Chapter 1: Fundamentals of

OB
By
Prof. Rajashree K. Gethe
Subtopics
• Evolution of Management thoughts
• Five functions of management
• Def. Scope and Importance of OB
• Relationship between OB and Individual
• Evolution of OB
• Models of OB (Autocratic, Custodial, Supportive, Collegial and
SOBC)
Evolution of Management Thoughts
• OB refers to the study of relationships among human beings who
works within the organization or workplace.
• Concept of OB Developed into following phases.
Classical Theory of Management (1880 to 1920)
• It signifies beginning of systematic study of organizations and management
practices.
• 3 main streams of management thinking under CME are
1. Scientific Management by F. W. Taylor
2. Administrative Management by Henry Fayol
3. Bureaucratic Management by Max Weber
Scientific Management by F. W. Taylor
• Fedric Winslow Taylor is the ‘Father of Scientific Management’.
• He worked for industrial efficiency.
• During his researches F.W. Tylor observed that the main reason of
ineffectiveness and wastage in factories was that both workers and managers
are not aware about the scientific methods.
• Definition:
• “Scientific Management means knowing exactly what you want men to do and
seeing that they will do it in the best and cheapest way.”
Scientific Management by F. W. Taylor

Science, not Harmony and Mental

rule of thumb not discord Revolution

Division of Development of Every

employee for their
work and greatest Efficiency &
responsibility Pay based on results
1) Science, not the Rule of Thumb-
This rule focuses on increasing the efficiency of an organisation through
scientific analysis of work and not with the ‘Rule of Thumb’ method.

2) Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers and
management should be cordial and completely harmonious.

3) Mental Revolution-
This technique involves a shift of attitude of management and workers
towards each other. Both should understand the value of each other and work
with full participation and cooperation. There should be scientific selection,
training and development of employees.
4) Division of work and responsibility-
It is similar to ‘Harmony, not discord’ and believes in mutual collaboration
between workers and the management. Managers and workers should have
mutual cooperation and confidence and a sense of goodwill.
There should be proper division of work and responsibility among manager and
employees.

5) Development of Every employee for their greatest Efficiency & Pay

based on results-
The effectiveness of a company also relies on the abilities and skills of its
employees. Thus, implementing training, learning best practices and technology,
is the scientific approach to brush up the employee skill.
Pay should be based on results
Administrative Management by Henry Fayol
• Henry Fayol, also known as the Father of Modern Management Theory, gave
a new perception on the concept of management.
• The fourteen principles of management created by Henri Fayol are explained
below.
1) Division of work
Henri believed that segregating work in the workforce amongst the workers will
enhance the quality of the product.
2) Authority and Responsibility
These are the two key aspects of management. Authority facilitates the
management to work efficiently, and responsibility makes them responsible for
the work done under their guidance or leadership.
3) Discipline
Without discipline, nothing can be accomplished. It is the core value for any project or
any management.
4) Unity of Command
This means an employee should have only one boss and follow his command. If an
employee has to follow more than one boss, there begins a conflict of interest and can
create confusion.
5) Unity of Direction
Whoever is engaged in the same activity should have a unified goal. This means all the
people working in a company should have one goal and motive which will make the
work easier and achieve the set goal easily.
6) Subordination of Individual Interest
This indicates a company should work unitedly towards the interest of a company rather
than personal interest. Be subordinate to the purposes of an organisation. This refers to
the whole chain of command in a company.
7) Fair remuneration to employees
This plays an important role in motivating the workers of a company. Remuneration can
be monetary or non-monetary. Ideally, it should be according to an individual’s efforts
they have put forth.
8) Centralization and Decentralization
In any company, the management or any authority responsible for the decision-making
process should be neutral. Henri Fayol stressed on the point that there should be a
balance between the hierarchy and division of power.
9) Order
A company should maintain a well-defined work order to have a favourable work
culture. The positive atmosphere in the workplace will boost more positive productivity.
10) Scalar Chain
Fayol, on this principle, highlights that the hierarchy steps should be from the top to the
lowest. This is necessary so that every employee knows their immediate senior also they
should be able to contact any, if needed.
11) Equity
All employees should be treated equally and respectfully. It’s the
responsibility of a manager that no employees face discrimination.
12) Stability
An employee delivers the best if they feel secure in their job. It is the duty of
the management to offer job security to their employees.
13) Initiative
The management should support and encourage the employees to take
initiatives in an organisation. It will help them to increase their motivation and
morale.
14) Esprit de Corps
It encourages Team Spirit, Group harmony and Mutual relationship among the
team members. Managers should promote team work.
Administrative Management by Henry Fayol
Bureaucratic Management by Max Weber
• “Bureaucracy is an organizational structure characterized by many laws,
standardized procedures, procedures and requirements, number of desks, the
meticulous division of labour and responsibility, clear hierarchies and professional
interactions between employees that are almost impersonal."- Max Weber
• A German scientist, Max Weber, describes bureaucracy and developed he belief
that there must be a fixed hierarchical structure for an organization and clear rules,
regulations, and lines of authority that regulate it. The bureaucracy of Max Weber
has the following attributes:
• Specialization of labour
• A formal set of rules and regulations
• Well-defined hierarchy within the organization
• Impersonality in the application of rules
Neo-Classical Theory Elton Mayo examined the impact of work conditions
in employee productivity.
1) Human Relations Theory Elton Mayo started these experiments by examining
1) the physical and environmental influences of the
workplace (e.g. brightness of lights, humidity)
and
2) later, moved into the psychological aspects (e.g.
breaks, group pressure, working hours,
managerial leadership) and
3) their impact on employee motivation as it applies
to productivity. In essence, the Hawthorne Effect,
as it applies to the workplace, can be summarized
as "Employees are more productive because the
employees know they are being studied." Elton
Mayo's experiments showed an increase in
worker productivity was produced by the
psychological stimulus of being singled out,
involved, and made to feel important.
 Neo-Classical Theory
1) Human Relations Theory by Elton Mayo
• Human Relations Theory focuses specifically on the individuals needs and
resultant behaviors of individuals and groups.
• Elton Mayo, an Australian psychologist from Harvard University, developed the Human
Relations Theory. He conducted a series of experiments, which are now known as
Hawthorne Studies or Hawthorne Experiments. https://edukedar.com/hawthorne-experiment/
• He concluded that people have unique preferences and can’t be treated as machines.
Here are some of the key takeaways of the Elton Mayo Human Relations Theory:
• Humans Are Complex And Different Factors Influence Their Behavior
• Group Dynamics (Team Relations) Influence Job Performance And Output
• Managers Should Understand That Employees Have Unique Needs And One Size
Doesn’t Fit All; Communication Is Essential Between Managers And Employees
• People Aren’t Solely Motivated By Compensation; Finding Meaning In Their Work Is
Important As Well
• Employees Are More Open To Change When Given The Opportunity To Participate
Behavioural Science Theory (Maslow and McGregor’s Theory)
• It presents an increased focus on group relationships and group behavior in
organizational effectiveness.
1) Maslow’s need Hierarchy Theory (Maslow)
2) Theory X & Y (McGregor)
3) Two-Factor Theory (Herzberg’s)
Modern Management Theory
• Modern Management Theory was created in direct response to the Classical
Management Theory that states employees are only motivated by money.
• The Modern Management Theory recognizes that workers are complex and
have many reasons for wanting to succeed in their job.
• The Modern Management Theory also believes that rapidly changing
technology can both cause and solve many problems in the workplace.
• This theory combines mathematical analysis with an understanding of human
emotions and motivation in order to create a working environment that is
maximally productive.
• Modern Management Theory is actually comprised of three other
management theories — Quantitative Theory, Systems Theory, and
Contingency Theory.
1) Quantitative Theory/Operations Research
Quantitative approach is a scientific method. It emphasizes the use of statistical
model and systematic mathematical techniques to solving complex management
problems.
It helps the management to making decisions in operations. It can only suggest the
alternatives based on statistical data. It cannot take final decision.

2) Systems Theory
Developed by Ludwig von Bertalanffy, this theory states that all parts of a company,
from the CEO to the entry-level employee, must work in harmony for the company to
survive.

3) Contingency Theory
Created by Fred Fiedler in the 1960s, this theory states that it is up to the leaders of a
company to assess a situation and use the best leadership strategy depends upon the
situation.
Five Functions of Management
• Planning
• Organizing
• Staffing
• Directing
• Controlling
Planning
• Planning is determining the objectives and formulating the methods to
achieve them. It is more simply said than done. A job well planned is
half done. During planning one needs to ask oneself the following:
• What am I trying to accomplish i.e. what is my objective?
• What resources do I have and do I need to accomplish the same?
• What are the methods and means to achieve the objectives?
• Is this the optimal path?
Organizing
• It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals.
• The management function that determines how the firm’s human, financial,
physical, informational, and technical resources are arranged and
coordinated to perform tasks to achieve desired goals.
• The deployment of resources to achieve strategic goals.
• Determining and define the activities required for the achievement of
planned goals.
• Grouping the activities into logical and convenient units.
Staffing
• It means the process of filling all positions in the organization with
adequate and qualified personnel.
• In management, staffing means, -
• Manpower planning- involving determination of the number and the kinds
of personnel required.
• Recruitment for attracting suitable personnel to seek jobs in the enterprise.
• Selection of the most suitable persons for the jobs under consideration.
• Placement and orientation of employees.
• Transfer and promotion of employees.
• Training and development of employees.
Directing
• The management function that energizes people to contribute their best
individually and in cooperation with other people.
• It means to guide, supervise, motivate and lead people in organization
towards the attainment of stated objectives.
This involves:
• Clearly communicating organizational goals
• Inspiring and motivating employees
• Providing an example for others to follow
• Guiding others
• Creating conditions that encourage management of diversity
Controlling
• The management function that measures performance, compares it to
objectives, implements necessary changes, and monitors progress.
• It means checking actual performance with the agreed standard that has
planned to satisfy the satisfactory performance.

• In management, controlling means-

• Establishing standards for measuring works performance.
• Measurement of actual performance and comparing it with the
standards
• Finding the variances between the two and the reason therefore, and
• Taking corrective action for correcting deviations so as to ensure
attainment of objectives.
Functions and Levels of Management
Organizational Behaviour
Definition, Scope and Importance of OB
• Organizational Behaviour is concerned with the understanding,
prediction and control of human behaviour in organizations. It focuses
on the individuals, the groups and the organization and also on their
interactional relationships. It is the study and application of knowledge
about how people act with organizations.
Features of OB
1. OB is a part of general management and not the whole of management. It represents
behavioral approach to management.
2. OB contains a body of theory, research and application associated with a growing
concern for people at the work place. It helps in understanding human behavior in work
organizations.
3. OB is a human tool for human benefit. It helps in predicting the behavior of individuals.
4. OB is inter-disciplinary field of study. It tries to synthesize knowledge drawn from
various behavioral and social sciences such as Psychology, Sociology, Anthropology,
Political-science, Economics, etc. In fact, OB is an applied behavioral sciences.
5. OB involves three levels of analysis of behavior-individual behavior, group behavior and
behavior of the organization itself.
6. OB is an action-oriented and goal-directed discipline. It provides a rational thinking
about people and their behavior
7.OB is both a science and an art. The systematic knowledge about human behavior is a
science. The application of behavioral knowledge and skills clearly leans towards being an
art.
8. OB seeks to fulfil both employees’ needs and organizational objectives
Objectives of Organizational Behavior
• The several objectives of organizational behavior are:-

• To create a social structure within the organization.

• To inspire employees to work energetically for the company.
• To construct a setting that will foster good leadership.
• To help the staff members cultivate successful group behaviors.
• To determine the conflict’s causes and find a solution.
• To identify the sources of dissatisfaction and take steps to mitigate or
eliminate those sources.
• To boost the organization's workforce’s morale.
• To keep the workplace atmosphere favourable inside the business.
Importance of OB
1. Improves communication: Studying OB helps understand and detangle the
communication patterns within an organisation. This helps the authorities
communicate better with the employees and stakeholders.
2. Increases productivity: Studying organisational behaviour theories provides
insight into the factors that promote job satisfaction and boost productivity at the
workplace. The results derived from the studies can be conceptualised effectively to
produce optimal outputs.
3. Enhances job satisfaction: Just like understanding OB theories and models
enhances productivity, it also helps understand employee satisfaction. This helps build
a healthier workplace for everyone working in the organisation.
4. Reduces turnover: Creating a healthy, positive environment ensures less employee
turnover. This also helps build a good reputation for the organisation at large.
5. Helps manage change: OB models, such as Lewin’s Change Management Model,
help the authorities understand how the stakeholders and employees would accept a
change within the organisation.
Scope of OB 2. Group Behaviour
(i) Work groups and group dynamics
The scope of OB involves three levels of
behaviour in organizations: individuals, (ii) Dynamics of conflict
groups and structure. (iii) Communciation
(iv) Leadership
1. Individual Behaviour (v) Morale
(i) Personality
(ii) Perception 3. Organization: Structure, Process
(iii) Values and Attitudes and Application
(iv) Learning (i) Organizational Climate
(v) Motivation (ii) Organizational Culture
(iii) Organizational Change
(iv) Organizational Effectiveness
(v) Organizational Development
Models of OB
Model Autocratic Custodial Supportive Collegial

Basis of Model Power Economic resources Leadership Partnership

Managerial Money
orientation Authority Support Teamwork

Employee Security and

orientation Obedience benefits Job performance Responsible
behaviour
Employee Dependence on Participation
psychological result Dependence on boss organization Self – discipline

Employee needs Security

met Subsistence Status and Self – actualization
recognition
Performance result Passive co- Moderate
Minimum operation Awakened drives enthusiasm
Autocratic model
• According to this paradigm, the workers are focused on compliance and
discipline.
• The top management is the only group with power.
• All decisions, strategies, and policies are made by the senior management in a
company that follows an authoritarian style.
• Lower-level personnel are required to comply with senior management’s
directives. They must comply; if not, they risk punishment or termination.
• Under this model, people tend to get easily irritated due to the lack of security,
reliance on superiors, and minimal performance following low pay. These are
the main problems of this model.
Custodial Model
• The custodial model assumes that employees will work more and stay
longer when they are paid fairly.
• According to this model, an equitable remuneration structure boosts
employee enthusiasm and productivity inside the company.
• Giving employees numerous financial and non-financial perks,
including job stability, fair compensation, bonuses, paid time off, and
prizes, is the main goal of this strategy, which aims to keep great staff
and boost motivation and productivity.
Supportive Model
• The supportive model works best when there is a positive work atmosphere,
management support, stronger relationships, harmony, good communication,
etc. Workers experience a sense of involvement.
• This approach assumes that although employees may be somewhat self-
motivated, they nevertheless require managerial help to achieve their best.
• As a result, a supportive model aims to strengthen the interaction between
managers and their staff members.
• It emphasises the psychology, inspiration, and zeal of workers. Here, the
supervisor is a great proponent of motivating staff to do better.
Collegial Model
• Collegial refers to a situation where groups of coworkers share
responsibilities. This model places a strong emphasis on encouraging
collaboration inside the company.
• The manager serves both as a mentor and a member of the team. Their
job is to encourage teamwork and make sure the team performs well.
They routinely encourage cooperation and keep track of outcomes.
• As per this model, managers and employees collaborate as a
team, hence the name is collegial model.
 SOBC (Stimulus-Organism-Behaviour-Consequences)
Model
• S-O-B-C stands for Stimulus, Organism(a person), Behavior and
Consequence. This model shows process of formation of behaviour.
• Stimulus: is any event that happens in the environment, it can be a sound(like
someone shouting) a scene(a car accident, a fight. etc...), events(like receiving
a paycheck).
• Organism: is a person, nothing more can be said about this, so in OB you can
consider that to be an employee or an employer.
• Behavior: the organism behavior and response in regards to the stimulus( for
example a child(Organism) may hit(Behavior) his brother after seeing a
violent movie(Stimulus).
• Consequence: is the outcome that comes after the behavior, it either
reinforces(thus repeated) the behavior or punished(thus not repeated). In the
child example previously mentioned, his mother can reprimand(Consequence:
punishment) him for doing what he did.
Questions for Study
• Discuss about the Evolution of Management Thoughts?
• Discuss about the 4 principles of Scientific Management by
F.W.Taylor?
• Discuss about the 14 principles of Administrative Management by
Henry Fayol?
• What are the various models of OB?