CHAPTER

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Introduction to
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Organisational
Behaviour
Subtopics:-
1.1 Introduction
1.2 Contributing Disciplines
1.3 Goals of Organizational Behaviour : Explaination,
Prediction & Control
1.4 Management
1.5 Challenges and Opportunities for OB : A Managerial
Perspective
1.6 Summary
1.7 Exercises
1.8 Case Study

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1.1 Introduction

Meet Andrew Chong. He has a business degree in Human Resource Management with a
minor in Psychology from Prestigious University of Management in Kuala Lumpur. Andrew
has spent the past 14 years working for Kuala Lumpur Technology Board. For the past four
of those years, Andrew has been a supervisor/team chief in an organizational change unit,
looking over 15-20 people.

‘My previous experience was a Human Resource Manager, so I have a business

background,’ says Andrew. ‘The people on my team are professionals-analysts, consultants
counselors etc. My job, as a supervisor, is more “people centered” than administrative or
technical. I have to understand the different needs of my people.

Some people, for example, quickly accept change. Some resist change when it cannot
see the benefits. Some people don’t want to make decisions. Others enjoy making
decisions and participating. I had to learn to use different approaches to motivate these
different types pf people. I had to enhance my skills in communication. I have learned
that communication is the key in dealing with my employees and with the politics inside
my organization.’

Andrew Chong has learned what most managers learn very quickly. A large part of the
success in any management job is developing good communication, interpersonal and
people’s skills. Managers must have technical knowledge in their area of expertise but
technical knowledge isn’t enough. Successful managers need interpersonal skills in order
to work with people.

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Where do managers get knowledge about handling people? For many years most
universities taught practical aspects of management, through courses in law, accounting,
finance, economics, business mathematics etc. But these courses did not teach managers
‘peoples’ management’ – the knowledge of human behaviour, people’s skills,
interpersonal skills and communication skills.

Over the last 10 years or so most business colleges and universities have changed their
approach to peoples’ management education and now the subject of Organizational
Behaviour which teaches human behaviour, interpersonal skills, communication skills and
people’s skills has become very important.

Organizational Behaviour is an exciting subject which examines the behaviour of people in

an organizational setting. It is a study about the activities, performance, manners, conduct
and actions of people in organizations.

It is designed to give you a better understanding of work environment in which most of us

spend a large part of our lives.

OB focuses on timeless topics like motivation, leadership, teamwork, job satisfaction and
communication.

Figure 1.1: OB studies how people behave in offices

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 Figure 1.2: OB topics

The subject of organizational behaviour is about managing the attitudes and actions of
individuals and groups.

Organizational Behaviour discusses the following issues and concerns in detail:

• How people can be motivated to join and remain in the organization?

• How can employees’ absenteeism and turnover be reduced?
• How people perform their jobs better?
• How to get people to practice good teamwork?
• How can employees’ loyalty to the organization be increased?
• How can moral and ethical behaviour be encouraged and practised in the
office?
• How employees can be encouraged to more creative and innovative?

1.1.1 Definition

Organizational Behaviour is a field of study that investigates the impact that individuals,
groups and structure have on behaviour within organizations for the purpose of applying
such knowledge towards improving an organization’s effectiveness. (Robbins, Millet, Water-
Marsh, 2004)

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Let us break down the above definition into simpler words:

• OB is a field of study
• Behaviour can be examined on three levels:
- The individual,
- The group, and
- The organization as a whole.

Figure 1.3: Three levels of behaviour

• OB applies the knowledge gained about individuals, groups and effect of

organizational structure on employee behaviour in order to make organizations work
more effectively. People do in an organization and how their behaviour affects the
performance of the organization.

Organizational Behaviour is the scientific study of the behavioural processes that occur in
work settings. OB is specifically concerned with employment-related situations. It
emphasises on human behaviour as related to issues such as jobs, work, absenteeism,
employment turnover, productivity, human performance and management.

The main topics and issues that OB studies are:

• Motivation
• Individual and Group Dynamics
• Leadership
• Organizational Structure
• Morale
• Power
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 • Labour-management behaviour
• Organizational change and development
• Attitude
• Perception
• Emotions
• Work conflict
• Job satisfaction
• Work design and
• Work stress.

Figure 1.4: Some topics and issues of OB.

1.2 Contributing Disciplines

Organizational behaviour is a behavioural science that is built on contributions from several

other behavioural and social sciences.

As a result, issues and topics of many other academic disciplines (subjects) are often studied
in organizational behaviour.

The field of organizational behaviour borrows many concepts and methods from the
following other behavioural and social sciences, (Fig 5):
• Psychology,
• Sociology,
• Social Psychology,
• Anthropology, and
• Political Science.

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 Figure 1.5: Organizational behaviour

1.2.1 Psychology

Psychology is the science of the mind and behaviour. The human mind is the most complex
machine on Earth. It is the source of all thought and behaviour.

Psychology measures, explains and sometimes changes the behaviour of humans and
other animals.

The study of psychology includes the functions of the brain to the environments in which
humans and other animals develop; from child development to aging.

Figure 1.6: The study of psychology includes the functions of the brain

Psychologists study two critical relationships: one between brain function and behaviour,
and one between the environment and behaviour.

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Psychologists apply the knowledge gained about human behaviour and mental processes
to various areas of human activity, such as for solving the problems of individuals' daily lives
and the treatment of mental illness such as depression.

Psychologists who study organizational behaviour are concerned with the issues of learning,
perception, personality, workforce diversity, emotions, training, leadership effectiveness,
employees’ needs, motivation, job satisfaction, decision-making processes, performance
appraisal, attitude measurement, employee-selection techniques, job design, and work
stress.

1.2.2 Sociology

Sociology is the study of society and human social interaction at group, organizational, and
even global levels. Sociology differs from psychology because it focuses on groups rather
than individuals.

The study of sociology can include short contacts between two strangers on the street to
the global and cultural social processes.

Sociology also studies the social structures that humans create and maintain such as
organizations, religion, and political systems.

Figure 1.7: Sociology focuses mainly on groups than individuals.

It focuses on how and why people are organized in society, either as individuals or as
members of associations, groups and institutions.

Areas within OB that have received valuable input from sociologist include group dynamics,
design of work teams, organizational culture, formal organization theory and structure,
bureaucracy, communications, status, power, conflict and work/life balance.

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1.2.3 Social Psychology

Social Psychology is an area within psychology that blends concepts from psychology and
sociology.

It is the study of the how people think about others, how they influence others and relate to
one another.

Fig 1.8: Social Psychology is the study of the how people think about others.

Social Psychology explores the forces within an individual such as traits, attitudes and
thoughts. It also explores the forces within the situation such as peer pressure, laws and rules.
The study of Social Psychology includes friendship, romantic attraction, aggression, helping,
arguments, stereotypes and prejudices.

Social Psychologists have made significant contributions in measuring, understanding, and

changing people’s attitudes, communication patterns, the way in which group activities
can satisfy individual needs, and the group decision-making processes.

1.2.4 Anthropology

Anthropology is the broad study of humankind around the world and throughout time. It is
concerned with the biological and cultural aspects of humans.

The study of Anthropology includes human diversity around the world, cross-cultural
differences, different cultural beliefs and communications styles.

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 Figure 1.9: In Sikhism, males usually wear their hair a turban as a sign of spirituality

Anthropology promotes an understanding between different cultures by explaining each

culture to the other, and by focusing on similarities rather than differences.

Much of our current understanding of organizational culture, organizational environments,

and differences between cultures is the result of the work of anthropologists.

Figure 1.10: Initiation ceremony of an African tribal group. Initiation ceremonies

Anthropologists have greatly contributed to organizational behaviour by helping us

understand differences in values, attitudes and behaviour between people from different
countries.

Example: to understand the differences in the working styles of Japanese business people
and American business people.

1.2.5 Political Science

Political science is the study of the behaviour of individuals and groups within a political
environment.

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It is the study of politics, government, public policy, law, and issues such as human rights,
famous trials, women and politics, war and peace, the criminal justice system, protection
of our environment, globalisation, terrorism and peacekeeping.

Political science has contributed to organizational behaviour by providing information and

insights into work related issues such as conflict management, allocation and distribution of
power, and how people manipulate power for individual self-interest.

1.3 Goals of Organizational Behaviour: Explanation, Prediction. Control

The success of an organization depends on the management's philosophy, values, vision and goals.
The responsibility of studying organisational behaviour and increasing organisational effectiveness
is an important duty of managers.

The goals of OB are to explain, predict and control behaviour:

Managers are specially concerned about explaining, predicting and controlling employee
behaviours such as:

• employee productivity
• employee motivation
• absenteeism
• turnover
• organisational citizenship
• job satisfaction

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1.4 Management

Figure 1.11: Managers play a very important role in the organization as they in charge of managing their employees

Employees are an important resource for any organization as the performance of

employees is directly related to the success of the organisation.

It is the job of the managers to help employees get important things done in a timely, high-
quality, and personally satisfying way.

In all organisations, managers perform jobs that involve directly supporting the work efforts
of others people.

Being a managers is a unique challenge that carries many different responsibilities.

Managers learn about what causes people individually or collectively (in group) to behave
as they do in organisational settings. Some of the questions and issues that managers are
faced with are:

• What motivates people?

• What makes some employees leaders and others not?
• How do employees communicate and make decisions in the organisations?
• How can workforce diversity be an advantage for the organisation?
• How do organisations respond to changes in their external environments?
• How can problems caused by cultural differences in employees be minimized?
• How do we cope with absenteeism and turnover?
• How can employee loyalty be increased?

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Managers can understand organisational behaviour by accurately describing events,
behaviours, and atitudes. How can this be accomplished?

They need to collect data about the environment in which people work and describe
events, behaviours and attitudes in order to develop plans for changing and improving
behaviour and attitudes of employees.

Figure 1.12: Managers collecting data

Data can be gathered by observing situations, surveying and interviewing employees, and
looking at written documents.

By direct observation, for example, managers can attend meetings and then describe
what is happening, such as who talks most often, what topics are discussed, or how
frequently those attending the meeting ask for the managers’ opinions in the topic.

Employees could also be interviewed in order to examine their attitudes in greater detail.
Some valuable information about attitudes and opinions can also be gathered by simply,
talking informally with employees.

Fig 1.13: Managers at a meeting

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Finally, data could be gathered from organisational documents, including annual reports,
department evaluations, memoranda, and other non-confidential personnel files.

After studying these documents managers can learn more about the attitudes of
employees, the quality of management, group interactions, or other possible reasons
behind the problems and issues in the organisation.

1.4.1 Management Functions

All managers perform these four basic management functions:

• Planning: Define goals, establish strategies and develop plans to achieve those goals.
• Organizing: Design the organisations work structure, determine what tasks
need to be done, who will do them, how they will be done, how tasks will be
grouped, who reports to whom, and where decisions are to be made.
• Directing: Motivate employees, lead the activities of others, select the most
effective communication channels, and resolve conflict among group
members.
• Controlling: Monitor and compare performance with goals, ensure things
are going as planned.

Plan Organise

Control Direct

Fig 1.14: Four basic management functions of Managers

1.4.2 Management Roles

All managers have to perform these three basic management roles:

• Interpersonal Roles: Make sure that information is provided to employees.

• Informational Roles: Connect all managerial work together and process information.
• Decisional Roles: Make important use of the information.

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 Informational
Roles Decisional Roles

Fig 1.15: Three basic management roles of Managers

1.4.3 Management Skills

A good manager should have these three basic management skills:

• Technical Skills: Involves process or technique knowledge and proficiency. Managers

use the processes, techniques and tools of a specific area.
• Human Skills: Involves the ability to communication effectively with people. Managers
interact and cooperate with employees.
• Conceptual Skills: involves the formulation of ideas. Managers understand abstract
relationships, develop ideas, and solve problems creatively.

Thus, technical skill deals with things, human skill concerns people and conceptual skills
have to do with ideas.

Fig. 1.16: Three basic

management skills of a
good Managers.

Conceptual Skills

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1.5 Challenges and Opportunities for OB: A Managerial Perspective

Some of the main challenges and opportunities facing manager’s are:

1. Responding to Globalisation
2. Managing workforce diversity
3. Improving quality, productivity and customer service
4. Empowering people
5. Absenteeism and turnover
6. Coping with ‘temporariness’
7. Stimulating innovation and change
8. Helping employees balance work/life conflict
9. Increasing employees loyalty
10.Increasing ethical behaviour

Fig.1.17: Globalization

1.5.1 Responding to Globalisation

Globalisation is the worldwide process of standardising prices, products, salaries, rates of

interest and profits. It combines business markets, economies, and ways of life across the
world.

More and more organizations have expanded their business operations in different
countries, making the world into one global marketplace.

1.5.2 Managing Workforce Diversity

One of the most important and broad-based challenges currently facing organizations is a
adapting to people who are different.

Workforce diversity is the presence of differences based up on gender, age, race, culture
and religion.
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 Figure.1.18: Workforce Diversity

Managers should have good interpersonal skills to work successfully with a broad mix of
people from different racial and ethnic backgrounds, of different ages and genders, and
of different cultures.

Valuing employee diversity in an organisation is very important therefore to manage and work with
others; managers should respect and accept individual differences in employees. Interpersonal
sensitivity and understanding are needed for valuing diversity.

The job title of ‘diversity manager’ is already appearing in many organisations; the job
holder is expected to lead the workplace and make it truly open to the talents of people
from all different cultural backgrounds.

But even after an emphasis on valuing diversity, all is not equal in the workplace. In still too
many situations, a glass ceiling exists, which is a hidden barrier limiting the career
advancement of women and minorities.

1.5.3 Improving Quality, Productivity and Customer Service

Managers are responsible for improving organizations productivity, quality of products and
services they offer.

For improving quality and productivity in the organization, they are implementing programs
such as process reengineering and total quality management (TQM).

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 Process Reengineering &
Total Quality Management
(TQM).

Fig.1.19: Managers are implementing programs such as Process Reengineering and Total Quality Management (TQM).

1.5.3.1Process Re-engineering

Managers are changing the very essence of the way things are done. One of the latest
developments in the fast-paced world of organizational change is process reengineering.
This involves rethinking and totally redesigning business process to encourage innovation
and change and improve key performance measure such as cost, quality, service and
speed.

Fig.1.20: BPR

Organisations were asked to ‘start over’, to forget how things were done in the past and to
ask only how they should be done to best meet key performance measures.

Answers to these questions are used to redesign activities and workflows to give better value
to both internal and external customers. Inefficient processes are thrown out and entire new
systems are introduced. Process-reengineering typically refines jobs and requires most
employees to undergo training to learn new skills.

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1.5.3.2 Total Quality Management

Fig 1.21: TQM

Only those organisations that deliver what customers want in terms of quality, service and
cost are successful in today’s competitive business environment. One of the most popular
approaches managers used to establish quality is known as total quality management
(TQM).

The basic principles for the Total Quality Management (TQM) philosophy of doing business
are to satisfy the customer, satisfy the supplier and continuously improve the business
processes.

It is a management philosophy that combines all organisational functions (marketing,

finance, design, engineering and production, customer services, etc.) to focus on meeting
customer needs and organisationl objectives.

Fig 1.22: Meeting customer needs

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TQM views an organisation as a collection of processes. TQM is about continuously
improving results in all aspects of work, as a result of improving capabilities, people,
processes, technology and machine capabilities.

This shows that TQM must be practiced in all activities, by all departments, such as:
Manufacturing, Marketing, Finance, Engineering, Research & Development, Sales,
Purchasing, Human Resource, etc.

According to TQM, the root cause of mistakes can be identified and removed, and
repetition can be prevented by changing the process. TQM is about working smarter, not
harder.

1.5.4 Empowering People

Empowerment is the ability to let others take their own responsibilities, risks, rewards and
decisions. It is about giving ‘power’ to the people to take control of their own lives.

Fig.1.23: Empowerment

To help a company grow and prosper in today's competitive marketplace the employees
need to play a major role in its success. They must make decisions that will improve the
productivity of the organisation and they must also take responsibility of both their success
and problems and failures.

In a growing number of today’s organisations, power is shifting from managers to

employees. In fact, many of today’s workers are not being ‘managed’ in the traditional
authoritarian and dictatorship styles used by generations of past managers.

In the new workplace, managers are more ‘helping’ and ‘supporting’ than traditional
‘directing’ and ‘controlling’ their employees. The word’ ‘manager’ is also increasingly more

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being replaced in the new workplace by ‘coordinator’, ‘coach’, or ‘team leader’.

Empowering involves more than simply giving employee’s flexibility in deciding how to carry
out manager’s order. It also involves sharing the relevant information and knowledge that
allows employees to do what is needed to meet the organization’s goals.

The key to empowering people successfully is the sharing of information with them.

1.5.5 Reducing Absenteeism and Turnover

Absenteeism and turnover of employees costs organizations big losses in productivity,

hiring/vacancy costs, new employee training costs and lost opportunities.

The cost of replacing one employee equals one to three times the annual salary and
benefits of an employee.

Organisations should support managers and hold them responsible for high turnover rate
in the organisation.

What can managers do to reduce absenteeism and turnover in the organisation? They
should recognise the reasons why people leave organisations. Managers should
understand the real causes of absenteeism. Managers should have realistic expectations
from their employees.

Fig 1.24: Absenteeism

Managers should emphasize rules and policies on absenteeism and resignation to new
employees in the hiring process to reduce turnover and absenteeism risks.

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Managers should also promote an organizational culture that supports employee retention
and high attendance. Managers have to be good leaders and should motivate people to
do their best work and appreciate the good work of employees.

Fig 1.25: Ways by which employers can show their appreciation to employees.

The number one reason employees leave their jobs is not the company, not the work, but
often the reason why people leave their jobs is the boss.

A solution is to keep valuable employees satisfied and productive, is correcting employees

issues and conflict before they leave.

Most people agree that salary, career growth, and benefit are main factors for why
employees stay or leave an organisation. But employees also want more involvement in
decision making, more appreciation, better communication, more team-building, flexible
work conditions, more independence and better leadership.

Very few organisations list managers’ leadership or organizational development as a top

priority in their retention programs. Most of the efforts to keep employees in the organisation
is focused on an increase in salary or benefits.

Most organisations ignore the fact that improving manager leadership can increase
employee performance and reduce turnover rate.

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1.5.6 Coping with “Temporariness”

Most managers and employees today work in an environment which is ‘temporary’. Evidence of
temporariness is everywhere is organisations.

Jobs are being continuously redesigned, tasks are increasingly being done by flexible teams
rather than by individuals; companies are relying more on temporary workers, jobs are
being sub-contracted out to other firms, and pensions are being redesigned to move with
people as they change jobs.

Fig 1.26: Workers attend training to update their knowledge and skills

Workers need to update their knowledge and skills continually to perform new job
requirements. In the past, employees were assigned to specific work groups, and that
assignment was quite permanent. There was a considerable amount of security in working
with the same people everyday.

Now it is very common to have temporary work groups, teams that include members from
different departments and whose members change all the time, and the increased use of
employee rotation to fill constantly changing work assignments.

Organisations themselves are in a state of instability. They continually reorganise their various
departments, sell off poor-performing businesses, cut back operations, give away
unimportant services and operations to other organisations, and replace permanent
employees with temporary workers.

Today’s managers must learn to cope with temporariness. They have to learn to live with
flexibility, spontaneity, and unpredictability.

The study of OB can provide important insights into helping managers better understand a
work world of continuous change, how to overcome resistance to change, and how to
best create organisational culture that succeeds with change.

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1.5.7 Simulation Innovation and Change

Only those organisations are successful that maintain their flexibility, continually improve
their quality, and beat their competition in the marketplace with new and innovative
products and services can survive in today’s competitive business market.

A business not using creativity is not using its full potential; therefore organizations much
encourage innovation and master the art of change.

Most managers simply do not emphasize much on creativity, they just want to survive and
are afraid to implement new and innovation ways to doing things. Why should
management be interested in innovation? Without innovation an organization will
eventually die or be killed by competitors.

Fig 1.27: Domino’s Home Delivery

Example: Domino’s put hundreds of small pizza companies out of the market by becoming
the experts in pizza home delivery.

Amazon.com has put a lot of bookstores out of business by proving that you can sell books
from an Internet Website.

Fig 1.28: Amazon.com a bookstore via an Internet Website.

Dell – the world’s largest seller of computers.

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Dell has become the world’s largest seller of computers by continually reinventing itself and
beating its competition.

An organization’s employees can be the driving force and energy for innovation and
change or they can also be a major hesitation and problem block for creativity and
innovation.
The challenge for managers is to encourage employee’s creativity and tolerance for
change. The field of OB provides a wealth of ideas and techniques to help in realizing this
goal.

1.5.8 Helping Employees Balance Work/Life Conflicts

Employees are increasingly complaining that the line between work and non-work time has
become blurred, creating personal conflicts and stress.

Some reasons why employees have difficulties in balancing their work life and personal life
are:
• First, the creation of global organisations means the world never sleeps.
At any time and on any day, for example, thousands of Nokia employees
are working somewhere. They need to consult with colleagues or
customers eight or ten time zones away means that many employees of
the global firms are ‘on-call’ 24 hours a day.
• Second, communication technology has allowed employees to do their work at
home, in their car, or on the beach in Langkawi. This lets many people in technical
and professional jobs do their work from any time and from any place.

Fig 1.29: Working at home

• Third, organisations are asking employees to put in longer hours. This makes it very
difficult for married employees to find time to fulfil commitments to home, spouse,
children, parents and friends. Employees are increasingly recognising that their work
is forcing them to ignore their personal lives and they’re not happy about it.
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Employees want jobs that can give them flexibility in their work schedules so they can better
manage work/life conflicts.

Organisations that don’t help their employees achieve a work/life balance will find it
increasingly difficult to attract and maintain capable and motivated employees.

A challenge for today’s managers is designing workplaces and jobs that can help
employees deal with work/life conflicts.

1.5.9 Increasing Employee Loyalty

Employees used to believe that their employers would reward their loyalty and good work
with job security, benefits, promotion and salary increase.

Fig 1.30: Employer rewarding an employee with a salary increases

But beginning in the mid-1980s, in response to global competition, organisations began to

reject traditional policies on job security, seniority, and rewards.

Organisations became ‘lean and mean’ by closing factories, moving operations to lower-
cost countries, selling off or closing down less-profitable businesses, removing entire levels
of management, and replacing permanent employees with temporary ones.

These changes have resulted into a sharp decline in employee loyalty. Employees think that
their employers are less committed to them, and as a result, employees respond by being
less committed to the company in which they work.

An important OB challenge will be for managers to create ways to motivate workers who
feel less committed to their employers, while still maintaining their organization’s global
competitiveness.

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1.5.10 Improving Ethical Behaviour

An organization is full of high expectations of workers productivity, work overload, tough

competition in the marketplace and sometimes lack of appreciation or recognition of
employees efforts and hard work, low salary and office politics.

It is not surprising that many employees feel pressured to break rules, and engage in other
forms of questionable practices. Employees are increasingly finding themselves facing
ethical dilemmas.

Fig 1.31: Employee engaged in questionable practice

An ethical dilemma is a situation in which people are required to define right and wrong
conduct. For example:
• Should an employee become a whistleblower; someone within the organization who
exposes the wrongdoings of others in order to maintain high ethical standards in the
organization, if he/she discovers illegal activities taking place in their company?
• Should employees follow orders from their manager even if they do not personally
agree?
• Should an employee involve himself/herself in office politics if it can help their career?

It is difficult to predict exactly what ethical dilemmas an employee will someday face.
However, research suggests that people at work often face such dilemmas in their
relationships with superiors, subordinates, customers, competitors, and suppliers.

More and more organisations are offering ethics training programs that teach employee
show to handle ethical dilemmas at work.

The training helps employees learn how to identify and deal with common ethical mistakes
or misconducts such as:
• Pretending the behaviour is not really unethical or illegal.
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• Excusing the behaviour by saying it’s really in the organisation’s or in my own
best interest.
• Thinking the behaviour is okay because no one else is expected to find out about it.
• Presuming that superiors will support and protect if anything will go wrong.

Organisations have a social responsibility-the duty of organisations to behave in ethical and

moral ways as institutions of the society.

Managers must ensure that social responsibility is practised in the organisation at all times.
Managers can distribute ‘code of ethics’ and ‘rules and regulations’ of the organization to
help employees face ethical dilemmas,

They can organize seminars, workshops and training programs to improve ethical
behaviours.

Fig 1.32: Managers can organize seminars/ workshops to improve behaviours.

Managers need to create ethically healthy environment in the organization where

employees can do their work productively.

1.6 Summary

• Organisational Behaviour studies the behaviour of people in a work setting.

• Goal of OB is to explain, predict and control employee behaviour.
• OB focuses on how to improve productivity, reduce absenteeism and turnover, and
increase employee loyalty, motivation and job satisfaction.
• OB is a behavioural science that is built on contributions from several other behavioural
and social sciences which include: Psychology, Sociology, Social Psychology,
Anthropology, and Political Science.

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• The main topics and issues that OB studies include employee motivation, job satisfaction,
work conflict, emotions, attitudes, perception, power, ethical behaviour, leadership,
group behaviour, work stress, change and organisational structure.
• Managers play a very important role in the organisation as they have a responsibility of
managing the employees.
• Managers have four basic functions: planning, organizing, directing and controlling.
• Managers have three basic roles: interpersonal roles, informational roles and decisional
roles.
• Managers have three basic skills: technical skills, human skills and conceptual skills.
• OB focuses on interpersonal roles and human skills of managers.
• OB offers a lot of solutions for improving the human skills of managers.
• There are many challenges and opportunities that managers face including
globalisation, workforce diversity, improving quality and productivity, improving customer
care, empowering employees, coping with absenteeism and turnover, increasing
employee loyalty and ethical behaviour in the workplace.
• OB recognizes differences in people and helps managers to see the value of workforce
diversity.
• OB can help improve quality and employee productivity by showing managers how to
empower their people, design and implement changes, and help employees balance
work/life conflicts.
• An ethical dilemma is a situation in which people are required to define right and wrong
conduct.
• TQM is about continuously improving results in all aspects of work, as a result of improving
capabilities, people, processes, technology and machine capabilities.
• Process re-engineering focuses on how things should be done in the future. This
involves rethinking and totally redesigning business processes to encourage innovation
and change and improve overall organisational performance.
• Organizations were asked to ‘start over’, to forget how things were done in the past and
to ask only how they should be done to best meet key performance measures.
• It is important for managers to develop meaningful solutions for today's complex
management problems by using innovative technological solutions that provide answers
to the problems that employees and organisations have.

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1.7 Exercises

Multiple Choices

1. Organizational Behaviour is a field of .

(a) technology
(b) psychology
(c) science
(d) biology

2. Behaviour can be examined on three levels; the individual, the group and the
____________.
(a) country
(b) culture
(c) office
(d) organization

3. The term “workforce diversity” refers to differences in gender race, age, religion and
__________ among people at work.
(a) social status
(b) personal wealth
(c) culture
(d) political preference

4. The main focus of process reengineering is .

(a) how things were done in the past
(b) how things should be done in the future
(c) reducing labour costs
(d) raising capital.

5. Which statement about OB is most correct?

(a) OB seeks “one-best-way solutions to management problems.
(b) OB is a unique science that has little relationship to other scientific disciplines.
(c) OB is focused on using knowledge for giving practical solutions to work
related problems people face in organizations and companies.
(d) OB studies the financial aspects of organizations.

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6. The management function of is concerned with
motivating employees and leading the activities of employees.
(a) planning
(b) organizing
(c) directing
(d) controlling.

7. The three basic management skills are human, technical and .

(a) behavioural
(b) conceptual
(c) scientific
(d) financial

8. The main principal of Total Quality Management is to continuously improve

.
(a) suppliers
(b) customers
(c) products
(d) business processes.

9. An ethical dilemma is a situation in which people have to define conduct.

(a) cultural
(b) political
(c) social
(d) right or wrong.

10. Organizations have , which is the duty of organizations to

behave in ethical and moral ways as institutions of the society.
(a) cultural awareness
(b) social responsibility
(c) political control
(d) financial profits

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Answer True or False
1. Organizational behaviour is defined as the study of how organizations behave in different
countries. T/F

2. OB studies financial and the cost related aspects of an organization. T/F

3. Field of OB borrows many concepts from mathematics, finance and economics. T/F

4. OB focuses on the technical skills of managers. T/F

5. A whistle blower is someone who exposes unethical behaviour in organizations. T/F

6. Ethical dilemma is a situation in which people have to decide what is right

and wrong. T/F

7. A ‘glass ceiling’ is a term used for the hidden barrier limiting the career advancement of
men. T/F

8. Workforce diversity is the presence of differences based upon gender, age, race, culture,
and religion. T/F

9. TQM is about continuously replacing employees with better ones. T/F

10. Most managers and employees today work in an environment which is permanent. T/F

Short Answer Questions

1. Define Organizational Behaviour.

2. What is an organization? Is the family unit an organization? Explain.

3. Identify and contrast the three general management roles.

4. What is TQM? How is it related to OB?

5. What is process reengineering? How is it related to OB?

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6. How are the OB concepts addressed in management functions, roles and skills?

7. What OB issues do managers and employees face in the 21st century?

8. Contrast psychology and sociology’s contribution to OB.

9. Explain how managers and organizations are responding to the problem of employee
ethical dilemmas.

10.What are the main functions of a manger?

1.8 Case Study

Information Valley Sdn Bhd: Putting People First

Information Valley is an Information Technology software provider company in Kuala

Lumpur. It began in 1984, and today it employs 2,400 people, generates sales of RM 175
million, and was recently bought by Centrino Technologies for RM 1 billion. Management of
Information Valley says the reason behind their success is the company’s “Put People First”
strategy.

The company’s CEO, Dr Abdul Rahman, says that the company’s growth and success are
because of three organizational principals. First, make the company such a great place to
work that people would not want to leave and will be excited to work there. Second, give
employees power and responsibility at every level. And third, let people grow as
professionals and individuals.

What does Information Valley do make its ‘Put People First’ policy a reality? Managers say
that company’s structure, rewards and its commitment to helping employees develop skills
and leadership. Work is done mostly in teams at Information Valley; there are no traditional
status symbols such as presidents’ parking space or small office cubicles for junior
executives.

Rewards include casual dress standards, child care centre, and daily extracurricular
activities in everything from aerobic exercises to personal finance. Management is most
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proud of its commitment to the development of its people. The company offers a long list
of training and educational opportunities to its employees. These are designed to help
employees build their level of skills.

Information Valley’s most important training program is called “Leadership is Everywhere’. It

is designed to ensure that the company will have people that can take up leadership roles
in a continuously changing environment.

The company supports training by placing its employees into departmental teams. Every
team has a team leader, whose duty is to promote new ideas and projects in the company.
Team leaders also provide one-on-one job coaching and career planning advice.

Nearly, all Information Valley employees are given the opportunity to become team
leaders.

Dr Abdul Rahman has more than just increased profits to support his beliefs that his ‘Put
People First’ strategy really works. It has also succeeded in increasing job satisfaction and
motivation for the employees. Turnover rate for Information Valley is only 5% a year, which
is far below the information-technology companies’ average of 20%-25% every year.

Case Study Questions

1. The ‘put-people-first’ strategy has worked for Information Valley. If this approach is so
effective, why do you think all companies have not applied this practise?

2. Do you think that ‘put-people-first’ approach is more suitable to certain businesses or

industries than others? If so, name a few companies that can benefit from applying this
approach. Why?

3. Do you see any difficulty in working at a company like Information Valley? Explain.

4. What possible difficulties can a manager at Information Valley face?

5. Some people have argued that “put-people-first policy does not leas to high profits.
High profit allows put-people first policy.” Do you agree with the statement? Explain.

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