests that in most organizations situations and
outcomes are contingent on or influenced by other variables.
Systems approach:- This approach views organization as a united, purposeful system composed of
interrelated parts. According to this approach, an organization system receives four kinds of inputs
from its environment : material, human, financial and informational. The organization converts
these inputs into products or services, employee behaviour, profits or losses and additional
information and supplies these to the environment. The system then receives feedback form the
environment regarding the output. Thus the organization becomes an input-transformation-output
Productivity approach:- Productivity, which is the ratio of output to input, is a measure of an
organization’s effectiveness. The higher the numerical value of this ration, the greater the
Interactionalism:- This is relatively a new approach to understanding behaviour in organizational
settings. Interactionalism attempts to explain how people select, interpret and change various
Emerging challenges to the OB specialist

Managing diversity Changing demographics of workplace

Ethical behaviour OB Challenges Changed employee expectations

Technology transformation Globalisation

1. Managing diversity:- Diversity is dealing with a collective mixture of differences and
similarities in a given group. It includes age, background, education, function and personality. It
also includes lifestyles, sexual orientation, geographic origin, tenure with an organization,
management and non-management values, beliefs and opinions. By ensuring the diversity,
businesses are able to –
(a) Access to a changing marketplace
(b) Superior customer service
© Alliances with suppliers and customers
(d) Continuous learning.
Barriers to accepting diversity:-
(a) Prejudice:- Unjustified negative attitude towards a person based on his or her membership of a
particular group.
(b) Ethnocentrism:- A tendency to regard one’s own group, culture on nation as superior to
© Stereotypes:- Set of beliefs about a group that is applied universally to all members of that
group, such as “all poor people are uneducated” or “all Asians are good at maths”.
(d) Discrimination:- Barring an individual from membership of an organization or from a job
because of his or here membership of a particular group.
(e) Harassment:- Consciously shunning (avoid, ignore) or verbally or physical abusing an
individual because of membership of a particular group.
(f) Sexual harassment:- Approaching a person in an unwanted, uninvited intimate way.
(g) Backlash:- Negative reaction to the gaining of power and influence by members of previously
under represented groups.

How to manage diversity effectively-

Managers need to ensure that they and their subordinates appreciate the value that
diversity brings to an organization, understand why diversity should be celebrated than ignored,
and work effectively with men and women who are physically challenged or are of a diverse race,
age, gender, ethnicity, nationality or sexual orientation.
Managing diversity involves-
(a) Increasing awareness:- Awareness demands appreciation of diversity as a fact of
organizational life. Awareness programmes in an organization should increase managers’ and
workers’ awareness of their own attitudes, biases (favouratism) and stereotypes and the differing
perspectives of diverse managers, subordinates, co-workers and customers.
(b) Increasing diversity skills:- Increasing diversity skills focus on improving the way the
managers and their subordinates interact with each other and on improving their ability to work
with different kinds of people. Educating managers and their subordinates to help to develop or
healthy respect for diversity and to take advantage of the skills and abilities of its diverse
(c) Encouraging cultural diversity:- Cultural diversity in the workplace is growing because of
globalization. People of diverse national origins-Koreans, Indians, Bolivians, Australians,
Britishers and others working together in teams to perform task. The manager or OB specialist has
to encourage cultural diversity by providing language training, encouraging employees to accept
foreign country assignments, providing counseling etc.
(d) Encouraging gender diversity:- The managers or OB specialists have to encourage gender
diversity. Though women’s participation in the workplace is increasing, their share of the rewards
is not increasing commensurately. One has to recognize the strengths in both the sexes.
(e) Committing top management to diversity:- When there is a commitment to diversity at top,
managers down the line embrass diversity through their actions and spread message that diversity
can be a source of competitive advantage.
(2) Changing demographics of workplace:- The major challenge from changing
demographics of workforce relates to dual career couple- couple where both partners are actively
pursuing professional careers. The increasing number of dual-career professionals limits individual
flexibility in accepting such assignments and may hinder organizational flexibility in acquiring and
developing talent.
Another change in the demographics of workplace is the growing number of young
employees, who are fresh, ambitious, enthusiastic and emotive have to be handled with
(3) Changing employee expectations:- With the change in the demographics of workforce,
employees expectations and attitudes have also changed. Today’s worker demands better
treatment, challenging assignments and career assignments. Job security, monetary benefits,
uniform, housing, canteen, buses and other facilities alone, therefore may not motivate the
(4) Globalization:- Growing internationalization has its impact on people management. The
management has to cope with problems of unfamiliar laws, languages, practices, competitors,
attitudes, management styles, work ethics and more. Personnel functions such as hiring, training,
compensating, maintaining and the like must acquire a global perspective. To face this challenge,
the management must be flexible and proactive. Attracting and retaining capable employees is a
big challenge to OB experts.
(5) Technology transformation:- Technology may be understood as anything that workers
of an organization use to transform its inputs into outputs. Automation may change the job of a
low-level worker from assembling a product to monitoring the machines that do the assembling, by
which the workers becomes bored and alienated and the consequence can be poor quality and low
productivity. This may encourage the management to automate further. Employers must also plan
for the effects of automation on their workforce, whether they include worker displacement,
replacement or retaining.
The 21st century belongs to IT, which is shaking the organizations and forcing
OB scholars to re-examine their concepts in the light of revolutionary changes brought about by it.
The information revolution has changed and will continue to change, the way we live and work.
(6) Promoting ethical behaviour:- As competition becomes severe, organizations tend to
compromise on ethics. Enforcing ethical behaviour is a major challenge.
Ethics refers to a system of moral principles – a sense of right and wrong, the
goodness and badness of actions, and the motives and consequences of these actions. As applied to
the organizations ethics is the study of good and evil, right and wrong, and just and unjust actions
of manager.
Why ethics are important ?
(a) Ethics correspond to basic human needs:- Desires to be ethical, not only in his private life but
also in his workplace, being a manager, he knows that his decisions may affect the lives of several
(b) Values create credibility with the public:- Public will honour and respect a company with
ethical values and favour its products and also public issues.
© Ethics and profit go together:- Company with ethical value is most likely to be successful in the
long run, though in the short run they may lose money.
(d) Values gives the management credibility with its employees. Values bring the leadership and
its people together.
(e) Values help the management in better decision making. Decisions which are in the interest of
the public, their employees and the company’s own long-term good, even though the decision-
making is slower.
(f) Law cannot protect the society, ethics can. Government cannot always regulate all activities
which are harmful to the society. An ethically-oriented management takes measures to prevent
pollution and protect workers health even before being mandated by law.
Managing ethics:-
(a) Ethical committees should be formed to advice on ethical issues.
(b) Ethics training programmes.
© Ethics hot line.
(d) Top management’s commitment for initiating and ensuring the ethical standards in his or her
(e) the code of ethics describes the general value system of the organization.


Learning can be defined as relatively permanent change in behaviour that occurs as a result of
practice or experience. Simply-learning is the modification of behaviour through practices training
or experience.
Components of learning:-
(a) Learning involves change; it may be good or bad.
(b) Not all changes reflect learning. To constitute learning, change should be relatively permanent.
© Learning is reflected in behaviour.
(d) The change in behaviour should occur as a result of experiences , practice or training.
(e) The practice or experience must be reinforced in order for learning to occur.
Learning occurs throughout one’s life.

Explicit & Tacit knowledge:- When employees learn, they acquire both explicit and tacit
knowledge. Explicit knowledge is organized and can be communicated from one person to
another. E.g., the information a student receives in class room. Explicit knowledge can be written
down and given to others.
Majority of the people have tacit or implied knowledge. Tacit knowledge is acquired
through observation and direct experience. E.g., a truck driver does not learn how to operate the
vehicle through lectures. Tacit knowledge is the idea that one knows more than what he or she can
tell. Tacit knowledge is what one knows but cannot tell.

How learning occurs:-

There are four theories which explain how learning occurs-
(1) Classical conditioning:- Ivan Pavlov propounded this theory. According to this theory
a physical event (or object) – termed a stimulus- that does not elicit (draw, bring out) a particular
response gradually acquires the capacity to elicit that response as a result of repeating pairing with
a stimulus that can elicit a reaction.
Pavlov conducted an experiment on dog and tried to relate the dog’s salivation
and the ringing of a bell. When Pavlov presented the dog with a piece of meat, the dog exhibited a
noticeable increase in salivation. When he withheld the presentation of meat and merely rang a
bell, the dog has no salivation. Then Pavlov proceeded to link the meat and the ringing of the bell.
After repeatedly hearing the bell before getting the food, the dog began to salivate as soon as the
bell rang. After a while, the dog would salivate merely at the sound of the bell, even if no food was
offered. The dog has learnt to respond (salivate) to the bell.
Before conditioning-
(US)Unconditioned stimulus(Food)--------------------- (UR)Unconditioned response (Salivation)
During conditioning-
(CS)Conditioned stimulus (Bell) -------------------- (US) Unconditioned stimulus (Food)
(UR) Unconditioned response (Salivation)
After conditioning-
(CS) Conditioned stimulus (Bell) ------------------- (CR) Conditioned response (Salivation)

Salivation in response to food is natural, unlearned response is a reflex, was

called the unconditioned reflex. The food is unconditioned stimulus. When Pavlov repeated the
presentation of meat after ringing the bell, and after some time the dog salivated in response to
bell. The bell is conditioned stimulus (CS) and the salivation is conditioned response (CR).
Example:- (a) Manufacturing plant  Top executive - cleaning up offices -Employees would
turn on their best.
(b) Traffic police.

(2) Operant conditioning :- It is also called instrumental conditioning. According to this

theory, our behaviour produces certain consequences and how we behave in future will depend on
what those consequences are. If our actions have pleasant effects then we will be more likely to
repeat them in the future. If, however, our actions have unpleasant effects, we are less likely to
repeat them in the future. Thus according to this theory, behaviour is the function of its
Researchers call “operant behaviour” because they operate on the environment- they
make the environment respond in ways that we want.
Example: Coffee vending machine.
(3) Cognitive theory of learning:- According to this theory people are conscious, active
participants in how they learn. In the cognitive view, people draw on their experiences and use past
learning as a basis for present behaviour. For example, if an employee faced with a choice of job
assignment will use previous experiences in deciding which one to accept. Second people make
choices about their behaviour. The employee recognizes his or her two alternatives and chooses
one. Third, people recognize the consequences of their choices. Thus, when the employee finds the
job assignments rewarding and fulfilling, he or she will recognize that the choice was a good one
and will understand why. Finally, people evaluate those consequences and add them to prior
learning, which affects future choices.
(4) Social learning theory:- This theory emphasized the ability of an individual to learn by
observing others. Important models include parents, teachers, peers, motion pictures, TV artists,
bosses and others.
According to this theory an individual acquires new knowledge by observing what
happens to his or her model.
Observational learning involves several processes:-
(a) The learner must pay attention to the model- the greater the attention, the more effective the
learning will be.
(b) The observer must have good retention of the model’s behaviour.
(c) Observer must practice model’s behaviour.
(d) Finally, the observer must have some motivation to learn from the model.
Principles of learning:-
Principles of learning are many but the most important of them are: motivation, reinforcement,
whole versus part learning, learning curves, meaningfulness of material and learning styles.
(a) Motivation:- Without motivation learning does not take place.
(b) Reinforcement:- Reinforcement is used to enhance desirable behaviour. Punishment and
extinction (disappearance, loss) are employed to minimize undesirable behaviour. Positive
reinforcement strengthens and enhances behaviour by the presentation of positive reinforces.
These are primary rein forcers and secondary rein forcers. Primary rein forcers satisfy basic
biological needs and include food, water, shelter and sexual pleasure. Secondary reinforcers
include money, status, grades, trophies and praise from others. In negative reinforcement an
unpleasant event that precedes a behaviour is removed when the desired behaviour occurs. Some
negative rein forcers are heat, extreme cold or electric shock etc.
(c) Whole versus part learning:- In parts learning, the individual is not only required to learn
each individual part but must be able to combine the separate parts so that the whole performance
can be accomplished. No overall conclusion to decide whether learning a whole job is superior to
breaking the job into parts.
(d) Learning curves:- A diagrammatic presentation of the amount learned in relation to time.
Learning proceeds in stages- called curves. Enthusiasm at commencement of training session, then
peaks, fatigue and spurt.
(e) Meaningfulness of material: - The more meaningful the material, the better does learning
proceed. Learning of nonsense syllables proceeds more slowly than that of prose or poetry.
(f) Learning styles: - Learning styles refers to the ability of an individual to learn. There are four
(i) Accommodator- Learns by doing and feeling.
(ii) Diverger – Learns by observing and feeling.
(iii) Converser- Learns by doing and thinking.
(iv) Assimilator – Learns by observing and thinking.

Learning and OB:-

Learning is of great relevance to the study of OB.
(a) Learning and training:- Learning is major objective of training. Training becomes effective if
training is conducted keeping learning principles in mind.
(b) Learning through feedback:- Feedback improves employee ability by frequently providing
information to correct performance problems. Feedback makes people aware of their performance
errors and helps them correct those errors quickly.
© Employee indiscipline:- Employee indiscipline acts are drunkenness on the job, late arrivals to
work, stealing company property etc. Research on discipline shows that manager should act
immediately to correct the problem. Disciplining employees for undesirable only tells what not to
(d) Stimulus generalization in organizations:- It is the ability to recognize differences among
stimuli (incentive). In stimulus generalization, the person learns the basic stimulus-response-
consequence sequence for one stimulus. When confronted with a new stimulus, he or she can
discriminate between the two stimuli and respond differently.


The term personality is derived from Latin word “personae” which means “to speak through”.
Personality refers to the sum total of internal and external traits of an individual, which are
relatively stable and which make the individual different from others.
Nature of personality:-
(a) Personality has both internal and external elements. The external traits are the observable
behaviours what we notice. For example sociability. Internal elements are thoughts, values and
genetic traits.
(b) An individual’s personality is relatively stable.
© An individual’s personality is both inherited as well as shaped by the environment.
(d) Each individual is unique in behaviour.

Theories of personality:-
(1) Type theory: - According to this theories, people are grouped into identifiable categories.
According to this theory personalities are classified according to the structure of the body.
Kretschmer and Sheldon classified as-
(a)Endomorph:- A short, plump (fatty) person, sociable, relaxed and even (calm)-tempered.
(b) Ectomorph:- A tall, thin person, restrained, self conscious.
© Mesomorph:- A heavy set of muscular individual, noisy, callous (heartless) and fond of
physical activity.

Carl Jung divided into introverts and extroverts.

Introverts are shy, quiet and retiring.
Extroverts are sociable and gregarious (unreserved, sociable) individuals. They are more oriented
towards other people, events and objects.
Type theories are simple as they are based on physical attributes or psychological factors
for categorization of personalities.

(2) Trait theory:-

Another important approach to understand personality is the trait. A trait differentiates one from
another in a relatively permanent or consistent way. A trait of an individual is abstracted from his
behaviour, and serves as useful unit of analysis to understand personality. A personality trait is
understood as being an enduring attribute of a person that appears consistently in a variety of
According to this theory personality can be described by a trait. We could rate an individual
on a scale of intelligence, emotional stability, aggressiveness, creativeness etc. when we are
describing ourselves and others as friendly, cautious, excitable, intelligent, and anxious we are
using trait terms.
There are two ways of assessing personality traits (i) the person describes himself by
answering questions about his attitudes, feelings and behaviours, (ii) someone else evaluates the
person’s traits either from what he knows about the individual or from direct observations of
behaviour. The first method, a personality inventory is used and the second involves using rating
scales. A personality inventory is a questionnaire in which the person reports reactions or feelings
in certain situations.
A rating scale is filled by someone else by what he or she knows about the individual or
by studying his or her behaviour in certain situation.

(3) Psychoanalytic theory:- Sigmund Freud developed this theory. According to this theory
behaviour is influenced by unconscious framework and this unconscious framework is composed
of three elements- Id, Ego and Super ego.
(a) Id:- It is the storehouse of all instincts such as wishes, desires that unconsciously direct and
determine our behaviour. The id is driven by the pleasure principle, which strives for immediate
gratification of all desires, wants and needs. Id knows and obeys no laws and rules and it is danger
for the person and for society as well. If the needs are not satisfied, the result is anxiety or tension.
(b) The Ego:- The id is unconscious part while ego is conscious part of human personality. The
ego is associated with reality. It checks the id through logic and intellect. The ego can be described
as controlling id through realities. Mental images do not satisfy needs. The starving man cannot
satisfy his hunger by eating images. Reality must be considered. The hungry man must have food
if the tension of hunger is to be reduced.
© The Super ego:- The super ego judges whether an action is right or wrong according to the
standards of the society. The super ego represents the values and morals of society as taught to the
child by parents and others. The id seeks pleasure, the ego tests reality and the super ego strives for
perfection. The super ego guide and govern a person to behave properly in the society.

(4) Social learning theory:- The social learning theory emphasizes on how an individual
behaves or acts in a given situation. According to the social learning theory a situation play an
important role in determining the behaviour.
Through learning one acquires knowledge, language, attitudes, values, manual
skills, fears, personality traits etc. Learning occurs through two ways – (i) learning through
reinforcement and (ii) learning by observing other, also called vicarious learning. For social
learning theorists, reinforcement is not always necessary for learning. They believe that an
individual can store his observations in memory, he can learn by observing the actions of others
and by noting the consequences of those actions.
This theory asserts that a person’s action in a given situation depend upon the
specific characteristics of a situation, the individual’s understanding of the situation, and past
behaviour in similar situation.

(5) Humanistic approach:- The humanistic approach to the study of personality includes a
number of theories.
(a) Carl Rogers self theory:- This theory is also described as ‘phenomelogical’ which studies
individual’s subjective experience, feelings and his concepts of world and self.
According to this theory behaviour is dependent upon how one perceives the world, i.e.,
behaviour is the result of immediate events as they are actually perceived and interpreted by the
Roger’s personality theory has two concepts: self and self-actualization. The self consist of all
ideas, perceptions and characterize ‘I’ or ‘me’: it includes the awareness ‘what I am” and ‘what I
can do’.
Self actualization is the basic motivating force representing the inherent tendency of the
organism to develop all its capabilities which serve to maintain or enhance the person.
(b) Maslow’s self-actualization theory:- Maslow is regarded as the spiritual father of humanism
in American psychology. According to this theory, each person alone is responsible for his own
existence. He is never static. He tries to become a useful member of the society and try to lead a
fruitful life. The drive of man which is inherent in him is called self – actualization.

Determinants of personality:-
Heredity Environment Family

Social Situational

Heredity:- Heredity refers to the transmission of the qualities from the parents to the children
through a biological mechanism. Physical structure, facial attractiveness temperament, sex, muscle
composition are examples that are generally influenced by one’s parents. Heredity plays an
important role in determining one’s personality.
Environment:- The environment i.e., one’s early conditioning, the family norms, friends and
social groups put an impact on one’s personality formation. The cultural environment in which
people are raised plays a major role in shaping personality. Most cultures expect different
behaviours from males and females. A poor boy raised in an urban slum is expected to behave
differently in some respects from a well – to- do rise in a middle-class suburb.
Family:- The family has considerable influence on personality development, particularly in the
early stages. For example, children raised in orphans are much more likely to socially and
emotionally maladjusted than their counterparts raised by parents in a warm, loving and
stimulating environment. Parents have more effect on the personality development of their children
as compared to other members of the family. Besides parents, siblings (brothers and sisters) also
influence shaping of personality. Elders serve as models for Youngers.
Socialization process:- The continuous impact of different social groups called, socialization
process, also affects the personality. Socialization process starts with the initial contact between a
mother and her infant. After infancy, other members of the immediate family, followed by social
groups (peers, school friends and members of the working group) play influential roles.
Situation:- Individual’s personality does change depending on the situation. For example, the
same person while facing an employment interview and while enjoying picnic with his/her friends
in a public park behaves quite differently depending on two different situations.
Situation exerts (exercise) on important pressure on the individual to behave in a
particular manner. For example, a worker whose personality history suggests that he had need for
power and achievement. But, when the same worker is placed in a highly bureaucratized work
situation, may feel frustrated and behave aggressively. This worker appears to be lazy and or a
troublemaker, yet developmental history would predict that the individual is a very hard worker,
indicates that his personality changed under changed situation.

How personality develops?

Personality develops with advancement in an individual’s age passing through certain stages.
Sigmund Freud is considered one of the pioneers among the theorists. According to
Freud, there are four stages of psychological development that shape one’s personality and its
development. They are-
(a) The oral stage: - The oral stage extends throughout the first year of life and also called as
infancy stage. The infants are totally dependents upon others for their survival and growth.
Dependence is their only way of obtaining instinctual gratification. Mouth becomes the first body
zone through which biological drives are met. Thumb sucking by an infant gratifies his/her sex
drive. Later on biting satisfies the drive for seeking pleasure.
Freud postulates that the stimulation given to the infant both in excessive and
inadequate amounts, makes the infant optimistic about the world. He/ she also have a tendency to
exploit or dominate others to satisfy the needs.
(b) The anal stage: - This stage extends from 1 to 3 years. The anal becomes the body zones for
sexual gratification. Toilet training given to the child by his parents will have influence on
adulthood. If the mother is too harsh (rough) and repressive (suppressive) the child withholds faces
(waste matter), and if this becomes excessive the child develops traits such as orderliness,
punctuality and cleanliness. Alternatively, if the mother pleads with the child to have regular
bowel movements the child will develop an anal-aggressive structure and show traits of cruelty,
destructiveness, and disorderliness.
© The phallic stage :-( 3 to 4 years). The sexual gratification shifts to sex organs. The children in
this age can be observed examining, and fondling their genitalia, masturbating and expressing
interest in matters of birth and sex.
(d) The latency period:- (4 to 6 years). This period is characterized by children’s disinterest in
matters related to sex. Also referred as elementary school age. The latency period is very important
for the social development of the child, for acquiring the knowledge and skills needed to get along
in the workday world.
(e) The genital stage: - This stage occurs between adolescence to adulthood. The sexual drive and
interest are revived in this stage. One takes interest in opposite sex. In other words, one tends to
seek sexual gratification through heterosexual love and attraction.
Erikson’s stages of personality development:-
Erikson extended Freud’s psychosexual development in a more systematic manner and identified
eight stages of human life.
(a) Infancy:- This stage is extended to one year from birth. The first year of the life of a person is
characterized by trust versus mistrust. The infants raised in loving and affectionate atmosphere
learn to trust others. Lack of love and affection leads to mistrust. This bears long lasting impact on
one’s personality and behaviour.
(b) Early childhood:- This stage spreads between two and three years of a child. During this
stage, child starts to acquire independence. When the child is allowed to it, he/she feels autonomy.
If disallowed, a sense of shame and doubt develops in the child.
© Play age:- In the age of four and five years, the child seeks to discover what can be done. If the
child is allowed and encouraged to do what he/she wants to do, the child develops a sense of
initiative. If the child is discouraged to do, he/she feels lack of self confidence.
(d) School age:- When the child joins school from 6 to 12 years, he/she learns knowledge and
skills. If the child makes progress, it develops a sense of industry and opposite results in a sense of
(e) Adolescence:- Twelve to twenty years. During this stage children try to gain a sense of identity
for them in the society. They do not want to become confused about themselves who they are.
(f) Young adulthood:- This stage spreads between twenty to twenty four years. The young during
this stage try to develop deep and permanent relationship with others to have a feeling of intimacy.
Feeling in it results in a sense of isolation.
(g) Adulthood:- Twenty five to sixty five years. Adults face the situation of generativity or self
absorption. Adults, who are productive in work, raise children with serious concern and guide to
next generation are called generative. Self absorbed adults do not look beyond themselves.
(h) Old (Sunset) age:- The adult of integrity gains a sense of wisdom. He/she appreciates
continuity of past, present and future and becomes fully satisfied. No fear of death. The reverse
situation in a sense of despair, (loosing hope) fear from death, desire for living second time and

Personality traits:- The following are important personality traits for OB that influence an
individuals behaviour in organizations.
(a) Authoritarianism:- An individual who has a strong belief in the legitimacy(authority,
authenticity) of established mechanism of formal authority. They are tend to be rigid in their
positions, places moral value on their beliefs, and are strongly oriented towards conformity to rules
and regulations.
(b) Locus of control:- Locus (what happens) of control refers to an individual’s belief that events
are either with in one’s control(internal locus of control) or are determined by forces beyond one’s
control (external locus of control).
Externals are less satisfied with their jobs, have higher absenteeism rates, are more
alienated from work settings and are less involved on their jobs than internals. Internals have more
control over their behaviour, more active in seeking information to make decisions and are more
active socially than externals.
© Introverts extroverts:- Extroverts are sociable individuals while introverts are shy, quiet and
retiring. Extroverts are suitable for positions that require interaction with others, introverts excels
(do extremely well) at tasks that require thought and analytical skills. Managerial positions are
dominated by extroverts.
(d) Machiavellianism:- Machiavellianism is named after Nicolas Machiavelli who wrote in the
16th century about how to manipulate and gain powers. Machiavellianism refers to an individual’s
propensity to manipulate people for solving his/her interest. An individual high in
Machiavellianism tends to be cool, logical and assessing the system around him, tries to control
people, events and situations by manipulating the system to his advantage. They are good for jobs
that need bargaining skills (labour negotiations) and commissioned sale.
(e) Self esteem:- Self esteem refers the feeling of like or dislike of one-self. People with high self-
esteem believe that they have abilities to undertake challenging jobs. High esteems are more
satisfied with their jobs than the low esteems.
(f) Risk taking:- People differ in taking risks. Managers with high risk taking make more rapid
decisions and use less information in making choices than do the low risk taking managers.
(g) Self monitoring:- It refers to an individual’s ability to adjust his or her behaviour to external
factors/situations. People with high self-monitoring show greater adaptability to adjust themselves
with external situations. They can behave differently in different situations. People with high self
monitoring are likely to be more successful managers, because they have to play multiple roles.
(h) Type A and Type B personalities:- Type A people are impatient and aggressive to achieve
more in less time, working fast, emphasizing quantity over quality, working for long hours,
making quick decisions are some of the behavioral examples of A type.
Type B personality is relaxed, incompetent and easy going. In organizations usually
great salespersons are of A type but senior executives are B type.

The ‘Big Five’ personality traits / model

(a) Extroversion refers to a person’s comfort level with relationships. Extroverts are sociable,
talkative, assertive and open to establishing new relationships. Introverts are less sociable, less
talkative, less assertive and more reluctant to begin relationships.
(b) Agreeableness refers to a person’s ability to get along with others. Highly agreeable people
value harmony more than they value having their way. They are cooperative ad trusting of others.
People who score low on agreeableness focus more on their own need than the needs of others.
© Conscientiousness refers to the number of goals that a person focuses on. A highly
conscientious person focuses on relatively few goals at one time. He or she is likely to be
organized, systematic, careful, thorough, responsible, self-disciplined and achievement-oriented.
A person with a low conscientious nature focuses on a higher number of goals at one time. The
individual is more disorganized, careless and irresponsible, as well as less self-disciplined.
(d) Emotional stability focuses on an individual’s ability to cope with stress. The individual with
positive emotional stability tends to be calm, enthusiastic and secure. A person with low emotional
stability tends to be nervous, depressed and insecure.
(e) Openness addresses one’s range of interests. Open people are willing to listen to new ideas and
to change their own ideas, beliefs and attitudes in response to new information. People with low
level of openness tend to be less receptive to new ideas and willing to change their minds.
Personality and OB:-
(a) Understanding personalities is important because personality affects behaviour, people with
similar personality types tend to get along well at work, while opposites do not.
(b) Personality profiles are used to categorize people as a means of predicting job performance.
Some personality characteristics are more productive than others.
© The concept of personality is not to be understood in an organizational context only. The need
for understanding human characteristics is more significant.

Perception can be defined as the process which involves seeing, receiving, selecting, organizing,
interpreting and giving meaning to the environment.
In simple sense, perception means perceiving i.e., giving meaning to the environment around us.
We look at something, but perceive it differently. For example, looking at a painting,
some may perceive it as beautiful, the others as ugly.

Perceptual process
Perception is a process of receiving and interpreting stimuli (thing that produces a reaction in
living things). The process starts with –
(a) Receiving stimuli :- The perception process starts with the reception of stimuli. The stimuli are
received from various sources. Through the five organs, we see things/objects, hear sounds, smell,
taste and touch things. Stimuli may be internal or external. External stimuli include light waves,
sound waves, mechanical energy or pressure and chemical energy from objects that one can smell
and taste. Internal stimuli include energy generated by muscles, food passing through the digestive
system, and glands secreting behaviour influencing hormones.
(b) Selection of stimuli:- All stimuli which are received are not accepted. Some stimuli are
noticed and some are screened out. A girl may always need a transistor to be tuned on while she is
reading or writing. She happily concentrates on her lessons even as the electronic device blares
film songs. A nurse working in a post-operative care might ignore the smell of recently disinfected
instruments or the sounds of co-workers talking nearby. But a small flashing red light on the nurse
station is immediately noticed because it signals that a patient’s vital signs are failing. The process
of filtering information by our sense is called selecting stimuli.
Several factors (internal and external) influence selection. External factors influencing selection
are –
(i) Nature:- By nature we mean whether the object is visual or auditory and whether it involves
pictures, people or animals. Pictures attract more attention than words picture with human being
attracts attention more than objects alone.
(ii) Location:- The best location for attracting attention is directly in front of the eyes and in the
centre of a page. In a newspaper or magazine, when the centre is not possible, the upper portion is
favorable than lower portion and left hand side receives more attention than right.
(iii) Colour:- Colour is used to attract attention. Colour can be used to emphasize the attractive
features of a product.
(iv) Size:- Generally, larger size objects attract more attention than do smaller ones. A full page
advertisement attracts more attention that a few lines advertisement.
(v) Contrast:- The contrast principle states that external stimuli which stand out against the
background, or which are not what people are expecting, will receive their attention.

(vi) Movement:- The principle of motion states that a moving object receives more attention than
an object that is stationary.
(vii) Repetition:- This principle states that a repeated external stimulus is more attention drawing
than a non-repetitive one. Example daily TV add.
(viii) Novelty and familiarity:- The novelty and familiarity principle states that either a novel or a
familiar external situation can serve as an attention getter. New objects in familiar objects in new
settings will draw more attention. Any this novel attracts attention fast, for example, humour,
animation and unusual graphics in an add.
Internal factors influencing selection:-
(i) Learning: - Learning has considerable influence on perception. In organizations, managers and
employees past experiences and learning strongly influence their perceptions.
(ii) Psychological needs:- Needs play a significant role in perceptual selectivity. Unreal things
look real because of needs. A thirsty person in a desert, for instance, gets the illusion of water
when seeing sand from a distance.
(iii) Age difference:- Older, senior executives complain about the inability of the new, young ones
to take tough decisions concerning terminating people or paying attention to details and paper
work. Different perceptions of old and young executives are due to their age difference.
(iv) Interest:- Perception is influenced by the interests of the perceiver. An architect will notice
many details of buildings though he or she passes by only once. Someone else may pass the same
building everyday for years without ever observing such details.
(v) Ambivalence:- Another factor of perceptual selection is ambivalence or mixed feelings about a
situation. For example, a young man may be ambivalent about his fiancée’s virtues and
shortcomings. But a young man who wants to remain a success in his circle, he represses the
awareness of her negative qualities and selectively perceives only those that are favorable.

(c) Perceptual organization:- Having selected stimuli or data, these need to be organized in
some form so as to assign some meaning to them. Thus, organizing the bits of information into a
meaningful whole is called organization. There are three ways by which the selected data is
(i) Grouping:- Grouping principle is exemplified when objects of similar shape, size or colour
tend to be grouped together. In an organization for example, who wear white collars may be
perceived a common group. All workers coming from the same place may be perceived as similar
on the basis of proximity.
(ii) Closure:- When people face with incomplete information, they tend to fill the gaps themselves
to make it more meaningful. They may do it on the basis of their experience, hunches (guess) or
past data. The tendency to form a complete message from an incomplete one is known as closure.
(iii) Simplification:- When people find themselves overloaded with information, they try to
simplify it to make more meaningful and understandable. In this process, what they do is to
subtract less important information and concentrate on important ones only.
(d) Interpretation:- The data collected and organized remain meaningless for the perceiver
till these are assigned meanings. Assigning meaning to data is called interpretation. The
parlakhemundi interpretation process is the most important element in the entire process of
perception. The following are the important factors which influence interpretation in organizations.
(i) Halo effect:- Drawing a general impression about an individual based on a single characteristic
or trait is called hallo effect. It refers to a tendency of perceiving people in terms of good and bad
and ascribing all good qualities to one who is liked and all bad qualities to another who is disliked.
For example, a professor awarding more marks to a well-liked students. The professor
who likes the student wants him to do well in the examination and his perception about the
student’s examination are influenced by what he wants to see. In organizations, superiors evaluate
subordinates on certain dimensions may assume that some one who is good in one dimension must
also be good at other things and rate the person highly.
(ii) Attribution:- Attribution refers to explaining human behaviour in terms of cause and effect.
The evaluation and reaction to others behaviour may be heavily influenced by their perception. For
example, if a prosperous worker does overtime on any day, it is perceived that he has done it in the
interest of the organization. If a poor worker also does the same, the action of behaviour is
perceived as being for money.
(iii) Stereotyping:- When individuals are judged on the basis of the characteristics of the group to
which they belong, is called stereotyping. Some examples of common stereotypes are women,
doctors, professors, artists, executives, workers and the like. The ‘older workers cannot learn new
skills’, ‘over-weight people lack discipline’, ‘Japanese are nationalistic’, and ‘workers are anti-
management’ are some other examples of stereotypes. Stereotyping does not give in-depth truth.
(iv) Perceptual set:- Previously held beliefs about objects influence an individual’s perceptions of
similar objects-called perceptual set.
For example, a manager may have developed general beliefs that workers are lazy and they want to
gain whatever is possible from the organization without giving of their best to it.
(v) Projection:- Under certain conditions, people tend to see in another person traits that they
themselves possess. That is, they project their own feelings, tendencies, motives into their
judgment of others.
For example, a person who is not energetic may see others as lazy, one who is dishonest may
perceive others as dishonest and who are afraid of interpret others as fearful.
(vi) Perceiver:- The perceivers motives, interests, attitudes, past experience and expectations are
important factors effect perception.
(e) The process of checking:- The perceiver tends to check whether his interpretations are right or
wrong. One way of checking is to put a series of questions to himself or herself and the answers
will confirm whether his or her perception is correct or incorrect. Another way is to check with
(f) The process of reacting:- The last phase is reaction. The perceiver will indulge in some action
in relation to his or her perception. The action depends on whether the perception is favourable or
unfavourable: it is positive when the perception is favourable and negative when the perception is
Perception and OB
(i) Employment interview:- Different interviewers try to see different things in the same
candidate and thus, arrive at different perceptions about the same candidate.
(ii) Performance appraisal:- Assessment of an employee’s performance very much depends on
the perception of the evaluator about the employee.
(iii) Performance expectation:- New employees during their selection process acquire a set of
expectations both about the organization and about the job.
(iv) Employee effort:- An employee’s future in an organization depend on effort.
(v) Employee loyalty:- Like effort, assessment of loyalty is also a subjective judgment susceptible
to perceptual distortions and bias.

Motivation is derived from Latin word “movere” which means “to move”.
Motivation is the process that starts with a physiological or psychological need that
activates behaviour that is aimed at a goal or incentive.
Motivation in simple terms may be understood as the set of forces that cause/affect/ influence
people to behave in certain ways.
Importance of motivation:- Motivated employees come out with new ways of doing jobs. They are
quality oriented. They are more productive. Any technology needs motivated employees to adopt it
(i) Motivated employees perform allotted tasks, they look for better ways to do a job.
(ii) A motivated employee is generally more quality oriented. This is true whether we are talking
about a top manager spending extra time on data gathering and analysis for a report, or a clerk
taking extra care when filing important documents. Motivation helps a manager make his
employees quality oriented.
(iii) Highly motivated workers are more productive. The high productivity of Japanese workers,
makes them to produce an automobile with fewer workers than elsewhere.
(iv) Every organization requires human resources. Three behavioural dimensions of human
resources are significant to the organization. (a) People must be attracted not only to join the
organization but also to remain in it, (b) people must perform tasks for which they are hired and in
a dependable manner, (c) People must go beyond this dependable role performance and engage in
some form of creative and innovative behaviour at work. For an organization to be effective,
motivation must stimulate.
(v) Any technology needs motivated employees to adopt it successfully. The secret behind the
success of ISRO has been its employees who are both capable of using and are willing to use the
advanced technology to reach the goals.

Theories of motivation
Maslow’s Need Hierarchy Theory
This theory is propounded by Abraham Harold Maslow, is the simplest and most widely
discussed theory of motivation. Maslow’s theory is based on human needs. According to this
theory only unsatisfied wants can influence behaviour, satisfied need do not act as motivators.
Since needs are many, they are arranged in an order of importance, or hierarchy, form the basic to
complex. The person advances to the next level of hierarchy, or from the basic to complex, only
when the lower level is at least minimally satisfied.
Maslow divided human needs into five levels.
Self Actualisation
Esteem Needs
Social Needs
Safety Needs
Physiological Needs
Physiological needs:- These needs are basic to human life. Included in this group are food,
clothing, shelter, air, water and other necessities of life. These needs relate to the survival and
maintenance of human life. These needs influence tremendously on human behaviour. These needs
are to be met first at least partly before higher level needs emerge. Once physiological needs are
satisfied, they no longer motivate the man.
Safety needs:- Once physiological needs are met, one’s attention turns to safety or security needs.
One can include economic security and protection from physical dangers such as war, crime,
waves, floods, earthquakes, riots and other similar conditions in this group. Meeting these needs
requires more money and the individual is prompted to work more. This needs become inactive
once they are satisfied.
Social needs:- Once the safety needs are met, social needs arise. Social needs are those related to
interaction with other people and may include- need for friends, need for belongingness and need
to give and receive love.
Esteem needs:- Esteem from others include prestige, recognition, acceptance, attention, status,
reputation and attention. Individuals need to be appreciated for what they can do. Satisfaction of
esteem needs generates self-confidence, strength and capability of being useful in the organization.
Inability to fulfill these needs leads to feelings like inferiority, weakness and helplessness.
Self actualization needs:- Self actualization is to become the total kind of person that one wants to
become to reach the peak of one’s potential. Maslow estimated only a few i.e., less than one
percent of the population fulfills the need for self – actualization.
Maslow’s theory provides an important explanation for the changing motivation of
workers over time. When a new employee first starts on the job, physiological or safety needs are
likely to command the most attention. Later, the attention will turn to higher needs.
Herzberg’s Motivation Hygience (Two Factor) Theory
Another important theory of motivation is proposed by psychologist Frederick Herzberg. This
theory is also known as two factor theory, the dual factor theory and the motivation-hygiene
theory, has been widely accepted by the managers concerned with the problem of human
behaviour at work. Herzberg conducted study on 200 accountants and engineers. He asked these
people to describe to describe two important incidents at their jobs: (i) when did you feel
particularly good about your job and (ii) when did you feel exceptionally bad about your job. He
used critical incident method for obtaining data. The replies the respondents offered were
consistent. The replies respondents gave when they felt good about their jobs were significantly
different from the replies given when they felt bad.
Satisfied needs make an individual search for higher level needs and frustration at one level will
push an individual down to lower level needs.
Factors such as achievement, recognition, the work itself,
responsibility, advancement and growth are related to job-satisfaction. These factors are known as
motivators when questioned when they felt good about their work, respondents tended to attribute
these characteristics to themselves.
On the other hand, when they were dissatisfied, they tended to factors, such as
company policy and administration, supervision, work conditions, status, salary, security and
interpersonal relations. These factors are known as dissatisfiers, hygiene factors, and maintenance
factors as they help prevent occurrence of undesirable consequences. According to Herzberg,
satisfaction and dissatisfaction are not opposite poles of one dimension, they are two separate
dimensions. Satisfaction is affected by motivators and dissatisfaction by hygiene factors/. This is
key idea for managers.
The essence of this theory is, improve hygienes and provide motivators – motivation takes place.
To achieve motivation, managers should cope with both satisfiers and dissatisfiers. Improving
hygiene factors – removes dissatisfaction from the minds of employees. Provide satisfiers,
motivation will then take place. Managers should not expect motivation by only improving the
hygiene work environment.

Hygiene: Job dissatisfaction Motivators: Job satisfaction

Company policy and administration, Achievement,
Supervision, Recognition,
Interpersonal relations, Work itself,
Working conditions, Responsibility, Advancement and growth.
Salary, status, security.

Theory X and Theory Y (Mc Gregor’s Participation Theory)
Mc Gregor formulated two distinct views of human being. Theory X is basically negative labeled
and theory Y is positive labeled.
Theory X assumes:
(a) People like to work as little as possible.
(b) People dislike responsibility and prefer to be directed by others.
© People are self-centered and indifferent to organizational needs and goals.
(d) People are not very sharp and bright.
Theory Y assumes:
(a) People are not by nature passive.
(b) They want to assume responsibility.
© They want their organization to succeed.
(d) People are capable of directing their own behaviour.
(e) They have need for achievement.
McGregor tried to outline the extremes to draw the fencing within which the
organizational man is usually seen to behave.


Alderfer’s ERG Theory

This theory was propounded by Clay Alderfer. Alderfer’s views are the results of questionnaire’s
he gave to over 100 bank employees.
According to Alderfer there are three categories of human needs. These are:
(i) Existence (E) :- The basic physiological needs (hunger and thirst) and protection from physical
(ii) Relatedness (R) :- Social and affiliation needs and the need for respect and positive regard
from others.
(iii) Growth (G) :- The need to develop and realize one’s potential.
Maslow proposed “satisfaction- progression”, Alderfer came out with
“frustration-regression” hypothesis.
If fulfillment of a higher need is blocked an individual’s attention will regress
back towards fulfillment of lower level needs.
For example, if relatedness needs are relatively fulfilled but growth-need fulfillment is blocked, an
individual’s attention will return to fulfillment of relatedness needs.


The word “communication” is derived from the Latin word “communis” which means common.
Communication is the process of exchanging information and understanding between people.
Communication means transference of messages or exchange of ideas, facts,
opinion or feelings by two or more persons. Communication does not simply involve sending of a
message by one person. It also involves the receiver listening to it, interpreting and responding it
or acting according to it. Communication involves at least two people- one to transmit the message
(sender) and another to receive the message (receiver).
Hudson defined communication, as conveying of message from one person to another.
Importance of communication:-
(a) Effective communication is important for managers in organizations to perform their basic
functions of planning, organizing, leading and controlling. Organization requires communicating
with others about their job assignments. To achieve group goals managers have to communicate
with subordinates. Communication is thus the foundation upon which the management function
depends. More than 75% time of managers spent in communicating with others.
(b) Effective communication is a basic requisite for successful functioning of an organization.
Inter-personal, inter-group and intra group communications are essential for flow of information.
Blood cells will malfunction and die if oxygen is not supplied, in the same way organization will
malfunction if it is deprived of necessary information.
(c) Communication helps control member behaviour in more than one way. Organizations have
guidelines that employees are required to follow, when employees are required first to
communicate any job-related grievance to their boss, to follow their job description.
(d) Communication fosters motivation by clarifying to employees what is to be done, how well
they are doing and what can be done to improve performance if it is below standard.
(e) Communication provides a release for the emotional expression of feelings and for fulfillment
of social needs. Communication within the group helps the members to show their frustration and
feelings of satisfaction.
(f) Communication is highly significant as it can destroy or create interpersonal relations.

Types of communication:-
(a) Verbal communication:- when the message is conveyed orally, it is called verbal
communication. It is the most economical both in terms of time and money.
(b) Written communication:- Communication that takes place between people in written form is
called written communication. Formal communication is usually in written form such as orders,
instructions, reports, bulletins etc.
(c) Non-verbal or gestural communication:- When the message is transmitted through some
gesture, is called gestural communication. People use different gestures such as moving hands and
eyes to communicate their views, ideas etc. For example, if the superior pats his subordinate on his
back, it is understood as appreciation for work.
(d) Horizontal communication:- Horizontal communication takes place between peers and it is
also called as lateral communication. It refers to transfer of information among positions of the
same level.
(e) Upward communication:- When communication flows form lower-level to higher level
employees, it is called upward communication. Upward communication encourages employees to
participate in the decision making process and submit valuable ideas and suggestions.
(f) Downward communication:- It refers to the flow of information of from higher level to the
lower level employees.
(g) Diagonal communication:- Diagonal communication refers to flow of messages between
persons who are in positions at different levels and in different departments.
(h) Formal communication:- The channels of communications established formally by the
management are called formal communication. The formal channels of communication are used
for the transmission of official message within or outside organization.
(i) Informal communication:- Communication which takes place on the basis of informal or
social relations among people in an organization is known as informal communications. It may
take place between persons across positions, people working in different divisions and units.


Inter-personal communication
The process of communication includes the following seven elements-
(a) The sender,
(b) Encoding,
(c) The message,
(d) The channel,
(e) Decoding,
(f) The receiver and
(g) Feedback.
(a) The sender:- The communication process begins with the sender who has an intended message
to communicate. The characteristics of the sender influence the communication process. For
example, a sensitive person will look at the communication process from the receiver’s
perspective, an insensitive person will be primarily concerned with his or her own needs.
(b) Encoding:- Encoding refers to converting a communication message into a series of symbols
or gestures. Encoding is necessary because information can only be transferred from one person to
another through representations or symbols or gestures.
(c) Message:- The message is the physical product from the source of encoding. When we speak,
the speech is the message, when we write, the writing is the message, when we gesture the
movements of arms, the expressions on our face are the messages.
Message is the physical form into which the sender encodes the information.
(d) The channel:- The channel is the medium through which the message is transmitted. Oral
communication via sound waves is the verbal channel utilized in speeches, meetings, phone calls
or informal discussions. Besides non-verbal channels like signals, symbols, gestures etc., may also
be used. Written communication channels include letters, memorandums, reports manuals and
Electronic channels include e-mail, voice mail, portable telephones, fax machines,
networked computers and video conferencing. The choice of channel assumes significance as the
use of proper channel also determines the effectiveness of communication.
(e) Decoding:- Decoding is the process of translating the sender’s message by the receiver.
(f) Receiver:- The person who receives the message is called receiver. Communication to be
effective needs to receiver – oriented.
(g) Feedback:- Feedback is the response of the receiver to the message. Feedback enables the
communicator to check whether the message has been properly understood or not by the receiver.
Communication Networks
A communication network is the pattern of communication flows among various positions in an
organization. Let us assume there are only five persons in an organizations, viz., A, B, C, D, and E.
(a) Wheel network:- The wheel net represents four workers and a
supervisor who is placed in the midst of the workers. Workers have Diagrams
no interaction among themselves. All communication must pass
through the supervisor. This is highly a centralized network.

(b) Chain network:- In this network, one person transits information to another as per the chain in
the organizational hierarchy.
For example, the president informs the vice-president who then passes to the head of the
department, who tells his/her manager, who passes on to the supervisor, who then informs the
© Circle network:- The circle network allows each member to converse
With the person on his or her left or right and no farther.

(d) Y network:- In this type, two people report to a supervisor

or boss.
(e) All channel network:- In all channel net, every member has
easy access to every other member in the group.


Barriers to communication
(i) Communication goals:- There must be some goal or objective in communication. This goal
provides the ender with the basis for formulating the message.
(ii) Communication skills:- Communication skills refer to clarity of thought, correct word usage,
grammatical accuracy, proper delivery of message, correct spelling or pronunciation, and proper
organization of sentences or speeches. Absence of these make it difficult for the receiver to
understand the message clearly.
(iii) Improper diction(pronunciation):- The way the sender utters a word or a phrase is, often,
not clear to the receiver. English is spoken differently in different states. For many school becomes
“ischool”, statistics is “istatistics”.
(iv) Fear:- Fear is another barrier of communication. A person under the influence of fear is likely
to lose balance and his or her communication skills will be affected adversely.
(v) Sender credibility:- The amount of faith the receiver places on the message depends on his or
her evaluation of the sender. The more receiver trusts the sender, the greater will be the receivers
willingness to listen the sender’s message.
(vi) Selective and poor listening:- Selective listening refers to the people’s tendency to hear only
what they want. We try to ignore information that conflicts with established beliefs or values. Poor
listening also distorts communication.
(vii) Lack of responsive feedback:- Non-response discourages the sender of the message. A non-
response means that the receiver is not interested in the message, and it is difficult to communicate
with such a person.
(viii) Meta-communication:- Meta-communication means an additional idea accompanying every
idea that is expressed. For example, a superintendent and foreman were standing at the latter’s
office. Upon hearing the girls in the office burst into loud laughter, superintendent said, “ the girls
seem happy this morning”.
The foreman got one or more of the following messages, “your secretaries are loafing (be
idle) on the job”, “your secretaries do not take their work seriously”, “you are not exercising
proper control”. Foreman changed the work stations.
(ix) Jargon:- Jargon means unintelligent or meaningless talk or writing, familiar only to a group. It
is full of special words known only to the members of a group.
(x) Information overload:- Because of information overload, the receiver cannot accommodate a
heavy load of message from the sender and the result is miscommunication.
(xi) Noise:- Noise will disrupt or interface with the receiver’s ability to receive the messages
(xii) Distance:- There will be delay in communication if the distance between the sender and the
receiver. This is particularly true in case of letter writing.
(xiii) Mechanical failure:- The failure of mechanical equipment may also disrupt communication.

Groups in organizations
Group and its nature:- A group may be defined as a collection of people who have a common
purpose or objective, interact with each other to accomplish the group objectives, are aware of one
another and perceive themselves to be part of group.
Group of people watching India Vs Pakistan one-day cricket match will not be called as group
because people do not interact with one another, do not know one another and also do not share a
common purpose.
Groups possess the following characteristics:-
(i) Two or more persons:- For group formation, at least two persons are must. There is no specific
limit on the maximum number of persons to form a group.
(ii) Collective identity:- Each group member knows one another. Each member of the group
perceives that he/she is a part of group.
(iii) Interaction:- Each member share his ideas with other members through different
communication methods such as face-to-face in writing, over the telephone, and across a computer
(iv) Common purpose:- The members of the group work to achieve some common purpose or
Types of groups:-
Different kinds of formal and informal groups are listed in the following table-
Formal group Informal group
Command group Friendship group
Task group Interest group
Project group Reference group.

Formal group:- Groups established by the organizations to achieve organizational goals are
called formal groups. A formal group is one that is deliberately created to perform a specific task.
(a) Command group:- Also called as standing task group is composed of a supervisor(manager)
and the subordinates who directly report to that supervisor. For example, the HOD and other
members, foreman and his group of subordinates. This group is permanently specified in
organizational structure.
(b) Task group:- Is a temporary formal group created to solve specific problems. The group
comprises employees who work together to complete a particular task or project, but who do not
necessarily report to the same supervisor. The employees belong to different departments, stay
together till the task is completed and once the work is completed, members return to their
respective groups.
(c) Project group:- Project groups are formed to complete a specific project. For example, a
research project assigned to a University professor by the UGC is a project group.
(d) Committees:- Are usually created outside the usual command group structure to solve
recurring problems. For example, University’s examination discipline committee to solve
disciplinary problems relating to exams.
Informal groups:- Groups that are neither created nor controlled by the organization are called
informal groups.
(a) Friendship group:- Friendship groups are associations, composed of people who like each
other and who like to be together. Such groups are formed because members have one or more
common characteristics, such as age, political beliefs, religious value and other bonds of attraction.
This groups satisfy affiliation (attachment) needs of their members.
(b) Interest group:- Interest groups are composed of individuals who may not be members of the
same organization, but they are united by their interest in a common issue. For example, a group of
university professors organizing a seminar.
© Reference group:- A reference group is any group with which an individual identifies for the
purpose of forming opinions or making decisions.
For example, the reference group for a new university lecturer, may be other scholars in the same
discipline working in other universities.
Open and closed groups:- Open group is in a constant state of change and the closed group is
quite stable. In open group members keep changing, new members joining and existing one
leaving. Open group has relatively a short time perspective.
In-group and Out-group:- An in-group is one in which we are already members and the one in
which we are not associated is an out-group.
The groups to which we belong are in-groups and groups which we don’t belong is out-
Why do people join groups?
People join groups because different groups offer different attractions and benefits to their
members. The following are the most popular reasons for joining a group-
(a) Security:- Groups provide security from outside pressures. Probably the strongest reason for
group formation is the people’s need for security. By joining a group one can reduce insecurity,
feel stronger and are more resistant to threats. New or experienced, no employee likes to stay
alone. If management creates an environment in which employees feel insecure, they are likely to
turn to unionization in order to reduce their feelings of insecurity.
(b) Esteem (respect) needs:- An individual can increase his self esteem through group
membership. First, one may gain esteem by becoming a member of a high status group. A person
belonging to a high status group is usually accorded a high status by outsiders.
Second, the close relationship provides opportunities for recognition and praise that are not
available outside the group. When one does a good piece of work, gets a praise from others.
(c) Power:- Membership of groups offer power to members in at least two ways. First, workers
enjoy much greater power collectively, than they do as individuals.
Second, leadership of an informal group enables an individual to exercise power over
group members.
(d) Identity:- As a member of a group, an individual gets identity, “who am I ?’. It is common
knowledge that we try to understand ourselves through the behaviour of others towards us. If
others praise us we feel we are great, if others enjoy our jokes, we see ourselves as funny persons
and so on.
(e) Affiliation:- Another reason why people join groups, is that people enjoy the regular company
of other people, particularly, those who possess common interests. Groups satisfy number of social
needs. Studies show persons prefer to be absent from work where they are unable to belong to
(f) Huddling (crowd together):- Because of the way bureaucracies work, individuals make use of
informal get together called huddles.

Group cohesiveness (Tendency to stick together, unity)
Group cohesiveness refers to the extent to of liking each member has towards others and how far
everyone wants to remain as the member of the group.
Group cohesiveness is the degree/extent to which the members are attracted to each other and to
the group.
Persons in a highly cohesive group value their membership and strive to maintain positive
relationships with other group members. Cohesiveness binds all group members to work as one
man to attain the set goals.
Factors influencing the group cohesiveness:-
(a) Interaction:- When individual members spend more time with each other they become more
(b) Size:- If the group size increases, cohesiveness tend to decrease. In large size groups
possibilities of interactions among members are less.
© Encouraging competition:- Encouraging competition with other rival groups or threat from
outside the group will increase the group cohesiveness.
(d) Similarity of attitudes:- If the attitudes and values among group members are similar, that
may influence the group cohesion.
(e) Shared goals:- Groups that share the common goals are likely to be more cohesive than those
that do not share such goals.
(f) Allocation of rewards:- Allocating rewards to the groups not to the members for increasing
group cohesiveness.

Consequences of group cohesiveness:-

(a) Cohesiveness affects the productivity of group members. The productivity of a cohesive group
tends to be higher than a less cohesive group. Highly cohesive group members tend to have lower
absenteeism (non-attendance) and turnover(return).
(b) Members of cohesive group communicate with each other more than members of less cohesive
groups. Sharing ideologies, attitudes is usually reinforcing.
© Each member of the cohesive group likes the other, by which conflicts are reduced and better
communication among members.
(d) High group cohesiveness offers job satisfaction to its members.

Implications for managers:-

(a) Cohesive group being united commands control over its members. It enables the group to
command a powerful bargaining power.
(b) If the cohesive groups are not managed and motivated effectively, its productivity is sure to be

Status may be defined as a social ranking within a group and is assigned to an individual on the
basis of position in the group of individual characteristics. The Professor in a University has a
better status than a lecturer. A person is given status because of some personal characteristics such
as age, sex, skill or education, seniority.
Status congruence is understood as the agreement between group members on the level of
status of individual members. When there is full agreement on member status levels (status
congruence) the major activity of the group is directed towards goal accomplishment. However,
when there is disagreement on status levels within the group, some group activity is diverted from
goal accomplishment and directed towards resolving this conflict.

Group Decision Making

Decision making is the process whereby a final but best choice is made among the available
When a group makes decision, it can be either through the consensus mode or through
majority vote. If all members of the group agree to the decision arrived at, it is called “consensus”.
If majority of the group members agree, it is called majority vote.

Process of decision making:-

This process involves the following four steps-
(a) Diagnosing the problem:- Decisions are made to solve problems. The first step is to identify
the problem.
(b) Developing alternatives:- Decisions are made out of alternatives. Therefore, alternatives are
developed through different sources like experience, practices in other organizations and ideas and
suggestions from different parties related to the diagnosed problem.
© Evaluating the alternatives:- These alternatives are to be evaluated to know their advantages
and disadvantages. Then finally the most appropriate alternative is to be selected.
(d) Implementing and monitoring the decision:- The last step is implementing and then
monitoring it, like seeing whether the activities are taking place according to plan or not. If not,
appropriate measures need to be taken to correct the situation.

Advantages of group decision making:-

(a) Compared to an individual, the groups usually have a greater knowledge, expertise and skill
base to make better decisions.
(b) Large number of members provide more perspectives of the problem. As such, the narrow
vision of a single perspective is avoided in making decisions.
© Helps to reach at a quality decision.
(d) Following increased group participation, comprehension (knowledge, command) of final
decision arrived at is usually high.
(a) Is a time consuming process.
(b) Influence groups usually manipulate the group decision in a direction of their liking and
(c) Sometimes, group decisions are simply a compromise between the various views and opinions
offered by the group members.

Techniques / Methods to improve group decision making

(i) Brainstorming:- This technique was developed by Alex Osborn in 1938 in an American
company for encouraging creative thinking in groups of six or eight people. According to Osborn,
brainstorming means using the brain to storm the problem. In brainstorming, the participants
should be connected with the problem directly or closely.
It is based on the following four guidelines:-
(a) Generate as many ideas as possible.
(b) Be creative, freewheeling(relaxed) and imaginative.
(c) Build upon piggyback (attached), extend or combine earlier ideas.
(d) Withhold criticism of others ideas.
There are two basic principles that underlie brainstorming-
(i) Deferred judgment, by which all ideas are encouraged without criticism and evaluation.
(ii) Quantity breeds quality. As more ideas come forth, it facilitates to develop the higher-quality
The success of brainstorming depends on each member’s capacity and willingness to
listen others thoughts, and to use these thoughts to spark new ideas of their own, and then feel free
to express them. Brainstorming sessions last from 10 minutes to one hour and do not require much
(ii) Nominal group technique (NGT):- In the NGT members have minimal interaction
prior to making a decision. NGT follows the following process-
(a) Members are brought together and presented a problem.
(b) Each member develops solution/ideas independently and writes them on cards.
(c) Each member presents his/her ideas to the group in a round-robin procedure.
(d) When the presentation of ideas by each member is over, brief time is allotted to
clarification of ideas or solutions.
(e) Group members individually rank their preferences for the best alternatives by secret ballot.
(f) Based on above, the group decision is announced.
The advantage of NGT is the integration of both group creativity and individual creativity and the
equal participation by all members in group decision making.
The disadvantage is that the members do not have the opportunity to benefit fro cross-
fertilization of ideas.
(iii) Delphi Technique:- The name Delphi indicates a shrine (holy place) at which the ancient
Greeks used to pray for information about the future. In Delphi technique of decision making,
members are scattered over large distances and not have face-to-face interaction for decision
making. Members selected because they are experts or have relevant information to share. The
Delphi technique follows the following process-
Firstly, a small group of members design a questionnaire which is administered (run) in a larger
group. The results so obtained are then tabulated (put into a table) and used in developing a revised
questionnaire. The questionnaire is then completed by the larger group. The results of the first
round are fed back to the respondent group to use these in their subsequent responses. The process
is repeated until consensus is reached.
The effectiveness of the Delphi technique depends on adequate time, participants expertise,
communication skill and motivation of members to immerse (submerge) themselves in the task.
(iv) Consensus Mapping:- In this technique, an attempt is made to arrive at a decision by
pooling the ideas together generated by several task sub-groups. It begins with developing ideas by
a task sub-group. The facilitators encourage participants to further develop clusters of ideas. The
ideas so generated by the task sub-groups (grouped closely together) are developed and narrowed
in smaller number of ideas. Then all ideas are consolidated into a representative structure called
“straw man map” for the all ideas generated by the sub-groups. Straw man map is further narrowed
down to arrive at a mutually acceptable solution.
This technique is best suited for problems that are multi-dimensional, have
interconnected relationships and involve many sequential steps in problem solving.

Quality circle:-
QC is a small group of employees who work voluntarily on company time, to address work
related problems such as quality control, cost reduction, production planning and techniques and
even product design.
Objective of QC- (a) Improvement in quality of product manufactured by the organization.
(b) Improvement in the methods of production and productivity.
© Development of employees participating in QC.
(d) Promoting morale of employees.
(e) Respect humanity and create a happy workplace worthwhile to work.

Effective Team Building

A team is a small number of people have complementary skills and are committed to a common
purpose or common performance goals for which they hold themselves mutually responsible.
Characteristics of a team:-
(a) It creates positive synergy.
(b) It creates and fosters comraderies among the members through regular and repeated
© It encourages members to sublimate their individual goals for those of the team.
(d) It also encourages members involvement in the team work.
Types of teams:-
(i) Problem solving teams:- Problem solving team, also known as corrective action team, is
constituted to solve some specific problem an organization or its some department is facing. The
member in such teams are drawn from the sections or departments that are related to the problem
to be solved. After solving the problems, the team is usually disbanded, allowing members to
return to their normal work.
(ii) Self- managed team:- This is natural group that is given substantial autonomy and in return,
asked to control its behaviour and produce significant results. It is also called as “autonomous” or
“empowered” team. Self managing team is characterized by empowerment, self plan, self
inspection and self responsible for the results. Over the years emphasis on building self-managed
teams has remained because of the advantages these teams offer.
For example, Howlett Packard- when its teams are empowered they discovered, productivity as
(iii) Work teams:- These are primarily concerned with the work done by the organization, such as
developing and manufacturing new products, providing services for customers and so on. Their
principal focus is on using the organization’s resources effectively.
(iv) Cross functional teams:- These teams are made up of members drawn from different
departments or functional specialists, particularly from those functional areas which have high
interdependence. The basic objective in forming such team is to solve problem that cannot be done
by a particular department. Such team is usually disbanded when the problem is solved.
(v) Virtual teams:- Those are the teams that may never actually meet together in the same room.
Their activities take place on the computer via teleconferencing and other electronic information
systems. For example, engineers in U.S., can contact audibly and visually with their counterparts
all around the globe. Decisions are made much faster.
(vi) Management teams:- Management teams consists of managers from various areas. They are
relatively permanent because their work does not end with the completion of a particular project or
solving a problem. The primary job of the management teams is to coach and counsel other teams
to be self managing by making decisions within the teams. The second most important task is to
coordinate the work between work teams that are interdependent.

Teams Versus Groups

Performance On both individual member’s On the work of individual
work and collective work. members.
Accountability On both individual and mutual On group as a whole.
Connection to management Usually self-managed or Responsive to demands placed
autonomous. on it by management.
Skills Complementary Diverse skills.
Common commitment to Common purpose.

(i) In groups performance depends on the work of individual members. The team performance
depends on both individual contributions and collective efforts of team members.
(ii) Members of groups usually do not take responsibility for any results other than their own.
Teams focus on both individual and mutual accountability.
(iii) Groups are required to be responsive to the demands regularly placed on them by
management. But in case of teams, once goals are set, then the management gives enough freedom
and flexibility to do its job.
(iv) Members in a group possess diverse skills but the skills in a team are complementary.
(v) Group members share a common goal, but team members share a common commitment to

Effective Team Building

According to Hackman, building an effective team involves a process that proceeds four distinct
stages. These are-
(a) Do pre-work:- This stage is in a way of forming stage of team building. This stage is marked
by decisions like what is the need for building a team, what authority the team should have and
(b) Create performance conditions:- In this stage, the concerned officials have to ensure that
proper conditions are created for performing the job. It involves making both material resources
(e.g., tools, equipment and money) and human resources (e.g., skilled personnel) available to the
teams. In addition, the support from the management is also needed to the team to do its own work.
© Form and build the team:- This stage involves three things to be done. First, clarify who is a
member and who is not a member of a team. Second, arrive at an agreement about the overall
mission and purpose. Third, clarify the behaviour expected of each member.
(d) Provide ongoing assistance:- Once the team has started functioning, it needs to be provided
with needed and timely assistance to keep it ongoing. For this managers may interfere to eliminate
team problems if any. For example, they may counsel the disruptive team members or replace
them by new ones. Similarly, material resources may need to be upgraded. It may be unwise for
managers to intervene in the successful affairs of a team, on the one hand, and to neglect
opportunities to help a team do even better, on the other.
Team work depends on cooperation, trust, training and rewards.
(a) Cooperation:- It is cooperation, not competition, that ensures team performance. Research has
proved that- cooperation is superior to competition in promoting achievement and productivity.
(b) Trust:- Absence of trust affects team performance adversely. For building trust, either
management or employees need to take initiative. Measures for building trust are – (i)
Communication:- Keep team members and employees informed by explaining policies and
decisions and providing accurate feedback. (ii) Support :- Provide help, advice, coaching and
support for team member’s ideas. (iii) Respect:- Delegation, in the form of real decision making
authority. (iv) Fairness:- Be quick to give credit and recognition to those who deserve it. (iv)
Predictability:- Be predictable and keep promises.
© Training:- Training is necessary because team members must know how to function effectively
as a team.
(d) Rewards:- While rewarding the team success also should be considered. To the extent that
teams performs well, they should be rewarded.

The person who guides or influences the behaviour of others is called “leader” and people
influenced are called “followers”.
Leadership:- Leadership is the process of encouraging / influencing and helping others to work
enthusiastically towards objectives.
Leadership and management:- Management is a process of planning, organizing, coordinating,
directing and controlling the group activities to accomplish organizational gaols
Leadership is a part of management.

Leadership Management
(a) Leader leads people. (a) Manager manages things.
(b) Leader can use his informal influence. (b) Managers hold formal positions.
© Leaders inspire others to achieve results. © Managers achieve results by
directing the activities of others.
(d) Leader inspires enthusiasm ( strong feeling of (d) Managers engenders fear.
Interest, eagerness). (subordinates obey out of fear).
(e) Leaders have followers. (e) Managers do not have.
(f) The main job a leader is to satisfy his followers. (f) The main aim of a manager is to
meet organizational goals.
(g) Any one can become a leader in an organization. (g) But management is confined to
people in particular positions.

Without leadership, an organization would be what the sage Valmiki wrote in the Ramayana, “ like
a heard of cattle without a keeper, an army without a general, a night without moon, such would be
the country where the king is not seen”.
Leadership transforms potential into reality.

Functions of leadership or role of leader in organisaion

(a) Developing team work:- Leader has to develop and combine his followers as a team. He has
to create a healthy working environment for his team.
(b) Representing the team:- He serves as a linking pin between his team members and
management. If requires, he communicates the problems of his subordinates to the management,
and also helps in problem solving.
© Counseling the workmen:- When team members face problems in doing they seek guidance
and advance from their leader. The problem may be technical or emotional in nature.
(d) Managing the team:- The leader has to ensure the timely completion of activities undertaken
by his / her team members.
(e) Using proper power:- He has to exercise his power and authority over his subordinates as per
the demand of the situation.
(f) Securing group effectiveness:- The leader needs to provide for a reward system to improve the
efficiency of capable workmen, delegate authority and invite participation in decision making.

Leadership styles:-
The way the leader influences his followers is called “leadership style”. The following are the
three basic styles-
(a) Autocratic or authoritative style:- In autocratic style, the leader centralizes power and
decision making is by himself / herself. The leader commands and decides, decision is passed on to
subordinates and they have to obey the orders. The subordinates have no opportunity to make
suggestion or take part in decision making. The advantage of this style is that tasks are efficiently
completed, since there is no opportunity for time consuming two-way communications. In this
style workers are made aware of what to do, but not why. This results low morale and job
(b) Democratic or participative style:- In democratic style, the leader takes decision in
consultation with the subordinates. In other words, the subordinates participate in decision making.
Hence, this is also known as participative style. Frequent interaction between the leader and
subordinates also helps build mutual faith and confidence. Participation in decision making enables
subordinates to satisfy their social and ego needs and makes them more committed.
The advantages of this style is it will improve subordinates moral and job
satisfaction. Develop subordinates potential abilities and helps in making right decision.
(c) Laissez-Fair or Free-Rein style:- This is just the opposite to autocratic style. The leader
leaves decision making to the subordinates. The subordinates enjoys full freedom to decide as and
what they like. This style is suitable when the group is composed of competent, experienced and
committed members. The biggest limitation is due to full freedom, it may create mismanagement
in decision – making.
Benevolent authoritative style:- The leaders use rewards to encourage performance, upward
communication is permitted but to the extent the boss wants, and there is some delegation in
decision making, though the major decisions are made by the people at the top of the hierarchy.


Theories of leadership
Trait theory:-
This theory of leadership focus on the individual characteristics of successful leaders. According to
this theory, leaders possess a set of traits which makes them distinct from followers. Attempts were
made to identify such qualities and Ralph Stogdill, surveyed more than 5000 leadership studies and
concluded that successful leaders tend to have the following qualities-
(a) Strong desire for accomplishment.
(b) Persistent (Refusing to give up) pursuit (chase) of goals.
(c) Initiative applied to social situations.
(d) Self-assumed personality.
(e) Willingness to accept behavioural consequences.
(f) Low susceptibility (easily influenced) to interpersonal stress.
(g) High tolerance of ambiguity (uncertainty).
(h) Ability to influence other people.
(i) Ability to structure social interactions.
(j) Creativity and intelligence used to solve problems.
Since all did not have these qualities only who possess be considered potential leaders. Ineffective
leadership is associated with such qualities as poor temperament, self-centeredness, inability to get
along with others, lack of vision, lack of character and mental health problems such as aggression,
depression, disorganization.
(a) The list of traits of successful leaders is too long and no finality about it.
(b) How much of which trait a successful leader must have is not clear. Certain traits, particularly
psychological, cannot be quantified.
© This theory assumes that leaders are born not trained. This is not accepted by the contemporary
(d) Leadership effectiveness does not only depend on the personality of the leader alone. Other
variables like the situation, the task, the organization and the characteristics of followers also

Behaviour theory
According to the behavioural theories, leadership can be described in terms of leaders’ behaviour
rather than the traits. Leadership can be identified by reference to their behaviour in relation to the
Behavioural theories differ from the trait theories in at least two ways. First actual leader’s
behaviours, not the personal traits were the main focus. Second, trait theories sought to separate
leaders from non-leaders, but behavioural theories attempted to determine how different kinds of
behaviours affect he performance and satisfaction of the followers.
The two important behavioural theories are Ohio State University studies and the studies of
Michigan University.
Ohio State University studies:- These studies were started shortly after World War – II. The main
objective of the studies was to identify the major dimensions of leadership and to investigate the
effect of leader behaviour on employee performance and job satisfaction. The two leadership
dimensions identified are-
(a) The initiating structure, which refers to leader behaviour that defines and organizes the group
tasks, assigns the tasks to employees and supervises their activities.
(b) Consideration refers to leader behaviour that can be characterized by friendliness, respect,
supportiveness, openness, trust and concern for the welfare of the employees.
The main point in the study is that both consideration and initiating structure are not seen as
being placed on a continuum. The leader could be low on one dimension and high on the other, or
high on both or low on both.
The University of Michigan studies:- The researchers at the University of Michigan
distinguished between two dimensions of leadership- production centered and employee centered.
Production centered leaders set rigid work standards, organized tasks down the last
detail, prescribed the work methods to be followed and closely supervised subordinates
Employee centered leaders encouraged employee participation in goal setting and in
work related decisions and helped ensure high performance by inspiring respect and trust.
In his study, Likert of the University of Michigan found that the employee centered
style resulted in higher performance compared to production centered one.

Managerial Grid
One of the most widely known styles of leadership is the managerial grid developed by Blake and
Mouton. The grid is based on two underlying dimensions labeled as concern for production and
concern for people. Based on these two dimensions, the authors have generated a 9 by 9 grid
representing concern for production along the horizontal dimension and concern for people along
the vertical dimension. The authors have identified five basic styles of leadership.
(a) Task management (9,1) :- Leader is primarily concerned with production and has little
concern for people. This person believes in getting work done at all costs.
(b) The country club management(1,9) :- Leader is primarily concerned with people.

Diagram from page no. 446 of text book of OB by Aswathappa.

(c) The middle of the road management(5,5) :- Leader represents a moderate concern for
(d) The team management (9,9) :- This style demonstrates high concern for both production
and people and is the ideal approach to leadership.
(e) The impoverished management (1,1) :- Leader has minimum concern for people and
The model is useful to managers in as much as it helps them identify their current styles
and develop the most desirable style.

Contingency Theories of Leadership

According to the contingency theories of leadership, the success of leadership depends upon the
situation in which the leader operates. Fred E. Fiedler developed a contingency model of
According to him, the leader’s effectiveness depends upon –
(a) his motivational style and (b) the favorableness of the situation.
Leaders are motivated by either interpersonal relations or goal accomplishment. Leaders differ in
their motivational styles. Some believe in getting the task done are task - oriented. Others are
relations – motivated leaders and they believe in getting along with others. These leaders believe in
participative style.
Situational favourableness:- The situation is favourable to the leader when he has influence and
control over his subordinates performance. The situation favourability is determined by (a) leader-
member relations (b) task structure and (c) position power.
(a) Leader-member relations- is the degree of followers’ trust, confidence and respect for the
(b) Task structure- describes the extent to which the task has a well defined goal, has methods of
operation and whose accomplishment can easily be measured. A high degree of task structure
contributes to a favourable situation for the leader which enables him to influence and control the
behaviour of subordinate. When the task is unstructured the situation is not favourable.
© Position power – comprises formal authority to command needed resources for task
accomplishment and reward power to award a reward for good performance and punishment for
laxity (negligence) on the part of subordinates. The greater the power the greater the leader’s
control over subordinates.
The most favourable situation for leaders to influence their group is one in which they
are well liked by the members, the task performed is highly structured and the leader has enough
power in the organization.
On the other hand, the most unfavourable situation is one in which they are
disliked, the task is highly unstructured and little power is attached in the organization.
The path goal theory is one of the contingency models and is developed by Robert House.
According to the goal setting theory, leader’s job is to create a favourable environment that helps
employees reach the organization’s goals. According to this theory the leader must clarify goals for
the subordinates and clear the path for realizing the goals. The theory is called path goal because
its major concern is how the leader influences the subordinates’ perceptions of their work goals,
personal goals and paths to goal attainment.
The path goal theory focuses on how leaders might influence motivation by
increasing the availability and attractiveness of rewards and by strengthening the expectancies that
effort can result in performance and performance in rewards. According to this theory the leader’s
effectiveness depends on the characteristics of the environment and the characteristics of the
This theory states that leaders can exercise four different kinds of styles: Directive leadership –
giving directions to the subordinates rather than seeking their cooperation, supportive leadership-
being friendly and approachable to subordinates, participative leadership – asking for
suggestions from subordinates before making decisions, achievement –oriented leadership –
setting challenging goals and assignments for subordinates. This theory suggests that leaders
should first assess the situation and select a leadership behaviour appropriate to the situational
demands. Path goal theory suggest that depending on the followers and situation, these different
leader behaviours can increase goal clarity of followers, enhance their level of satisfaction and
raise their expectations that effort will result in effective performance, which in turn, will lead to
valued rewards.

Leadership and followership:-

It is true that leadership refers to the influence of the leader on the followers. At the same time, the
characteristics of employees and their tasks do yield influence on the leader. Leadership is
therefore, a mutual influence process.
Leader’s influence on followers- why is leader able to influence his followers? What makes
followers simply obey whatever their leader says?
A leader is able to change the behaviour of his followers because he enjoys power which comes to
him from at least five sources. They are (i) reward power which refers to the leader’s capacity to
reward followers, (ii) coercive power which is the flip side of reward power and refers to the
leader’s capacity to coerce or punish followers, (iii) legitimate power which refers to the power a
leader possesses as a result of occupying a particular position or role in the organization, (iv)
expert power that refers to power that a leader possesses as a result of his knowledge and expertise
regarding the tasks to be performed by subordinates and (v) referent power which is dependent
upon the extent to which subordinates identify with, look up to and wish to emulate the leader.
Followers’ influence on leader:- The fact that the followers and situations will influence their
leader is a recent discovery. The following are some of the sources of influence on the leader’s
behaviour – (i) performance or responses of subordinates, (ii) characteristics of subordinates, such
as male or female, young or old, personal background and the like, (iii) the nature of the task, (iv)
organizational policy and climate, (v) peers and their influence on the leaders and (vi) influence of
supervisors on the leader.

How to be an effective leader

Leader does not mean imposing will on unwilling working under one in an office or a factory. In
practice, people are always impressed by something extraordinary and great and are prepared to
follow it if it really touches their hearts. Thus leadership needs to win the hearts of others to attain
some desired goals. Factors that influence leadership effectiveness are-
(i) Mental and physical health:- A healthy mind rests in a healthy body. A leader needs to have
sound health both mental and physical to be able to bear the pulls and pressures of his role as
leader. He must also possess stamina and balanced temperament.
(ii) Intelligence and knowledge:- A leader should have required knowledge and professional
competence and has to update continuously.
(iii) Clear-cut and worthy goals:- Actions without clear cut directions leads no where. Hence, a
leader needs to be very clear in mind about what to achieve, how to achieve and then reinforce it
by a strong will power and conviction.
(iv) Sense of responsibility:- A leader must have sense of responsibility for the task assigned to
(v) Motivation:- A leader needs to have capacity to appreciate others and look at things from his
subordinates angle.
(vi) Initiative and drive:- Passive goodness of leader is never helpful unless it is action-oriented
and result producing. Initiative and drive are, therefore, the essential pre-requisites of effective
(vii) Conviction:- There are millions with opinions but very few with convictions. Leader must
have courage of conviction to impress upon his subordinates.


Formal leadership occurs when a manager leads by exercising formal authority. The exercise of
formal authority through such acts as assigning duties derives, from the manager’s official position
within the organisation’s hierarchy of authority.
Informal leadership arises when a person without formal authority
is influential in directing the behaviour of others.
Managers themselves may act as formal leaders in some situations and as informal
leaders in some situations. When acting as a formal leader, the manager follows the chain of
command and exerts influence downward in the hierarchy of authority from manager to
subordinates. But when acting as informal leader, the manager influences employees outside the
formal organizational chain of command.


Transactional leadership:- Transactional leaders manage the transactions between the
organization and the its members so that the organizations objective is achieved. They get things
done by giving rewards, pay hike, recognition who perform better.
Transformational leadership:- The leaders focus on changing the attitude of employees towards
building the commitment for organizational objectives. Leaders generate awareness and stir their
subordinates to look beyond their self-interest for the good of the group/organization.


Conflict can simply be defined as disagreement, be it in violent or subtle (delicate) form between
two parties or persons.
Conflict and competition:-
Competition does not involve direct action by one party to interfere with the activities of the other.
But, in the case of conflict, one party tries to prevent the success of others.
For example, track events are examples of competition because each runner attempts to run faster
than the others, but in the game of football each team tries to prevent the other to win involve both
competition and conflict.

Types of conflicts:-
(a) Intrapersonal conflict:- When conflict occurs within an individual, it is called
intrapersonal conflict. It emerges as a result of conflicting role taken by the individual. For
example, when a child gets sick at school, the parent often must leave work to care for the
(b) Interpersonal conflict:- Conflict between two or more people is called interpersonal
conflict. Individual differences create interpersonal conflicts.
(c) Inter-group conflict:- When conflict occurs between groups or teams is inter group
conflict. Group conflicts emerges when one group gain power and improve its image.
Group conflicts can be constructive also. Group conflicts increase group cohesiveness,
increased focus on tasks and increased loyalty to the group.
(d) Inter organizational conflict:- Conflicts that occur between two or more organizations.
Such conflict may include conflict between organizations pursuing similar objectives,
conflict between government agency and organization and conflict between head office and
manufacturing unit.
(e) Functional conflict and dysfunctional conflict:- Conflicts that support the goals of the
group and improve the performance are functional conflicts. These are also called
‘constructive conflicts’. Moderate or optimum level of conflict contributes to high
organizational performance.
The destructive form of conflict which hinder group performance is called
dysfunctional conflict. For example, intense conflict between employees and administration
destroys the working relationships between them and seriously reduces the level of organizational
efficiency and performance.

Styles/Techniques of conflict management:-

(a) Avoiding:- Avoiding is a deliberate decision to sidestep a conflictful issue, postpone
addressing it till later or withdraw from a conflicting situation. In certain situations it may be
appropriate to avoid a conflict. For example, when two parties are much angry and need time
to cool down, it may be best to use avoidance.
(b) Accommodating:- In this style, one party is willing to self- sacrifice in the interest of the
other part. A style in which one is concerned with the other party’s goals be met but relatively
unconcerned with getting one’s own way is called accommodating. Accommodating manager
may become frustrated as his/her own needs are never met. In turn he may lose self-esteem.
(c) Competing:- In this style, one tries to meet one’s goals at the other party’s expense. Much
reliance on competing strategy may be dangerous because one who does so may become
reluctant to admit even when he/she is wrong.
(d) Compromising:- Each party tries to sacrifice something to reach a solution to the conflict. A
typical “give” and “take” policy. Comprises are often made in the final hours of union-
management negotiations, when time is of the essence.
(e) Collaborating:- Collaborating style involves attempts to satisfy the needs of both the parties.
Thus, it is based on “win-win” style. In this style, a creative solution usually emerges because
of the joint efforts of both the parties who are keen on both gaining from the situation without
hurting the other.

Conflict Resolution:-
Goal conflict occurs when the attainment of one goal excludes the possibilities of attaining
another. Four major forms of goal conflict are – (a) Approach-approach conflict, (b) Approach-
avoidance conflict, (c) Avoidance-avoidance conflict and (d) Multiple approach-avoidance
Approach-approach conflict:- This conflict arises when the individual is caught between two or
more positive but mutually exclusive goals. For example, a person is feeling hungry and sleepy at
the same time. This conflict is resolved by giving up one of the goals.
Approach- avoidance conflict:- This conflict arises when an individual is simultaneously
attracted to and repelled by a single goal object. For example, a person picks up the telephone
receiver and begins to dial the number of someone from whom he or she wants to ask a favour, but
fearing he or she may insult the other person or be turned down, he or she quickly puts the receiver
back on the hook.
Avoidance-avoidance conflict:- This conflict arises when an individual is forced to choose
between two negative but exclusive goals. For example, a choice between the pain from a chronic
disease such as ulcers and the fear of going to the hospital for surgery.
Multiple approach-avoidance conflict:- A conflict of this type, in which two alternatives- both
involving positive and negative features- is referred to as a double approach-avoidance conflict.
Dancing at Delhi would have been a breakthrough in the life of the boy, but his mother’s death
snatched the opportunity from him. Marriage with the damsel would have turned the boy’s life for
better, but it did not.

Transactional Analysis (TA)

When two people interact with each other there results a social transaction. Analysis of the social
transactions is called “TA”. TA is, “the study of moves people make in their dealings with each
other and is based on the idea that people’s interactions resemble moves in games”.
TA assumes that a person has three ego states, viz., parent, adult and child.
The parent ego state represents that part of a person’s personality that is authoritative, dogmatic
(rigid, strict) overprotective, controlling, nurturing, critical and righteous. These characteristics are
learnt from one’s parents. Therefore, the parent ego is the “ taught” ego state.
The adult ego state represents the mature, rational and objective part of peron’s personality. These
characteristics are acquired as one matures into adolescence and adulthood. The adult ego is
“thinking” ego state.
The child ego state represents the childish, dependent and immature part of the personality. Child
is the “felt” ego state.
Social transactions: People interact with each other from the child, adult or parent ego state.
Depending on the kinds of ego states involved, the interaction can be either complimentary,
crossed or ulterior.
Complimentary transactions occur when the message sent or the behaviour exhibited by one
person’s ego state receives the appropriate or expected response from the other person’s ego state.
In crossed transactions the receiver’s response is not what was expected by the sender and does
not satisfy the sender’s needs. For example, the stimulus comes from the first person under the
adult ego state, but the response from the other person is under the child ego state.
Ulterior transaction involve at least two ego states on the part of the first person. The individual
may say one thing (as in adult) but mean something quite different (as a parent). These transaction
is the most difficult to identify and deal with.


Managers are individuals who achieve goals through other people. Managers get things done
through other people. They make decisions, allocate resources and direct the activities of others to
attain goals.

Functions of Management:-
(b) Planning:- The planning function refers to define an organization’s goals, establish an
overall strategy for achieving those goals and developing a comprehensive hierarchy of
plans to integrate and coordinate activities.
(c) Organizing:- Managers are responsible for designing an organization’s structure. It
includes the determination of what tasks are to be done, who is to do them, how the tasks
are to be grouped, who reports to whom and where decisions are to be made.
(d) Leading:- Every organization contains people and it is the job of the management to direct
and coordinate those people. This is leading function. Managers have to motivate
employees, direct the activities of others, select the most effective communication
channels, or resolve conflicts among members.
(e) Controlling:- Management must monitor the organization’s performance. Actual
performance must be compared with the set goals. If there are any significant deviations, it
is management’s job to get the organization back on track. This monitoring, comparing and
correcting is meant by the controlling function.

Management skills:-

(iv) Technical skills:- Technical skill refers to the ability to apply specialized knowledge or
expertise. Vocational and on-the-job training programmes largely do a good job in
developing this skill. All jobs require some specialized expertise and many develop
their skills on the job.
(v) Human skills:- Human skills refers to the ability to work with, understand and
motivate other people, both individually and in groups. Many people may be
technically proficient but interpersonally incompetent. They might be poor listeners,
unable to understand the needs of others or have difficulty in managing conflicts. Since
managers get things done through other people, they must have good human skills to
communicate, motivate and delegate.
(vi) Conceptual skills:-Managers must have the mental ability to analyse and diagnose
complex situations. These tasks require conceptual skills. For example decision making
requires managers to spot problems, identify alternatives that can correct them, evaluate
those alternatives and select the best one. Managers can be technically and
interpersonally competent yet still fail because of an inability to rationally process and
interpret information.

Role of a manager:-

Managers are required to perform duties that are ceremonial and symbolic in nature. All managers
have a leadership role. This role includes hiring, training, motivating and disciplining employees.
Then the liaison role, which means contacting outsiders who provide the manager with
information. These may be individuals or groups inside or outside the organisation. When the sales
manager obtains information from the quality control manager in his own company is internal
liaison relationship. When the sales manager has contacts with other sales executives through a
marketing trade association it is outside liaison relationship. Managers perform a spokesperson
role when they represent the organization to outsiders. Managers perform the disseminator role by
transforming information to organizational members. They also perform informational role by
collecting information from outside their organizations and by reading magazines and talking with
other people to learn changes about what competitors may be planning and the like. Allocators role
refers to allocation of human, physical and monetary resources. Managers handle disturbance
handling role by taking corrective action in response to unforeseen problems. In the entrepreneur
role, managers initiate and oversee new projects that will improve their organization’s


Constraints in decision making

(i) Time constraints:- Organizations impose deadlines on decisions. For instance,

department budgets need to be completed, a report on new-product development has to
be ready by the first of the month . These conditions create time pressures on decision
(ii) Historical precedents:- Decisions made in the past are ghosts that disturb current
choices. For example, commitments made in the past constrain current options.
(iii) Reward systems:- The organization’s reward system influences decision makers by
suggesting to them what choices are preferable in terms of personal payoff.
(iv) Performance evaluation:- Managers are strongly influenced in their decision making
by the criteria by which they are evaluated. If a division manager believes that the
manufacturing plants under his responsibility are operating best when he hears nothing
negative, we should not be surprised to find his plant mangers spending a good part of
their time ensuring that negative information doesn’t reach the division boss.
(v) Cultural differences:- The cultural background of the decision maker can have
significant influence on his or her selection of problems, depth of analysis, the
importance places on logic and rationality, or whether organizational decisions should
be made autocratically by an individual manager or collectively in groups. For instance,
Arabs don’t necessarily make decisions the same way that Canadians do.
(vi) Formal regulations:- Organisations create rules, policies, procedures and other
formalized regulations in order to standardize the behavior of their members. By
programming decisions, organizations are able to get individuals to achieve high levels
of performance without paying for the years of experience that would be necessary in
the absence of regulations. And of course, in so doing they limit the decision maker’s


Organisational culture (corporate culture) has been defined as the philosophies, ideologies,
values, assumptions, beliefs, expectations, attitudes and norms that knit an organization together
and are shared by its employees.
Organisational culture can be defined as a set of beliefs, assumptions, values, shared feelings and
perceptions which influence the actions and decisions taken by the organization.
Characteristics of organizational culture:-
(a) Individual Initiative:- The degree of responsibility, freedom and independence that
individuals have.
(b) Risk Tolerance:- The degree to which employees are encouraged to be aggressive, innovative
and risk-seeking.
© Direction:- The degree to which organization creates clear objectives and performance
(d) Integration:- Degree to which units within the organization are encouraged to operate in a
coordinated manner.
(e) Management Support:- The degree to which managers provide clear communication and
assistance, and support to their subordinates.
(f) Control:- The number of rules and regulations and the amount of direct supervision that is used
to control employee behaviour.
(g) Identity :- The degree to which members identify with the organization as a whole.
(h) Reward system:- The degree to which reward allocations are based on employee performance
criteria in contrast to seniority, favouritism and so on.
(i) Communication Patterns:- The degree to which organizational communications are restricted
to the formal hierarchy of authority.
Types of cultures:-
(a) Dominant culture:- Dominant culture is marked by a set of core values that are shared by a
majority of the organizational members.
(b) Subculture:- Subculture refers to a set of values that are shared by the members of a division
or department.
© Strong and weak culture:- Based on intensity of sharedness, a strong culture is characterized
by the organization’s core values being intensely held and widely shared.
When core values are not shared with high degree of intensity, it forms
weak culture.
(d) National culture:- National culture is the dominant culture with in the political boundaries of
the nation. National culture has considerable significance for international managers who need to
manage cultural diversities.
(e) Business culture:- Business culture represent norms, values and beliefs that pertain (relevant)
to all aspects of doing business in a culture. Business culture tells the people the correct,
acceptable ways to conduct business in the society.
Creating or developing a culture:- Beliefs and values have their base on the past happenings.
The ultimate source of an organisation’s culture is its founders. The founders start their
organization with a vision of what their organization should be. Then, the vision is imposed on all
organizational members. For example, J.R.D. Tata’s belief on professionalism, and assumption
that only honesty and fair dealings will pay have made the vast Tata empire what it is today.
According to Luthans the process of creating involves the following steps:
(a) A single person (founder) has an idea or vision for an enterprise.
(b) The founder brings in some people and creates a core group that shares a common vision.
© The founding core group begins to act to create an organization by raising funds, obtaining
patents, incorporating, locating space, building and so on.
Sustaining a culture:- Culture once established need to be sustained through reinforcement
practices of human resources. Three such practices for maintaining culture are selection practices,
the actions of top management and socialization methods.
(i) Selection:- The first step in sustaining culture is the careful selection of entry level candidates.
The basic purpose of selection process is to appoint right people for right jobs. Thus, by
identifying the suitable candidates who can culturally match the organizational culture, selection
helps sustain culture considerably.
(ii) Top management:- Subordinates imitate their superiors. Hence, the actions of top management
such as what the managers say and how they behave have a major impact on the employees
working at lower levels. Managerial actions like degree of freedom granted to the subordinates,
prescriptions of the employee uniform, pay off in terms of pay raises, promotions and other
rewards also help create a common history i.e., culture in the organization.
(iii) Socialisation:- Socialisation is the process of adaptation. New organizational members coming
form different moods are likely to disturb the common customs and beliefs already established in
the organization. Therefore, the new employees need to be trained to adapt the organizational
Changing a culture:- As organizations do not remain the same over a period of time, so is the
case of culture as well. Culture established in one type of environment may not remain effective in
changed environment. If it is so, the organization must either adapt to new conditions of
environment or it may not survive. Hence, the need for change in organizational culture.
Changing culture is as much important is not so simple. Changing a strong
culture is particularly difficult because the cultural values and assumptions have taken deep roots
and employees become so committed to them. It is easier to change the culture when it is weak.

Culture and organizational effectiveness

(a) Performance and satisfaction:- Culture has significant impact on performance. Strategy
implementation is made easy through culture. Culture is characterized by goal alignment, that is all
employees share common goal. Strong culture creates a high level of motivation because of shared
value. Strong culture provides control mechanism.
(b) Strong commitment from employees:- Culture provides a sense of identity to members and
increases their commitment to the organization. Employees are motivated when they see their
work is rewarding.
© Effective control:- Culture serves as control mechanism that shapes behaviour of employees. A
strong culture imbibes people to perform effectively and keep firm grip on quality, and people do
not engage in poor team work or be disrespected to employees.
(d) Promotion and innovation:- Organisational culture contributes to creativity and innovation
by the development of norms that support such a process.
(e) Strategy formulation and implementation:- Culture energizes people in the company to do
their jobs in a strategy- support manner.



HRM is the function performed in organizations that facilitates the most effective use of
employees to achieve organizational and individual goals.
The process of HRM includes human resource planning, job and work design,
job analysis, staffing, training and development, performance appraisal and review, compensation
and reward, employee protection and representation and organization improvement.
HRM process consists of four functions-
(a) Acquisition of human resources- job analysis, HR planning, recruitment, selection, placement,
induction and internal mobility.
(b) Development of human resources- Improving skills, knowledge, aptitude and value.
© Motivation of human resources
(d) Maintenance of human resources- Providing good working conditions and to retain people who
are performing at high levels.
Every organization is made up o people. Those organizations which are able to
acquire, develop, stimulate and keep outstanding workers will be both effective and efficient.
Human resources create organizations and makes them survive and prosper. If human resources
are neglected or mismanaged, the organization is unlikely to do well.

Recruitment is the process of finding and attracting capable applicants for employment. The
recruitment process begins when new recruits (employees) are sought and ends when their
applications are submitted. The result is a pool of applicants from which new employees are
selected. Recruitment is the first stage in the process which continues with selection and ceases
with the placement of the candidate. The general purpose of the recruitment is to provide a pool of
potentially qualified job candidates.
Recruitment may be from internal to the firm or external sources. Among the
internal sources are the present employees, employee referrals, former employees and previous
applicants. Internal recruitment is less costly, skills and abilities of candidates are aware and it
will promote the employee morale. Creative problem solving may be hindered by the lack of new
talents. External sources are- advertisements, employment exchanges,
colleges/universities/institutes, consultants, trade unions, competitor firms. Organizations will have
new skills, new talents and new experiences. But this may dismotivate and put impact on the
morale of employees.

Selection:- Selection is the process of picking right candidate for the right job. Selection is
the process of picking individuals with required qualifications and competence to fill jobs in the
Recruitment and selection are two crucial steps in the human resource process. Recruitment is the
process of identifying and encouraging prospective employees to apply for jobs, selection is
concerned with the picking of right candidates from the pool of applicants. Recruitment is said to
be positive in its approach as it seeks to attract as many candidates as possible, selection is
negative in its approach as it seeks to eliminate as many unqualified applicants as possible to
identify the right candidates. Effective selection helps secure people who have the competence and
willingness to work.
Selection is a long-chain process involves activities such as tests, interviews and
reference and background checks, medical test and job offer.

Orientation:- Orientation, also called induction, is designed to provide the information to

the new employee who need to function comfortably and efficiently in the organization. Typically,
induction conveys three types of information-
(i) General information about the daily work routine,
(ii) A review of the orgnisation’s history, founding fathers, objectives, operations, products or
services as well as how the employee’s job contributes to the organisation’s needs, and
(iii) Organisations policies, work rules and employee benefits.
Purpose of orientation is to make new employees feel “at home” in the new environments.
Employees feel anxious when they enter in organization. Effective orientation programmes reduce
the anxiety of new employees by giving them information on the job environment and on
supervisors by introducing them to co-workers, and by encouraging them to ask questions and will
create a favourable impression about the organization.

Placement:- Placement is the assignment or reassignment of an employee to a new or

different job. After an employee has been hired and oriented, he or she must be placed in his/her
right job. Placement includes initial assignment of new employees and the promotion, transfer or
demotion of present employees.

Training and development:- After the employee is placed on the job, he or she
needs training to perform his or her duties effectively. Workers must be trained to operate
machines, reduce scraps and avoid accidents. It is not that only workers need training. Managers,
supervisors and executives also need to be developed in order to enable them acquire growth and
maturity in thinking and actions. Training and development constitute an ongoing process in any
Any training and development programme must include such inputs as skills, education,
ethics, attitudinal change and problem – solving abilities.
Importance of training- Employees become efficient after undergoing training and they
contribute to the growth of the organization. Accidents, scrap and damage to machinery and
equipment can be avoided or minimized. Future needs for employees will be met through training
and development programmes. A company’s training programme pays dividends to the employee
and the organization.
Methods and techniques of training:-
On-the-job training:- On-the-job training method refers to those that are applied in the
workplace, while the employee is actually working. The techniques include job instruction
training, job rotation, apprenticeship and coaching.
Off-the-job training:- Of-the-job training is used away from the work places. Techniques include
lectures, video presentation, case study, simulation, self study, laboratory training etc.
Performance appraisal is the assessment of the individual’s performance in a systematic way. The
performance being measured against such factors as quality and quantity of output, initiative,
leadership abilities, supervision and cooperation. Performance appraisal is done for effecting
promotions, decide pay rises and to confirm probationary employees.
Objectives:- (a) To decide upon a pay rise.
(b) To assess the training and development needs of employees.
© To let the employees know where they stand in so far as their performance is concerned.
(d) To determine whether the programmes such as selection, training, transfers have been effective
or not.
(e) To effect promotions based on competencies.

Methods of appraisal:-
Number of methods have been devised to measure the quantity and quality of employee job
performance. Each of the methods could be effective for some purposes, for some organizations.
Methods/approaches of appraisal can be classified into (i) past - oriented methods and (ii) future
oriented methods.
Performance interview:- Once appraisal has been made on an employee, the raters should discuss
and review the performance with the ratees, so that they will receive feedback about where they
stand in the eyes of the superiors. Feedback is necessary to effect improvement in performance,
specially when it is inadequate. Performance interview has three goals-(a) to change behaviours of
employee whose performance is not meeting organizational requirements or their own personal
goals, (b) to maintain behaviours of employees who are performing in an acceptable manner and
(c) to recognize superior performance behaviour so that they will be continued.

Remuneration is what employees receive in exchange for their contribution to the organization.
Adequate remuneration helps the organization obtain, retain and maintain productive workforce.
Industrial peace largely depends on the remuneration.
Remuneration package of employees includes varied components such as wage and salary,
incentives or payment by results, fringe or non-wage benefits, non- monetary benefits constitute
employee remuneration.

Organisational change is the process in which organizations move from their present state to an
improved state.
Importance of change:- Change is inevitable. Organizations are compared with human beings.
Individuals have two types of changes. One, they try to adjust and adopt to the changes occurring
in the external environment such as offer of new job, sickness, competition or loss of property.
Second, even externally nothing changes, still individuals keep changing (adulthood, family
responsibilities, oldage etc.).
Organizations change because both of situational fluctuations in the environment demands
as well as because it is in their nature to grow and develop.
Example:- Nokia started in 1865 as a pulp and paper company and bought into rubber business 30
years later and into cable wiring in the 1920s. Nokia invested in electronics and was soon making
televisions and computer monitors. In the 1980s, invested in mobile communication. Today,
people around the world know of Nokia for its cellular telephones.

Reasons for organisational change:-

External reasons:-
(a) Government policies:- Government policies necessitating changes in organizations. For
example, slashing of grants by UGC have forced universities to strengthen their revenue by
conducting training programmes, self finance courses, consultancy. Government policy of
privatizing the power sector encouraged many companies to diversify into the power sector.
(b) Competition:- Organisations need to come up the challenges posted by the competitors to
sustain and survive.
© Technological advances:- Technology advances has posed a question before the organization
either run or ruin. Revolutionary changes in communication technology compelled Doordarshan to
(d) Change in people requirements:- Customers dictate the organizations what they actually
require. With changing requirements of customers the five-star-hotels started to offer new services
such as conference hall facilities, secretarial services, business centres etc.
(e) Globalisation:- Globalisation made organizations to rethink their boundaries of markets and to
encourage their employees to think globally. Globalizing the organization means rethinking the
most efficient ways to use resources, gather and disseminate (circulate) information and develop
people to become global citizens.
The major players in the global markets are MNCs and they seek entry into the
Indian market through joint ventures. P & G the American FMCG giant, entered into a join-
venture with Godrej in 1992. P & G engineers have introduced new systems of manufacturing and
material resource planning in Godrej plants which compelled for several structural changes.
(g) Scarcity of resources:- Scarcity of resources is another external force which is invoking
organizational change.

Internal reasons-
(a) Change in leadership:- Change in leadership changes culture and values in the organization.
V.Krishnamurthy of SAIL, Ratan Tata are examples how the change in leadership led to internal
changes in the organization.
(b) Introducing new technology:- Introducing new technology is bound to have consequences for
other functions as well.
© Organisational life cycles:- Organisational life cycles act as potent sources of organizational
(d) For meeting crises:- For meeting crises makes continuation of the status quo unthinkable and
difficult. Sudden death of CEO, loss of major suppliers, cutback in the budget, civil disturbances
are the examples of unforeseen crises.
(e) The domino effect:- The domino effect means one change triggers off a series of related
changes. For e.g., establishing the department of business administration may cause the creation of
teaching and non-teaching positions and construction of building, budget allocation etc.
TQM is a technique developed by Edward Demming to improve the efficiency of flexible work
teams. The broad goal of total quality management is continuous improvement. TQM aims to
reduce costs, improve quality and reduce waste. Workers in a TQM system are expected to make
suggestions for improving all aspects of the work process and are expected to share their
specialized knowledge with management so that it can be communicated throughout the
(a) Proactive changes:- Proactive changes occur when some factors make realize organization
think over and finally decide that implementation of a particular change is necessary. Change is
introduced in a planned manner.
(b) Reactive changes:- Reactive changes occur when forces compel organization to implement
change without delay.
Planned change:- When changes are effected after working out when and how they will be carried
out, planned changes occur. For initiating planned change, the manager needs to constantly watch
the changes taking place in the external and internal environment of the business so that corrective
measures are taken accordingly and the changes could be effected successfully. Proactive changes
are affected in a planned manner after assessing the underlying forces in the system.
Kurt Lewin developed the Force Field Theory which demonstrates how forces for and against
change balance and how the organization is balanced at anytime, between these two opposing
forces. This model is a process of 3 steps. According to this model, effective changes occurs by
unfreezing the current situation, moving to a desired condition, and then refreezing the system so
that it remains in this desired state. This theory is useful in understanding the ways of managing
According to this model, effective change occurs by unfreezing the current situation, moving to a
desired condition and then refreezing the system so that it remains in this desired state.
(a) Unfreezing:- Unfreezing involves encouraging individuals to discard (abandon) old behaviours
by shaking up the equilibrium state that maintains status quo. Unfreezing is accomplished by
linking rewards with willingness to change and punishment with unwillingness to change. Thus,
individuals are made to feel that they have to forget their old ways and accept the new way.
(b) Changing:- Second step aims to shift or alter the behaviour of individuals, departments or
orgainsation in which the changes are to take place. Generally changing or moving implies
developing new behaviours, values and attitudes.
© Refreezing:- Here the change becomes permanent. New attitudes, behaviour, values are
established as the new status quo. Mangers should ensure that the reward system encourage the
new behaviours and avoid the old ways of functioning.
For change efforts successful, these three stage process must be completed.
Successful change thus requires that old behaviours be discarded, new behaviours be introduced
and those new behaviours be institutionalized and rewarded.
Organization level resistance to change / Sources of organizational resistance
Many forces make it difficult for an organization to change in response to changing conditions in
its environment.
(a) Organizational structure:- An organization’s structure can be an obstacle to change. Most
changes have the capacity to change the organisation’s power structure. For example, introduction
of decentralized decision making is seen as a threat to the power of supervisors and middle
managers but a welcome by lower-level employees.
(b) Organisational culture:- The values and norms in an organizational culture are another
source of resistance to change. If organizational change disrupts values and requires people to
change their personalities, attitudes and beliefs, that cause resistance to change.
© Organisational strategy:- An organisation’s strategy can be an obstacle to change. Managers
are often influenced by previous commitments and they stick to a course of action even if it is not
(d) Structural inertia (inactivity) :- organizations have several systems designed to maintain
stability. Job assignments, selection and training of new employees and performance reward
systems are designed to maintain stability. Whenever an organization is confronted with change,
this structural inertia acts as a counter balance to sustain stability.

Individual level resistance to change :-

(a) Fear of the unknown:- Some feel that changes often bring in ambiguity and uncertainty. For
example, introducing a new computer system. Some may fear they may fail and develop a negative
(b) New learning:- One require to learn a new language, technology.
© Disruption of stable friendship:- Change disrupt the stable friendship.
(d)Distrust of management:- Employees suspect managers as they may exploit.


Managing resistance to change:-

Organisational change is inevitable. So managers should be sensitive to the resistance to changes
so that it can be overcome. The following are the six key approaches suggested to manage the
organizational change.
(a) Education and communication:- Misunderstanding can be reduced by providing details to the
employees about why change is needed. Employees can be educated through discussions, group
presentations or reports.
(b) Participation:- Before a change is introduced, particularly those oppose the change can be
brought into the decision process.
© Facilitation and support:- Facilitation should be provided to the employees who have trouble,
dealing with the change. Counseling therapy, skill training or short paid leave may be provided.
(d) Negotiation:- Negotiation particularly with a group of people resisting to change. Reward
package may be negotiated to meet the needs.
(e) Manipulation:- Manipulation implies covert attempts to influence.
(f) Coercion:- As a last resort, can apply direct threats such as threats of transfer, loss of
promotion etc.
Trends in International business:-
The post-world war-II years saw a major expansion of world trade. The world has entered
an era of global economic activity, including world wide production, distribution and increasingly
large number of international joint ventures, multinational mergers and acquisitions and alliances.
Most major firms earning more from their international operations than from domestic markets.
For example, Honda, British Petroleum, Siemens do business in more than 50 countries. The assets
of most MNCs are owned by different nationalities and their employees hail from different
countries. From 1948 to 1972, world exports grew from $ 51 billion to $ 415 billion (7 fold
increase) and in 1990’s $ 4.3 trillion, 1999 - $ 7.1 trillion an increase of 66%. Imports exceeded $
1 trillion by 1980 from $ 800 billion in 1975.

International OB:-
An international business organization is one which expands its business activities that crosses
national borders. There are similarities and dissimilarities in certain respects between national and
international organizations. Cultural variations across the nations, human behaviour at work in
them underlines the need for understanding international organizational behaviour.

FDI:- Some companies make a direct investment to take full advantage offered by foreign
markets in another company through foreign direct investment (FDI).


Culture is an important factor for variations in behaviour. In fact, there are factors like differing
standards of living and varied geographical conditions which can cause variations in behaviour,
but culture is the determining factor. Culture is a set of beliefs, norms and values that guide the
everyday life of an individual and these are passed on to the generations through stories, rituals and
symbols. Cultural norms prescribes behaviors and practices like when and whom we can marry,
and what clothes one can or cannot wear to a function or to the office. Cultural values tell what is
most dear to our hearts. For example, Americans value freedom to choose one’s own destiny-
whether it leads to success or failure. Japanese culture values belongingness - one must belong to
and support a group in order to survive. Belonging to a group than individualism. Cultural values
have a major influence on the way people relate to each other and also to what they aspire for in a
job. Human behaviour varies across cultures. Culture is the major cause for variations in human
behaviour across organizations.
Though cultures across countries vary, there are similarities. Cultural similarities shared by
countries from cultural clusters. International business utilize the culture clustering approach in
formulating their strategy. For example, New Zealand focus first exporting efforts on Australia.
Hong Kong firms to China markets. Canadians with British partners. Improvements in
communication and transportation made clustering possible.


Individual behaviour varies across cultures. The variations can be studied in terms of motivation,
cultural adjustment and managerial responses.
(1) Motivation:- In a multicultural work environment, everyone is not motivated by the same
factors. Motivation appeals, rewards for performance and punishment need be culture-specific.
(a) Recognition:- Americans want to be directly recognized fro their individual contributions, but
Japanese recognition comes through identification with group. In Arab culture, when a department
reaches its goal, the recognition will first go to the head and then down to the lowest level of
(b) Control:- All people are motivated by the power of being in control of their own lives or work
space. Americans feel good about being independent and in control of their own destinies.
Japanese motivation comes through group harmony.
© Management styles:- Management styles are important motivators in each culture. American
styles are characterized by professionalism and friendliness. Japanese motive through counseling.
(2) Compensation:- Compensation includes wages and salaries, incentives such as bonuses and
pension benefit. There are wide variations both among countries and among organizations within
countries. Americans measure individual success more in terms of material possession. Monetary
rewards motivate Americans. But Japanese are motivated by rewards shared among the group such
as bonuses, social services and fringe benefits.
In India employees of MNCs are paid much more than their counterparts in
host countries for identical work and different industries have different wage and salary structures.
(3) Cultural adjustment:- Cultural adjustment is a critical determinant of expatriate ( an
individual who lives and works away from his own country) performance.
The concept of an adjustment cycle or curve, depicted is helpful in demonstrating
the phases encountered during cultural adjustment. The curve is based on psychological reactions
to overseas assignments and comprises 4 phases.
The phases of cultural adjustement-

Phase-1- Begins with anxiety, fear of the unknown, sense of adventure and so on. There can be an
upswing of mood, which has been referred as the “honeymoon” or “tourist” phase.
Phase – 2- But after some time, realities of every day life begins, homesickness sets in, and a
down swing may occur. This is a critical time and how the expatriate copes with the psychological
adjustment has an important outcome in terms of success or failure.
Phase – 3 – As the person begins to adjust to the new environment, there is an upswing.
Phase – 4 – This level off over a time to what has been described as healthy recovery.
(4) Managerial responses:- Managers in the international environment need different
competencies and skills.
As the individual behaviour varies across cultures, so does group behaviour also. There are 4 key
areas in which group behaviour varies. They are – group dynamics, leadership, power and conflicts
and communication.
(i) Group dynamics:- Group formation based on members belonging to diverse cultural
background may create distrust among group members, stereotyping and communication
problems, which need the help of managers for group cohesiveness and cooperation in its
(ii) Leadership:- Leadership effectiveness depends upon the situation in which leadership is
exercised. Leadership styles are also dictated by the cultural factors in a situation. For example, in
a culture characterized by high power distance, leaders adopt autocratic style as employees expect
the leaders to make decisions, exercise control and solve problems. In a culture with low power
distance employees expect their participation in decision making.
(iii) Power and conflict:- Power is strength and there is always a craze for hoarding power as
much as one can. Conflict among organizational members is inevitable and may vary from culture
to culture. For example, power and conflict are more pronounced in India and U.K. But in Japan,
attempts to increase one’s power are foiled, but more focus is given on promoting harmony and
group cohesiveness.
(iv) Communication:- Variations in language and coordination issues across culture also affect
communication in the international organisations. Language varies from country to country and in
turn culture to culture.
Communication binds and coordinates people together working in different cultures.
Mangers need to contend not only with the differences in language, but a time difference also. For
example, when an Indian manager needs to talk on telephone, his Russian counterpart in Moscow
may be have asleep. This creates coordination problem between the two. The solution lies in
evolving innovative methods for coordinating organizational activities across the cultures scattered
on the globe.