Chapter 1

Foundations of
Organizational
behaviour

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 What is OB and why is it important
What is………..OB?
• Organizational behavior is
the study of
the behavioral dynamics of
individuals and groups
in organizational settings,
including corporate offices. To
meet their short- and long-term
goals, business leaders need
to understand what motivates
their employees and how they
interact with each other.
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Why?
• The study of organizational
behaviour gives insight on
how employees behave and
perform in the workplace. It
helps us develop an
understanding of the aspects
that can motivate employees,
increase their performance,
and help organizations
establish a strong and trusting
relationship with their
employees.
 What is succesful behaviour when it
comes to organizations

• Job security
• Careful hiring
• Power to people
• Generous pay for performance
• Lots of traning
• Less emphasis on status (we feeling)
• Trust building
• -- all human factors

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 Aims
• All organizations consist of people (many or few, local or
international, production or service, etc.)
• To understand how an organization works on a "micro
level"
• Gaining insight into the human mechanisms that can
often mean the difference between success or failure of
an organization
• Understand and create an overview of the opportunities
we have to influence how and how effectively
organizations work
• Help to understand and navigate situations that we
encounter every day
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 Areas of interests

• Organizational climate and culture -

Something all organizations have, a
pattern of assumptions and expectations,
important for organizational performance.
• Power and Influence - Conflicts, who
decides, coercion, roles, etc.
• Leadership and change - leadership style,
behavior, leadership roles, charismatic,
etc.
• Behaviour
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 Definitions

• Organizational behavior
• How individuals and groups act in
an organization
• Management and organizational behavior
Activities focused on acquiring,
• developing and using
• the knowledge and
• skills of people in the
• organization
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 Why do we have organizations?
• Because “it pays off”
• No one can do alone what an organization can do (joint
efforts)
• This is a question that many have tried to answer over
the years and the answer depends on who answers.
• Organizations are designed to control and coordinate
human activities, symbolic and physical resource to
achieve a particular goal.
• Control mechanisms: motivate actors to seek to achieve
the organization's goals
• Coordination mechanisms: Behavior, actors and action,
agents and behavior
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 What is organizations?
• Social entitites
• Deliberately constructed (activities and coordination) ,
with goals
• Objectives: unclear and / or draws
• Many control mechanisms
• Goals - may shift
• Varying efficiency in goal achievement
• Some activities are organized hierarchically, others in
markets and still others alliances (hybrid)
• Where are the boundaries? – The environment

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 Economists and Organizations
• Agents are assumed to act rationally
• Pursues the optimum
• Maximizes self-interest
• Everyone has identical preferences
• Division of labor is run from the outside: by technology and the like.
• Market contracts or employment contracts
• This is identical to the market or hierarchy issue
• Choosing hierarchy (or organization) over market is the big topic for
economists: principal-agent theory

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 Pshycologists and their opinion about
organizations
• How does the organization's features (control and coordination
mechanisms) influence the behavior of individuals and groups within
its framework?
• How does the behavior of individuals and groups contribute to the
achievement of the organization's goals?
• Wider range of motivational factors than economists
• Status, self-perception, job satisfaction, personal power, etc.
• People indulge in an organization
• Not clear preferences on arrival
• As economists preoccupied with communication - but more fine-
grained
• Room for error in perception of information

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• How does the organization's features (control and coordination
mechanisms) influence the behavior of individuals and groups within
its framework?
• How does the behavior of individuals and groups contribute to the
achievement of the organization's goals?
• Wider range of motivational factors than economists
• Status, self-perception, job satisfaction, personal power, etc.
• People indulge in an organization
• Not clear preferences on arrival
• As economists preoccupied with communication - but more fine-
grained
• Room for error in perception of information

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 Sociologists point of views
• Organizations in relation to the surrounding community
• The meaning of faith and beliefs (culture)
• Distribution of power
• Weber on control & coordination: through rules in a bureaucracy
• Division of labor comes from outside
• Hierarchical power / authority relation
• Formal rules of conduct / action
• Social norms - as a means of control / coordination
• Culture
• Institutions
• Change: is there equilibrium?

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 Division of labour

• Dividing the work process into separate parts

• Division of labor specialization productivity
• But why share as it does?
• Economists: determined from the outside
• Sociologists: also power, authority,
• Can too much be divided?
• Fragmentation, alienation?

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 Coordination

• A value chain:
• Oil extraction tankers refining wholesale
retail
• How can decisions be coordinated?
• Price - mechanism
• Hierarchy
• New types of coordination

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 Information and communication

• Economists' rational agents are supposed to know everything -

but there are:
• Full information
• Common information
• Private information (asymmetrically distributed).
• Emerges through communication
• PSYK: communication channels, wealth, recipients, sender,
disruptive conditions
• SOC: information is distributed according to certain rules
• Incomplete agreements / rules:
• Incomplete info /insecurity / incomplete rules / freedom of action

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 Elements of Organizations
• As we have seen, it can be difficult to define
what an organization is, but some of the key
elements are:
• Network of individuals
• Systems
• Coordination
• Division of labor and integration
• Goal
• Continuity over time, independent of individual

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 How old get organizations?

• Humans now have a life expectancy of 80 years or

more
• The average age for large companies is typically 40
to 50 years
• A few organizations survive much longer - Kongō
Gumi Co. Ltd., 578 (acquired in 2006) - Stiftskeller St.
Peter, restaurant in a monastery, 803 - Stora, (now
StoraEnso) paper (pulp) and chemistry, 1288
• A Bank of Korea study in 2008 found 5586
companies over 200 years old, 3146 in Japan, 837 in
Germany and 222 in the Netherlands.

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Frederic Taylor: scientific Management

Optimizes production with scientific

methods
(identifies the best way to do something)
Higher productivity, standardization,
control, routines, no need to think, etc.
"Why is it every time I ask for a pair of
hands, they come with a brain attached?"
Henry Ford
Used to some extent still today
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 Fayol

• Fayol builds on its understanding of organizations in 5 main

areas: - planning, organizing, leading, coordinating and
controlling
• Fayol tried to describe management normatively
• In order to make the organization work, he set out 14 principles
that had to be followed - e.g. specialization, responsibility and
power, hierarchy, fair remuneration, centralization, employment
security, initiative, etc.
• He differs from Taylor in two areas - it is fine to bring the brain, ie.
everyone can take initiatives - only responsible for one leader
• Criticism - not all organizations need hierarchy, control etc.

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 Chester Barnard:

• Focus on collaboration - all organizations consist of

small groups
• Barnard's elements consist of: - willingness to
cooperate, the same goal, clear communication,
specialization, incentives, hierarchy (power), decision
making
• Collaboration is the most important thing but is often
not easy, you have to have all the elements in place
• The informal organization is important

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 Others:

• Herbert Simon: leaders and decision-making

• Elton Mayo: The Hawthorne Studies and Human
Factors
• Mary Parker Follet: dynamism, empowerment,
participation, leadership, conflicts, experiences.
• Morgan: 8 metaphors for organizations, e.g.
machine, organism, brain, politician etc.

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