Ch 1: Introduction to OB

Meaning of Organizational Behaviour

▪ Organizational behaviour is the study of what people think, feel and do in and
around organizations.

▪ Organizational Behavior (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 toward improving an
organization’s effectiveness.
Definitions
According to Luthans
“OB is directly concerned with the understanding, predicting and
controlling of human behavior in organizations.”
According to LM Prasad
The study and application of knowledge about human behaviour related to
other elements of an organization such as structure, technology and
social systems
Stephen P Robbins
Organizational behaviour as a systematic study of the actions and
attitudes that people exhibit within organizations.
▪ It studies three determinants of behavior in organizations: individuals, groups,
and structure.
▪ In addition, OB applies the knowledge gained about individuals, groups, and
the effect of structure on behavior in order to make organizations work more
effectively.
▪ OB is concerned with the study of what people do in an organization and how
their behavior affects the organization’s performance.
▪ Specifically with employment-related situations
▪ Jobs,work, absenteeism, employment turnover , productivity, human
performance, and management
 Key Elements of
OB
There is a complex set of key
forces that affect organizational
behavior today. These key forces
are classified into four areas;

● People.
● Structure.
● Technology.
● Environment.

There is an interaction between

people, structure, and technology
and these elements are influenced
by the environment.
People
The essential element of OB is people. Here people mean an employee that works
for that organization. So, you must take care of how well the people are treated
and how well you listen to them.

As the backbone of an organization, they help to achieve the organization’s goals

by doing the work systematically. So, if there are any changes in their behavior, a
leader needs to know the reason behind that.

Structure
The employee that works individually or in groups creates the whole structure. It is
the layout of the organization. The roles and responsibilities of people in a
structure should be clearly described. If you do so, there will not be any confusion
regarding their duties which results in greater efficiency.
Technology
People and structures are not enough for an organization. When you provide the
needed technology, people can perform the task effectively. If you failed to provide
technology, it would be difficult for people to complete their responsibilities.
It also helps to reduce production costs. Depending on the work needed to
complete, you can use technology.

Environment
The last one is “Business Environment.” For an organization to run successfully,
external factors also matter the most. Business leaders must study both the
internal environment (organizational culture) and the external environment
(economic, social, political, and cultural) factors. A manager should not hesitate to
make any changes as and when required.
 Goals of OB
Organizational behaviour is an applied science that deals with individual behaviour as
well as group behaviour in an organization. The four primary goals of organizational
behavior are −
● To describe
● To understand
● To predict
● To control

To describe − The first objective is to narrate how people behave under various
conditions.
For example, as a manager, one information regarding the junior employee who
comes to the office late and leaves the office early.
To understand − The second goal of organizational behavior is to understand why
people behave as they do. Managers have to understand the reasons behind their
actions.
For example, as a manager, one has to find out the reasons why the junior
employee is coming late and leaving early before taking any actions against him/her
as per company rules.
To predict − Predicting future behavior of employees is another goal of
organizational behavior. When we understand the behaviour, we can predict the
behavoural trends.
For example, as a manager one should be able to predict employee turnover,
employee grievances, absenteeism, etc
To control − The final goal of organizational behavior is to control and develop a
friendly ambiance for the organization. Unpredicted behaviour cant be controlled. So
when certain behavour such as absenteeism, late comings, etc are predicted,
different measures can be used to control e.g. changing rules and regulations,
changing policies, etc
OB System

A system is defined as the set of interrelated and interdependent component

arranged in a manner that produces a unified whole. The system is
composed of a number of subsystems and all the subsystem are related to
each other. Organizational behavior (OB) in a system perspective consists
of the following interacting and interrelated components.
i. Input: It provides stimulus to behavior
ii. Processing: It is concerned with adding value to the input.
iii. Output: Outputs are the behavioral consequences
iv. Feedback: Feedbacks are corrective information
OB System
Inputs
Input Variables

● Individual variables: It relates to individual differences in employees.

It is person specific. They can be personal characteristics (i.e. age,
gender, marital status). The personality (the way how an individual
reacts and interacts with others), the values and attitudes.
● Group Variables: A group consists of two or more individuals working
for a particular objective. Group variables are concerned with role,
status, norms, size, composition and cohesiveness.
● Organization System Variable: It is concerned with the structure,
and working culture of an organization.
Processing
Individual Level Processing

● Perception: It is concerned with giving meaning to stimulus. The

perception of an individual is based on their perception of what reality
is, not on reality itself. The world that is perceived is the world
● Learning: It refers to relatively permanent change in behavior that
occurs as a result of information and experience.
● Motivation: It is stimulation of energies with intensity, direction and
persistence of efforts to achieve goals.
● Decision Making: It is related to selecting the best alternative among
the available alternatives.
Group Level Processing

● Communication: It is transmission of information and understanding

for meaningful purpose.
● Leadership: It is the ability to influence a group towards achievement
of goals.
● Power and Politics: It refers to the capacity of influencing the
behavior of others.
● Conflict: It consist of all kinds of opposition and antagonistic
interaction between different individuals.
● Team work: It is directed for synergistic effect.
Organization System Level Processing

● HR Policies and Practices: It is concerned with management,

practices of job design, analysis, recruitment, selection, socialization,
training, development, performance appraisal.
● Organizational Development: It is the process of managing planned
change through behavioral intervention.
Outputs
Outputs of OB
Productivity: One of the major concerns of OB is productivity. Since it is an
indicator of how much an organization is creating relative to its inputs. In other
words, it is a measurement of performance that includes efficiency and
effectiveness. It is ratio between input and output.

Absenteeism: second major output variable of the OB system is absenteeism. It

is defined as the intentional failure to go to work. The high degree of workers
absenteeism may result in poor organizational productivity and vice versa.

Turnover: it is the third output or dependent variable of OB system. It is

something that occurs when people quit their jobs. It covers both voluntary and
involuntary permanent withdrawal from an organization. A high level of employee
turnover brings a low level of productivity and vice-versa.
 Cont…
Organizational citizenship behaviour (OCB): it is the extent to which an
individual's behaviour makes a positive overall contribution to the organization.
According to one expert "OCB is discretionary (Voluntary) behaviour that is not part
of an employee's formal job requirements, but that nevertheless promotes the
effective functioning of the organization."

Job satisfaction: it is the final dependent variable in an OB system. Job satisfaction

is the amount of overall positive effect (or feelings) that individuals have towards their
jobs. It represents an attitude rather than behaviour. This variable is also important
from the organizational point of view because satisfaction is negatively related to
absenteeism and turnover (i.e. high level of job satisfaction produces a low level of
employee absenteeism and turnover and vice versa.)
Feedback
Feedback

It provides information to redesign OB inputs and processing to achieve

the desired behavioral consequences in the system. It also helps to
understand loopholes in the system and suggests for rectification of
deviations from the expected behaviour.
Levels of OB Analysis
Individual Level

At the individual level of analysis, organizational behavior involves the

study of learning, perception, creativity, motivation, personality, turnover,
task performance, cooperative behavior, deviant behavior, ethics, and
cognition. At this level of analysis, organizational behavior draws heavily
upon psychology, engineering, and medicine. For example, a study of
organizational behavior at the individual level of analysis might focus on
the impact of different types of factors as productivity and absenteeism.
Group Level

At the group level of analysis, organizational behavior involves the study

of group dynamics, intra and intergroup conflict and cohesion, leadership,
power, norms, interpersonal communication, networks, and roles. At this
level of analysis, organizational behavior draws upon the sociological and
socio-psychological sciences. For example, a study of how different
personality types correspond to different leadership styles and levels of
results operates at the group level of analysis.
Organizational Level

At the organization level of analysis, organizational behavior involves the

study of topics such as organizational culture, organizational structure,
cultural diversity, inter-organizational cooperation and conflict, change,
technology, and external environmental forces. At this level of analysis,
organizational behavior draws upon anthropology and political science.
The various studies on organizational cultures, from William Ouchi's
classic Theory Z: How American Business Can Meet the Japanese
Challenge (1981) to the more recent Organizational Culture and
Leadership (2004) are examples of organizational behavior conducted at
the organization level of analysis.
Basic Assumptions of OB
 Basic Assumptions of OB

Every field of social science has a philosophical foundation of basic

concepts that guide its development.

OB has also certain basic assumptions revolving around the nature

of people and the nature of organization.

A. Nature of the people

1. Individual differences
2. A whole person
3. Caused behavior
4. Value of the person
B. Nature of the organization
1. Social System
2. Mutual interest
Nature of the people
1. Individual differences
❖ Every individual in the world is different from all others.
❖ The idea of individual difference comes originally from psychology.
❖ Individual may differ in physical characteristics, intelligence,
aptitudes, attitudes, personality, skills and so on.
❖ Such differences may affect on the job behaviors of employees so
managers need to consider these differences.
❖ Therefore, every person should be selected, trained and treated on
the basis of what the kind of person s/he is.
Nature of the people

2. A whole person

❖ An employees personal life is not detached from his working life.

❖ When an employee comes to the workstation as a complete person,

s/he has his/her background, sentiments, emotions, feelings etc.
which can not be separated from the skills they are using in the job.

❖ Therefore, the manager need to help an all–round development of

the man rather than a particular aspects of a person.
Nature of the people
3. Caused behaviors
❖ According to psychologists, human behavior is caused, motivated and
goal directed.
❖ People’s behavior is caused by needs which can be directed and
controlled in order to get desired results.
❖ Therefore, managers need to motivate employees, and determine
what managerial action satisfy human needs and what actions
threaten their need fulfillment.
Nature of the people

4. Value of the person

❖ This concept tells that employees should be treated differently as

compared to other resources in the organization.

❖ People’s feelings, sentiments, aspiration, skills etc. should be

recognized in the organization.

❖ People should be treated with respect, dignity and equity not should
be treated like an animal or a machine.
Nature of the Organization

1. Social System
❖ All organizations are social systems which are greatly affected by
social norms and values.

❖ In every formal setting there develops informal relationships to fulfill

social needs

❖ Informal relationship should be considered to fulfill their social needs

Nature of the Organization

2. Mutual Interest
❖ The individual and organizational goal are never the same.

❖ Neither the employees nor the organization are self-sufficient in

achieving their goals.

❖ Mutual interest of organization and employees can be fulfilled only if

they move ahead mutually.
Contributing Disciplines to the field of OB
 Contributing Disciplines
Psychology seeks to Sociology studies
measure,explain, people in relation to
and change their fellow human
behavior beings
Social psychology
focuses on the influence
of people on one another

Anthropology is the Political science is the study

study of societies of the behavior of individuals
to learn about human and groups within a political
beings and their activities environment
Contributing Disciplines to the OB Field
Psychology
The science that seeks to measure, explain, and
sometimes change the behavior of humans and other
animals
Contributing Disciplines to the OB Field (cont’d)
Sociology
The study of people in relation to their fellow human beings
Contributing Disciplines to the OB Field (cont’d)
Social Psychology
An area within psychology that blends concepts from
psychology and sociology and that focuses on the influence
of people on one another
Contributing Disciplines to the OB Field (cont’d)
Anthropology
The study of societies to learn about human beings and
their activities
Challenges and Opportunities for OB
1.Responding to Globalization

▪ Challenges
• Understanding varied norms and values, symbols
• Motivating highly diversified workforce
• Coping with anti capitalism backlash
• Dealing with cross-cultural differences
▪ Opportunities
• Expanded Market and revenue
• Learn new things
• Higher standard of living
• Avail qualitative products and services at lower costs
2.Managing workforce diversity
▪ Challenges
• Workforce diversity:
▪ Gender, race, national origin, age, disability, refugee, migrants, etc
• Embracing diversity
• Changing demographics
• Accepting and managing value differences
• If not managed- may result into higher turnover, increased interpersonal
conflict and ineffective communication

▪ Opportunities:
• Workforce diversity can increase creativity and innovation in organizations
as well as improve decision making by providing different perspective on
problem.
3.Improving quality & productivity
▪ Challenges:
• To improve quality and productivity simultaneously is very challenging
• People are changing from price conscious to quality conscious however price
comparison is always there
• Now quality should be improved not through mass production but customized
production
• The definition of quality is changing day by day

▪ Opportunities:
• Qualitative products have higher demand and higher price
• Important factor for gaining competitive advantage
• Producing qualitative products also minimizes waste and lesser errors in output
4.Improving people skills
▪ Challenges:
• Employees are getting outdated quickly so time and again training & learning
is required
• Trained employees are difficult to retain as the competitors lure them with
better financial and non financial facilities and prospects
• To work in team is very much required but getting diverse group members
work in team is a difficult task
• A type of training may not be equally effective for everyone

▪ Opportunities:
• Skilled employees are comparatively more productive
• Skilled & productive employees are more rewarded, hence more motivated
• Competitive advantage can be gained only through skilled employees
5.Empowering people
▪ Challenges:
• Decision making is being pushed down to the operating level, where
workers are being given the freedom to make choices about schedules
and procedures and to solve work-related problems. – To what extent
the employees should be empowered ?
• Giving up control by managers and taking in charge of ones work is
difficult task

▪ Opportunities:
▪ Realization of potential from employees to the greatest extent
▪ Assuming responsibilities for own decisions
▪ Learning and easy adaption in the changing environment
▪ Top management can concentrate on important aspects and strategic
planning of the organization
6.Stimulating innovation & change
▪ Challenges:
• Employees can work and think only as employees i.e. they won’t involve themselves in
organization like the employer
• Making them think for organization innovatively is a challenge for management
• An organization’s employees can be the impetus for innovation and change or they can
be major stumbling block.
• Employees also resist change and managers must master the art of change or they’ll
become candidate for extinction.

▪ Opportunities:
• Everyone whether educated or uneducated may be highly creative. If employees start
thinking creatively for organization, they can gain competitive advantage over
competitors
• Innovative employees always devise new way of doing work effectively and efficiently
• Employees accepting changes easily adapt easily in dynamic environment and learn new
things easily
7.Coping with “temporariness”
▪ Challenges:
• Everything is changing rapidly e.g.- taste & preference, likes & dislikes, skills,
training, the way employees get motivated, technologies, etc
• Making employees ready for one task and making them flexible to assume
another responsibility requiring new skill is a difficult task
• Training and retraining, educating and reeducating is difficult for any
organzation

▪ Opportunities:
• If a manager develops a learning organization where workers continually
update their knowledge and skills, they can easily perform new job.
• If a manager is able to develop a culture of change, the employees will
adjust to the changing environment and develop competitive advantages
8.Helping employees balance work/life conflicts
▪ Challenges:
• Globalization has lead to sleepless worlds
• communication technology has made employee to do their work at
home, in their car, or during the holidays
• Nuclear family with single breadwinner and no time for their family
is making relationships emotionless

▪ Opportunities:
• If employees are provided opportunities for balancing their family
life with work life, they will develop a sense of belongingness and
the absenteeism and turnover will decrease while job satisfaction
and productivity will increase.
9.Declining employee loyalty
▪ Challenges:
• The attrition rate has increased to a great level
• A basis of unethical business practices
• Only professional relationship between employee and employer i.e. no sense
of belongingness for organization
• Difficult to devise ways to motivate workers who feel less committed to their
employers, while maintaining their organizations’ global competitiveness

▪ Opportunities:
• If employee loyalty is maintained they can be motivated easily, wastage will be
minimized, turnover and absenteeism will decrease
• Active involvement of the employees will lead to positive contribution to the
organization
10.Improving ethical behavior
▪ Challenges:
• Members of organizations are increasingly finding themselves facing
ethical dilemmas, situations in which they are required to define right
and wrong conduct.
• Ethical behaviour is very hard to define.
• Level of ethics is also declining day by day

▪ Opportunities:
• Managers and their organizations are writing and distributing codes of
ethics to guide employees through ethical dilemmas.
• If standardized and accepted by all, discipline will be maintained and
dysfunctional conflict will be eliminated to a great extent