REWARDING HUMAN RESOURCES

Unit V
Discussion Points
• Performance Appraisal: Methods and needs for
Performance Appraisal

• Organization Climate and its impact on HRM.

• Components of Organization Culture

• Quality of Work Life – Determinants of quality of work life.

Impact of QWL on Organization Climate and Culture.
 Definitions

According to Newstrom, “It is the process of evaluating the performance of

employees, sharing that information with them and searching for ways to improve
their performance’’.
According to Dale s. Beach, “it is the systematic evaluation of the individual with
respect to his or her performance on the job and his or her potential for
development”
 Meaning

Performance appraisal is the step where the management finds out how effective
it has been at hiring and placing employees .

A “Performance appraisal” is a process of evaluating an employee’s performance

of a job in terms of its requirements.
OBJECTIVES OF PERFORMANCE APPRAISAL

Work related  To assess the work of employees in relation to job

objectives
requirements.
 To improve efficiency.

 To assess the strong and weak points in the working of the

Career employees and finding remedies for weak points through

development training.
objectives
 To determine career potential.
 To plan promotions, transfers , etc. of the employees
Communication  To provide feedback to employees so that they come to
objectives know where they stand and can improve their job
performance.
 To clearly establish goals
 To provide coaching , counselling, to employees

Organizational  To serve as a basis for promotion or demotion

objectives  To serve as basis for wage and salary
administration
 Process

Setting
performance
Taking corrective standards
standards Communicating
standards

Discussing
Measuring
results
standards

Comparing
standards
1.SETTING PERFORMANCE STANDARDS
The first step in the process of performance appraisal is the setting up of the standards

which will be used to as the base to compare the actual performance of the

employees. This step requires setting the criteria to judge the performance of the

employees as successful or unsuccessful and the degrees of their contribution to the

organizational goals and objectives. The standards set should be clear, easily

understandable and in measurable terms. In case the performance of the employee

cannot be measured, great care should be taken to describe the standards.

2.Communicating the standards
Once set, it is the responsibility of the management to communicate the standards to all

the employees of the organization. The employees should be informed and the

standards should be clearly explained to the employees. This will help them to

understand their roles and to know what exactly is expected from them. The standards

should also be communicated to the appraisers or the evaluators and if required, the

standards can also be modified at this stage itself according to the relevant feedback

from the employees or the evaluators

3.Measuring the actual performance

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the
specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
appropriate techniques of measurement, taking care that personal bias does not affect
the outcome of the process and providing assistance rather than interfering in an
employees work.
4.Comparing actual performance with desired
performance
The actual performance is compared with the desired or the standard performance. The

comparison tells the deviations in the performance of the employees from the standards

set. The result

can show the actual performance being more than the desired performance or, the actual

performance being less than the desired performance depicting a negative deviation in

the organizational performance. It includes recalling, evaluating and analysis of data

related to the employees’ performance

 5.Discussing results [Feedback]

The result of the appraisal is communicated and discussed with the

employees on one-to-one basis. The focus of this discussion is on

communication and listening. The results, the problems and the possible

solutions are discussed with the aim of problem solving and reaching

consensus. The feedback should be given with a positive attitude as this

can have an effect on the employees’ future performance.

 Methods of Performance Appraisal

Traditional Methods Modern Methods

1.Ranking method
1.MBO
2.Paired comparison
2.BARS
3. grading method
4.Forced Distribution Method 3.Assessment centers
5.Forced choice method 4.360 degree appraisal
6.Checklist method 5.Cost accounting method
7.Critical Incidents
8.Graphic scale method
9.Essay method
10.Field review method
11.Confidential report
 Ranking method

This method is very old and simple form of performance appraisal. An

employee is ranked one against the other in the working group under
this method.

eg : if there are five workers in the work group , the most efficient
worker is ranked as number one and the least efficient worker is
ranked as five.

i)It does not tell that how much better or worse one is than another.

(ii) The task of ranking individuals is difficult when a large number of

employees are rated.
Paired comparison method

In this method each employee is compared with other

employees on one on one basis, usually based on one trait
only.

This system is also not suitable in those cases where the

number of employees is usually high.
 Grading Method:

Under this method, certain features worth understanding the

performance of an employee are identified. Such features may be
leadership, communication power, analytic ability, job knowledge, etc.
The raters mark/rate such features according to a scale and match the
employees’ performance in comparison to his/her own developed grade
definition.

To take an example A, B, C, D, E types of grade definitions for each feature may

be developed by a rater to indicate the ratings—A= very significant, B= Significant,
C = Moderate, D= Average, E= Poor. Such types of grading are of much use for
selection of an employee or grading them in written examinations.
FORCED DISTRIBUTION METHOD

The method assumes that employees’ performance level confirms to a normal

statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful for rating a large
number of employees’ job performance and promo ability. It tends to eliminate or
reduce bias.

It is also highly simple to understand and easy to apply in appraising the performance of

employees in organizations. It suffer from the drawback that improve similarly, no single

grade would rise in a ratings.

 Forced distribution method

No.
of
employees 10% 20% 40% 20% 10%

poor Below average good Excellent

average

Force distribution curve

Forced-Choice Method:

The forced-choice method is developed by J. P. Guilford. It contains a series

of groups of statements, and rater rates how effectively a statement
describes each individual being evaluated. Common method of forced-choice
method contains two statements, both positive and negative.

Each statement carries a score or weight, which is not made known to the rater. The
human resource section does rating for all sets of statements— both positive and
negative. The final rating is done on the basis of all sets of statements. Thus,
employee rating in this manner makes the method more objective. The only problem
associated with this method is that the actual constructing of several evaluative
statements also called ‘forced-choice scales’, takes a lot of time and effort.
 Forced choice method

Criteria Rating

1.Regularity on the job Most Least

• Always regular
• Inform in advance for delay
• Never regular
• Remain absent
• Neither regular nor irregular
Check-List Method:

The basic purpose of utilizing check-list method is to ease the evaluation burden upon
the rater. In this method, a series of statements, i.e., questions with their answers in
‘yes’ or ‘no’ are prepared by the HR department The check-list is, then, presented to
the rater to tick appropriate answers relevant to the appraisee. Each question carries a
weight-age in relationship to their importance.

When the check-list is completed, it is sent to the HR department to prepare the final
scores for all appraises based on all questions.
 Check list method YES NO

Is regular on Job ?
Does maintain discipline well ?
Does show consistent behavior to all
students?
Is interested in (teaching) job?
Does ever make mistake?
Does show favoritism to particular
students?
Is willing to help colleagues?
 Critical Incident Method

Critical incident method or critical incident technique is a

performance appraisal tool which analyses the behavior of
employee in certain events in which either he performed
very well and the ones in which he could have done better.
 Critical Incident method

Ex: A fire, sudden breakdown, accident

Workers Reaction scale

A Informed the supervisor immediately 5

B Become anxious on loss of output 4
C Tried to repair the machine 3
D Complained for poor maintenance 2
E Was happy to forced test 1
 GRAPHIC SCALE METHOD

Graphic Rating Scale is a type of performance appraisal method.

In this method traits or behaviors that are important for effective
performance are listed out and each employee is rated against
these traits. The rating helps employers to quantify the behaviors
displayed by its employees.
Some of these behaviors might be:
• Quality of work
• Teamwork
• Sense of responsibility
• Ethics etc.
Ratings are usually on a scale of 1-5,
1 being Non-existent,
2 being Average,
3 being Good,
4 being Very Good and
5 being Excellent.

Example of a Graphic Rating Scale question:

How would you rate the individual in terms of quality of work, neatness and accuracy?
1. Non-Existent: Careless Worker. Tends to repeat similar mistakes
2. Average: Work is sometimes unsatisfactory due to untidiness
3. Good: Work is acceptable. Not many errors
4. Very Good: Reliable worker. Good quality of work. Checks work and observes.
5. Excellent: Work is of high quality. Errors are rare, if any. Little wasted effort.
 ESSAY METHOD

Under this method, the supervisor writes a report about the employee which is based on
his assessment. The supervisor continuously watches the subordinates and writes his
assessment in the report.
While preparing an essay on the employee, the rater generally considers the following
factors.

Job knowledge and potential of the employee

Employee’s relations with co workers and supervisors.

Employee’s traits and attitudes

Employees understanding of the company’s programs, policies, objectives etc.

Development needs for the future etc.
Field Review Method:

When there is a reason to suspect rater’s biasedness or his or her rating

appears to be quite higher than others, these are neutralized with the help of a
review process. The review process is usually conducted by the personnel
officer in the HR department.

The review process involves the following activities:

(a) Identify areas of inter-rater disagreement.

(b) Help the group arrive at a consensus.

(c) Ensure that each rater conceives of the standard similarity.

However, the process is a time-consuming one. The supervisors generally resent what they
consider the staff interference. Hence, the method is not widely used.
 Field review method

Performance subordinate peers superior customer

Dimension

Leadership
^ ^

Communication ^ ^

Interpersonal skills ^ ^

Decision making ^ ^ ^

Technical skills ^ ^ ^

Motivation ^ ^ ^
 Confidential Report:

It is the traditional way of appraising employees mainly in the Government

Departments. Evaluation is made by the immediate boss or supervisor for
giving effect to promotion and transfer. Usually a structured format is devised
to collect information on employee’s strength weakness, intelligence, attitude,
character, attendance, discipline report etc.
Modern methods
Management by Objectives (MBO):

process whereby the superior and subordinate managers of

 “

an organization jointly identify its common goals, define each

individual’s major areas of responsibility in terms of results
expected of him and use these measures as guides for
operating the unit and assessing the contribution of each its
members”.
 MBO Process

Set organizational goals

Defining performance target
Performance review
feedback
BARS method
 Stands for Behaviorally Anchored Rating Scale

  determines the main performance dimensions of the job 

 Then the tool utilizes narrative information, such as from a critical

incidents file, and assigns quantified ranks to each expected
behavior.

 Performance is assessed along a scale with clearly defined

scale points containing examples of specific behaviors.
 EXAMPLE of BARS method

1 2 3 4 5

Always follows
Always doctors orders,
follows available to
doctors meet with
Always Always follow doctors
Sometimes follows orders ,never whenever
doctors
fails to follow doctors impatient with needed, never
orders, never
doctors orders, difficult impatient with
impatient with
orders, often occasionally patients, difficult patients,
difficult helps other
impatient with impatient with helps other
patients , nurses with
difficult difficult nurses with difficult patients,
always
patients, patients, difficult always follows
follows
doesn’t rarely does patients, hospital
hospital
always follow not follow always follow procedures,
procedures. eases patient
hospital hospital hospital
fears
procedures. procedures. procedures.

Ex: A supervisor of nurse indicated which scale point best describes the
behavior of the nurse.
360 degree performance appraisal
 Examples of 360 degree performance appraisal method

These companies are using 360 Degree Performance Appraisal Method

Wipro Maruti Udyog

Infosys HCL Technologies
Reliance Industries Wyeth Consumer Health
(WCH)
 Con
stan
t
indu check
emp ces
perf loyee to
orm
bette
r
 Advantages

PROMOTION
COMPENSATION

EMPLOYEES DEVELOPMENT

COMMUNICATION

MOTIVATION

SELECTION VALIDATION
PROBLEMs OR ERRORS IN PERFORMANCE APPRAISAL

Halo
error

Central
tendency

Lenience
Similarity
or
error
strictness
HALO ERROR:
A situation in which a supervisor generalizes from one dimension
of a persons job performance to all dimensions of performance.

CENTRAL TENDENCY:

An error that occurs when a manager rates all employees average

even when there performances vary.

LENIENCE ERROR:
A situation occurs when manager rates all employees in a group
higher than they deserve.
 SIMILARITY ERROR:

Similarity error is a negative tendency of the evaluator at the

time of interview, assessment and performance appraisal. Here

in, the evaluator's rating is biased towards the employees whom

he or she perceives to be similar to himself or herself personally

or professionally.
 Organization culture
Organizational culture is a system of shared assumptions, values, and
beliefs, which governs how people behave in organizations. These
shared values have a strong influence on the people in the
organization and dictate how they dress, act, and perform their jobs.

 Every organization develops and maintains a unique culture, which

provides guidelines and boundaries for the behavior of the members of
the organization. 

• Beliefs(what one thinks is true)

• Values(what one thinks is good)

Characteristics of organizational culture

Innovation Attention to
detail

Emphasizes Focus on
on outcome people

Teamwork
Innovation and Risk Taking

Risk and returns go hand in hand. Places where you take a risk (calculated risk of

course!), the chances of returns are higher. Same goes for innovation. You could

either be a follower or a pioneer. Pioneering has its share of risks, but at times, it can

also have a breakthrough outcome for the organization. Thus, innovation and risk

taking is one of the main characteristics of organizational culture defining how much

room the business allows for innovation.

Attention to Detail

Attention to detail defines how much importance a company allots to precision and detail

in the workplace. This is also a universal value as the degree of attention the employees

are expected to give is crucial to the success of any business. The management defines

the degree of attention to be given to details.

Outcome Orientation

Some organizations pay more attention to results rather

than processes. It is really the business model of each

business that defines whether the focus should be on the

outcome or the processes. This defines the outcome

orientation of the business.

People Orientation

This is still one of the most contentious issues in organizational culture

today. How much should be the management focus on the people?

Some organizations are famous for being employee oriented as they

focus more on creating a better work environment for its 'associates' to

work in. Others still are feudal in nature, treating employees no better

than work-machines.
Team Orientation

It is a well established fact that synergistic teams help

give better results as compared to individual efforts.

Each organization makes its efforts to create teams

that will have complimentary skills and will effectively

work together.
Elements/components of organizational culture

Organizational values

Organizational beliefs

Organizational norms
 Importance of organizational culture concept

• The culture decides the way employees interact at their workplace

• The culture of the workplace also goes a long way in promoting healthy
competition at the workplace.

• The culture of an organization represents certain predefined policies which

guide the employees and give them a sense of direction at the workplace.

• The organization culture brings all the employees on a common

platform.

The work culture unites the employees who are otherwise from different back
grounds
 Types of organizational cultures
Clan Culture
 working environment is a friendly one.
 People have a lot in common, and it’s similar to a large family.
 The leaders or the executives are seen as mentors or maybe even as father figures. The
organization is held together by loyalty and tradition.
 There is great involvement. The organization emphasizes long-term Human Resource
development and bonds colleagues by morals.
 Success is defined within the framework of addressing the needs of the clients and caring
for the people.
 The organization promotes teamwork, participation, and consensus.

Leader Type: facilitator, mentor, team builder

Value Drivers: Commitment, communication, development

Theory of Effectiveness: Human Resource development and participation are effective

Quality Improvement Strategy: Empowerment, team building, employee involvement,

Human Resource development, open communication.

EXAMPLE: zappos (online retailer)

 Adhocracy Culture

This is a dynamic and creative working environment. Employees take risks. Leaders are
seen as innovators and risk takers. Experiments and innovation are the bonding materials
within the organization. Prominence is emphasized. The long-term goal is to grow and
create new resources. The availability of new products or services is seen as success.
The organization promotes individual initiative and freedom.

The hierarchy
Leader Type: Innovator, entrepreneur, visionary
culture
Value Drivers: Innovative outputs, transformation, agility

Theory of Effectiveness: Innovativeness, vision and new resources are effective

Quality Improvement Strategy: Surprise and delight, creating new standards,

anticipating needs, continuous improvement, finding creative solutions

EXAMPLE : APPLE INC.

 Market Culture
This is a results-based organization that emphasizes finishing work and
getting things done. People are competitive and focused on goals.
Leaders are hard drivers, producers, and rivals at the same time. They
are tough and have high expectations. The emphasis on winning keeps
the organization together. Reputation and success are the most important.
Long-term focus is on rival activities and reaching goals. Market
penetration and stock are the definitions of success. Competitive prices
and market leadership are important. The organizational style is based on
competition.
Leader Type: Hard driver, competitor, producer
Value Drivers: Market share, goal achievement, profitability
Theory of Effectiveness: Aggressively competing and customer focus
are effective
Quality Improvement Strategy: Measuring client preferences, improving
productivity, creating external partnerships, enhancing competiveness,
involving customers and suppliers.
EXAMPLE: MICROSOFT,GE
 Hierarchy Culture
This is a formalized and structured work environment. Procedures decide what people
do. Leaders are proud of their efficiency-based coordination and organization. Keeping
the organization functioning smoothly is most crucial. Formal rules and policy keep the
organization together. The long-term goals are stability and results, paired with efficient
and smooth execution of tasks. Trustful delivery, smooth planning, and low costs define
success. The personnel management has to guarantee work and predictability.

Leader Type: Coordinator, monitor, organizer

Value Drivers: Efficiency, timeliness, consistency, and uniformity

Theory of Effectiveness: Control and efficiency with capable processes are effective

Quality Improvement Strategy: Error detection, measurement, process control,

systematic problem solving, quality tools.

EXAMPLE: Government Departments

 Advantages of organization culture

Improve productivity

Increase marketability

Form unity among

employees
 Disadvantages of organizational culture

Tough to
change

Behavioral Employees may

Unavoidable driver not accept it

Misalignment
 QUALITY OF WORK LIFE

Introduction
 Was first introduced in1972 during an international labour relations conference.

 Dissatisfaction with working life affects the workers regardless of position or status.

 Profitability of a company is linked to satisfaction of its work force.

 A company that does not measure and improve employee satisfaction may face
increasing turnover, declining productivity and limited ability to attract and retain
qualified replacements.

 Healthy quality of work life leads to

 Positive employee attitudes towards their work and the company.

 Increased productivity and intrinsic motivation.

 Enhanced organizational effectiveness and competitive advantage.

MEANING

QWL refers to the favorableness or unfavourableness of a job environment

for the people working in an organization.

Quality of work life can be defined as the environment at the work place
provided to the people on the job. 

In addition to improving the work system, QWL programs usually emphasize

on development of employee skills, the reduction of occupational stress and
the development of more co-operative labor-management relations.
 Major parts of QWL

Occupational health
care

Suitable working time

Appropriate salary
 Nature and scope of QWL:
QWL is the quality of relationship between employees
and total working environment

To improve the QWL following aspects are important:

1) Recognition of work life issues.
2) Commitment to improvement.
3) Quality of work life teams.
4) Training to facilitators.
5) Conduct focus group discussions.
6) Analyze information from focus group.
7) Identify and implement improvement opportunities.
8) Flexible work hours.
9) Autonomy to work.
PROBLEMS IN INCREASING THE QWL

• Poor reward and recognition.

• Dead-end jobs.
• Managing by intimidation.
• Negative working environment.
• No job security.
• Negative attitude.
 DETERMINANTS OF QWL

ATTITUDE
ENVIRONMENT

OPPORTUNITIES

NATURE OF JOB

PEOPLE
STRESS LEVEL
CAREER PROSPECTS
CHALLENGES

GROWTH AND DEVELOPMENT

RISK INVOLVED AND REWARD

Attitude: The person who is entrusted with a particular job needs to have sufficient
knowledge, required skill and expertise, enough experience, enthusiasm, energy level,
willingness to learn new things, dynamism, sense of belongingness in the organization,
involvement in the job, inter personnel relations, adaptability to changes in the situation,
openness for innovative ideas, competitiveness, zeal, ability to work under pressure,
leadership qualities and team-spirit.
Environment: The job may involve dealing with customers who have varied tolerance
level, preferences, behavioral pattern, level of understanding; or it may involve working
with dangerous machines like drilling pipes, cranes, lathe machines, welding and
soldering machines, or even with animals where maximum safety precautions have to be
observed which needs lot of concentration, alertness, presence of mind, quick with
involuntary actions, synchronization of eyes, hands and body, sometimes high level of
patience, tactfulness, empathy and compassion and control over emotions.
Nature of Job: For example, a driller in the oil drilling unit, a diver, a fire-fighter, traffic policeman, tram
engine driver, construction laborers, welder, miner, lathe mechanic have to do dangerous jobs and have to be
more alert in order to avoid any loss of limb, or loss of life which is irreparable; whereas a pilot, doctor, judge,
journalist have to be more prudent and tactful in handling the situation; a CEO, a professor, a teacher have
more responsibility and accountability but safe working environment; a cashier or a security guard cannot
afford to be careless in his job as it involves loss of money, property and wealth; a politician or a public figure
cannot afford to be careless, for his reputation and goodwill is at stake. Some jobs need soft skills, leadership
qualities, intelligence, decision making abilities, abilities to tram and extract work from others; other jobs need
forethought, vision and yet other jobs need motor skills, perfection and extreme carefulness.

People: Almost everyone has to deal with three set of people in the work place. Those are namely boss, co-
workers in the same level and subordinates. Apart from this, some professions need interaction with people
like patients, media persons, public, customers, thieves, robbers, physically disabled people, mentally
challenged, children, foreign delegates, gangsters, politicians, public figures and celebrities. These situations
demand high level of prudence, cool temper, tactfulness, humor, kindness, diplomacy and sensitiveness.
stress Level: All these above mentioned factors are inter-related and inter-
dependant. Stress level need not be directly proportional to the compensation. Stress is of
different types - mental stress/physical stress and psychological or emotional stress. A
Managing Director of a company will have mental stress, a laborer will have physical stress,
a psychiatrist will have emotional stress. Mental stress and Emotional stress cause more
damage than physical stress.
Career Prospects: Every job should offer career development. That is an important factor
which decides the quality of work life. Status improvement, more recognition from the
Management, appreciations are the motivating factors for anyone to take keen interest in his
job. The work atmosphere should be conducive to achieve organizational goal as well as
individual development. It is a win-win situation for both the parties; an employee should be
rewarded appropriately for his good work, extra efforts, sincerity and at the same time a
lethargic and careless employee should be penalized suitably; this will motivate the former
to work with more zeal and deter the latter from being so, and strive for better performance.
Challenges: The job should offer some challenges at least to make it

interesting; That enables an employee to upgrade his knowledge and skill and

capabilities; whereas the monotony of the job makes a person dull, non-enthusiastic,

dissatisfied, frustrating, complacent, initiative - less and uninteresting. Challenge is the

fire that keeps the innovation and thrill alive. A well-accomplished challenging job

yields greater satisfaction than a monetary perk; it boosts the self-confidence also.
Growth and Development: 
If an organization does not give chance for growth and personal development it is very difficult to
retain the talented personnel and also to find new talent with experience and skill.
Risk Involved and Reward:
 Generally reward or compensation is directly proportional to the quantum of work, man-hours,
nature and extent of responsibility, accountability, delegated powers, authority of position in the
organizational chart, risk involved, level of expected commitment, deadlines and targets, industry,
country, demand and supply of skilled manpower and even political stability and economic
policies of a nation. Although risk is involved in every job its nature and degree varies in them; All
said and done, reward is a key criteria to lure a prospective worker to accept the offer.

Conclusion: A happy and healthy employee will give better turnover, make good decisions and
positively contribute to the organizational goal. An assured good quality of work life will not only
attract young and new talent but also retain the existing experienced talent.
 ORGANIZATIONAL CLIMATE
 The concept of organizational climate was formally
introduced by the human relationists in the late 1940s.

 Organizational climate is also referred to as the

“situational determinants” or “Environmental
determinants” which affect the human behavior.

“Organizational culture is connected with the nature of

  

beliefs and expectations about organizational life, while

climate is an indicator of whether these beliefs and
expectations are being fulfilled.”
Characteristics of Organizational Climate

1. General Perception:
Organizational climate is a general expression of what the organization is. It
is the summary perception which people have about the organization. It
conveys the impressions people have of the organizational internal
environment within which they work.

2. Abstract and Intangible Concept:

Organizational climate is a qualitative concept. It is very difficult to explain
the components of organizational climate in quantitative or measurable
units.

3. Unique and Distinct Identity:

Organizational climate gives a distinct identity to the organization. It
explains how one organization is different from other organizations.
 4. Enduring Quality:
Organizational climate is built up over a period of time. It represents a
relatively enduring quality of the internal environment that is
experienced by the organizational members.

Impact of Organizational Climate:

. Constraint System:
1
Organizational climate can operate as a constraint system in both the
positive and negative sense. This can be done by providing information to
the employees about what kind of behavior will be rewarded, punished or
ignored. Thus, behavior can be influenced by varying degrees of rewards
and punishments. Such a constraint system would influence the behavior of
those people who are most interested in those specific values which are
assigned to different behavioral outcomes.
 . Evaluation of Self and Others:
 2

Organizational variables may affect behavior through evaluation

of self and others. In this evaluation process both the
physiological and psychological variables will be associated.
Such evaluation will affect the human behavior.

3. By Acting as Stimuli:

Organizational factors can influence human behavior by acting
as stimuli. As stimuli they influence individual’s arousal level,
which is a motivational variable directing human behavior. The
level of arousal will directly affect the level of activation and
hence performance.
 4 .By Helping the Individual to Form a Perception:

Organizational factors influence the behavior by helping the individual

in forming a perception of the organization. The perception then
influences behavior. Thus, good organizational climate is
instrumental to higher employee satisfaction, better human relations
and higher productivity.