Importance of Organizational Behavior

The environment of business is ever changing. Because of this fact, the role of
the manager has become increasingly more important. With recent increase in
workload and responsibilities, managers have found that their importance in a
working environment has also increased. In order to help managers and
supervisors learn more about the complexity of the new workforce many different
areas of study have been developed. One area of study that has increased in
importance over the years is the study of organizational behavior. In order to
understand the importance of organizational behavior, we must first define exactly
what organizational behavior is and what it covers. Organizational behavior is the
study of attitudes and behavior of individuals and groups in organizations (Johns 6).
Organizational behavior tries to examine different types of workers in all types of
different situations. Organizational behavior aims to help managers and
supervisors in many ways. It plays a role in all facets of an organization. Finance,
marketing, and production are just departments within an organization. It studies
the human behavior within the organization and the relationship between human
behavior and the organization.

There are many reasons for the importance of organizational behavior in an

organization.

First, most people are born and educated in organizations, acquire most of the
material possessions from organizations, and die as members of organizations. In
addition, we can be consumers, employees, or investors in an organization.

Second, the study of organizational behavior can greatly clarify the factors that
affect how managers manage.

Third, the value of organizational behavior is that it isolates important aspects of

the manager’s job and offers specific perspectives on the human side of
management.

Finally, an understanding of organizational behavior can play a vital role in

managerial work.
 Many future managers aren’t aware of the importance of organizational behavior
and don’t understand what relevance it has to them as managers in the business
environment. Organizational behavior studies these attitudes and behaviors of
workers today and tries to determine the best ways too effectively manage and
change them. Organizational behavior also studies how organizations can be more
effective and how events in the external environments affect organizations.
Learning about organizational behavior in today's business environment will help
managers develop a better work related understanding of themselves and their
subordinates. This understanding can help future managers obtain a successful
career in the business world. The most frequent problem that managers face is
often described as "people" problems (Robbins 1). Since the job of a manager
requires working with and through other people the development of good "people
skills" become a valuable and essential asset. Organizational behavior helps to
refine these "people skills" and make managers more effective to their supervisors
and subordinates alike. One are of concern in organizational behavior deals with
employee job satisfaction, which is an attitude. The reason managers should be
concerned with employee job satisfaction are based on three areas of thought. First,
there is a definite link between satisfaction and worker productivity. A happy
worker is willing to work harder and for the company. Second, satisfaction appears
to be negatively related to absenteeism and turnover rate. A worker that is happy
with their job is more likely to show up at all scheduled times. Finally, it can be
agreed that managers have a humanistic responsibility to provide their employees
with jobs that are challenging, intrinsically rewarding and satisfying (Robbins 2).
These are just a couple of examples of why studying organizational behavior is
important to the career of future managers throughout the working world.

Organizational behavior as a studied concept is made up of many parts. Each

part forms a different link in a chain of thought that help develop the study of
organizational behavior.

Another key organizational behavior that directly affects competitiveness in the

marketplace is the management of critical variables and performance metrics.
Measurement is vital. The trick is to know which variables to measure. When you
want to ensure that the product you are shipping is of the highest quality, should
you inspect a sample of the product just prior to shipping or is it more prudent to
inspect the work-in-process inventory at key locations throughout the process? The
latter would involve critical variables and would discover defects sooner, minimizing
the production of defective material. In addition, it gives the engineer more
opportunity to resolve issues prior to the creation of defective products. This is
similar to the benefits provided by statistical process control and control charts.
However, both "results" and "drivers" have value. Investors and upper management
may look toward results to gauge how the enterprise is doing in relation to the
competition, while engineers tend to look toward drivers when assessing whether or
not a process is in control. Drivers put you closer to root cause than results do.

I have already concluded that for an organization to be truly effective, a strong

study of organizational behavior must be established within the organization. I
have tried to pick out some points that show how an organization can benefit from
using practices found in organizational behavior. Communication, Leadership, and
Motivation are all important parts of employee job satisfaction. Employee job
satisfaction is important to a company as stated earlier. Today's business world in
increasing in complexity everyday. Not only does the company end up growing, so
do their employees. In order for a company to be successful, management must try
to develop employee to management relationships. Studying organizational
behavior can help companies better understand employees which will eventually
lead to a better more stable company

Fayol Principle

Principles of Management

A principle refers to a fundamental truth. It establishes cause and effect relationship between two or more
variables under given situation. They serve as a guide to thought & actions. Therefore, management principles are
the statements of fundamental truth based on logic which provides guidelines for managerial decision making and
actions. These principles are derived: -
a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.
There are 14 Principles of Management described by Henri Fayol.

1. Division of Labor
a. Henry Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and allotted to various
persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his performance.
 e. Specialization leads to efficiency & economy in spheres of business.
2. Parity of Authority & Responsibility:
a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have concerned
authority.
d.Authority refers to the right of superiors to get exactness from their sub-ordinates whereas
responsibility means obligation for the performance of the job assigned.
d. There should be a balance between the two i.e. they must go hand in hand.
e. Authority without responsibility leads to irresponsible behavior whereas responsibility without
authority makes the person ineffective.
3. Principle of One Boss
a. A sub-ordinate should receive orders and be accountable to one and only one boss at a time.
b. In other words, a sub-ordinate should not receive instructions from more than one person because
-
- It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts
c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential.
d. Unity of command provides the enterprise a disciplined, stable & orderly existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction
a. Fayol advocates one head one plan which means that there should be one plan for a group of
activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action for them and
they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should be directed
towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.

Basis Unity of command Unity of direction

Meaning It implies that a sub-ordinate should receive It means one head, one plan for a group of
orders & instructions from only one boss. activities having similar objectives.

Nature It is related to the functioning of personnel’s. It is related to the functioning of departments,

or organization as a whole.
Necessity It is necessary for fixing responsibility of each It is necessary for sound organization.
subordinates.

Advantage It avoids conflicts, confusion & chaos. It avoids duplication of efforts and wastage of
resources.

Result It leads to better superior sub-ordinate It leads to smooth running of the enterprise.
relationship.

Therefore it is obvious that they are different from each other but they are dependent on each other i.e. unity of
direction is a pre-requisite for unity of command. But it does not automatically comes from the unity of direction.
5. Equity
a. Equity means combination of fairness, kindness & justice.
b. The employees should be treated with kindness & equity if devotion is expected of them.
c. It implies that managers should be fair and impartial while dealing with the subordinates.
d. They should give similar treatment to people of similar position.
e. They should not discriminate with respect to age, caste, sex, religion, relation etc.
f. Equity is essential to create and maintain cordial relations between the managers and sub-
ordinate.
g. But equity does not mean total absence of harshness.
h. Fayol was of opinion that, “at times force and harshness might become necessary for the sake of
equity”.
6. Order
a. This principle is concerned with proper & systematic arrangement of things and people.
b. Arrangement of things is called material order and placement of people is called social order.
c. Material order- There should be safe, appropriate and specific place for every article and every
place to be effectively used for specific activity and commodity.
d. Social order- Selection and appointment of most suitable person on the suitable job. There should
be a specific place for every one and everyone should have a specific place so that they can
easily be contacted whenever need arises.
7. Discipline
a. According to Fayol, “Discipline means sincerity, obedience, respect of authority & observance of
rules and regulations of the enterprise”.
b. This principle applies that subordinate should respect their superiors and obey their order.
c. It is an important requisite for smooth running of the enterprise.
d. Discipline is not only required on path of subordinates but also on the part of management.
e. Discipline can be enforced if -
- There are good superiors at all levels.
- There are clear & fair agreements with workers.
- Sanctions (punishments) are judiciously applied.
8. Initiative
a. Workers should be encouraged to take initiative in the work assigned to them.
b. It means eagerness to initiate actions without being asked to do so.
 c. Fayol advised that management should provide opportunity to its employees to suggest ideas,
experiences& new method of work.
d. It helps in developing an atmosphere of trust and understanding.
e. People then enjoy working in the organization because it adds to their zeal and energy.
f. To suggest improvement in formulation & implementation of place.
g. They can be encouraged with the help of monetary & non-monetary incentives.
9. Fair Remuneration
a. The quantum and method of remuneration to be paid to the workers should be fair, reasonable,
satisfactory & rewarding of the efforts.
b. As far as possible it should accord satisfaction to both employer and the employees.
c. Wages should be determined on the basis of cost of living, work assigned, financial position of the
business, wage rate prevailing etc.
d. Logical & appropriate wage rates and methods of their payment reduce tension & differences
between workers & management creates harmonious relationship and pleasing atmosphere of
work.
e. Fayol also recommended provision of other benefits such as free education, medical & residential
facilities to workers.
10.Stability of Tenure
a. Fayol emphasized that employees should not be moved frequently from one job position to
another i.e. the period of service in a job should be fixed.
b. Therefore employees should be appointed after keeping in view principles of recruitment &
selection but once they are appointed their services should be served.
c. According to Fayol. “Time is required for an employee to get used to a new work & succeed to
doing it well but if he is removed before that he will not be able to render worthwhile services”.
d. As a result, the time, effort and money spent on training the worker will go waste.
e. Stability of job creates team spirit and a sense of belongingness among workers which ultimately
increase the quality as well as quantity of work.
11.Scalar Chain
a. Fayol defines scalar chain as ’The chain of superiors ranging from the ultimate authority to the
lowest”.
b. Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar
chain.
c. But, for the sake of convenience & urgency, this path can be cut shirt and this short cut is known
as Gang Plank.
d. A Gang Plank is a temporary arrangement between two different points to facilitate quick & easy
communication as explained below:
 In the figure given, if D has to communicate with G he will first send the communication upwards
with the help of C, B to A and then downwards with the help of E and F to G which will take quite
some time and by that time, it may not be worth therefore a gang plank has been developed
between the two.
e. Gang Plank clarifies that management principles are not rigid rather they are very flexible. They
can be moulded and modified as per the requirements of situations
12.Sub-Ordination of Individual Interest to General Interest
a. An organization is much bigger than the individual it constitutes therefore interest of the
undertaking should prevail in all circumstances.
b. As far as possible, reconciliation should be achieved between individual and group interests.
c. But in case of conflict, individual must sacrifice for bigger interests.
d. In order to achieve this attitude, it is essential that -
- Employees should be honest & sincere.
- Proper & regular supervision of work.
- Reconciliation of mutual differences and clashes by mutual agreement. For example,
for change of location of plant, for change of profit sharing ratio, etc.
13.Espirit De’ Corps (can be achieved through unity of command)
a. It refers to team spirit i.e. harmony in the work groups and mutual understanding among the
members.
b. Spirit De’ Corps inspires workers to work harder.
c. Fayol cautioned the managers against dividing the employees into competing groups because it
might damage the moral of the workers and interest of the undertaking in the long run.
d. To inculcate Espirit De’ Corps following steps should be undertaken -
 There should be proper co-ordination of work at all levels
 Subordinates should be encouraged to develop informal relations among themselves.
 Efforts should be made to create enthusiasm and keenness among subordinates so that
they can work to the maximum ability.
 Efficient employees should be rewarded and those who are not up to the mark should be
given a chance to improve their performance.
 Subordinates should be made conscious of that whatever they are doing is of great
importance to the business & society.
e. He also cautioned against the more use of Britain communication to the subordinates i.e. face to
face communication should be developed. The managers should infuse team spirit &
belongingness. There should be no place for misunderstanding. People then enjoy working in the
 organization & offer their best towards the organization.
14.Centralization & De-Centralization
a. Centralization means concentration of authority at the top level. In other words, centralization is a
situation in which top management retains most of the decision making authority.
b. Decentralization means disposal of decision making authority to all the levels of the organization.
In other words, sharing authority downwards is decentralization.
c. According to Fayol, “Degree of centralization or decentralization depends on no. of factors like
size of business, experience of superiors, dependability & ability of subordinates etc.
d. Anything which increases the role of subordinate is decentralization & anything which decreases it
is centralization.
e. Fayol suggested that absolute centralization or decentralization is not feasible. An organization
should strike to achieve a lot between the two.

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© 1998 - 2011
Management Study Guide

Works Cited

Johns, Gary. Organizational Behavior: Understanding and Managing Life at Work.

(New York, NY.: Harper Collins, 1996)

Robbins, Stephen P. Essentials of Organizational Behavior. (Englewood Cliffs, NJ.;

Prentice Hall, 1994)