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Organizational Behavior (OB) can be defined as the understanding,

prediction and management of human behavior both individually or in a group that occur
within an organization. Internal and external perspectives are the two theories of how
organizational behavior can be viewed from an organization’s point of view. In this tutorial,
we will be learning in detail about both the theories.

Importance of OB
While working in an organization, it is very important to understand others behavior as well
as make others understand ours. In order to maintain a healthy working environment, we
need to adapt to the environment and understand the goals we need to achieve. This can be
done easily if we understand the importance of OB.
Following points bring out the importance of OB −
 It helps in explaining the interpersonal relationships employees share with each other as well as
with their higher and lower subordinates.
 The prediction of individual behavior can be explained.
 It balances the cordial relationship in an enterprise by maintaining effective communication.
 It assists in marketing.
 It helps managers to encourage their sub-ordinates.
 Any change within the organization can be made easier.
 It helps in predicting human behavior & their application to achieve organizational goals.
 It helps in making the organization more effective.
Thus studying organizational behavior helps in recognizing the patterns of human behavior
and in turn throw light on how these patterns profoundly influence the performance of an
organization.
There are three major factors that affect OB. The working environment being the base for all
three factors, they are also known as the determinants of OB. The three determinants are −

 People
 Structure
 Technology

People
An organization consists of people with different traits, personality, skills, qualities,
interests, background, beliefs, values and intelligence. In order to maintain a healthy
environment, all the employees should be treated equally and be judged according to their
work and other aspects that affects the firm.
Example − A company offers campus placement to trainees from different states like
Orissa, Haryana, Arunachal Pradesh and many more. However, during and after training, all
trainees are examined only on the basis of their performance in the tasks assigned.
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Organizational Structure
Structure is the layout design of an organization. It is the construction and arrangement of
relationships, strategies according to the organizational goal.
Example − Organizational structure defines the relation of a manager with employees and
co-workers.

Technology
Technology can be defined as the implementation of scientific knowledge for practical
usage. It also provides the resources required by the people that affect their work and task
performance in the right direction.
Example − Introduction of SAP, big data and other software in the market determines
individual and organizational performance.

Environment
All companies function within a given internal and external environment. Internal
environment can be defined as the conditions, factors, and elements within an enterprise that
influences the activities, choices made by the firm, and especially the behavior of the
employees. While external environment can be defined as outside factors that affect the
company's ability to operate. Some of them can be manipulated by the company’s
marketing, while others require the company to make adjustments.
Some examples of internal environment include employee morale, culture changes,
financial changes or issues, and some examples of external environment include political
factors, changes to the economy and the company itself.
The concept of OB is based on two key elements namely −

 Nature of people
 Nature of the organization

Nature of People
In simple words, nature of people is the basic qualities of a person, or the character that
personifies an individual they can be similar or unique. Talking at the organizational level,
some major factors affecting the nature of people have been highlighted. They are −
 Individual Difference − It is the managerial approach towards each employee individually, that
is one-on-one approach and not the statistical approach, that is, avoidance of single
rule. Example− Manager should not be biased towards any particular employee rather should
treat them equally and try not to judge anyone on any other factor apart from their work.
 Perception − It is a unique ability to observe, listen and conclude something. It is believing in our
senses. In short, the way we interpret things and have our point of view is our
perception. Example − Aman thinks late night parties spoil youth while Anamika thinks late
night parties are a way of making new friends. Here we see both Aman and Anamika have
different perception about the same thing.
 A whole person − As we all know that a person’s skill or brain cannot be employed we have to
employee a whole person. Skill comes from background and knowledge. Our personal life cannot
be totally separated from our work life, just like emotional conditions are not separable from
physical conditions. So, people function is the functioning of a total human being not a specific
feature of human being.
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 Motivated behavior − It is the behavior implanted or caused by some motivation from some
person, group or even a situation. In an organization, we can see two different types of motivated
employees −
o Positive motivation − Encouraging others to change their behavior or say complete a
task by luring them with promotions or any other profits. Example − “If you complete
this, you will gain this.”
o Negative motivation − Forcing or warning others to change their behavior else there can
be serious consequences. Example − “If you don’t complete this, you will be deprived
from the office.”
 Value of person − Employees want to be valued and appreciated for their skills and abilities
followed by opportunities which help them develop themselves.

Nature of Organization
Nature of organization states the motive of the firm. It is the opportunities it provides in the
global market. It also defines the employees’ standard; in short, it defines the character of
the company by acting as a mirror reflection of the company. We can understand the nature
of any firm with its social system, the mutual interest it shares and the work ethics.
Let us take a quick look at all these factors −
 Social system − Every organization socializes with other firms, their customers, or simply the
outer world, and all of its employees - their own social roles and status. Their behavior is mainly
influenced by their group as well as individual drives. Social system are of two types namely −
o Formal − Groups formed by people working together in a firm or people that belong to
the same club is considered as formal social system. Example − A success party after
getting a project.
o Informal − A group of friends, people socializing with others freely, enjoying, partying
or chilling. Example − Birthday party.
 Mutual interest − Every organization needs people and people need organizations to survive and
prosper. Basically it’s a mutual understanding between the organization and the employees that
helps both reach their respective objectives. Example − We deposit our money in the bank, in
return the bank gives us loan, interest, etc.
 Ethics − They are the moral principles of an individual, group, and organization. In order to
attract and keep valuable employees, ethical treatment is necessary and some moral standards
need to be set. In fact, companies are now establishing code of ethics training reward for notable
ethical behavior.
 In a very broad sense, the scope of OB is the extent to which it can govern or
influence the operations of an organization. The scope of OB integrates 3 concepts
respectively −

 Individual Behavior
 It is the study of individual’s personality, learning, attitudes, motivation, and job
satisfaction. In this study, we interact with others in order to study about them and
make our perception about them.
 Example − The personal interview round is conducted to interact with candidates to
check their skills, apart from those mentioned in the resume.

 Inter-individual Behavior
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 It is the study conducted through communication between the employees among

themselves as well as their subordinates, understanding people’s leadership qualities,
group dynamics, group conflicts, power and politics.
 Example − A meeting to decide list of new board members.

 Group Behavior
 Group behavior studies the formation of organization, structure of organization and
effectiveness of organization. The group efforts made towards the achievement of
organization’s goal is group behavior. In short, it is the way how a group behaves.
 Example − Strike, rally etc.
Functions of a manager are the various roles played by the manager in an organization. A
manager is accountable for all the happenings in the firm and is answerable to the
management. The seven major roles played by the manager are −

 Planning
 Organizing
 Staffing
 Directing/leading
 Coordinating
 Reporting
 Budgeting
 Controlling

Organizational behavior reflects the behavior of the people and management all together, it is
considered as field study not just a discipline. A discipline is an accepted science that is
based upon theoretical foundation, whereas OB is an inter-disciplinary approach where
knowledge from different disciplines like psychology, sociology, anthropology, etc. are
included. It is used to solve organizational problems, especially those related to human
beings.
 There are four different types of models in OB. We will throw some light on each of
these four models.

 Autocratic Model
 The root level of this model is power with a managerial orientation of authority. The
employees in this model are oriented towards obedience and discipline. They are
dependent on their boss. The employee requirement that is met is subsistence. The
performance result is less.
 The major drawbacks of this model are people are easily frustrated, insecurity,
dependency on the superiors, minimum performance because of minimum wage.

 Custodial Model
 The root level of this model is economic resources with a managerial orientation of
money. The employees in this model are oriented towards security and benefits
provided to them. They are dependent on the organization. The employee
requirement that is met is security.
 This model is adapted by firms having high resources as the name suggest. It is
dependent on economic resources. This approach directs to depend on firm rather
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than on manager or boss. They give passive cooperation as they are satisfied but not
strongly encouraged.

 Supportive Model
 The root level of this model is leadership with a managerial orientation of support.
The employees in this model are oriented towards their job performance and
participation. The employee requirement that is met is status and recognition. The
performance result is awakened drives.
 This model is dependent on leadership strive. It gives a climate to help employees
grow and accomplish the job in the interest of the organization. Management job is to
assist the employee’s job performance. Employees feel a sense of participation.

 Collegial Model
 The root level of this model is partnership with a managerial orientation of teamwork.
The employees in this model are oriented towards responsible behavior and self-
discipline. The employee requirement that is met is self-actualization. The
performance result is moderate zeal.
 This is an extension of supportive model. The team work approach is adapted for this
model. Self-discipline is maintained. Workers feel an obligation to uphold quality
standard for the better image of the company. A sense of “accept” and “respect” is
seen.
Learning can be defined as the permanent change in behavior due to direct and indirect
experience. It means change in behavior, attitude due to education and training, practice and
experience. It is completed by acquisition of knowledge and skills, which are relatively
permanent.

Personality
The word personality is derived from a Greek word “persona” which means “to speak
through.” Personality is the combination of characteristics or qualities that forms a person’s
unique identity. It signifies the role which a person plays in public. Every individual has a
unique, personal and major determinant of his behavior that defines his/her personality.
Personality trait is basically influenced by two major features −

 Inherited characteristics
 Learned characteristics

Inherited Characteristics
The features an individual acquires from their parents or forefathers, in other words the
gifted features an individual possesses by birth is considered as inherited characteristics. It
consists of the following features −

 Color of a person’s eye

 Religion/Race of a person
 Shape of the nose
 Shape of earlobes

Learned Characteristics
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Nobody learns everything by birth. First, our school is our home, then our society, followed
by educational institutes. The characteristics an individual acquires by observing, practicing,
and learning from others and the surroundings is known as learned characteristics.
Learned characteristics includes the following features −
 Perception − Result of different senses like feeling, hearing etc.
 Values − Influences perception of a situation, decision making process.
 Personality − Patterns of thinking, feeling, understanding and behaving.
 Attitude − Positive or negative attitude like expressing one’s thought.

Traits of Personality
Personality traits are the enduring features that define an individual’s behavior. A
personality trait is a unique feature in an individual. Psychologists resolved that there are
five major personality traits and every individual can be categorized into at least one of
them. These five personality traits are −

 Extrovert
 Neurotic
 Open
 Agreeable
 Conscientious

Major Personality Attributes

Following are the five major personality attributes that influence OB −

Locus of Control
Locus of control is the center of control of an individual’s code of conduct. People can be
grouped into two categories i.e., internals and externals respectively.
People who consider themselves as the masters of their own fates are known as internals,
while, those who affirm that their lives are controlled by outside forces known as externals.
Before making any decision, internals actively search for information, they are achievement
driven, and want to command their environment. Thus, internals do well on jobs that craves
complex information processing, taking initiative and independent action.
Externals, on the other hand, are more compliant, more willing to follow instructions, so,
they do well in structured, routine jobs.

Machiavellianism
Machiavellianism is being practical, emotionally distant, and believing that ends justify
means.
Machiavellians are always wanting to win and are great persuaders. Here are the significant
features of a high-mach individuals −

 High-Machs prefer precise interactions rather than beating about the bush.
 High-Machs tend to improvise; they do not necessarily abide by rules and regulations all the time.
 High-Machs get distracted by emotional details that are irrelevant to the outcome of a project.
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Self-esteem
It is the extent up to which people either like or dislike themselves. Self-Esteem is directly
related to the expectations of success and on-the-job satisfaction.
Individuals with high self-esteem think that they have what it takes to succeed. So, they take
more challenges while selecting a job.
On the other hand, individuals with low self-esteem are more susceptible to external
distractions. So, they are more likely to seek the approval of others and to adapt the beliefs
and behaviors of those they respect.

Self-monitoring
Self-monitoring is the capability of regulating one’s behavior according to social situations.
Individuals with high self-monitoring skill easily adjust their behavior according to external,
situational factors. Their impulsive talents allow them to present public personae which are
completely different from their private personalities.
However, people with low self-monitoring skills cannot cover themselves. Regardless of any
situation, they are always themselves. They have an attitude of, “what you see is what you
get.”

Risk taking
Generally, managers are reluctant on taking risks. However, individual risk-taking
inclination affects the bulk of information required by the managers and how long it takes
them to make decisions.
Thus, it is very important to recognize these differences and align risk-taking propensity
with precise job demands that can make sense.
A theory is a simple model of reality that helps us understand, explain, predict and deal with
reality. We have some theories that explain an individual’s personality.

Perceptual Process
Perceptual process are the different stages of perception we go through. The different stages
are −

 Receiving
 Selecting
 Organizing
 Interpreting
Receiving
Receiving is the first and most important stage in the process of perception. It is the initial
stage in which a person collects all information and receives the information through the
sense organs.

Selecting
Selecting is the second stage in the process. Here a person doesn’t receive the data randomly
but selectively. A person selects some information out of all in accordance with his interest
or needs. The selection of data is dominated by various external and internal factors.
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 External factors − The factors that influence the perception of an individual externally are
intensity, size, contrast, movement, repetition, familiarity, and novelty.
 Internal factors − The factors that influence the perception of an individual internally are
psychological requirements, learning, background, experience, self-acceptance, and interest.

Organizing
Keeping things in order or say in a synchronized way is organizing. In order to make sense
of the data received, it is important to organize them.
We can organize the data by −
 Grouping them on the basis of their similarity, proximity, closure, continuity.
 Establishing a figure ground is the basic process in perception. Here by figure we mean what is
kept as main focus and by ground we mean background stimuli, which are not given attention.
 Perceptual constancy that is the tendency to stabilize perception so that contextual changes don’t
affect them.

Interpreting
Finally, we have the process of interpreting which means forming an idea about a particular
object depending upon the need or interest. Interpretation means that the information we
have sensed and organized, is finally given a meaning by turning it into something that can
be categorized. It includes stereotyping, halo effect etc.

Importance of Perception in OB
We need to understand what the role of perception in an organization is. It is very important
in establishing different role of perceptions like −

 Understanding the tasks to be performed.

 Understanding associated importance of tasks allotted.
 Understanding preferred behavior to complete respective tasks.
 Clarifying role perceptions.
For example, every member in a group has to be clear regarding the role allotted to them.
Programmer writes the code, tester checks it, etc.
Motivation can be described as the internal force that impacts the direction, intensity, and
endurance of a person’s voluntary choice of behavior. It consists of −
 Direction − focused by goals.
 Intensity − bulk of effort allocated.
 Persistence − amount of time taken for the effort to be exerted.
Example − A team leader encourages team members to work efficiently.

Features of Motivation
Motivation is an internal feeling, that is, it defines the psychological state of a person. It is a
continuous process and we should make sure that it is not disturbed. A person should be
encouraged completely.
Motivation consists of three interacting and dependent elements −
 Needs − The requirements or deficiency which is created whenever there is physiological
imbalance.
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 Drives − The various camps or events organized to motivate the employees and give them new
opportunities.
 Incentives − Employees need to be rewarded for their nice work in order to keep them
encouraged.

Importance of Motivation
We need to motivate employees because of the following reasons −

 Motivated employee are more quality oriented.

 Highly motivated employees are more productive as compared to other employees.
 It helps in achieving three behavior dimension of human resource namely
o Candidates must be attracted not only to join but also remain in the firm.
o Employees must perform task in a dependable manner.
o Employees should be creative, spontaneous and innovative at work.

Maslow’s Hierarchy of Needs Theory

This theory was produced in order to answer the question “What motivates an individual”.
Every second need comes to force when the first need is satisfied completely. Maslow
explained the hierarchy of needs by grouping them into two: deficiency needs and growth
needs.

Physiological Needs
Every individual needs to take care of the basic requirements required to sustain. These
requirements include food to eat, clothing to wear and shelter to live in. These necessities
are relatively independent of each other but are finite.

Safety Needs
Everybody wants to stay in a protected environment with minimal danger so that they can
have a peaceful life. Safety needs basically includes protection from physiological danger
like accident and having economic security like bank accounts, health insurance
In an enterprise, it includes job security, salary increment, etc. The managerial practice to
satisfy this involves offering pension scheme, provident fund, gratuity etc.
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Social Needs
We have all heard that man is a social animal, we want to be there with those people where
we are loved and we are accepted as we are; nobody wants to be judged. This is a common
requirement every human desires.
This theory helps managers to think about encouraging their employees by identifying
employee needs. In short, it presents motivation as constantly changing force, expressing
itself to the constant need for fulfilment of new and higher levels of needs.

Esteem
Esteem means the typical human desire to be accepted and valued by others. People often
involve in a profession or hobby to gain recognition, earn fame and respect. According to
Maslow, the needs of humans have strict guidelines - the hierarchies rather than being
sharply separated, are interrelated. This means that esteem and the consequent levels are not
strictly separated but are closely related.

Self-Actualization
Self-actualization means realizing one’s full potential. Maslow describes this as a desire to
complete everything that one can, to become the most that one can be.
Our management style is firmly influenced by our beliefs and assumptions about what
encourages members of our team like: If we believe that our team members dislike work,
then we tend towards an authoritarian style of management. However, if we assume that
employees take pride in doing a good job, we tend to adopt a more participative style.
Douglas McGregor, the eminent social psychologist, divides management style into two
contrasting theories −

 Theory X
 Theory Y

Theory X
This theory believes that employees are naturally unmotivated and dislike working, and this
encourages an authoritarian style of management. According to this theory, management
must firmly intervene to get things done. This style of management concludes that workers −
 Disfavor working.
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 Abstain responsibility and the need to be directed.

 Need to be controlled, forced, and warned to deliver what's needed.
 Demand to be supervised at each and every step, with controls put in place.
 Require to be attracted to produce results, else they have no ambition or incentive to work.
McGregor observed that X-type workers are in fact mostly in minority, and yet in mass
organizations, such as large scale production environment, X Theory management may be
needed and can be unavoidable.

Theory Y
This theory explains a participative style of management, that is, distributive in nature. It
concludes that employees are happy to work, are self-motivated and creative, and enjoy
working with greater responsibility. It estimates that workers −
 Take responsibility willingly and are encouraged to fulfill the goals they are given.
 Explore and accept responsibility and do not need much guidance.
 Assume work as a natural part of life and solve work issues imaginatively.
In Y-type organizations, people at lower levels are engaged in decision making and have
more responsibility.

Comparing Theory X & Theory Y

Let us now compare both the theories −

Motivation
Theory X considers that people dislike work, they want to avoid it and do not take
responsibilities willingly.
While, Theory Y considers that people are self-motivated, and sportingly take
responsibilities.

Management Style and Control

In Theory X-type organization, management is authoritarian, and centralized control is
maintained.
While in Theory Y-type organization, the management style is participative, employees are
involved decision making, but the power retains to implement decisions.

Work Organization
Theory X employees are specialized and the same work cycle continues.
In Theory Y, the work tends to be coordinated around wider areas of skill or knowledge.
Employees are also motivated to develop expertise, and make suggestions and
improvements.

Rewards and Appraisals

Theory X-type organizations work on a ‘carrot and stick’ basis, and performance assessment
is part of the overall mechanism of control and compensation.
Coming to Theory Y-type organizations, appraisal is also regular and crucial, but is usually
a separate mechanism from organizational controls. Theory Y-type organizations provide
employees frequent opportunities for promotion.
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Application
Admitting the fact that Theory X management style is widely accepted as inferior to others,
it has its place in large scale production procedure and unskilled production-line work.
Many of the principles of Theory Y are widely accepted by different types of organization
that value and motivate active participation.
Theory Y-style management is appropriate for knowledge work and licensed services.
Licensed service organizations naturally develop Theory Y-type practices by the nature of
their work, even high structure knowledge framework, like call center operations, benefit
from its principles to motivate knowledge sharing and continuous improvement.
A group can be defined as two or more interacting and interdependent individuals who come
together to achieve particular objectives. A group behavior can be stated as a course of
action a group takes as a family. For example: Strike.

Types of Groups
There are two types of groups an individual forms. They are formal groups and informal
groups. Let us know about these two groups.

Formal Groups
These are the type of work groups created by the organization and have designated work
assignments and rooted tasks. The behavior of such groups is directed toward achieving
organizational goals.
These can be further classified into two sub-groups −
 Command group − It is a group consisting of individuals who report directly to the manager.
 Interest group − It is a group formed by individuals working together to achieve a specific
objective. Example − A group of workers working on a project and reporting to the same
manager is considered as a command group. A group of friends chilling out together is
considered as interest group or say members of a club.

Informal Groups
These groups are formed with friendships and common interests. These can be further
classified into two sub-groups −
 Task group − Those working together to finish a job or task is known as task group.
 Friendship group − Those brought together because of their shared interests or common
characteristics is known as friendship group.

Why Do People Join Groups

There is no particular reason answering why individuals join groups. Group helps individual
to feel stronger, have fewer self-doubts, and be more contrary to threats.
The following points help us understand the need of joining a group by individuals −
 Security mirrors strength in numbers. Status pinpoints a prestige that comes from belonging to
a specific group. Inclusion in a group is considered as important because it provides recognition
and status.
 Self-esteem transmits people's feelings of self-worth. Membership can sometimes raise feelings
of self-esteem like being accepted into a highly valued group.
 Affiliation with groups can meet one's social needs. Work groups significantly contribute to
meet the need for friendships and social relations.
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 Groups represent power. What mostly cannot be achieved individually becomes possible with
group effort. Power might be aimed to protect themselves from unreasonable demands. Informal
groups provide options for individuals to practice power.
 People may join a group for goal achievement. Sometimes it takes more than one person to
accomplish a particular task.

Group Roles
The concept of roles is applicable to all employees within an organization as well as to their
life outside the organization. A role is a set of expected behavior patterns attributed to the
one who occupies the position demanded by the social unit.
Individuals play multiple roles at the same time. Employees attempt to understand what kind
of behavior is expected from them. An individual when presented by divergent role
expectations experiences role conflict. Group roles are divided into three types −

 Task-oriented Roles
 Relationship-oriented Roles
 Individual Roles
Task-oriented Roles
Roles allotted to individuals according to their work and eligibility is known as task-oriented
roles. Task-oriented roles can broadly divide individuals into six categories initiator,
informer, clarifier, summarizer, reality tester and information seekers or providers
respectively.
 Initiator − The one who proposes, suggests, defines.
 Informer − The one who offers facts, expresses feelings, gives opinions.
 Clarifier − The one who interprets, defines, clarifies everything.
 Summarizer − The one who links, restates, concludes, summarizes.
 Reality Tester − The one who provides critical analysis.
 Information seekers or providers − The one who gives information and data.
These roles present the work performed by different individuals according to their marked
designation.

Relationship-oriented Roles
Roles that group individuals according to their efforts made to maintain healthy relationship
in the group and achieve the goals are known as relationship-oriented roles. There are five
categories of individuals in this category namely: harmonizer, gatekeeper, consensus tester,
encourager, and compromiser.
 Harmonizers − The one who limits tension and reconciles disagreements.
 Gatekeeper − The one who ensures participation by all.
 Consensus Tester − The one who analyzes the decision-making process.
 Encourager − The one who is warm, responsive, active, shows acceptance.
 Compromiser − The one who admits error, limits conflict.
These roles depict the various roles an individual plays to maintain healthy self as well as
group relationships.

Individual Roles
Roles that classify a person according to the measure of individual effort put in the project
aimed is known as individual roles. Five types of individuals fall into these roles: aggressor,
blocker, dominator, cavalier, and avoidance.
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 Aggressor − The one who devalues others, attacks ideas.

 Blocker − The one who disagrees and rebels beyond reason.
 Dominator − The one who insists superiority to manipulate.
 Cavalier − The one who takes part in a group non-productively.
 Avoidance − The one who shows special interest to avoid task.
These are the various roles a person plays in an organization.

Well-Functioning Groups
We know what a group is, why it is important to form a group, and what the group-oriented
roles are. Now we need to know how to mark a group as a well-functioning group, what
features are necessary for a group to mark it as efficient.
A group is considered effective when it has the following characteristics.

 Relaxed, comfortable, friendly atmosphere.

 Task to be executed are well understood and accepted.
 Members listen well and actively participate in given assignments.
 Assignments are made clear and are accepted.
 Group is acquainted of its operation and function.
 People express their feelings and ideas openly.
 Consensus decision-making process is followed.
 Conflict and disagreement center regarding ideas or method.
Group Behavior – Example
Let us understand group behavior with the help of an example.
To work on a specific project, we make a group of 4 members: Rohit, Raj, Sid, and Rahul. It
is not possible for any one of them to complete the project individually as it may be time
consuming as well as not all the members as individuals have mastered the skills required to
complete the project. This indicates the need to come together as a group.
Moving ahead, let us specify their roles. Rohit is the initiator, as he proposes the idea of the
project, Raj collects all the information and resources required for the project and becomes
the informer, Sid is the clarifier as he interprets the data and saves refined information, and
Rahul is the summarizer as he concludes the result of the project that is what do we achieve
by the end of our project. These are the task-oriented roles.
When a group of people come together and present their ideas there is a fair chance of
collision. Rohit tries to resolve all the disagreements and disputes in the first place and acts
as a harmonizer, Sid makes sure that everybody is giving their full support and effort in the
project and acts as a gatekeeper, Raj is the one encouraging everyone and motivating them
when they fail to try harder to complete the project and is the encourager, while Rahul tests
the project at each stage and examines the major decision to be made and is the consensus
tester. These are the relationship-oriented roles of each member.
Individually, each of them have different tasks to fulfill. Rohit tries to be the group leader
and impose his ideas on others and we consider him as the dominator, Rahul is always up
with excuses to avoid the task given to him and acts as avoider, Raj is the one who opposes
everything but is never up with some new idea and becomes the blocker, while Sid takes
part in every group activity in a non-productive way and becomes the cavalier.
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Reference Groups
It is a group to which a person or another group is compared. Reference groups are used in
order to examine and determine the nature of a person or other group's features and
sociological attributes. It is the group to which a person relates or aspires to link himself or
herself psychologically.
It is important for deciding a person's self-identity, attitudes, and social ties. It becomes the
ground of reference in making comparisons or contrasts and in judging one's appearance and
performance. These groups act as a benchmark and contrast needed for comparison and
evaluation of group and personal characteristics.
An example of a reference group, would be the certainty of wealth. An individual in the US
with an annual income of $70,000, may consider himself rich if he compares himself to
those in the middle income strata, who earn roughly $22,000 a year. However, if the same
person considers the relevant reference group to be those in the top 0.5% of households in
the US, those making $1.8 million or more, then the individual's income of $70,000 would
make him seem rather poor.
Group decision-making commonly known as collaborative decision-making is a situation
faced when individuals collectively make a choice from the alternatives before them.
The decision is then no longer attributable to any individual group member as all the
individuals and social group processes like social influence contribute to the decision
outcome.
The decisions made by groups are mostly different from those made by individuals. For
example, groups tend to make decisions that are more extreme than those made by
individual members, as individuals tend to be biased.

Advantages of Group Decision Making

Group decision making has two advantages over individual decision making.

Synergy
It is the idea that the whole is greater than the aggregate of its parts. When a group makes a
decision collectively, its judgment can be powerful than that of any of its members. Through
discussing, questioning, and collaborative approach, group members can identify more
complete and robust solutions and recommendations.

Sharing of information
Group decisions take into account a wider scope of information as each group member may
contribute distinct information and expertise. Sharing information increases understanding,
clarifies issues, and facilitates movement towards a collective decision.

Disadvantages of Group Decision Making

The major disadvantages of group decision making are as follows −

Diffusion of Responsibility
Group decision making results in distribution of responsibility that results in lack of
accountability for outcomes. In this way, everyone is responsible for a decision, and no one
really is. Moreover, group decisions can make it easier for members to refuse personal
responsibilities and blame others for bad decisions.
 16

Lower Efficiency
Group decisions can sometimes be less efficient than individual decisions. It takes additional
time because there is a need of active participation, discussion, and coordination among
group members. Without good facilitation and structure, meetings can get eliminated in
trivial details that may matter a lot to one person but not to the others.

Groupthink
One of the biggest disadvantage of effective group decision making is groupthink. It is a
psychological phenomenon that occurs within a group of people in which the wish for
harmony or conformity results in an illogical or dysfunctional decision-making outcome.
By refraining themselves from outside influences and actively suppressing opposing
viewpoints in the interest of minimizing conflict, group members reach a consensus decision
without critical evaluation of substitute viewpoints.
Groupthink sometimes produces dehumanizing actions against the out-group.

Group Decision-Making Techniques

In order to eliminate group think and group shift from a group, we can use four different
techniques that will help us make a collaborative decision that is best for the group. These
techniques are −

 Brainstorming
 Nominal group thinking
 Didactic technique
 Delphi technique
Brainstorming
This technique includes a group of people, mostly between five and ten in number, sitting
around a table, producing ideas in the form of free association. The main focus is on
generation of ideas and not on evaluation of these ideas.
If more ideas can be originated, then it is likely that there will be a unique and creative idea
among them. All these ideas are written on the blackboard with a piece of chalk so that all
the team members can see every idea and try to improvise these ideas.
Brainstorming technique is very effective when the problem is comparatively precise and
can be simply defined. A complex problem can be divided into parts and each part can be
dealt with separately at a time.

Nominal Group Thinking

This technique is similar to brainstorming except that this approach is more structured. It
motivates individual creativity. Members form the group for namesake and operate
independently, originate ideas for solving the problem on their own, in silence and in
writing. Members do not communicate well with each other so that strong personality
domination is evaded.
The group coordinator either collects the written ideas or writes them on a large blackboard
so that each member of the group can see what the ideas are. These ideas are further
discussed one by one in turn and each participant is motivated to comment on these ideas in
order to clarify and improve them. After all these ideas have been discussed, they are
 17

evaluated for their merits and drawbacks and each actively participating member is needed
to vote on each idea and allot it a rank on the basis of priority of each alternative solution.
The idea with the highest cumulative ranking is selected as the final solution to the problem.

Didactic Interaction
This technique is applicable only in certain situations, but is an excellent method when a
situation actually demands it. The type of problem should be such that it generates output in
the form of yes or no. Say for example, a decision is to be made whether to buy or not to buy
a product, to merge or not to merge, to expand or not to expand and so on. These types of
decision requires an extensive and exhaustive discussion and investigation since a wrong
decision can have serious consequences.
There are many advantages as well as disadvantages of this type of situation. The group that
makes the decision is divided into two sub-groups, one in favor of the “go” decision and the
opposing in favor of “no go” decision.
The first group enlists all the “pros” of the problem solution and the second group lists all
the “cons”. These groups meet and discuss their discoveries and their reasons.
After tiring discussions, the groups switch sides and try to find weaknesses in their own
original standpoints. This interchange of ideas and understanding of various viewpoints
results in mutual acceptance of the facts as they exist so that a solution can be put together
around these facts and ultimately a final decision is reached.

Delphi Technique
This technique is the improvised version of the nominal group technique, except that it
involves obtaining the opinions of experts physically distant from each other and unknown
to each other.
This isolates group members from the undue influence of others. Basically, the types of
problems sorted by this technique are not specific in nature or related to a particular situation
at a given time.
For example, the technique could be used to explain the problems that could be created in
the event of a war. The Delphi technique includes the following steps −
 The problem is first identified and a panel of experts are selected. These experts are asked to
provide potential solutions through a series of thoughtfully designed questionnaires.
 Each expert concludes and returns the initial questionnaire.
 The results of the questionnaire are composed at a central location and the central coordinator
prepares a second set of questionnaire based on the previous answers.
 Each member receives a copy of the results accompanied by the second questionnaire.
 Members are required to review the results and respond to the second questionnaire. The results
typically trigger new solutions or motivate changes in the original ideas.
 The process is repeated until a general agreement is obtained.
Leadership can be defined as the ability of the management to make sound decisions and
inspire others to perform well. It is the process of directing the behavior of others towards
achieving a common goal. In short, leadership is getting things done through others.

Leadership
Leadership is very important in a firm as it leads to higher performance by the team
members, it improves motivation and morale within the members, and helps to respond to
change.
 18

Leadership facilitates organizational success by creating responsibility and accountability

among the members of the organization. In short, it increases value in an organization.

Leader Vs Manager
A leader is someone whom people follow or someone who guides or directs others. A
manager is someone who is responsible for directing and controlling the work and staff in an
organization, or of a department within it.
The main difference between the two is that a leader works by example, while a manager
dictates expectations. If a manager goes against the rules, that will tarnish his position as a
manager. If a leader goes against the example he or she is trying to set, that will be seen as a
setback. Following are a few subtle differences between the two −
 A leader is an innovator and creator whereas a manager is a commander.
 A leader can’t be a manager but the opposite is possible, a manager is more than a leader.
 A leader does what is right, while the manager makes things right.
 A leader deals with change whereas a manager plans for a change.
 A leader gives direction to do something whereas the manager plans for everything that is to be
done.
 A leader encourages people whereas the manager controls people.
 A leader handles communication, credibility, and empowerment whereas a manager deals with
organizing and staffing.

Leadership Styles
Different leadership styles exist in work environments. The culture and goal of an
organization determine which leadership style fits best. Some organizations offer different
leadership styles within an organization, depending on the necessary tasks to complete and
departmental needs.
We find five different leadership styles in the corporate world. They are as follows −

Laissez-Faire
A laissez-faire leader does not directly supervise employees and fails to provide regular
updates to those under his supervision. Highly experienced and trained employees with
minimal requirement of supervision fall under the laissez-faire leadership style.
But, not all employees possess these features. This leadership style blocks the production of
employees needing supervision. The laissez-faire style implements no leadership or
supervision efforts from managers, which can lead to poor production, lack of control and
increasing costs.

Autocratic
The autocratic leadership style permits managers to make decisions alone without the input
of others. Managers access total authority and impose their will on employees. No one
opposes the decisions of autocratic leaders. Countries like Cuba and North Korea operate
under the autocratic leadership style.
This leadership style benefits those who require direct supervision. Creative employees who
participate in group functions detest this leadership style.

Participative
This is also known as the democratic leadership style. It values the input of team members
and peers, but the responsibility of making the final decision rests with the participative
 19

leader. Participative leadership motivates employee morale because employees make

contributions to the decision-making process. It accounts to a feeling that their opinions
matter.
When an organization needs to make changes within itself, that is internally, the
participative leadership style helps employees accept changes easily as they play a role in
the process. This leadership style meets challenges when companies need to make a decision
in a short period of time.

Transactional
Transactional leadership style is formed by the concept of reward and punishment.
Transactional leaders believe that the employee's performance is completely dependent on
these two factors. When there is an encouragement, the workers put in their best effort and
the bonus is in monetary terms in most of the cases. In case they fail to achieve the set target
they are given a negative appraisal.
Transactional leaders pay more attention to physical and security requirements of the
employees.

Transformational
Transformational leadership has the ability to affect employee's perceptions through the
returns that organization gets in the form of human capital benefits. These leaders have the
ability to reap higher benefits by introducing knowledge management processes,
encouraging interpersonal communication among employees and creating healthy
organizational culture.
It helps in flourishing organizational innovation by creating a participative environment or
culture. It promotes a culture where the employees have autonomy to speak about their
experiences and share knowledge.
It has been seen that transformational leaders are more innovative than transactional and
laisse-faire leaders.

Leadership Theories:
Traditional Theory
Traditional theory is a theory based on different traits of a human beings. It assumes that
leaders are born and not made. According to this theory, leadership behavior is the sum total
of all traits that a leader possess.
Thus this theory gives the profile of a successful and complete leader. According to this
theory, there are five human traits. They are −
 Physical trait − it includes energy, activity, appearance, and height.
 Ability trait − it includes judgement, knowledge, and fluency in speech.
 Personal trait − it includes self-confidence, creativity, and enthusiasm.
 Work trait − it includes organization and achievement.
 Social trait − it includes interpersonal skill, cooperativeness, popularity and prestige.

Drawbacks
Following are the major drawbacks of this theory −

 Traits are not arranged according to their importance.

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 There is no quantitative tool to judge the human traits.

 This trait can’t be used universally.
 This trait can be achieved and developed.
 Situational factors are avoided.

Behavioral Theory
This theory explains the effectiveness of leadership. According to this theory, leadership has
two qualities i.e., initiating structure and consideration. These qualities are tested with
higher and lower levels with proper intersection of each other.

Initiating Structure
It is the level up to which a leader is task oriented and directs the employee towards
achieving a goal. In this case, the leader gives instruction, makes plan and schedules work
activities.

Consideration
It is the level up to which a leader is concerned with the sub-ordinates, ideas and feelings.
Considerate leaders are friendly, they show concern for sub-ordinates’ well-being and
satisfaction.

This type of leadership is achieved by performance and is found to be effective. But it is not
the best way as situational factors are not taken into consideration.

Contingency Theory
According to this theory, propounded by Paul Hersey and Ken Blanchard, believes the
effectiveness of a leader is dependent on the action or readiness of his followers. By
readiness we mean the extent to which the followers are able and willing to achieve the goal.
This theory is explained on the basis of four cases.
 21

 Case 1 − In case one, we have high relationship behavior and low task behavior. The leader
motivates the followers and helps in decision making. Not much productivity can be seen in this
case but the sense of togetherness is high.
 Case 2 − In case two, we have high relationship behavior as well as high task behavior. In this
combination, the leader explains the decision and helps to build confidence of the employees. In
this case, productivity as well as loyalty towards the leader is more.
 Case 3 − In case three, we have a combination of low relationship behavior and low task
behavior. Here we see that the leader delegates the responsibility of decision making to the
followers. In this case, there is poor communication as well as poor production.
 Case 4 − Here we deal with a combination of low relationship behavior and high task behavior.
The leader gives specific direction and supervises the performance. This theory is effective only
if the leaders change their style irrespective of the readiness of the followers.

Conflict can be defined as a mental struggle resulting from incompatible or opposing

needs, drives, wishes, and external or internal demands. Where there are people, there is
conflict.
They are usually taken in a negative association. However, this is inaccurate as conflicts are
necessary for healthy relationships. It all depends on the approach we use to resolve the
conflict.

Classification of Conflict
When we think of the different types of conflict, we might instantly think of the ones
referred to in literature, especially in fiction. They can be applied to real life, of course.
However, in contemporary times, types of conflict which are easily identifiable are classified
into four different types −

 Intrapersonal
 Intragroup
 Interpersonal
 Intergroup
Intrapersonal Conflict
Intrapersonal conflict takes place within an individual. The person experiences it in his own
mind. Thus, it is a type of conflict that is psychological involving the individual’s thoughts,
 22

values, principles and emotions. Intrapersonal conflict may come in different forms, from
the simple mundane ones like deciding whether or not to go vegan for lunch to ones that can
affect major decisions such as choosing a career path.
However, this type of conflict can be quite difficult to handle, if you find it hard to decipher
your inner struggles. It results in restlessness and uneasiness, or can even cause depression.
On such occasions, it is advised to seek a way to let go of the anxiety by communicating
with other people. Eventually, when the person finds himself/herself out of the situation,
he/she can become more empowered as a person. Thus, the experience invokes a positive
change which helps in personal growth.

Intragroup Conflict
Intragroup conflict occurs among individuals within a team. The incompatibilities and
misunderstandings between team members leads to intragroup conflict. It starts from
interpersonal disagreements like team members have different personalities which may lead
to tension or differences in views and ideas. Say for example, during a presentation,
members of the team might find the notions presented by the one presiding to be erroneous
due to their differences in opinion.
Within a team, conflict can be helpful in coming up with decisions, which will eventually
allow them to achieve their objectives as a team. But, if the degree of conflict disrupts
harmony among the members, then some serious guidance from a different party will be
needed for it to be settled.

Interpersonal Conflict
Interpersonal conflict means a conflict between two individuals. Basically, this occurs
because of some differences in people. We have varied personalities which usually lead to
incompatible choices and opinions. So, it is a natural occurrence which can eventually help
in personal growth or developing our relationships with others.
In addition, adjustments are necessary for managing this type of conflict. However, when
interpersonal conflict becomes too destructive, calling in a mediator helps so as to have the
issue resolved.

Intergroup Conflict
Intergroup conflict occurs when a misunderstanding arises among different teams within an
organization. For example, the marketing department of an organization can come in conflict
with the customer support department. This is because of the varied sets of goals and
interests of these different groups. In addition to this, competition also contributes to
intergroup conflict. There are other factors which increase this type of conflict. Some of
these factors may include a rivalry in resources or the boundaries set by a group to others
which forms their own identity as a team.
Conflict should not always be perceived as a problem rather at times it is a chance for
growth and can be an effective means of opening up among groups or individuals. However,
when conflict begins to suppress or disrupt productivity and gives way to more conflicts,
then conflict management is what is needed for problem resolution.

Conflict Resolution
Conflict resolution is a method by which two or more parties find a peaceful solution to a
disagreement among them. The disagreement can be personal, financial, political, or
emotional. When a disagreement arises, often the best course of action is negotiation to
 23

resolve the disagreement. We all know that when people gather for a discussion, it is not
necessary that what one thinks is right the other thinks the same way, this difference in
thinking or mentality leads to conflict.
"I’m doing my best at work and you expect me to do more! Why don’t you ask the other
team members?" This is the start of a conflict! Let us know about some of the conflict
management techniques.

Conflict Management Techniques

We get into a conflict when the person opposite to us has a different mindset. It is very
common in a workplace to get into differences of opinion. Sometimes there is a conflict
between two or more employees, sometimes employees have a conflict with their managers
and so on. Now the question is, how can we manage disagreements in ways that build
personal and collegial relationships?
Here are five strategies from conflict management theory for managing stressful situations.
None of them is a "one-size-fits-all" answer. Which one is the best in a given situation
depends on variety of factors, including an appraisal of the levels of conflict.
 Collaborating − win/win
 Compromising − win some/lose some
 Accommodating − lose/win
 Competing − win/lose
 Avoiding − no winners/no losers

Collaborating
This technique follows the rule "I win, you win". Collaborating means working together by
integrating ideas set out by multiple people. The objective here is to find a creative solution
acceptable to everyone. It calls for a significant time commitment but is not appropriate for
all conflicts.
This technique is used in situations where −

 There is a high level of trust

 We don't want to take complete responsibility
 We want others to also have "ownership" of solutions
 People involved are willing to change their thinking
 We need to work through animosity and hard feelings
However, this process takes a lot of time and energy and some may take advantage of other
people's trust and openness.
Example − A businessman should work collaboratively with the manager to establish
policies, but collaborative decision-making regarding office supplies wastes time better
spent on other activities.

Compromising
This technique follows the rule "You bend, I bend". Compromising means adjusting with
each other’s opinions and ideas, and thinking of a solution where some points of both the
parties can be entertained. Similarly, both the parties need to give up on some of their ideas
and should agree with the other.
This technique can be used in situations where −
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 People of equal levels are equally committed to goals

 Time can be saved by reaching intermediate settlements on individual parts of complex matters
 Goals are moderately important
Important values and long-term objectives can be derailed using this technique. This process
may not work if initial demands are high and mainly if there's no commitment to honor the
compromise solutions.
Example − Two friends had a fight and they decide to compromise with each other through
mutual understanding.

Accommodating
This technique follows the rule "I lose, you win". Accommodating means giving up of ideas
and thoughts so that the other party wins and the conflict ends. This technique can be used
when −
 An issue is not that important to us as it is to the other person
 We realize we are wrong
 We are willing to let others learn by mistake
 We know we cannot win
 It is not the right time and we would prefer to simply build credit for the future
 Harmony is extremely important
 What the parties have in common is a good deal more important than their differences
However, using this technique, one's own ideas don't get attention and credibility, and
influence can be lost.
Example − When we fight with someone we love we choose to let them win.

Competing
This technique follows the rule "I win, you lose". Competing means when there is a dispute
a person or a group is not willing to collaborate or adjust but it simply wants the opposite
party to lose. This technique can be used when −
 We know you are right.
 Time is short and a quick decision is to be made.
 A strong personality is trying to steamroll us and we don't want to be taken advantage of.
 We need to stand up for our rights.
This technique can further escalate conflict or losers may retaliate.
Example − When in a debate the party with more facts wins.

Avoiding
This technique follows the rule "No winners, no losers". Avoiding means the ideas
suggested by both the parties are rejected and a third person is involved who takes a decision
without favoring any of the parties. This technique can be used when −
 The conflict is small and relationships are at stake
 We are counting to ten to cool off
 More important issues are pressing and we feel we don't have time to deal with this particular one
 We have no power and we see no chance of getting our concerns met
 We are too emotionally involved and others around us can solve the conflict more successfully
Using this technique may lead to postponing the conflict, that may make matters worse.
Example − Rahul and Rohit had a fight, their mother came and punished both of them.
 25

Organizational culture can be defined as the group norms, values, beliefs and assumptions
practiced in an organization. It brings stability and control within the firm. The organization
is more stable and its objective can be understood more clearly.
Organizational culture helps the group members to resolve their differences, overcome the
barriers and also helps them in tackling risks.

Elements of Organizational Culture

The two key elements seen in organizational culture are −
 Visible elements − These elements are seen by the outer world. Example, dress code, activities,
setup, etc.
 Invisible elements − These inner elements of the group cannot be seen by people outside the
group or firm. Example, values, norms, assumptions, etc. Now let us discuss some other elements
of organizational culture. They are −
 Stories − Stories regarding the history of the firm, or founder.
 Rituals − Precise practices an organization follows as a habit.
 Symbol − The logo or signature or the style statement of a company.
 Language − A common language that can be followed by all, like English.
 Practice − Discipline, daily routine or say the tight schedule everyone follows without any
failure.
 Values and Norms − The idea over which a company is based or the thought of the firm is
considered as its value and the condition to adopt them are called norms.
 Assumptions − It means we consider something to be true without any facts. Assumptions can be
used as the standard of working, means the employees prepare themselves to remain above
standard.

Different Types of Organizational Culture

The culture a firm follows can be further classified into different types. They are −

 Mechanistic and Organic culture

 Authoritarian and Participative culture
 Subculture and Dominant culture
 Strong and Weak culture
 Entrepreneurial and Market culture
Mechanistic and Organic Culture
Mechanistic culture is formed by formal rule and standard operating procedures. Everything
needs to be defined clearly to the employees like their task, responsibility and concerned
authorities. Communication process is carried according to the direction given by the
organization. Accountability is one of the key factors of mechanistic culture.
Organic culture is defined as the essence of social values in an organization. Thus there
exists a high degree of sociability with very few formal rules and regulations in the
company. It has a systematic hierarchy of authority that leads towards free flow of
communication. Some key elements of organic culture include authority, responsibility,
accountability and direct flow towards the employee.

Authoritarian and Participative Culture

Authoritarian culture means power of one. In this culture, power remains with the top level
management. All the decisions are made by the top management with no employee
involvement in the decision making as well as goal shaping process. The authority demands
 26

obedience from the employee and warns them for punishment in case of mistake or
irregularity. This type of culture is followed by military organization.
In participative culture, employees actively participate in the decision making and goal
shaping process. As the name suggests, it believes in collaborative decision making. In this
type of culture, employees are perfectionist, active and professional. Along with group
decision making, group problem solving process is also seen here.

Subculture and Dominant Culture

In subculture, some members of the organization make and follow a culture but not all
members. It is a part of organizational culture, thus we can see many subcultures in an
organization. Every department in a company have their own culture that gets converted to a
subculture. So, the strength and adaptability of an organizational culture is dependent on the
success of subculture.
In dominant culture, majority of subculture combine to become a dominant culture. The
success of dominant culture is dependent on the homogeneity of the subculture, that is, the
mixture of different cultures. At the same point of time, some cold war between a dominant
culture and a minor culture can also be seen.

Strong and Weak Culture

In a strong culture, the employees are loyal and have a feeling of belongingness towards the
organization. They are proud of their company as well as of the work they do and they slave
towards their goal with proper coordination and control. Perception and commitment are two
aspects that are seen within the employees. In this culture, there is less employee turnover
and high productivity.
In a weak culture, the employees hardly praise their organization. There is no loyalty
towards the company. Thus, employee dissatisfaction and high labor turnover are two
aspects of this culture.

Entrepreneurial and Market Culture

Entrepreneurial culture is a flexible and risk-taking culture. Here the employees show their
innovativeness in thinking and are experimental in practice. Individual initiations make the
goal easy to achieve. Employees are given freedom in their activity. The organization
rewards the employees for better performance.
Market culture is based on achievement of goal. It is a highly target-oriented and completely
profit-oriented culture. Here the relationship between the employees and the organization is
to achieve the goal. The social relation among the workers is not motivating.

How to Create an Organizational Culture

An organizational culture is created with the combination of certain criteria that are
mentioned below −
 The founder of the organization may partly set a culture.
 The environment within which the organization standards may influence its activities to set a
culture.
 Sometimes interchange of culture in between different organizations create different new cultures.
 The members of the organization may set a culture that is flexible to adapt.
 New cultures are also created in an organization due to demand of time and situation.
 27

The culture of an organizational can change due to composition of workforce, merger and
acquisition, planned organizational change, and influence of other organizational culture.
Organizational change can be defined as the alteration in structure, technology or people in
an organization or behavior by an organization. Here we need to note that change in
organizational culture is different from change in an organization. A new method or style or
new rule is implemented here.
An organizational change occurs due to two major factors namely −
 External factor − External factors are those factors that are present outside the firm but force the
firm to change or implement a new law, rule etc. For example, all banks are bound to follow the
rules laid down by the RBI.
 Internal factor − Internal factors are those factors that are caused or introduced inside an
organization that forces a change. For example, no smoking in the workplace.

Importance of Organizational Change

There is a need of change in an organization because there is always a hope for further
development, and in order to survive in a competitive market, the organization needs to be
updated with changes. However, we have listed some reasons to explain why changes are
deliberately made and carefully planned by the organization before implementation.

 It improves the means to satisfy the economic requirements of people.

 It enhances the profitability of organization.
 It promotes employee satisfaction and well-being.

Planned Change
We can define planned change as any kind of alteration or modification which is done in
advance and differently for improvement.

The Need for Planned Change

Planned change takes places in an organization when there is a demand for change due to
two types of forces. These forces are grouped into internal sources and external sources.
Internal forces that lead to a planned change in an organization include obsolescence of
production and service, new market opportunities, new strategic direction, increasing
workforce diversity, and shift in socio-cultural values.
External forces that lead to a planned change in an organization include regulators,
competitors, market force, customers, and technology. Each of these forces can create
pressing demand for change in small or big, public or private, business or non-business
organizations.

Process of Planned Change

Once the management decides to implement some changes in the organization, it needs to be
done carefully as it is a very sensitive issue. It is very important for all the employees to
adapt to change. According to Kurt Lewin, the planned organizational change is
implemented in three different stages. They are −
 Unfreezing − In this stage, the organization studies if the change is required or not, what and why
is the change necessary. Considering the entire situation, the organization decides for appropriate
change. Thus a plan and strategy is formulated as required.
 28

 Changing − In this stage, the organization executes the plan and program for change. For this
purpose, proper precautions are taken in order to maintain cooperation and coordination between
the employees and management, avoiding miscommunication or disputes. Adequate supervision
and control is arranged as needed.
 Refreezing − This is the final stage, in order to bring organizational change. By way of
supervision, the organization tries to evaluate the effectiveness of change. Collecting all this
information, the management interprets whether to continue or replace change by some other
alternatives or to make further minor changes.

Types of Planned Change

On the basis of a company’s requirement planned change is classified into three types. They
are −

 Change in structure
 Change in technology
 Change in people
Change in Structure
We say that the planned change required is change in structure when development is
required in these following areas −

 Change in management
 New management
 Change in position or location
 Change in objective, rules, regulations etc.
 Launching new branches
Change in Technology
We say that the planned change required is change in technology when development is
required in these following areas −

 Need of office automation

 Installing new hardware and software
 Executing new working procedures
 New methods in production function
 Producing new products and devices
 New training, research and development program
Change in People
We say that the planned change required is change in people when development is required
in these following areas −

 New candidate requirement

 Promotion or demotion
 Transfer to other location
 Suspension or dismissal
 Deputation
 Training and development
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Organizational Development is a field of research, theory, as well as practice devoted to

expanding the knowledge and effectiveness of how people accomplish successful
organizational change and performance.
Organizational development is not an overnight transformation that can be done in an
organization, rather it is a gradual process that has to be executed systematically and by
taking care of the external environment.

Organization Development Techniques

Companies adopt organizational development technique to modify the behavior of people
who are resisting change. It is a program to bring a change in the values, norms, attitudes,
perception, and behavior of people and improve the quality of inter-personal relations. Some
of the major organizational development techniques are −

 Sensitivity technique
 Survey feedback
 Process consultation
 Team building
 Intergroup development
Now let us have a look at all these techniques.

Sensitivity Technique
Here sensitivity refers to the psychological aspect of human mind that has to be shaped to
act as expected by the group. In this technique, one’s own weakness is exposed and
members understand how others react towards them. Stress is on group dynamics and
tackling inter-relationship disputes.
The idea is to improve the behavior of people in order to maintain smooth inter-personal
relationship without any power or influence. Members are motivated to have an open, heart-
to-heart talk to develop mature relationship. Sensitivity training borders on psychotherapy
where the emotions as well as body language are considered.

Survey Feedback
In this technique, the discrepancies among a group are weeded out using questionnaires,
which identify the difference in perception amongst the same working family, group or
department. The collected data is then tabulated and distributed for further deliberations.
This acts as the basis for further discussions and the discrepancies if any can be sorted out
by open discussions with all concerned, defending and opposing till a consensus is reached.
This technique mainly focuses on ideas and not on persons who put up those ideas.

Process Consultation
In this technique, a firm may either seek the support of experts from within the firm or from
outside. The firm must check that process consultation is done through an external expert
with the needed support provided by the authorities from within the organization.

Team Building
In this technique, attempts are made at the group or inter-group level. The main objective is
to improve co-ordination thereby improving the performance as a group. This can be done
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by goal setting, development of inter-personal relations, role analysis to identify roles and
responsibilities and team process analysis.

Intergroup Development
Inter group development technique attempts to change the perceptions of groups about
themselves or about other groups. This can be done by organizing independent group
meeting, developing a list consisting of perception of itself, views about other departments
and how others view them, trying to understand and resolve the actual cause of conflicts, or
sub grouping the groups to remove difference in perceptions and impressions that groups
have about each other.