UNIT-1

Organizational Behavior (OB)

It 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.

SCOPE OF OB:

 The scope of the organizational behavior is as under:

 Impact of personality on performance

 Employee motivation

 Leadership
  How to create effective teams and groups

 Study of different organizational structures

 Individual behavior, attitude and learning

 Perception

 Design and development of effective organization

 Job design

 Impact of culture on organizational behavior

 Management of change

 Management of conflict and stress

 Organizational development

 Organizational culture

 Transactional analysis

 Group behavior, power and politics

 Job design

 Study of emotions

The field of the organizational behavior does not depend upon deductions based on gut feelings
but attempts to gather information regarding an issue in a scientific manner under controlled
conditions. It uses information and interprets the findings so that the behavior of an individual
and group can be canalized as desired.

Large number of psychologists, social scientists and academicians has carried out research on
various issues related to organization behavior. Employee performance and job satisfaction are
determinants of accomplishment of individual and organizational goals.

Organizations have been set up to fulfill needs of the people. In today’s competitive world, the
organizations have to be growth-oriented. This is possible when productivity is ensured with
respect to quantity of product to be produced with zero error quality. Employee absenteeism and
turnover has a negative impact on productivity.

Employee who absents frequently cannot contribute towards productivity and growth of the
organization. In the same manner, employee turnover causes increased cost of production. Job
satisfaction is a major factor to analyze performance of an individual towards his work. Satisfied
workers are productive workers who contribute towards building an appropriate work culture in
an organization.
Organizations are composed of number of individuals working independently or collectively in
teams, and number of such teams makes a department and number of such departments makes an
organization. It is a formal structure and all departments have to function in a coordinated manner
to achieve the organizational objective.

It is therefore important for all employees to possess a positive attitude towards work. They need
to function in congenial atmosphere and accomplish assigned goals. It is also important for
managers to develop an appropriate work culture. Use of authority, delegation of certain powers
to subordinates, division of labor, efficient communication.

Benchmarking, re-engineering, job re-design and empowerment are some of the important factors
so that an organization can function as well-oiled machine. This is not only applicable to
manufacturing organizations but also to service and social organizations.

NATURE OF OB:

Organizational behaviour has emerged as a separate field of study.

The nature it has acquired is identified as follows:

1. A Separate Field of Study and Not a Discipline Only:

By definition, a discipline is an accepted science that is based on a theoretical foundation. But,
O.B. has a multi- interdisciplinary orientation and is, thus, not based on a specific theoretical
background. Therefore, it is better reasonable to call O.B. a separate field of study rather than a
discipline only.

2. An Interdisciplinary Approach:
Organizational behaviour is essentially an interdisci-plinary approach to study human behaviour
at work. It tries to integrate the relevant knowledge drawn from re-lated disciplines like
psychology, sociology and anthro-pology to make them applicable for studying and analysing
organizational behaviour.

3. An Applied Science:
The very nature of O.B. is applied. What O.B. basically does is the application of various
researches to solve the organizational problems related to human behaviour. The basic line of
difference between pure science and O.B. is that while the former concentrates of fundamental
researches, the latter concentrates on applied researches. O.B. involves both applied research and
its application in organizational analysis. Hence, O.B. can be called both science as well as art.

4. A Normative Science:
Organizational Behaviour is a normative science also. While the positive science discusses only
cause effect relationship, O.B. prescribes how the findings of applied researches can be applied to
socially accepted organizational goals. Thus, O.B. deals with what is accepted by individuals and
society engaged in an organization. Yes, it is not that O.B. is not normative at all. In fact, O.B. is
normative as well that is well underscored by the proliferation of management theories.

5. A Humanistic and Optimistic Approach:

Organizational Behaviour applies humanistic approach towards people working in the
organization. It, deals with the thinking and feeling of human beings. O.B. is based on the belief
that people have an innate desire to be independent, creative and productive. It also realizes that
people working in the organization can and will actualise these potentials if they are given proper
conditions and environment. Environment affects performance or workers working in an
organization.

6 A Total System Approach:

The system approach is one that integrates all the variables, affecting organizational functioning.
The systems approach has been developed by the behavioural scientists to analyse human
behaviour in view of his/her socio-psychological framework. Man’s socio- psychological
framework makes man a complex one and the systems approach tries to study his/her complexity
and find solution to it.

Some of the important characteristics of organizational behaviour are discussed as follows:

1. Organizational behaviour is a rational thinking, not an emotional feeling about people. The
major goals of organizational behaviour are to explain and predict human behavioural in
organizations. It is action-oriented and goal-directed.

2. Organizational behavioural seeks to balanced human and technical values at work. It seeks to
achieve productivity by building and maintaining employee’s dignity, growth and satisfaction,
rather than at the expense of these values.

3. Organizational behaviour integrates behavioural sciences. Many of its core concepts are
borrowed from others fields and discipline like social psychology, sociology, and anthropology,
etc.

4. Organizational behaviour is both a science and an art, the knowledge about human behaviour
in organizations leans towards being science. Modern organizational behaviour is, at once,
empirical, interpretative, and critical. It is an interpretative science in the pursuit of knowledge
and meaning.

5. Organizational behaviour exists at multiple like levels. Behaviour occurs at the individual, the
group, and the organizational systems levels. Behaviour that is attributable to each of these levels
can be both identified and isolated but at the same time these three levels interact with each other
and OB-being affected by the behaviour of individuals, group level behaviour is affected by the
organizational level phenomena and so on.

6. Organizational behaviour does not exist in vacuum. Organizations are made up of both social
and technical components and therefore characterized as social-technical systems. The
operational implication of this is that any approach of looking at behaviour must also take into
account the technical component of organization especially such issues as the nature of work and
the technology. Organizations at the same time, must take into account the constructs of the
working environment, for example, the extent to which the market and the product is changing.

Organisational Behaviour – Ethical Perspective on Organisational Behaviour (OB)

Emergence and Ethical Perspective:

Organisational behaviour has emerged gradually, right from inception of social organisation. The
main factor which promoted the growth of OB was understanding the needs and motives of the
people engaged in organisational activities. Individual’s desires and wants were focused on the
activities devoted to obtain material means of satisfaction of his wants.
In this context, one can observe that it has direct link between labour, capital and management.
The fact that needs of the labour force have not been given adequate importance by the
management. The discontent at the work places becomes severe due to bad working conditions,
occupational diseases and the unhealthy atmosphere.

Following points discuss the three levels briefly:

1. Individual Level – Deals with the concepts at the individual level. Examples of individual-
level concepts are perception, personality, learning, motivation, and attitude.

2. Group Level – Deals with the concepts at the group level. Examples of group-level concepts
are team, conflict, leadership, power, and politics. Group-level concepts may include how groups
are formed, how to make effective teams, how individually and collectively the group activities
can be improved, how to motivate employees, and which type of group would be suitable for a
particular assignment.

3. Organizational Level – Deals with the concepts at the organizational level. Examples of
organizational-level concepts are change management and organizational culture. Other topics
discussed at organizational level include the concept of organization, different organizational
models, and organizational change along with its impact and implementation. The working
conditions and stress management are also discussed at the organizational level.

Organisational Behaviour - Roles:

 Understanding Human Behaviour,

 Controlling and Directing Behaviour and
 Organisational Adaptation

1. Understanding Human Behaviour:

Organisational Behaviour provides a way for understanding human behaviour in the organisation.

Organisational Behaviour can be understood at the individual level, interpersonal level, group
level and intergroup level.

(a) Individual Level:

It provides for analysing why and how an individual behaves in a particular way.

Human behaviour is a complex phenom-enon and is affected by a large number of factors:

1. Psychological

2. Social

3. Cultural

Organisational Behaviour integrates these factors to provide simplicity in understanding human

behaviour.
(b) Interpersonal Level:

Interpersonal interaction is normally in peer relationship which represents mans most natural
attempt at socialisation. Two person relationship is inevitable in the organization. Analysis of-

i. Reciprocal relationship

ii. Role analysis and

iii. Transitional Analysis

Are some of the common methods which provide such un-derstanding.

(c) Group Level:

Group pressures become a force in shaping human behav-iour.

Research in group dynamics has contributed vitally to organisational behaviour and shows how a
group behaves in its:

i. Norms

ii. Cohesion

iii. Goals

iv. Procedures

v. Communication pattern

vi. Leadership and

vii. Membership

Understanding group relationships is very important for organisational morale and productivity.

(d) Intergroup Level:

The organisation is made up of many groups that develop a complex of relationships to build its
process and substance.

Intergroup relationship may be in the form of cooperation or competition.

Organisational Behaviour helps in understanding and achieving cooperative group relationships

through:

i. Interaction

ii. Rotation of members among groups

iii. Avoidance of win-lose situation

iv. Focus on total group objectives

2. Controlling and Directing Behaviour:

After understanding the mechanism of human behaviour, managers are required to control and
direct the behaviour so that it conforms to standards required for achieving organisational
objectives.

Organisational Behaviour helps managers in the following areas:

(a) Use of Power and Sanction:

i. Organisational Behaviour can be controlled and directed by the use of power and sanctions
which are formally prescribed by the organisation.

ii. Power is referred to as capacity of an individual to take certain action and may be utilised in
many ways.

iii. Organisational Behaviour explains how various means of power and sanction can be utilised
so that both organisational and individual objectives are achieved simultaneously.

(b) Leadership:

Organisational Behaviour brings new insights and under-standing to the theory of leadership.

It identifies various leadership styles available to a manager and analyses which style is more
appropriate in a given situ-ation.

(c) Communication:

i. It is communication through which people come in con-tact with others.

ii. To achieve organisational effectiveness the communi-cation must be effective.

iii. The communication process and how it works in inter-personal dynamics has been evaluated
by Organisational Behaviour.

(d) Organisational Climate:

i. Organisational climate refers to the total organisational situations affecting human behaviour.
ii. Organisational Behaviour suggests the approach to create organisational climate in totality
rather than merely improving the physiological conditions or in-creasing employees satisfaction
by changing isolated work process.
iii. Organisational Behaviour states that it is very impor-tant to create an atmosphere of effective
supervision, the opportunity for the realisation of personal goals, con-genial relations with others
at the work place and a sense of accomplishment.

3. Organisational Adaptation:
i. Organisations, as dynamic entities, are characterised by pervasive change.
ii. Organisations have to adapt themselves to the environmental changes by making suitable
internal arrangement.

iii. Managers have to face dual problems- Identifying need for change and then implementing the
changes without adversely affecting the need for satisfaction of organisational people.

Organisational behaviour is based mainly on two main principles:

1. Nature of the people, and

2. Nature of the organisation.

1. Nature of the People:

In this, we have to know the:

(i) Individual differences,

(ii) Whole person,

(iii) Caused behaviour, and

(iv) Human dignity.

(i) Individual Differences:

Every individual is different from the other in respect of intelligence, habit, nature, attitude, etc.
This individual difference is the outcome of his psychological aspects. Organisational behaviour
is a part of psychology.

An individual with psychological differences will show the same in his behavioural pattern in an
organisation. Management (Manager) has to behave differently with different persons. This
knowledge is provided to management by the study of OB.

(ii) Whole Person:

An individual is a whole person with physical and psychological aspects. Therefore, we cannot
deal with a person by part. For example, an employee working in an organisation has a lot of
personal problems worrying him. It is not possible for him to perform the work by keeping away
these problems at home and work efficiently with his physical capability alone.

No one can separate the physical and psychological aspects and deal with the individual. Hence,
the knowledge of OB and management has to be integrated and the problem of an individual
probed to find out remedial action to solve it considering the individual as a whole person.
Solving the problem will become quite easy, if the relation between OB and management is well-
understood by the manager.

(iii) Caused Behaviour:

This is a reaction in an individual due to some needs and wants, which he has to satisfy. These
may be financial or non-financial. This caused behaviour has to be regulated by proper
motivation. Hence the management and OB have to work together to understand the exact nature
of the need of an individual to be satisfied and the desired incentive to be provided to the
individual so as to help satisfy his needs.

(iv) Human Dignity:

People in an organisation have some strong beliefs and possess certain value systems of their
own. Let it be a manager or a worker; each possesses the dignity of his position and role in the
organisation. An individual, who possesses a strong value system may not compromise it simply,
as such he has to be given the deserving value and recognition. Related approach of OB and
management will be of great help in such a situation.

2. Nature of Organisation:

Nature of organisation has two aspects:

(i) Social system.

(ii) Mutual interests.

(i) Social System:

Organisational activities are controlled by social and psychological norms. People have
psychological needs and motives, at the same time, they are bound to shoulder social
responsibility, according to their role in the organisation.

The behaviour of people in an organisation is normally governed by the group and by individual’s
desire. One can find the above two types of norms operating. Due to proper interaction of these
norms, organisational activities become cordial and efficient.

(ii) Mutual Interests:

These always bring cooperation and confidence among people. It is the source of sound
organisational behaviour. People and organisation are interdependent like OB and management.
People need organisation for livelihood on the other hand, the organisation needs people for
achieving its goals. So the relation between OB and management can bring all round progress, if
both have amiable relationship between them.

Organisational Behaviour – 5 Key Factors Affecting Organisational Behaviour:

Individual, Group, Organisational Structure, Technology and Business Environment

These factors affect OB in the following manner:

Factor # 1. Individual:
People are valuable resources of every organisation. Individual is the most important component
of OB. In fact, the study of OB revolves around individual, intrapersonal forces, study of
interpersonal forces and study of an individual in an organisational setting.

Every individual differs from other, everyone behaves differently; however, those who behave
same may be placed in one category and study can be made for each category so as to describe,
understand, predict and control their behaviour. The factors which affect the individual also affect
OB. For example, personality, attitude, learning, perception, values, ethics, norms, motivation,
culture, thought process, family background, etc.

Factor # 2. Group:
An organisation is a group of two or more persons, who collectively work for attainment of set
objectives on a continuous basis. An individual behaves differently when he is in group, instead
of that when he is alone. Even the behaviour is different when he is in different groups e.g., when
supervisor is accompanied with subordinates and when he is in company of other supervisors.

Under the study of OB, efforts are made to study conduct of people, when they are in a group.
Therefore, group factors such as communication, group processes, group decision making,
comparative values, cross cultural attitudes, etc., affect OB.

Factor # 3. Organisational Structure/Design:

Organisational structure or design depends on division of work, departmentalisation, hierarchy
and coordination. These factors vary in different organisations. Moreover, power relationships,
extent of decentralisation, reporting methods and work procedures also differ in organisations.

These factors affect the individual and the OB. It becomes easier to get desired behaviour from
employees when organisational design happens to be effective. If employees like the
organisational structure, they are motivated and work happily in the organisation and vice-versa.

Factor # 4. Technology:
The most important thing to achieve organisational goals is performance of assigned jobs by the
employees. If the employees perform their jobs in time, then only organisational goals can be
achieved. The work is performed with the help of technology i.e. with technique and equipment.

If the technology and equipment matches the choice of employees, they will be satisfied and tasks
will be performed efficiently on time and vice versa. Thus, technology and equipment affect the
employees’ behaviour as well as OB.

Factor # 5. Business Environment:

The surroundings of a business in which it operates is called business environment. Business
environment is composed of external and internal factors. External environment can also be
classified as micro environment (which are controllable by firm and vary from industry to
industry) and macro environment (which affects the whole economy).

Organisational Behaviour – Goals

Hence, the following activities may be considered as the goals of OB:

i. Changing the traditional slow organisational practices to modern technology based fast
workplaces.

ii. Empowering employees through training and development to improve their productivity and
quality of work.

iii. The existing practices (traditional) cannot make workers to be dynamic and adopt new
practices. The goal of OB is to make employees to behave rationally through behaviour modeling
and be dynamic and visionaries. They should be prompted to analyse the changes taking place in
the organisation and draw logical inferences through reasoning.

iv. Traditional managers are “command and control” type of people. The goal of OB is to convert
these type of people. The goal of OB is to convert these managers into stable leaders who work as
team members along with their subordinates. Although hierarchy of positions exist, it should not
be exhibited.

v. Many decision-makers, many a time, work on their instructions. But instructions do not work
always. Therefore, the goal of OB is to make these people to take decisions after studying the
problems in a systematic way.

vi. As technology is ruling the business world today, it has made 24 x 7 global business
environment more sophisticated. Hence, one of the OB goals is to design and develop fast work
practices adopting technology to increase speed and efficiency of work. This leads to increased
productivity of both the work force and the organisation. The digital divide (separation of tech-
savvy and non tech- savvy people) has to be minimized or eradicated by investing on human
capital.

vii. Today’s workforce comprises of more knowledge workers. Hence the organisations have to
work on emotional aspects of workers which develops the creativity, innovation and enterprising
spirit of each individual workers leading to better behaviour.

viii. The most important goal of OB is to induce workers to be ethical in their operations and in
discharging assigned tasks.

Thus, the overall objective of OB is to improve the skills of the people working in an
organisations in terms of changing individual behaviour and group behaviour so that organisation
becomes successful. The main goal is to make the organisation a learning organisation.

Organisational Behaviour – Processes to Modify and Integrate Organisational Behaviour

There are four major processes which can modify and integrate organisational behaviour, i.e.,
attitudes and behaviours of individuals and groups in an organisation:

(1) Managerial Style.

(2) Positive Behaviour Reinforcement.

(3) Job Enrichment, and

(4) Organisational Development.

Process # 1. Managerial Style:

Under Theory X and Theory Y as pointed out by McGregor, we have almost diametrically
oppo-site assumptions about organisational behaviour. Managerial leadership style indicates the
overall pattern of manager’s be­haviour while trying to fulfil managerial responsibilities. It also
suggests the manner in which the superior-subordinate relation-ship is carried out. Leadership
style influences productivity and employee satisfaction.
It may give special emphasis either on production or on employee satisfaction. Occasionally,
manage-rial style may give equal emphasis to both and try to achieve high production as well as
high employee satisfaction. Produc-tion-centred approach increases productivity at the expense of
the human organisation.

Process # 2. Positive Behaviour Reinforcement:

Management re-wards constructive behaviour and tries to eliminate undesirable employee
behaviour and activities. Rewards reinforce positive behaviour because people tend to repeat
pleasurable (reward-ing) actions. Performance feedback itself can be a reward be-cause it satisfies
a human need of knowing how one is doing and where one stands.

Employee behaviour which leads to failure will be corrected. Successful behaviours are rewarded.
Thus organisational behaviour can be modified by a planned programme of positive behaviour
reinforcement through re-ward systems.

Process # 3. Job Enrichment:

A better job can often create better attitudes and greater willingness to cooperate and perform
duties with enthusiasm and zeal. A better job can also offer greater employee satisfaction and
provide ample opportunity for growth.

A job must be challenging and meaningful, job enlargement and enrichment can create most
favourable employee behaviour and action which can also integrate the objectives of individuals
and the organisation. Job enrichment provides duties which are meaningful, enjoyable and
satisfying.

Process # 4. Organisational Development:

A fourth method for modifying and integrating organisational behaviour is organisational
development. In its complete sense organisational development (OD) allows for the humanisation
of the formal organisation by minimising the obstacles to organisational effectiveness, setting
members work on the problems identified, and giving feedback on the development of skills
found necessary or important- all under the guidance of a trained behavioural scientist.

Therefore, the vital role played by OB can be discussed as follows:

1. Attaining Organizational Effectiveness:

Refers to a process that acts as an indicator or a scorecard for an organization’s performance. The
analysis of performance can be done from individual and organizational perspectives.

2. Sustaining Changes in Business Environment:

Refers to the need of an organization to accept the changes occurring in the business
environment. The dynamic external environment increases the importance of OB as a field of
study, because it affects the internal environment as well, thus, forcing an organization to accept
changes as survival strategy.

3. Balancing Increase in Capitalism:

Refers to the economic system that is represented by private ownership of capital and means of
production. The features of capitalism make the study of OB very important because of
increasing monopolists and capital-intensive industries.
4. Surviving Intense Competition:

Requires great efforts on part of an organization. You should note that an organization can face
fierce competition by adopting various policies, such as capturing market share and developing
human resource. The study of OB helps the organization to develop the human resource by
molding their behavior for the benefits of organization.

5. Managing Global Influences:

Refers to controlling the effects of privatization, liberalization, and globalization on

organizations. Global influences make the workforce of an organization more diverse in nature,
thus makes the study of OB more important.

6. Fulfilling Human Needs:

Refers to managing and enhancing the skills of employees.

For developing these skills, a manager must be capable of:

i. Understanding human aspirations

ii. Building coordination among employees

iii. Imparting timely training to employees

iv. Motivating them so that they willingly utilize their abilities towards attainment of
organizational goals

v. Communicating the goals successfully to employees so that they would know what is expected
of them

vi. Introducing new and innovative ideas

Employees also expect the organization to understand their needs and provide them with right
impetus to grow both financially and professionally. Thus, knowledge of OB helps the
management to understand and fulfill these needs of employees.

7. Managing the Complexity in the Structure of Organizations:

Refers to controlling the complexity that may arise in the organizational structure due to dynamic
business environment. As an organization grows, its structure becomes complex because its
command chain expands, the scope of authority becomes multifaceted, and the responsibilities of
employees keep changing.

8. Managing the Presence of Labour Unions:

Refers to monitoring and controlling the activities of labour unions. These unions persuade the
management of an organization to give importance to human relations. Therefore, organizations
lay emphasis on the study of OB to take care of human aspects.
Organisational Behaviour – Importance of Organisational Behaviour

Let us look at some of them:

1. Creates Sustainable Competitive Advantage:

Everyone knows that the voice of Lata Mangeshkar is very melodious. It is valuable, rare and
difficult to imitate. Hence, she has been having little or no competition for long and no one could
substitute her. This analogy explains sustainable competitive advantage. Resource-based view of
firms asserts that competitive advantage is created through valuable, rare, inimitable, and non-
substitutable resources.

OB converts people in an organisation into valuable, rare, inimitable, and non-substitutable

through various OB practices aligned to achieve goals. For example, OB can create a culture of
innovation, performance, knowledge sharing, and trust through a combination of individual
development, team design, and leadership development.

2. Individual Component:
Rajiv is not able to get results in sales and finds the job very stressful. His boss suspects his
introvert nature. If we had a psychometric test before selecting him for the job, this situation
could have been avoided. If we erred in selection, we can still confirm his personality trait and
shift him to another job profile where he can succeed. A third alternative is to train him to change
his behaviour.

This illustrates that OB is important to accomplish the following:

i. Identify the underlying reasons for poor or non-performance and enable change.

ii. Help a person to modify his/her behaviour to achieve full potential by identifying what
motivates a person, how the person can learn and be more creative, and manage stress. In other
words, OB can facilitate tak-ing a whole gamut of actions required for the person to contribute to
competitiveness.

3. Group/Team Component:
A company had created two teams simultaneously to develop a new product. The Vice-President,
product development, had done so to create internal competition and speed up the product
development to beat the competition.

After three months, Team A’ had made no progress, but Team ‘B’ was on the verge of testing the
first prototype. Both teams were full of bright people. Hence, the Vice-President won-dered what
had happened to Team A’. After some deliberation, one Ms Shami Jain was transferred from
Team ‘B’ to Team A’.

She realised that Team A’ had far better ideas, but was unable to take a decision. She championed
one of the ideas, and within a month, Team A’ came out with a prototype, which was later
adopted by the company. What did the Vice-President do? She used her knowledge of Team
Wheel from OB and transferred a person who could get Team A’ to decide. This illustrates the
importance of OB in designing effective teams.

4. Organisational Component:
OB helps in designing, structuring, and changing culture to create a learning and innovative
organisation. It suggests ways to implant an organisational subculture within the overall culture.
5. Leadership Component:
Kasper Rorsted is known for transforming Henkel. Armed with the knowledge of OB, he
reinvented the culture of Henkel into a ‘winning culture’. His leadership style, knowledge of the
leadership style of his team, and understanding of the methods to change the behaviour of people
helped him create the winning culture. Leading organisations through crisis and creating
transformation are strong contributions of OB.

6. External Forces Component:

Southwest Airline, the pioneer of the low cost airlines in the US, is widely known for its
innovative and fun loving working environment. In fact, having a fun loving nature was the first
requirement to get a job in the company.

Organisational Behaviour – Challenges Faced by Organizational Behaviour:

Following points discuss these issues briefly:

1. Globalization:
Implies that no organization can work effectively in isolation and has to comply with the global
factors that have an impact on it. Globalization poses numerous challenges in front of an
organization. At the individual level, an employee may require to work on foreign assignments or
collaborate with people from different cultures.

At the group level, problems may arise in decision-making procedures and while working in
teams that include people of different cultural backgrounds. At the organizational level, problems
may arise in case of mergers or acquisitions due to vast cultural differences.

2. Management of Workforce Diversity:

Refers to the need of numerous conflict resolution techniques and problem- solving approaches to
deal with diverse workforce. It is difficult to manage the employees belonging to different
cultural backgrounds, due to differences in their values, beliefs, attitudes, and behaviors. A proper
management of workforce diversity can have numerous positive results, such as the availability of
fresh ideas and talents.

3. Improvement in Quality and Productivity:

Refers to matching the desired levels of quality and productivity with the ever-changing demands.
Management guru Tom Peter says, “Almost all quality improvement comes via simplification of
design, manufacturing, layout, processes, and procedures.” Now-a-days, a number of programs,
such as process reengineering and quality management are being implemented to bring
improvement in productivity.

4. Improvement in People Skills:

Implies that it is the necessity of time to improve and upgrade the skills of employees from time
to time. The change in business, political, and technological environment makes it important to
train and develop the employees according to new trends. The technical and interpersonal skills
of employees need constant improvement.
5. Incorporation of Innovation:
Implies that it is necessary to incorporate change in rules, regulations, processes and procedures
of an organization to suit the current standards. It is easy to formulate the strategies for change in
an organization, but difficult to implement it due to the employee resistance. If the resistance of
employees is overcome then the positive changes can be brought in the organization to enhance
the productivity level.

6. Incorporation of Work-Life Balance:

Indicates that the demanding work schedules and challenging jobs tend to upset the personal and
social life of employees at times. Work-life balance can be achieved by implementing the
concepts, such as work from home and flexible work-timings.

IMPACT of IT :
Organizational behaviour helps us to develop an understanding of the attitude and performance of
employees and the organization as a whole. There are a variety of factors that can influence
organizational behaviour, including the company culture, policies, and structure. These aspects
can have an impact on employee's productivity and their commitment to the organization.

The Impact on Employee Performance:

External or internal locus of control plays a very important role for people to sustain usefulness
and learning performance. The experiences and knowledge gained by an individual through
organizational learning are crucial in increasing the performance of that individual. It is,
therefore, necessary for businesses to fulfill learning in an arrangement and use it to improve
employee performance

Globalisation:
Organization behavior is a subject that analyzes the behavior of people in group and attempt to
create efficient and effective business environment.

Globalization is the process that improves the interaction through integration of society, culture,
politics and business across the world. Globalization is the integration of any market with the
global economy.

In short, Globalization refers to the complex economic networks of international competition,

resource suppliers, and product markets.

Before the globalization national borders were perfectly insulated and businesses were free from
any foreign competition. Today world is a global village where multinationals are spreading their
business across the world. At the same time large pool of workforce are chasing down job
opportunities across national borders.

As globalization has fostered the thought of multiculturalism, the relationship between culture
and organizational behavior has become increasingly valued.

Today organizations become more global; workforce of an organization made up of people

belongs to different nation and different culture. This diversity in workforce has created a large
shift in organization behavior. Global organizations bring diverse people together. These diverse
persons have different values, beliefs, and ethics. Besides, there are gender, age, race, ethnicity
differences among them. Management of diverse people gives new roles to the leaders in the
organizations.

Cultural diversity is geared toward having a deep respect and understanding of the various people
in the organization. This aspect of the organization is strengthened by having feedback,
teamwork, team-building activities and interpersonal communication. During such engagements,
individuals are able to interact and appreciate each other’s culture; consequently, an
accommodating culture and organizational behavior is established within the organization.

Diversity in Organisation behaviour :

1.Innovation
It is widely noted that diverse teams lead to more innovative and effective ideas and
implementation. The logic behind this is relatively simple. Innovative thinking inherently requires
individuals to go outside of the normal paradigms of operation, utilizing diverse perspectives to
craft new and unique conclusions. A group of similar individuals with similar skills are much less
likely to stumble across a series of new ideas that may lead to innovative progress. Indeed,
similarity breeds groupthink, which diminishes creativity.

2.Localization
Some theorize that, in a global marketplace, a company that employs a diverse workforce is better
able to understand the demographics of the global consumer-marketplace it serves, and is
therefore better equipped to thrive in that marketplace than a company that has a more limited
range of employee demographics. With the emerging markets across the globe demonstrating
substantial GDP and market growth, organizations need local talent to enter the marketplace and
communicate effectively. Individuals from a certain region will have a deep awareness of the
needs in that region, as well as a similar culture, enabling them to add considerable value to the
organizational development of strategy.

3.Adaptability
Finally, organizations must be technologically and culturally adaptable in the modern economy.
This is crucial to reacting to competitive dynamics quickly and staying ahead of industry trends.
Diversity enables unique thinking and improved decision making through a deeper and more
comprehensive worldview. Diversity also enables hiring of various individuals with diverse skill
sets, creating a larger talent pool. The value of this, particularly at the managerial level, is
enormous. Staying quick on one’s feet (as an organization, that is) by leveraging the strength of
diversity is critical to capturing opportunities and dodging external threats.

4.Mismanaging Diversity
While diversity has clear benefits from an organizational perspective, the threat in diversity
comes from mismanagement. Due to the legal framework surrounding diversity in the workplace,
the underlying threat to mismanaging diversity arises through neglect of relevant rules and
regulations. Equity of pay for all employees, as well as ethical hiring practices that do not give
preference one candidate over another for discriminatory reasons, are absolutely essential for
managers and human resource professionals to understand.

Reward Systems IN OB:

Reward systems in organizations are used for a variety of reasons. It is generally agreed that
reward systems influence the following:
(A)Job effort and performance Following expectancy theory, employees’ effort and
performance would be expected to increase when they felt that rewards were contingent upon
good performance. Hence, reward systems serve a very basic motivational function.
(B)Attendance and retention Reward systems have also been shown to influence an employee’s
decision to come to work or to remain with the organization. This was discussed in the previous
chapter.
(C)Employee commitment to the organization It has been found that reward systems in no
small way influence employee commitment to the organization, primarily through the exchange
process.

1.Organizational Culture
Organizational culture consists of values and motives that contribute to the environment within an
organization. It influences the way people work and interact with each other. Employees become
more responsible when they feel respected and become an integral part of the team.

2.Incentive System
Employees tend to feel more motivated when there is a solid reward system. Once this effective
system is established, it is necessary to reward employees who perform well. They should be
consistently applied within the company.

3.Decision Making
Organizational behavior changes the way people make decisions. Businesses that are able to
encourage risks in decision making within the company culture can enhance innovation and
creativity. Effective communication allows managers and employees to understand the business
context and provides the opportunity for employees to get involved.
It is essential to focus on the types of organizational behaviour that you would like to modify or
maintain. Eliminating the negative elements that slow down employee productivity can generate a
more efficient and positive organizational culture.

Multi cultural Team:

Multicultural team can provide strategic advancement for an organization. However some
researchers argued that transnational team (cultural difference, electronic communication, lack of
monitoring etc.) reduces the salience of team identity which leads to team-withholding behaviour.

Organizational behaviour theories and concepts

There are several crucial reasons why companies should utilize the concepts and theories of OB,
as well as understand the key terms that are associated with organizational behaviour. One of the
most important and broad-based challenges facing organizations today is adapting to diverse
work environments. Organizations are becoming more heterogeneous in terms of gender, race,
and ethnicity. For example, several key terms that must also be understood organizational culture,
diversity, communication, organizational effectiveness and efficiency, organizational learning.
Attitudes
Attitudes are evaluative statements either favourable or unfavourable concerning objects, people,
or events. They reflect how an individual feels about something. When a person says, “I like my
job,” he or she is expressing an attitude about work.
The Theory of Cognitive Dissonance: Cognitive dissonance theory sought to explain the
relationship between attitudes and behaviour. Cognitive dissonance is any incompatibility or
inconsistency between attitudes or between behaviour and attitudes. The theory argued that any
form of inconsistency is uncomfortable and that individuals will try to reduce the dissonance and,
thus, the discomfort. In other words, individuals seek stability with a minimum of dissonance.
Personality
There are dozens of personality traits could use; for instance, aggressive, shy, ambitious, loyal,
and lazy.
The Big Five Model of Personality Dimensions are

1.Extraversion: The degree to which someone is sociable, talkative, and assertive.

2.Agreeableness: The degree to which someone is good-natured, cooperative, and trusting.

3.Conscientiousness: The degree to which someone is responsible, dependable, persistent, and

achievement oriented.

4.Emotional stability: The degree to which someone is calm, enthusiastic, and secure (positive)
or tense, nervous, depressed, and insecure (negative).

5.Openness to experience: The degree to which someone is imaginative, artistically sensitive,

and intellectual

Perception
Perception involves the way we view the world around us. It adds meaning to information
gathered via the five senses of touch, smell, hearing, vision and taste. Perception is the primary
vehicle through which we come to understand our surroundings and ourselves. Perception can be
defined as a process by which individuals organize and interpret their sensory impressions in
order to give meaning to their environment.

Why is perception important in the study of OB? Simply because people's behaviour is based on
their perception of what reality is, not on reality itself. Virtually all management activities rely on
perception. In appraising performance, managers use their perceptions of an employee's
behaviour as a basis for evaluation. One work situation that highlights the importance of
perception is the selection interview. Perception is also culturally determined. Based on our
cultural backgrounds, we tend to perceive things in certain ways.

Thus, perception is the primary vehicle through which we come to understand our surroundings
and ourselves. Social perception is the process of interpreting information about another person.
Social perception is directly concerned with how one individual perceives other individuals.
Formal organization participants constantly perceive one another. Managers are perceiving

Attribution
Attribution simply refers to how a person explains the cause of another's or his or her own
behaviour. Attribution thus is the most relevant application of perception concepts to organization
behaviour – the issue of person perception.

The attributions or inferred causes we provide for behaviour have important implications in
organizations. In explaining the causes of employee performance, good or bad, we are asked to
explain the behaviour that was the basis for the performance.

Our perceptions of people differ from our perceptions of inanimate objects like machines or
buildings. Non-living objects are subject to the laws of nature; they have no beliefs, motives or
intentions. People do. The result is that when we observe people, we attempt to develop
explanations of why they behave in certain ways.
Nature of Perception:
“Perception refers to the interpretation of sensory data. In other words, sensation involves
detecting the presence of a stimulus whereas perception involves understanding what the stimulus
means. For example, when we see something, the visual stimulus is the light energy reflected
from the external world and the eye becomes the sensor. This visual image of the external thing
becomes perception when it is interpreted in the visual cortex of the brain. Thus, visual
perception refers to interpreting the image of the external world projected on the retina of the eye
and constructing a model of the three dimensional world.”

Perception is determined by both physiological and psychological characteristics of the human

being whereas sensation is conceived with only the physiological features.

Perception is a subjective process, therefore, different people may perceive the same environment
differently based on what particular aspects of the situation they choose to selectively absorb,
how they organize this information and the manner in which they interpret it to obtain a grasp of
the situation.

Importance of Perception:
(i) Perception is very important in understanding the human behaviour, because every person
perceives the world and approaches the life problems differently- Whatever we see or feel is not
necessarily the same as it really is. It is because what we hear is not what is really said, but what
we perceive as being said. When we buy something, it is not because it is the best, but because we
take it to be the best. Thus, it is because of perception, we can find out why one individual finds a
job satisfying while another one may not be satisfied with it.

(ii) If people behave on the basis of their perception, we can predict their behaviour in the
changed circumstances by understanding their present perception of the environment. One person
may be viewing the facts in one way which may be different from the facts as seen by another
viewer.
(iii) With the help of perception, the needs of various people can be determined, because people’s
perception is influenced by their needs. Like the mirrors at an amusement park, they distort the
world in relation to their tensions.
(iv) Perception is very important for the manager who wants to avoid making errors when dealing
with people and events in the work setting. This problem is made more complicated by the fact
that different people perceive the same situation differently. In order to deal with the subordinates
effectively, the managers must understand their perceptions properly.

Perceptual Selectivity
There are various factors influencing it. For the convenience of study they can be divided into the
following two categories:
(A)External Factors

These factors are related to the external environment or stimuli. These factors are in
reality the characteristics of the stimuli. It is only these characteristics of the stimuli that
attract a person and he selects them, otherwise he overlooks them. The following are the
chief external factors that influence perceptual selectivity:

(1)Size: Size means the big or small size of the stimuli. Generally, it has been observed
that stimuli which have a large size attract people quickly. There is a greater possibility of
the perception of such stimuli being selected. For example, when we read a book, it has
two types of written words, e.g., headings which are printed in big letters while their
explanation is written in small letters. The moment we open a book our attention
immediately goes towards the headings and not the explanation that follows them. In the
context of business we find big sized advertisement attracting people quicker than the
small-sized advertisement.

(2) Intensity: Intensity means that some stimuli are brighter, louder, stronger in odour
and more colourful than the others. Somebody gets attracted to a loud sound than a lower
sound. Similarly brighter stimuli attract people more. For example, bright packing in
business, loud advertisement, loud speaking by a supervisor- all these things are done so
that the people get attracted to them.

(3) Repetition: Repetition factor indicates that the repetition of a stimuli has a particular
attraction. It is on the basis of this principle that the businessmen display the
advertisement of their products repeatedly. When a particular stimulus repeatedly
appears before us, it is natural that we start taking interest in it. A person desirous of
getting a job meets the personnel manager time and again.In this case we find this factor
of repetition at work.

(4) Motion: This factor tells us that people get attracted more to the moving stimuli
instead of The fixed stimuli. That is why there is a greater possibility of perception about
the moving stimuli and their selection. We usually find flashing neon sign boards
displayed in the market, at the cross-roads, etc. The advertising material remains in
motion in these advertisements. People moving about during the night get attracted
towards them. This is an attractive medium of advertisement.

(5) Contrast: Contrast means when a stimulus in its own group appears to be different.
Every stimulus is looked at in the context of its background. Here background means the
group of which the stimulus happens to be a part. If a member of a group appears to be
different from the other members, the perceiver will be attracted towards it.

For example, in the following two diagrams, the squares given in the centre are of the
same size but when we look at the central square in Fig. A it looks a little small and when
the same square in the Fig. B is looked at, it appears big. Therefore, it is clear that a
stimulus (object, event or person) appears different in a different background. The use of
background is made in order to make a stimulus attractive for the people.

(6) Novelty and Familiarity: The factor of novelty and familiarity plays an important
role in the selection of stimuli. Novelty means the presence of new stimuli in the existing
environment. For example, if a foreign lecturer is appointed to teach Management
Concept and Organisational Behaviour in a class, he will attract students’ attention
towards him. This is an example of creating novelty in an old environment in order to
attract the attention of the perceivers.

(B) Internal Factors of Perceptual Selectivity

The following are the internal factors influencing the perceptual selectivity:

(1) Self-Concept: Self-concept of a person is the chief internal factor of perceptual

selectivity Self-concept means as to what extent we know ourselves and how confident
we are for ourselves. The of a person helps in formulating his concept about the stimuli.
For example, if a person self-concept doubts his ability, he will fear the stimuli (his outer
world). On the contrary, if he is confident about his self, he will accept the stimuli
happily. In other words, the more we understand ourselves, the more easily we
understand others. Therefore, correct self-concept influences accurate perception.

(2) Belief: A person’s belief in external environment/stimuli helps him in the selection of
the stimuli. A person thinks about a stimulus as per his belief in it and not what it actually
is. In other words, a person accepts facts after duly censoring them so that his present
belief in them remains intact.

(3) Needs: The selection of the stimuli available in the environment is influenced by our
needs. If a person wishes to attain some particular achievement he will get attracted
towards only those stimuli which fulfill his wish. Similarly, if a person wishes an increase
in his affiliation he will get attracted towards only those stimuli which help him in
satisfying his wish for greater affiliation.

(4) Expectation: We have an expectation of a particular behaviour from everybody. We

select them on the basis of our expectation (or the behaviour expected out of them). For
example, if we expect the use of a rough/foul language by a particular section of people,
our relationship with them will depend on that very expectation. Our expectation can be
fully wrong or absolutely right. Expectation can also undergo a change.

(5) Response Disposition: Response disposition means that a person gets attracted
towards a known rather than an unknown object/person. A person gets attracted quickly
towards things which he already knows, while he ignores other things about which he
knows nothing. For example, there are two lectures going on before a religious man.
In one of the lectures religion is being taught while the second lecture is about the
economic condition of the country, it is undoubted that the person will feel interested
only in the religions discourse because he is familiar with the vocabulary of the discourse
and he will easily understand everything. This happens only because of individual’s
response disposition.

(6) Interest: Selection of stimuli available in the environment is influenced by the

interest of the perceiver. For example, a plastic surgeon and not a lecturer, will get
attracted towards an individual having an unusual nose.

(7) Learning: Some learned experience influences the perception of an individual. On

the basis of learned experience whatever a person expects to see or hear, he sees or hears
the same. Look carefully and understand the given diagram. We will read the sentence
written in the triangle as Turn off the switch’ in the first instance while there is an extra
The’ in the sentence. This happens only because we usually make use of the sentence
Turn off the Switch. It means that we know it from our previous experience.

Social perception

Social perception (or person perception) Social perception refers to identifying and
utilizing social cues to make judgments about social roles, rules, relationships, context, or
the characteristics (e.g., trustworthiness) of others. This domain also includes social
knowledge, which refers to one’s knowledge of social roles, norms, and schemas
surrounding social situations and interactions.
There are four main components of social perception: observation, attribution,
integration, and confirmation.
Observations - serve as the raw data of social perception—an interplay of three sources:
persons, situations, and behavior. These sources are used as evidence in supporting a
person's impression or inference about others. Another important factor to understand
when talking about social perception is attribution.
Attribution - is expressing an individual's personality as the source or cause of their
behavior during an event or situation.
integration - To fully understand the impact of personal or situational attributions, social
perceivers must integrate all available information into a unified impression.
confirmation - All of this combined determines how people attribute certain traits and
how those traits are interpreted.
Attribution Errors :

The fundamental attribution error is our tendency to explain someone's behavior based on
internal factors, such as personality or disposition, and to underestimate the influence that
external factors, such as situational influences, have on another person's behavior.

The fundamental attribution error is our tendency to explain the behavior of others based
on character or disposition. This is particularly true when the behavior is negative.
Explaining Our Own Behavior:
When it comes to explaining our own behavior, we're more likely to do just the opposite.
In other words, we have a tendency to explain our own behavior in terms of external,
situational influences. Why? One reason is that we are familiar with our circumstances. If
we are laid off from our job and become homeless, we know that the poverty we find
ourselves in is not the result our character, but the result of our circumstance. When we
see another person homeless, we see only the end result, and we make an assumption
about what led to it.

For example, in one study when something bad happened to someone else, subjects
blamed that person’s behavior or personality 65% of the time. But, when something bad
happened to the subjects, they blamed themselves only 44% of the time, blaming the
situation they were in much more often.

So, the fundamental attribution error explains why we often judge others harshly while
letting ourselves off the hook at the same time by rationalizing our own unethical
behavior.

FAE meaning :
***The fundamental attribution error is the tendency people have to overemphasize
personal characteristics and ignore situational factors in judging others’ behavior.
--Because of the fundamental attribution error, we tend to believe that others do bad
things because they are bad people. We’re inclined to ignore situational factors that might
have played a role.

WHAT IS THE FUNDAMENTAL ATTRIBUTION ERROR?

The fundamental attribution error refers to an individual's tendency to attribute another's
actions to their character or personality, while attributing their behavior to external
situational factors outside of their control. In other words, you tend to cut yourself a
break while holding others 100 percent accountable for their actions.

The fundamental attribution error exists because of how people perceive the world. While
you have at least some idea of your character, motivations, and situational factors that
affect your day-to-day, you rarely know everything that's going on with someone else.
Similar to confirmation and overconfidence biases, its impact on business and life can be
reduced by taking several measures.

FUNDAMENTAL ATTRIBUTION ERROR EXAMPLE

It's clear to see how the fundamental attribution error (FAE) can impact your personal
life, but it's important to recognize the influence it can have on your work, as well.
Whether you're an employee or manager, cognitive biases, like the FAE, can play a role
in how you interact with others in the workplace and how you make key business
decisions.
Attribute error example :

For example, think back to the "lazy employee." Since she was late to an important
meeting, you might be inclined to form a judgement of her character based on this one
action alone. It's possible, however, that her behavior is due to several external, rather
than internal, factors. For instance, any number of situational factors could have caused
her to run behind schedule, such as a family emergency or traffic jam, which have
nothing to do with the quality of her character.

In action, forming impressions of a person's character based on limited information can

have long-lasting effects. Now that you perceive this person as "lazy," your opinions of
her may begin to shift over time. Unless the opportunity arises for you to get to know
your employee better, you may always view her in a negative light.

FAE is impossible to overcome completely. But with a combination of awareness and a

few small tools and tactics, you can be more gracious and empathic with your co-
workers. In fact, being able to acknowledge cognitive biases like FAE and make the
conscious effort to limit their effects is an essential component of becoming a better
manager.

Attribution Theory

The Figure 10.2 below summarizes the key elements in attribution theory.
 Attribution theory has been proposed to develop explanations of the ways in which we
judge people differently, depending on what meaning we attribute to a given behaviour.
Attribution is a perceptual process. The way we explain success of failure – whether our
own or that of another person – affects our feelings and our subsequent behaviour. Harold
Kelley extended attribution theory by trying to identify the antecedents of internal and
external attributions. Kelley proposed that individuals make attributions based on
information gathered in the form of three informational cues:

1. Consensus: Consensus is the extent to which peers in the same situation behave the
same way. In other words, if everyone who is faced with a similar situation responds in
the same way, we can say the behaviour shows consensus. If everybody in the same
circumstance behaves in the same way, you would be given an external attribution,
whereas if a single employee behaves in a particular way, your conclusion would be
internal.
2. Distinctiveness: Distinctiveness is the degree to which the person behaves the same
way in other situations. What we want to know is, if this behaviour is unusual or not. If it
is, the observer is likely to give the behaviour an external attribution. If this action is not
unusual, it will probably be judged as internal.
3. Consistency: Consistency refers to the frequency of a particular behaviour over time.
An observer looks for consistency in a person's action. The more consistent the
behaviour, the more the observer is inclined to attribute it to internal causes.
Consensus, distinctiveness and consistency are the cues used to determine whether the
cause of behaviour is internal or external. The process of determinating the cause of
behaviour may not be simple and clear-cut, because of some biases that occur in forming
attributions.

Organizational Behavior as a Function of the Locus of Control:

The theory of locus of control came from research and observation in clinical psychology. Both
the theory and the measurement have been refined to the extent that the concept is heuristically
important. Numerous studies of the locus of control have been related to motivational, attitudinal
and behavioral variables in the setting of organizations.

Impression management :
Impression management is a conscious or subconscious process in which people attempt to
influence the perceptions of other people about a person, object or event by regulating and
controlling information in social interaction.

An example of impression management theory in play is in sports such as soccer. At an important

game, a player would want to showcase themselves in the best light possible, because there are
college recruiters watching. This person would have the flashiest pair of cleats and try and
perform their best to show off their skills. Their main goal may be to impress the college
recruiters in a way that maximizes their chances of being chosen for a college team rather than
winning the game.
WHAT IS IMPRESSION MANAGEMENT?

impression management in organizations as behaviors that employees (commonly referred to as

actors) use to shape how they are seen by others (commonly referred to as targets—who are
typically supervisors and coworkers, but sometimes subordinates and customers) at work

WHAT IMPRESSION MANAGEMENT BEHAVIORS HAVE BEEN IDENTIFIED?

Identified five tactics of impression management that are associated with specific desired images.
Specifically,

1.ingratiation (e.g., favors, opinion conformity) is used to be seen as likeable.

2.self-promotion (e.g., boasting, taking credit) is used to be seen as competent.

3.exemplification (e.g., staying late at work, appearing busy) is used to be seen as dedicated.

4.intimidation (e.g., making threats) is used to be seen as menacing, and

5.supplication (e.g., playing dumb) is used to be seen as needy. Interestingly, each of these
desired images is associated with an undesired image; thus, impression management can backfire,
and people who seek to be seen as likeable, competent, dedicated, threatening, or needy, self-
righteous, respectively.