CH 1: INTRODUCTION TO OB

Organizational Behavior
[

OB refers to the behavior of individuals and groups within

organizations and the interaction between organizational
members and their external environments or

Acc to Stephens, “OB is a field of According to Aldag and

study that investigates the impact Brief, " OB is a branch of
that individuals, groups, and social sciences that seeks to
structure have on behavior within build theories that can be
organizations, for the purpose of applied to predicting ,
applying such knowledge toward understanding and
improving an organization’s controlling behaviour in a
effectiveness. work organisation."
Study of Organizational Behaviour
Determinants of behavior in an organization

 OB studies human behaviour at individual level, group

level and organisational level.

Basically, organisations are made up of people, therefore

managers in the organisation must know how they behave
in an organisation to make organisation productive.

1. Individuals
2. Groups and
3. Structure
Elements of Organizational Behavior

1. People: People make up the internal social system of the

organization. They consists of individuals and groups. Groups
may be formal or informal.
2. Structure: Structures define the formal relationship between
people in an organization.
3. Technology: Technology consist of physical objects, activities and
process, knowledge, etc through which people accomplish their
tasks to achieve organizational objectives.
4. Environment: All organizations operate within an external
environment. It is part of a larger system that contains thousand
of other elements..
 Organizational Behavior (OB)
 The attitudes and behaviours of individuals and
groups in organizations
 Why study OB?
 Effective and competitive organizations
 Help you to retain the people who came up with the

good ideas
 Useful in any job, organization, industry, anywhere
 Evolution of OB
Classical View (Early 1900s)
 Attempts to prescribe the “correct” way to manage
an organization and achieve its goals
 High specialization of labour (each dept tended to
its own business, and decision making was
centralized)
 Bureaucracy
 Max Weber
 Strict chain of command, detailed rules, high specialization, centralized
power, and selection and promotion based on technical competence
 Scientific Management
 Frederick Taylor
 Use of careful research to determine degree of specialization
 Evolution of OB
Human Relations Movement
 Hawthorne Studies – research conducted at the

Hawthorne plant of Western Electric in the 1920s

that examined how psychological and social
processes affect productivity
 How physical environment affects productivity

 Effect of interest being shown in them

 Advocates management styles that are more

participative and oriented towards employee needs

 Evolution of OB
 Where are we today???
 The Contingency Approach
 No one is the best way to manage
 Management style depends on the demands of the
situation
 Nature of Organizational Behaviour
Organizational Behaviour (OB)

- is an interdisciplinary behavioural science, dynamic, no

absolutes

- is all pervasive

- studies phenomena and dynamics (processes) of organisations

- relates these processes to their various human units

- There are no absolutes in OB

 Importance of OB
1. Understanding of self and others
a) Individual Behavior
b) Inter-personal Behavior
c) Group Behavior
2. Motivation of Resources
3. Effective communication
4. Organizational Climate
5. Good Human Relations
6. Introduction of change in the mgmt.
 Few Absolutes in OB
• Impossible to make simple and accurate
generalizations
• Human beings are complex and diverse
• OB concepts must reflect situational conditions:
contingency variables
 Organizational Behaviour
Finding Solutions

Company: Dominos Pizza

Industry: Fast Food

Issue: Turnover Rate, High Training Costs

Facts about the industry:

Minimum wages paid to entry level employees
Low loyalty

Your Solution?
 Organizational Behavior Issues: An illustration
CEO David Brandon, “… you can’t overcome a bad culture by
paying people a few bucks more.”

Key Element Recognized: Store managers churn at high rates, it

has a tremendous negative effect with store-level employee
turnover rates
1.Hire Better Quality Store Managers
Tests to measure number and people skills
2. Provide Better Tools to Store Managers
Computer Tracking Program for employee level statistics
3. More Meaningfully Incentivize Store Managers
Stock options, Tie incentives to Sales Growth and Customer
Service Measurements
Limitations of OB
 Theoretical soundness open to doubt
 Behavior flavour
 Manipulative behavior
 OB is an interdisciplinary subject --
Fields Contributing to OB

Micro:
The
Individual

Macro:
Groups &
Organizations
 Fields Contributing to OB

Psychology
Applied Science that Examines and Predicts Human Behaviour
Helps Understand: Personality, Attitude, Motivation, Leadership, Decision
Making, Conflict Management
Focus: Individual Ex. Working Conditions that can affect performance

Sociology
Studies the impact of social environment or culture on Group Behaviour
Helps Understand: Group-dynamics, Role of communication, Norms,
Status, Power, Conflict Management, Group Decision-Making, Change
Management
Focus: Group Behaviour Ex. Team behaviour

Social Psychology
Blend of both concepts
Focus: People’s influence on one another
Helps Understand: Change: How to implement and make it more acceptable
 Fields Contributing to OB

Anthropology:
Study of how humans are evolving in cultural and environmental
context.
Helps Understand: Cultural influences from various parts of the
world, cross-cultural interaction and issues, challenges of
changing environment
Relevant due to rampant Globalization, Mergers and Acquisitions

Economics:
Ex. Decision Making
 Various Models of OB
1. The Autocratic Model: Relies on power. Managers have the
ability, authority to control their employees and the employee’s
performance is lower than expected.
 Various Models of OB
2. Custodial Model: Relies on Economic Resources. Employee
need that is met is security. Passive Cooperation. Managers
simulate employees by offering benefits, less team work
 Various Models of OB

3) Supportive Model: Relies on leadership. Managers support

employees by encouraging, to perform better, get along with
each other and as well as developing their skills. Participation,
Task Involvement, Moderate enthusiasm
 Various Models of OB

4) Collegial Model: Relies on Teamwork. Employees cooperate

and work as a team
 Various Models of OB
5) System Model: Relies on self-motivation. Caring employer,
Diverse workforce, Dynamic Environment, Psychological
ownership for the organization, Inspired employees, Higher
order needs
Various Models of OB
 Trends, Challenges and Opportunities in OB
• Power Shift from the Organization to Consumer
Example: Nationalized Banks

Employees: Changing Psychological Contract : More autonomy &

Flexibility
Individual rising above post
Value of title, promotion changing
Loyalty, Job Switching, Information Gathering
Managing the Millennial Generation
Rewards, Opportunities to enhance skills
 Trends, Challenges and Opportunities in OB
Helping employees balance work-life conflicts
• Global workforce means work no longer sleeps. Workers are on-call
24-hours a day or working nontraditional shifts.
• Balancing work and life demands now surpasses job security as an
employee priority.
• Average work-week in India is … hours?

• Diversity: Managing employees of different backgrounds

Language differences, Gender Differences, National Ethnic groupings
Attitude and cultural differences

Technological Changes
Ex. Internet Revolution, 24x7Connectivity, Devices
Creating a positive work environment
 Trends, Challenges and Opportunities in OB
Trends in working arrangements
A newer way to structure your organizations and jobs
Ex. The Virtual corporation, Telecommuting

• Globalization, Economic Pressures

Increased foreign assignments
– Differing needs and aspirations in workforce
Working with people from different cultures
– Domestic motivational techniques and managerial styles may
not work
Overseeing movement of jobs to countries with low-cost labor
 Trends, Challenges and Opportunities in OB
• Corporate Governance and Ethics leadership
Corporate Social Responsibility, New Companies Act, 2013
With effect from April 1, 2014, every company, private limited or
public limited, which either has a net worth of Rs 500 crore or a
turnover of Rs 1,000 crore or net profit of Rs 5 crore, needs to spend
at least 2% of its average net profit for the immediately preceding
three financial years on corporate social responsibility activities.
• The quality revolution: Total quality management and re-engineering
Examples: Dell, GE
• Stimulating Innovation and Change
• Increasing “temporariness” in the workplace
 Some Current Trends in OB

• The Role of Social Media

Facebook, Twitter, LinkedIn, Pinterest, MySpace, and Google+.
Sharing multimedia including Instagram, YouTube, and Flickr.
Includes:
Narratives (i.e., blogs and comments) and
Multimedia (images, videos, and audio recordings)

Social media interactions blur the lines between

personal communication and professional
communication.
 Some Current Trends/Issues in OB

• How do companies handle Social Media?

• Initial reaction: Write off as a fad, Slow acceptance

• Now Used to
– Connect Externally with customers and investors
– Branding, networking, sharing project related information
– Monitoring competition, Recruiting employees
– Connect Internally with employees (Yammer)
 OB Offers Insights Into:
• Improving quality and
productivity
• Customer service and building a
customer-responsive culture
• Developing people skills

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Focus on Quality, Speed, and Flexibility
• Intense competition has given rise to the need for
organizations to improve quality, speed, and
flexibility.
• This requires a high degree of employee
involvement, commitment, and teamwork.
• Organizational behaviour is concerned with
these issues.
 Positive Organizational Behaviour
• Creating a positive work environment can be a
competitive advantage
• Positive Organizational Scholarship (Positive OB):
– Examines how organizations develop human strengths,
foster vitality and resilience, and unlock potential.
– Focus is on employee strengths, not their weaknesses.

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