CHAPTER 1

The Dynamics of People and

Organizations
Introduction

Organizations are complex systems

We need to understand how such systems operate
 for us to be EFFECTIVE EMPLOYEES and
future MANAGERS
Human behavior in organizations is rather
unpredictable
We need to learn about human behavior, to
explore how to improve our interpersonal skills, to
manage our relationships with others at work
Definition 1

Organizational Behavior (OB)- is the study

and application of knowledge about how
people – as individuals and as groups –
act within organizations
Definition 2
OB – provides a useful set of tools at many levels of
analysis:
Helps managers look at the behavior of individuals
within an organization
Aids managers in their understanding of the
complexities involved in interpersonal relations
Aids managers in examining the dynamics of
relationships within small groups (both formal teams
and informal groups)
Aids managers in examining the dynamics of
relationships between groups
Managers can view organizations as whole systems
that have inter-organizational relationships
Goals 1

Describe
Understand
Predict
Control
Goals 2
To describe, systematically, how people
behave under a variety of conditions
To understand why people behave as they
do (the reasons behind people actions)
To predict future employee behavior (so
that managers could take preventive actions)
To control (at least partially) and develop
some human activity at work
Forces
A complex of forces affects the nature of organizations
today

People
•Individuals

•Groups

Environment Structure Organizational

•Government
•Jobs
•Competition

•Societal pressures
•Relationships Behavior

Technology
•Machinery

•Computer hardware and software

People 1
Make up the internal social system of the
organization
The living, thinking, feeling beings who work
in the organizations to achieve their objectives.
Consists of individuals and groups; large
groups as well as small ones.
Unofficial, informal groups and more official,
formal ones.
Groups are dynamic. They form, change, and
disband.
People 2

Workforce has become richly diverse

Managers need to be tuned in to these diverse
patterns and trends, and be prepared to adapt to
them
Structure

The formal relationship and use of people in

organizations.
Creates complex problems of cooperation,
negotiation, and decision making.
Technology

Provides the resources with which people work

and affects the tasks that they perform
Technology used has a significant influence on
working conditions
Allows people to do more and better work, but it
also restricts people in various ways
Environment
All organization operate in a certain
setting
External environment
Individual organizations cannot escape
being influenced by the external
environment.
 Characteristics of the OB Field
Interdisciplinary – it integrates the behavioral
sciences (the systematic body of knowledge
pertaining to why and how people behave as they
do) with other social sciences that can contribute
to the subject (helps improve the relationships
between people and organizations)
Dynamic – the field of OB has grown in depth
and breadth, and will continue to mature
Research-based – ongoing process through which
valuable behavioral knowledge is continually
uncovered
Fundamental Concepts 1

Every social science has a philosophical

foundation of basic concepts that guide its
development
OB starts with a set of fundamental
concepts revolving around the nature
of people and organizations.
“Enduring principles” endorsed by
airline executive Herb Kelleher
Fundamental Concepts 2
“The best way to handle stiff competition and a fast-
changing world is to build your organization on enduring
principles.”
Fundamental concepts of OB:
The nature of people The nature of organizations
- Individual Differences - Social systems
- Perception - Mutual interest
- A whole person - Ethics
- Motivated Behavior
- Desire for Involvement
- Value of the person
Individual Differences
Law of individual differences – belief that each
person is different from all others
Individual differences require that a manager’s
approach to employees be individual, not
statistical
Individual differences mean that management can
motivate employees best by treating them
differently
Some standard, across-the-board way of dealing
with employees could be adopted, and minimum
judgment would be required thereafter, if it were
not for individual differences
Perception 1
The unique way in which each person sees,
organizes, interprets things
People look at the world and see things differently
Even when presented with the same
object, two people may view it in two
different ways
People use an organized framework
that they have built out of a lifetime
of experiences and accumulated
values
Perception 2

Difference in personalities, needs demographic

factors, and past experiences, or different physical
settings, time periods, or social surroundings may
make employees see their work worlds differently
Whatever the reason, we tend to act on the basis of
our perceptions
Perception 3
Selective perception – people tend to pay attention
to those features of their wok environment which
are consistent with or reinforce their own
expectations
This causes misinterpretations of single events at
work, but also leads to future rigidity in the search
for new experiences
Managers must learn to expect perceptual
differences among their employees, accept people
as emotional beings, and manage them individual
ways
A Whole Person
People function as total human beings
Organizations hire persons as a whole person
rather than certain characteristics
Employees belong to many organizations other
than their employer, and they may play many roles
inside and outside the firm
If the whole person can be improved, then he/she
can be more productive and benefits will extend
beyond the firm into the larger society in which
employee lives
Motivated Behavior
People are motivated not by what we think they
ought to have but by what they themselves want
Management should motivate people
Motivation is essential to the operation of
organizations
No matter how much technology and equipment
an organization has, these resources cannot be put
to use until they are released and guided by people
who have been motivated
Desire for Involvement
Drive for self-efficacy or the belief that one has
the necessary capabilities to perform a task, fulfill
role expectations, make a meaningful contribution,
or meet a challenging situation successfully
We hunger for the chance to share what we know
and to learn from the experience
Organization need to provide opportunities for
meaningful involvement, a practice which will
result in mutual benefit for both parties
Value of the Person
We humans are not simply economic tools
We want to be valued for our skills and
abilities and to be provided with opportunities
to develop ourselves
Managers should treat employees with care,
respect and dignity
Social Systems
Organization are social systems
People have social roles and status
Two types of social systems:
- formal (official) social system
- informal social system
The existence of a social system implies that the
organizational environment is one of dynamic change,
rather than a static set of relations as pictured on an
organizational chart
Everything is related to everything else
The idea of a social system provides a framework for
analyzing organizational behavior issues
It helps make organizational behavior problems
understandable and manageable
Mutual Interest
Organizations have a human purpose
They are formed and maintained on the basis of
some mutual interest among their participants
Organizations need people, and people need
organizations
Provide a super-ordinate goal – one that can be
attained only through the integrated efforts of
individuals and their employers
Provide a common base on which to build upon
Without it there is no sense to try to assemble a
group and develop cooperation
Ethics

Organizations must treat employees in an ethical

fashion
Right, fair, just, decent way
Promote morality
Companies have recognized positive
role models and set up internal
procedures to handle misconduct
 Four Basic Approaches of OB
Human resources (supportive) approach – employee
growth and development are supported
Contingency – different situations require different
behavioral practices for effectiveness ; “no one best
way”
Result-oriented – all organizations need to achieve
some relevant outcomes or results; productivity – is a
ratio that compares units of output with units of
inputs, often against a predetermined standard
Systems – all parts of an organization interact in a
complex relationship
Formula for Organizational
Performance

1. Knowledge x skill = ability x attitude x situation

= motivation
1. Ability x motivation = potential human
performance
4. PHP x resources x = organizational
opportunity results
Summary
OB is the study and application of knowledge about how
people – as individuals and groups – act in organizations
Its goals are to make managers more effective at
describing, understanding, predicting and controlling
human behavior
Key elements to consider are people, structure,
technology and the external environment
Fundamental concepts of OB relate to the nature of
people (individual differences, perception, a whole
person, motivated behavior, desire for involvement, and
value of the person) and to the nature of organizations
(social system, mutual interest, ethics)
Effective management can be best be attained through
the understanding and use of the human resources,
contingency, result-oriented, and system approaches.