CHAPTER ONE

An Overview of Organizational Behavior

1.1. Definition and Background of Organizational Behavior

Being one of the most prevalent debates in recent years, nowadays, organizational related studies
have become a major topic of studies. Organizations as defined as “a consciously coordinated
social unit, composed of two or more people that functions on a relatively continuous basis to
achieve a common goal or set of goals”. So we can see that individuals, walking under the flag of
organization are valuable resources to the firm. It is totally impossible to find an organization
without any manpower. Therefore, as long as organizations are consisted of individuals, it is very
important to know and learn about these fundamental elements of the firms. That is the reason
the concept of organizational behavior is a major field of study these days. Organizational
behavior is defined as “a field of study that investigates the impact that individuals, groups, and
structure have on behavior within organizations, for the purpose of applying such knowledge
toward improving an organization's effectiveness.
Definition
The term ‘Organizational Behavior’ has two words ‘organization’ and ‘Behavior’.
Now, what is an organization?
We can define the term “organization” as two or more individuals who are interacting with each
other within a deliberately structured set up and working in an interdependent way to achieve
some common objective/s. Organizations play a major role in our lives. We possibly cannot
think of a single moment in our lives when we are not depending on organizations in some form
or another.

Then what is Behavior? Is it the behavior of the organization or the behavior of the people who
are working in the organization? It is the behavior of the people working in an organization to
achieve common goals or objectives. Organization comprises of people with different attitudes,
cultures, beliefs, norms and values.

So now, let’s understand “Organizational Behavior” and what it exactly means. ‘Organizational
Behavior’ can be defined as the study of what people think, feel, and do in and around
organizations. The study of Organizational Behavior facilitates the process of explaining,

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understanding, predicting, maintaining, and changing employee behavior in an organizational
setting.

Hence, according to Stephen P. Robbins, “organizational behavior is a field of study that

investigates the impact of individuals, groups, and structure on behavior within organizations for
the purpose of applying such knowledge towards improving an organization's effectiveness.”
Succinctly,
 Organizational behavior is a field of study dedicated to better understanding and
managing people at work.
 Organizational behavior studies three determinants of behavior in organizations:
Individuals, Groups, and Structure.
 Additionally, organizational behavior applies the knowledge gained about individuals,
groups, and the effect of structure on behavior in order to make organizations work more
effectively.
 Organizational behavior is concerned in what people do in an organization and how that
behavior affects the performance of the organization.
In general, organizational behavior is an academic discipline that can help managers make good
decisions while working with people in complex dynamic environments.
In today’s competitive global economy, managing people effectively and ethically is more
important than ever. After all, OB deals with the study of what people do in an organization, how
their behavior can affect performance of the organization, and highlights the ways for molding
these behaviors towards improving organization’s performance and effectiveness. Hence, OB
helps present and future managers better understand and manage people at work.

1.2.The Three Basic Units of Analysis in OB

Developing an OB model
In this section, we will present a general model that defines the field of OB, stakes out its
parameters, and identifies its primary dependent and independent variables.
A model is an abstraction of reality; a simplified representation of some real-world phenomenon.
Figure1.1 presents the skeleton on which we will construct our OB model. It proposes three
levels of analysis in OB. As we moved from the individual level to the organization systems

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level, we add systematically to our understanding of behavior in organizations. The three basic
levels are analogous to building blocks – each level is constructed on the previous level. Group
concepts grow out of the foundation laid in the individual section; we overlay structural
constraints on the individual and group in order to arrive at organizational behavior.
FIGURE1. 1: BASIC OB MODEL

OB researchers draw conclusions about causal relationships of two (dependent and independent)
variables. Dependent variables are the key factors we want to explain or predict; and
independent variables. The primary dependent variables in OB are: productivity, absenteeism,
turnover, and job satisfaction.
Productivity is a performance measure including effectiveness (achievement of goals) and
efficiency.
Absenteeism is failure to report to work.
Turnover is voluntary and involuntary permanent withdrawal from the organization.
Job Satisfaction is a general attitude toward one’s job; the difference between the amount of
rewards workers receive and the amount they believe they should receive.
The major determinants of productivity, absenteeism, turnover, and job satisfaction are
independent variables at individual, group, and organizational system level.

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1.3. Replacing intuition with systematic study
We watch what others do and try to explain to ourselves why they have engaged in their
behavior. In addition, we have attempted to predict what they might do under different sets of
conditions. Unfortunately, your casual or commonsense approach to reading others can often
lead to erroneous predictions. However, we can improve our predictive ability by replacing your
intuitive opinions with a more systematic approach. Underlying this systematic approach is the
belief that behavior is not random. Rather, there are certain fundamental constituencies
underlying the behavior of all individuals that can be identified and then modified to reflect
individual differences.
When we use the phrase Systematic study, we mean looking at relationships, attempting to
attribute causes and effects, and basing our conclusions on scientific evidence- that is, on data
gathered under controlled conditions and measured and interpreted in a reasonably rigorous
manner. Hence, behavior is generally predictable, and the systematic study of behavior is a
means to making reasonably accurate predictions.
The objective is to encourage you to move away from your intuition views of behavior toward a
systematic analysis, in the belief that such analysis will improve your accuracy in explaining and
predicting behavior.
1.4. A review of a manager’s job and its relation to the study of OB
In all organizations, managers perform jobs that involve directly supporting the work efforts of
others. Being a manager is a unique challenge that carries distinct performance responsibilities.
Managers help other people get important things done in timely, high quality, and personally
satisfying ways. In the new workplace, this is accomplished more through “helping” and
“supporting” than through traditional notions of “directing” and “controlling”.
The Management process
An effective manager is one whose organizational unit, group, or team consistently achieves its
goals while members remain capable, committed, and enthusiastic.
This definition focuses attention on two key results. The first is task performance— the quality
and quantity of the work produced or the services provided by the work unit as a whole. The
second is job satisfaction—how people feel about their work and the work setting. Just as a
valuable machine should not be allowed to break down for lack of proper maintenance, the
valuable contributions of the human resource should never be lost for lack of proper care.

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Accordingly, OB directs a manager’s attention to such matters as job satisfaction, job
involvement, and organizational commitment, as well as measures of actual task performance.
The five functions of management are planning, organizing, staffing, leading, and controlling.
Planning-Defining goals, setting specific performance objectives, and identify the actions
needed to achieve them.
Organizing-Creating work structures and systems, and arranging resources to accomplish goals
and objectives
Staffing- Putting the right person in the right position at the right time
Leading-Instilling enthusiasm by communicating with others, motivating them to work hard,
and maintaining good interpersonal relations
Controlling-Ensuring those things are going well by monitoring performance and taking
corrective action as necessary
Managerial Skills and Competencies
A skill is an ability to translate knowledge into action that results in a desired performance.
Robert Katz divides the essential managerial skills into three categories: technical, human, and
conceptual.
Technical Skills- A technical skill is an ability to perform specialized tasks. Such ability derives
from knowledge or expertise gained from education or experience. Some technical skills require
preparatory education, whereas others are acquired through specific training and on-the-job
experience.
Human Skills- Central to managerial work and team leadership are human skills, or the ability
to work well with other people. They emerge as a spirit of trust, enthusiasm, and genuine
involvement in interpersonal relationships.
Conceptual Skills- It involves the ability to see and understand how the whole organizational
system works, and how the parts are interrelated. All good managers are able to view the
organization or situation as a whole and to solve problems to the benefit of everyone concerned.

1.5. The Characteristics of OB

Interdisciplinary Body of Knowledge- OB is an interdisciplinary body of knowledge with

strong ties to the behavioral sciences- psychology, sociology, and anthropology, as well as to
allied social sciences- such as economics and political science. Organizational behavior is

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unique, however, in its devotion to applying and integrating these diverse insights to achieve a
better understanding of human behavior in organizations.
Organizational learning- is the process of acquiring knowledge and using information to adapt
successfully to changing circumstances.
Use of Scientific Methods OB uses scientific methods to develop and empirically test
generalizations about behavior in organizations. Scientific thinking is important to OB
researchers and scholars for these reasons: (1) the process of data collection is controlled and
systematic; (2) proposed explanations are carefully tested; and (3) only explanations that can be
scientifically verified are accepted. Research concepts and designs in OB are explained further in
the module “Research Methods in Organizational Behavior.”
Focus on Application The field of organizational behavior focuses on applications that can
make a real difference in how organizations and people in them perform. Outcome or dependent
variables studied by researchers, for example, include task performance, job satisfaction, job
involvement, absenteeism, and turnover. It is in this sense that OB is an applied social science
that can ultimately help to improve the functioning of organizations and the work experiences of
their members. Among the practical questions addressed by the discipline and in this book are:
How should rewards such as merit pay raises be allocated? When should jobs be designed for
individuals and for groups? What are the ingredients of successful teamwork? How can
organizational cultures be changed? Should decisions be made by individual, consultative, or
group methods? In a negotiation, what is the best way to achieve “win-win” outcomes?
Contingency Thinking Rather than assume that there is one “best” or universal way to manage
people and organizations, OB recognizes that management practices must be tailored to fit the
exact nature of each situation. Using a contingency approach, researchers try to identify how
different situations can best be understood and handled. We recognize that culture can affect how
OB theories and concepts apply in different countries.14 what works well in one culture may not
work as well in another. Other important contingency variables addressed in this book include
environment, technology, task, structure, and people.
1.6. The Development of OB
Even though the concepts of organizational behavior came in to existence more than 200 years
ago, current OB theory and practice are essentially products of the twentieth century.

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Frederick Taylor’s principles of scientific management were instrumental in engineering
precision and standardization into people’s jobs. Henri Fayol defined the universal functions that
all managers perform and the principles that constitute good management practice.
Max Weber developed a theory of authority structures and described organizational activity
based on authority relations.
The “people side” of organizations came into its own in the 1930s, predominantly as a result of
the Hawthorne studies. These studies led to a new emphasis on the human factor in organizations
and increased paternalism by management. In the late 1950s, managers‟ attention was caught by
the ideas of people like Abraham Maslow and Douglas McGregor, who proposed that
organization structures and management practices had to be altered to bring out the full
productive potential of employees. Motivation and leadership theories offered by David
McClelland, Fred Fiedler, Frederick Herzberg, and other behavioral scientists during the 1960s
and 1970s provided managers with still greater insights into employee behavior.
Almost all contemporary management and organizational behavior concepts are contingency
based. That is, they provide various recommendations dependent on situational factors. As a
maturing discipline, current OB research is emphasizing the refinement of existing theories.

1.7. Contributing Disciplines to OB

Organizational behavior is a blended discipline that has grown out of contributions from
numerous earlier fields of study. Organizational behavior is an applied behavioral science that is
built on contributions from a number of behavioral disciplines. The significant ones are
psychology, sociology, social psychology, anthropology, and political science. Psychology’s
contribution has been mainly at the individual or micro level of analysis. But the other four
disciplines have contributed to the understanding of macro concepts such as group processes and
organization.
1) Psychology is the science of human behavior. It is the science that seeks to measure, explain
and sometimes change the behavior of human and other animals. Psychologists study and
attempt to understand individual behavior. Learning theorists, personality theorists, counseling
psychologists, and industrial and organizational psychologists have made contributions to
organizational behavior field. Psychology helps in understanding the foundations of motivation,
interpersonal perceptions, learning and training, or role of personality.

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2) Sociology is the science of society. Sociology studies people in relation to their fellow human
beings. Sociologists have contributed a lot to organizational behavior through their study of
group behavior in organizations, particularly formal and complex organizations. Sociologists
have provided valuable inputs in the areas of group dynamics, design of work teams,
organizational culture, bureaucracy, communications, power, conflict, and Intergroup behavior.

3) Social psychology is an area within psychology, but blends concepts from both psychology &
sociology. It focuses on the influence of people on one another. One major area where social
psychologists have investigated considerably is change – how to implement it and how to reduce
barriers to its acceptance. Other areas where social psychologists have made significant
contribution are the areas of measuring, understanding, and changing attitudes; communication
patterns; and the group decision making process.

4) Anthropology is the science of the learned behavior of human beings. It is especially

important to understanding organizational culture. It helps in understanding differences in
values, attitudes and behavior of people from different backgrounds. Anthropologists study
societies to learn about human beings and their activities.
5) Political science is the study of the behavior of individuals and groups within a political
environment. Specific topics of concern include structuring of conflict, allocation of power, and
how people manipulate power for individual self-interest.

6) Economics: - Any organization to survive and sustain must be aware of the economic
viability of their effort. This applies even to the non-profit and voluntary organizations as well.

1.8. Management and organizational behavior in the 21st century

Organizational behavior is a discipline that can help managers to make good decisions while
working with people in complex and dynamic environments. The managers should have full
awareness of the complex and shifting demands that the dynamic environment will make upon
them. Here are some of the realities of the new workplace.
Changing Workforce
Managers in organizations must be prepared to deal with workforce diversity- ethnic, racial
backgrounds, gender and age, lifestyle, etc. Managers must also be prepared to deal with the
workers whose skills whether gained through formal education or on-the-job training may not be

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consistent with the demands of new technologies and tasks. Furthermore, managers must be
prepared to deal with workers values that reflect a dynamic society in which family values,
environmental concerns and the very concept „career‟ are changing.
Thus, the successful manager will value diversity and will always find ways to meet the needs of
complex workforce.

Consumer Expectations Are Changing

In today’s market place, only those organizations that are able to deliver what consumers want in
terms of quality services and cost will prosper. This is the age of total quality management,
where the organization and all of its members operate with commitments to continuous
improvement and to meeting customer needs completely. Hence, the successful manager will
value quality and consumers, and will personally do things that add value to the organization’s
ability to meet customers’‟ needs.

Changing Organizations
Organizations are changing and will continue to do so in order to survive and prosper in a
complex environment. Under different pressures today, we see organizations downsizing,
forming alliances, creating new organizational structures, going global and employing more
technologies. Thus, the manager must be comfortable working in and with organizations that are
operating in new and different ways.

Managers Must Change

For the manger to succeed he/she must be willing to step forward and make the necessary
personal and organizational changes to secure it. Hence, progressive manager must make
behavioral and attitudinal adjustments necessary to succeed in every dynamic times and
situation.

Concluding Remarks
Managers who know the success in a highly dynamic environment will actively support
opportunity seekers and problem solvers. These are managers who continually analyze changing
situations to identify opportunity which can be exploited or problems to be solved. They are
managers who excel at helping other people to do these same things well.

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The field of organizational behavior helps managers in knowing what to “look for‟ in work
situations, understand what they find, and take the required action.

Good managers are, therefore, able to recognize the significance of performance accomplishment
of people at work, people’s attitudes and behaviors and any events that occur in the work unit in
the organization as a whole and even in external environment and take constructive active action
to improve things as a result of this insight.

The study of organizational behavior can provide managers with the following practical
advantages:
i. Organizational behavior provides managers with a way of systematically thinking about the
behavior of people at work.
ii. Organizational behavior provides managers with techniques for dealing with the problems
and opportunities that commonly occur in work setting.
1.9. Organization as a System
An organization is a managed system designed and operated to achieve a specific set of
objectives. A system is a set of interdependent parts (departments) that processes inputs into
outputs. A system is a „series of functions or activities within an organization that work together
for the aim of the organization.
Parts of the system must work to support each other. Subsystems are those parts making up the
whole system. Organization subsystems are functionally related activities. Main functions of
subsystems are to absorb inputs, transform them into outputs, transfer them to users, and
coordinate all of these activities.
The subsystems of the organization are production, boundary spanning, adaptive, maintenance,
and managerial.
1) Production Subsystems
Production subsystem is the technical core of the organization creating the product, service, or
ideas that are consumed by the market.
Every organization has a production subsystem. In a business firm, the production system is the
task-oriented work that creates the product or service. For example, an assembly line or tellers in
a bank.
2) Boundary Spanning Subsystems

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Boundary spanning subsystems carry on transactions with the environment. Boundary spanning
subsystems procure the input, dispose of the output, or assist in these functions. Even though the
activities themselves are performed within the organization; they connect them with external
points of contact. For example, selling, purchasing, recruiting, and acquiring capital resources
are Boundary spanning subsystems activities.
3) Adaptive Subsystems
The organization must change along with the changes in environment. Adaptive subsystems are
those organization activities that monitor, or sense, the nature of the world in which the
organization operates.
Research and development, lobbying to influence government policy are kinds of adaptive
subsystems activities.
4) Maintenance Subsystems
Maintenance subsystems smooth out the problems of operating the other subsystems.
Maintenance subsystems serve to monitor the internal operations of other subsystems.
One important function of the maintenance subsystems is to maintain high enough levels of
motivation so that members continue to contribute. Motivation is maintained by activities such as
indoctrination, socialization, rewarding, punishing, training, and so on. Other maintenance
functions are setting standards for work, raw materials, and products or service quality.
5) Managerial Subsystems
According to Katz and Kahn, managerial subsystems are the organized activities for controlling,
coordinating, and directing the many subsystems of the structure.
Managerial subsystems activities focus on general policy and strategy to interact with the
environment so as to ensure long-term survival. Other functions of managerial subsystems are the
resolution of internal conflict between departments, and the use of authority structure to
disseminate directives.

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