Organizational

Behavior
Module-1
 What is OB?

Organization behavior is the study of human behavior in

organizational settings, the interface between human
behavior and organization, and the organization itself.

According to Luthans, Organizational behavior can be

defined as the understanding, prediction, and management
of the human behavior that affects the performance of the
organization.
 LEVELS OF STUDY OF OB
There are three levels of study of OB:

 Individuals in Organizations (MICRO LEVEL))

 Work Groups (MESO- LEVEL)
 How Organizations Behave (MACRO-LEVEL)
 Why study Organizational Behavior?

1) Understanding self and others

 Individual Behavior
 Group Behavior
2) Motivation of Human Resources
3) Improvement of Quality and Productivity
4) Effective Organizational Climate
5) Good Human Relations
Historical/Evolution Of OB

 In the nineteenth century, very few organizations were present,

Hence the development of management as a scientific field was
quite Late. However, management is equally important to both
Small and large organizations.
 The people who are who initially started taking interest in
analyzing organizations were economists.
 The main objective of OB is to help present and prospective managers
In making advancements towards the new concept like technology,
Globalization e.t.c.
 Historical/Evolution of OB
Various phases involved in the Historical development of organizational Behavior:
Industrial Revolution

Scientific Management F.W Taylor

Human Relations Movements 1)Great depression

2) Labour movement

Organizational Behavior Fred Luthans

 Industrial Revolution

 Industrial revolution resulted in many behavior phenomena

like discipline, impersonality, working correlation e.t.c
 Robert Owen, a youthful factory owner, around the year
1800, was the first person who focussed on the personal needs of
employees. He rejected to employ young children. He taught
his workers the importance of sanitation, self-control and
enhanced their employment conditions.
 At the same time, J.N. Tata started giving attention to the well-being of
workers. Therefore, he installed fire extinguishers and humidifiers for
the first time in his factories. He initiated a pension fund in 1886 and
started to pay compensation for accidents in 1895
 Viewpoints of Owen and Tata were either slowly accepted or rejected.
They often focused on a do-good-approach rather than truly determining
 Scientific management
 F.W. Taylor as a scientist made several researches regarding
how people can be effectively utilized. He observed during
his research that the main reason of ineffectiveness and wastage
in factories was that both workers and managers were not aware
about scientific methods. Hence, he developed a theory known
as 'Scientific Management', in which he propagated that the
efficiency can be enhanced by analysis, inquiry and measurement.
The following principles are given by Taylor:
 Replacing Rule of thumb with science
 Co-operation between management and workers
 Maximum output in place of restricted output
 Development of workers through scientific selection and training
 Human Relations Movements(ELTON MAYO)

Human relations movement emerged due to the failure

of the scientific management theory. It gives great
importance to assistance, and morale of the employees.
These movements emphasised that employees should not
be considered as machines rather they should be treated
as human beings. Proper attention should be given to
needs and problems of employees, and they should be
involved in decision-making matters concerned with working
conditions. Great Depression and the Labour movement are
some Major contributors of the human relations movement
Great Depression

 Great Depression originated from the stock exchange crash which occurred in 1929 in US.
The outcomes of the depression were huge unemployment, decrease of purchasing power,
disintegration of markets, and decline in living standard of people. This phenomenon was
not only limited to America but was prevalent worldwide.

 One benefit of 'Great Depression' was that the management started to recognise that apart
from production, other functions like marketing, finance and personnel were necessary for
a company's growth and existence. Great Depression presented various human problems
that managers needed to identify and handle.
Labour Movement

 Ongoing exploitation of workers has made them realize that they need to raise their voices
in order to survive. Hence, they created strong unions. This had a positive impact on
management. Management started to give major focus on relationships of employees and
minor focus on working hours, wages, and working conditions. Unluckily, many times the
role of human relations emerged for unjust motives. In various cases, managers were
threatened by laborers to fulfill their demands. However, it is much better, if managers are
self-motivated to work for the welfare of employees instead of being forced by them.
 Organizational Behavior

 Human relations movement prospered for a long period of time

but the movement grew So fast that it became faded and meaningless
after some time. Some managers have begun to focus on Smiling or
well being good to others while at the same time they are cleverly
controlling the employees.
 As time went by, human relations lost its importance. Thus a new
concept emerged in late 1950s and early 1960s with the increased
maturity and research, It was termed as Organizational Behavior
 In the 1960s and 1970s major focus was on motivation and leadership
theories, job design, and job satisfaction. In the 1980s, the focus shifted
towards organizational culture, teamwork, and politics. In the 1990s, attention
shifted towards individual, honesty, character, virtue ethics and positive
Environmental Context of OB

1) Information Technology
2) Globalization
3) Diversity
4) Ethics
5) Design and cultural
6) Reward Systems
Introduction

 Today’s environment context of OB is markedly different from that of the past.

 IT, globalization, diversity, and ethics have forced management of all types of
organizations to totally rethink their approach to both operations and human resources.
 Because of the paradigm shift .organizations are now more responsive to both their
external and internal environments.
 Information Technology:
The impact that the information technology explosion has had on organizations
is truly amazing with no end in sight. Obviously, technological breakthroughs in
the last two centuries have had a dramatic impact. For example, followers of
pioneering economist Joseph Schumpeter's 50-year model note that the first
wave in modern history (1780s – 1840s) brought steam power that drove the
Industrial Revolution, next came the railroads (1840-1890s); followed by
electric power (1890s-1930s), and then cheap oil and the automobile
(1930s 1980s). Now the fifth wave is being powered by information
technology Yet this latest technological breakthrough is argued to have a faster
(it took radio 38 years to reach 50 million users, TV 13 years, but the Web just 5 years),
much different, more pervasive impact. Various IT devices have made virtually all
information available anytime, anywhere. Besides the common tools of the
Information Age, perhaps the biggest environmental impact on the field of
 Globalization

“Globalization is the process of interaction and integration among people,

companies, and governments worldwide”
Besides information technology, the other major (at least equal to)
The environmental context impacting organizational behavior is globalization.
Friedman feels we have now entered the third phase of globalization.
" The first, from about 1492-1800, was characterized by countries
globalizing. The second (1800-2000) was companies globalizing
. And the third, since the turn of the new century, has mainly been
fueled by information technology available to everyone in the world,
groups, and individuals. As Friedman declares, "In Globalization 1.0
there was a ticket agent. In Globalization 2.0 the e-ticket replaced
the ticket agent. In Globalization 3.0 you are your own ticket agent."
Globalization

 The implications of this globalization for organizational behavior are profound and direct.
 Managing the Global Workforce indicates that the new globalization context has changed the way
globally, transnational leaders strategize, organize, and manage.
 cultures around the world impact the organizational behavior of managers and employees quite differently.
For example, a recent study found that cultural differences (by country, race/ethnicity, and religion)
affected the attitudes and behaviors of managers toward profit and other related business concerns.
 In understanding and applying organizational behavior concepts in other countries around the world, one
must be aware of the similarities and differences.
 People are influenced by multiple cultures—national, regional, organizational, functional, and
professional. Even though people are from the same country, they still have different beliefs, values, and
behaviors
 For Example some country managers prefer to may be more effective with—an autocratic leadership
style rather than the typical U.S. manager’s leadership style.
 Diversity in work Place

 Diversity means understanding that each individual is unique, and recognizing

their individual differences. These differences can be along the dimensions of race,
gender and ethnicity.
 Similar to globalization, diversity and social issues have had a dramatic effect
on the study and application of management and organizational behavior.
outcomes for following effective diversity management:
1. Creating a work environment or culture that allows everyone to contribute all that
They can to the organization.
2. Enhancing the ability of people from different backgrounds to work effectively
together.
Major Reasons for Increasing Diversity:
Individual approaches to managing diversity

Individual approaches to managing diversity:

 Learning
 Empathy

Organizational Approaches to Managing Diversity:

 Testing
 Training
 Mentoring
 Work/family programs
 Ethics and Ethical Behavior in Organizations

 Ethics involves moral issues and choices and deals with right and wrong behavior.
 Organizational influences come from ethical codes, role models, policies and practices,
and reward and punishment systems. The external forces having an impact on ethical
behavior include political, legal, economic, and international developments. These
factors often work interdependently in shaping the ethical behavior of
individuals and groups in organizations.
 For example, attitudes toward unauthorized copying of software among both
business executives and business faculty members. It was found that the faculty
members did not view this to be as big an ethical problem as did the executives
Principles of Ethics:
 Organization Design

 organization design and culture are dominant environmental factors that interact
with the personal cognitions and the behavior.
 The modern approach to organization theory and design consists of very flexible networks
and recognizes the interaction of technology and people
Modern organization designs are as follows
 Horizontal Organization
 Virtual Organizations
 Organization Culture

 When people join an organization, they bring with them the values and beliefs
they have been taught. Quite often, however, these values and beliefs are
insufficient for helping the individual succeed in the organization.
The person needs to learn how the particular enterprise does things.
Organizational culture has a number of important characteristics. Some of
the most readily agreed upon are the following:
 Norms
 Dominant values
 Organization climate
 Reward Systems

 Organizations provide rewards to their personnel in order to try to motivate their performance
and encourage their loyalty and retention
 Organizational rewards take a number of different forms including money (salary, bonuses, incentive pay),
recognition, and benefits. This first part examines money as the most dominant reward system in today’s
organizations
 Traditional methods of administering pay
Base pay Approach
Merit pay approach
Pay for performance
Recognition as a organizational reward
Recognition vs money
Definition of Management

 Management is the art of knowing what you want to do and seeing that is done in
the best and cheapest way. - F W Taylor

 To manage is to forecast and to plan, to organize, to command , to coordinate and to

control.
- Henry
Fayol
Functions of Management
1. Planning

Deciding in advance what to do, when to do

and how to do. It is necessary to ensure proper
utilisation of human and non human resources.
It helps in avoiding Confusion , risk,
uncertainties, wastage
2. Organizing
 3. Staffing

 1. Manpower planning
 2. Recruitment, selection, and placement
 3. Training and development
 4. Remuneration
 5. Performance appraisal
 6. Promotion and transfer
 4. Directing

It means influencing, guiding,

supervising, motivating subordinates
for the achievement of organizational
goals
 5. Controlling

It means measurement of actual

performance against the standard set and
correction of deviation if any to ensure
achievement of organizational goals
Foundations of Individual Behavior