CHAPTER ONE

THE NATURE OF ORGANIZATIONAL BEHAVIOR

What is an Organization?
It is a collection of people working together under a defined structure for the purpose of
achieving predetermined outcomes on a relatively continuous basis through the use of financial,
human, and material resources.
It is also a place where managers practice the art of management.
A structured social system consisting of groups and individuals working together to meet some
agreed up on objectives.
What is Organization Behaviour?
Organizational behavior is a field of study that investigates the impact that individuals, groups
and organizational structure have on behavior within the organization, for the purpose of
applying such knowledge towards improving an organizational effectiveness.
Main elements of this definition;
 Organizational behavior is an investigative study of individuals and groups,
 The impact of organizational structure on human behavior and
 The application of knowledge to achieve organizational effectiveness.
OB involves integration of studies undertaken relating to behavioral sciences like psychology,
sociology, anthropology, economics, social psychology and political science. Therefore,
organizational behavior is a comprehensive field of study in which individual, group and
organizational structure is studied in relation to organizational growth and organizational culture,
in an environment where impact of modern technology is great.
OB focuses on how to improve productivity, reduce absenteeism and turnover, and increase
employee citizenship and job satisfaction. The nature of the study of OB is investigative to
establish cause and effect relationship.
For example: if an organization pays good dividend to its employees, the productivity can be
increased. The increased productivity is an effect.
Generally, OB provides a set of tools that allow: people to understand, analyze, and describe
behavior in organizations; and managers to improve, enhance, or change work behaviors so that
individuals, groups, and the whole organization can achieve their goals.
OB is the art on the part of manager to understand, describe, forecast and modify individual
behaviour/human behavior in an organization.
a. Describe: Study of organizational behavior is based on scientific methods, which have been
applied on human beings. It is a science, that analyses as to how people behave in different
situations in the organization.
A manager should be able describe the behavior of each of the individuals under his command,
identify attitude, and be able to pinpoint his behavior so that the situation in the organization is
under control.

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b. Understand: Understand why people behave in particular manner and try to identify reasons
so that corrective actions can be taken.
c. Predict: By frequent closer interaction, a leader is in a position to identify the nature of
workers. A leader should be able to handle each individual differently so that his or her
actions can be channelized to higher productivity.
d. Control: Managers in the organizations should train their subordinates continuously; aim
being development of skills, promotion of productivity and improvement of individual
behaviour. He/she must lay down control measures so that the energy of workers is diverted
towards organizational objectives.
Environment has a great impact on human behaviour. Appropriate internal environment would
help organizations to build favorable work environment that will help individuals and groups
within organizations to work effectively towards higher productivity.
Fundamental Concepts of OB
The subject of OB is developed on the following concepts.
1. Individual difference: Each individual is different from others in different ways. Each
person in this world is unique.
2. A whole person: When an individual is appointed, his skill alone is not hired, but his social
background, likes and dislikes, pride and prejudices etc.
3. Caused behavior: Behavior of an employee is caused and not random. Thus, when a worker
comes late or makes a problem with the supervisor, there is a cause behind. The manager
must discover the cause behind the behavior.
4. Human dignity: People should be treated with respect and dignity. Employees are not
economic tools, but they are a higher order in the universe.
5. Organizations are social systems: People have psychological needs, social roles and status.
Their behavior is influenced by their group as well as by their individual drives. Activities in
organization are governed by the social laws and as well as psychological laws.
The Three Basic Units of Analysis in Organization Behavior
The following are the three Basic Units of Analysis in Organization Behavior

Basic OB Model
Organization
Systems Level

Group Level

Individual Level

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Characteristics of OB
 Organizations are composed of individuals and groups.
 Organizations are oriented toward the achievement of goals.
 Organizations need employees’ specialization and coordination in order to accomplish their
goals.
The Development of Organizational Behavior
By most estimates organizational behavior emerged as a distinct field around 1940s. However,
its origin can be traced much further back in time. The Greek philosopher Plato wrote about
equity in work relationships. Another Greek philosopher, Aristotle spoke about the elements of
persuasive communication.
The writings of sixteenth-century Italian philosopher, Niccolo Machiavelli laid the foundation
for contemporary work on organizational power and politics. In 1776, Adam smith advocated a
new form of organizational structure based on division of labor. One hundred years later, the
German sociologist Max Weber, wrote about rational organizations and initiated discussion on
charismatic leadership. Soon after, Fredrick W.Taylor introduced the systematic use of goal
setting and reward or incentives to motivate employees. Generally, four significant Eras; pre-
scientific, classical, behavioral and modern have paved the way for the field of organizational
behavior.
1) The pre-scientific Era (pre1000-1880)
The practice of management can be traced to earliest history as abundant archaeological
evidences, such as the great pyramids, stands in silent tribute to the talent of bygone managers.
Illiterate workers (or slaves), miserable working conditions, primitive agrarian economies and
crude tools made the tasks of managers in ancient civilizations extremely difficult. Moreover,
even though, managers during the prescientific era did not have formal education and training in
proven management methods, they accomplished amazing things. As time passed, exploration of
natural resources and technological advances lead to the industrial revolution. The classical
management era was born out of this interest.
2) The classical Era (1980-1930)
During this time, the first theory of management began to evolve. Two major thrusts were
administrative theory and scientific management.
Scientific management: According to time-honored definition, scientific management is the
kind of management which conducts a business or affairs by standards established by factors or
truths gained through systematic observation, experiment or reasoning.
Fredrick Taylor created with being the “father of scientific management”; published the principle
of scientific management. In 1911, trough time and task study, standardization of tools and
procedures, development of piece rate incentive schemes and systematic selection and training.
Taylor dramatically improved productivity. Taylor’s goal was to make work behavior as stable
and predictable as possible so that increased usage of sophisticated machines and factories would
achieve maximum efficiency. He relied heavily on monetary incentives because he saw workers
as basically lazy beings, motivated primarily by money.

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Administrative theory: Also called the universal process school of management. The origin of
administrative theory approaches can be traced to Henry Fayol the French industrialist. In his
1916 adminstration‘Industrielle et Generalle’, Fayol divided the manager’s job in to five
functions; planning, organizing, command, coordination and control. He then recommended 14
universal principles of management. Fayol viewed as potentially disruptive factor to be closely
controlled by management. Thus, these 14 principles emphasized on division of labor, authority,
discipline, and strictly enforced chain of command. They include:- Division of labor, Authority,
Discipline, Unity of command, Unity of direction, Subordination, Remuneration, Centralization,
Scalar chain, Order, Equity, Stability and tenure of staff, Initiative and Esprit de corps.
3) The behavioral or Neo-classical Era (1930-1960)
A significant landmark in the evolution of managing and understanding the behavior of people in
the behavioral Era was the outcomes of the human relation movement during the 1930s.
A unique combination of factors fostered the human relation movement during the 1930s. First,
following the legalization of union management collective bargaining in the United States in
1930s; management began looking for a new ways of handling employees. Second, behavioral
scientists conducting on the job research, started calling for a more attention for the ‘human’
factors. Managers a headed the call for better human relations and improved working conditions.
One such study conducted at western electric’s Hawthorne plant, was a prime stimulus for the
human relation movement. Another essential to the human relation movement were the writings
of Elton Mayo and Mary parker Follett. Australian born Mayo, who headed the Harvard
researchers at Hawthorne, advised managers to attend to the emotional needs of employees in his
1933 classic, the human problem of industrial civilization. Follet was a true pioneer, not only as
a female management consultant in the male-dominated industrial world of the 1920s, but also a
writer who saw employees as a complex bundle of attitudes, beliefs and needs. Mary Follett told
managers to motivate job performance instead of merely demanding it, a "pull" rather than a
"push" strategy.
4) The Modern Era (1960 onward)
The writing of Douglas McGregor, the total quality management movement, and the contingency
approach to management were the significant land marks in the evolution of managing and
understanding the behavior of people during the modern era.
In 1960s Douglas McGregor, wrote the book entitled; the human side of an enterprise, which has
become an important philosophical base for the modern view of people at work. He formulated
two sharply contrasting sets of assumptions about human nature. His theory x assumptions, were
pessimistic and negative and according to his interpretation they were typical of how managers
traditionally perceived employees. To help managers break with this negative tradition, he
formulated his theory of Y modern and positive set of assumption about people. McGregor
believed that managers could accomplish more through others by viewing them as self-
energized, committed, responsible and creative beings.
The underlying principles of total quality management are more important than ever given the
growth of both E-business on the internet and the overall service economy. Total quality means
that the organization’s culture is defined by and supports the constant attainment of customer
satisfaction through an integrated system of tools, techniques and training. This involves the
continuous improvement of organizational process, resulting in high quality products and

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services. Quality consultant, Richard J Schonberger sums up TQM as ‘continuous, customer-
centered, employee driven improvement.
Principles of total quality management; Despite variations in the language and scope of total
quality programs, it is possible to identify three total quality principles:
 Does it first time to eliminate costly reworks?
 Listen to and learn from employees and customers.
 Make a continuous improvement in an everyday matter.
Why Do We Study OB?
 To learn about yourself and how to deal with others.
 You are part of an organization now, and will continue to be a part of various organizations.
 Organizations are increasingly expecting individuals to be able to work in teams.
 Some of you may want to be managers or entrepreneurs.
CONTRIBUTING DISCIPLINES TO OB
OB is an applied behavioral science that is built upon contributions from a number of behavioral
disciplines. These include;
– Psychology
– Sociology
– Social Psychology
– Anthropology
– Political Science
1. Psychology
Psychology is the science that seeks to measure, explain, and sometimes change the behavior of
humans and other animals.
Psychology is an applied science, which attempts to explain human behavior in a particular
situation and predicts actions of individuals. Psychologists have been able to modify individual
behavior largely with the help of various studies. It has contributed towards various theories on
learning, motivation, personality, training and development, theories on individual decision
making, leadership, job satisfaction, performance appraisal, attitude, ego state, job design, work
stress and conflict management. Studies of these theories can improve personal skills, bring
change in attitude and develop positive approach to organizational systems. Various psych
ological tests are conducted in the organizations for selection of employees, measuring
personality attributes and aptitude. Various other dimensions of human personality are also
measured. These instruments are scientific in nature and have been finalized after a great deal of
research.
Field of psychology continues to explore new areas applicable to the field of organizational
behavior. Contribution of psychology has enriched the organizational behavior field.

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2. Sociology
Sociologists study the social system in which individuals fill their roles; that is, sociology studies
people in relation to their fellow human beings.
Science of Sociology studies the impact of culture on group behavior and has contributed to a
large extent to the field of group-dynamics, roles that individual plays in the organization,
communication, norms, status, power, conflict management, formal organization theory, group
processes and group decision-making.

3. Social Psychology
An area that blends concepts from psychology and sociology and that focuses on the influence of
people on one another.
W orking organizations are formal assembly of people who are assigned specific jobs and play a
vital role in formulating human behavior. It is a subject where concept of psychology and
sociology are blend to achieve better human behavior in organization. The field has contributed
to manage change, group decision-making, communication and ability of people in the
organization, to maintain social norms.

4. Anthropology
It is a field of study relating to human activities in various cultural and environmental
frameworks. It understands difference in behavior based on value system of different cultures of

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various countries. The study is more relevant to organizational behavior today due to
globalization, mergers and acquisitions of various industries. The advent of the 21st century has
created a situation wherein cross-cultural people will have to work in one particular industry.
Managers will have to deal with individuals and groups belonging to different ethnic cultures and
exercise adequate control or even channelize behavior in the desired direction by appropriately
manipulating various cultural factors.

5. Political Science
It is the study of the behavior of individuals and groups within a political environment.
Political science has contributed to the field of Organizational behavior. Stability of government
at national level is one major factor for promotion of international business, financial
investments, expansion and employment. Various government rules and regulations play a very
decisive role in growth of the organization. All organizations have to abide by the rules of the
government of the day.

Organization behavior has used the studies on comparative attitudes and cross-cultural
transactions. Environment studies conducted by the field of anthropology aims to understand
organizational human behavior so that acquisitions and mergers are smooth. Organizations are
bound by its culture that is formed by human beings.

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MANAGEMENT AND ORGANIZATION BEHAVIOR IN THE 21 ST CENTURY
(CHALLENGES & OPPORTUNITIES)
Today’s workplace is indeed undergoing immense and permanent changes. The 21st century
environment requires new-taking & new ways of managing. The nature of work is changing so
rapidly that rigid job structures impede the work to be done now, and that may drastically change
the following year, month, or even week. There is a revolution going on in the workplace such as
 Knowledge is replacing infrastructure.
 Values and Self-leadership are replacing direct supervision i.e. command and control
supervisions.
 Networks are replacing hierarchies.
 Virtual teams are replacing committees.
 Companies are looking for employees with emotional intelligence, not just technical smarts.
 Globalization has become the mantra of corporate survival.
 Co-workers are not down the hall; they are at the other end of internet connections. Chances
are they live somewhere else on the planet.
 Organizations have been “re-engineered” for greater speed, efficiency & flexibility.
 Teams are pushing aside the individual as the primary building block of organizations.
 Command and control management is giving ways to participative management &
empowerment.
 Ego centered leaders are being replaced by customer centered leaders.
 Employees increasingly are being viewed as internal customers.
All this creates a mandate for a new kind of manager in the 21st century, i.e. there is managerial
shifting as shown below in the table.

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Challenges of OB
 INDIVIDUAL LEVEL
– Job satisfaction
– Empowerment
– Behaving ethically
 GROUP LEVEL
– Working with others
– Workforce diversity
 CHALLENGES AT THE ORGANIZATIONAL LEVEL
i. Productivity- A performance measure including effectiveness and efficiency.
 Effectiveness: achievement of goals.
 Efficiency: the ratio of effective work output to the input required to produce the work
ii. Developing Effective Employees
 Absenteeism- Failure to report to work
 Turnover- Voluntary and involuntary permanent withdrawal from the organization

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 Organizational Citizenship- Discretionary behavior that is not part of an employee’s formal
job requirements, but is helpful to the organization
iii. Competition From the Global Environment
iv. Managing and Working in a Global Village

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