CHAPTER ONE

AN OVER VIEW OF ORGANIZATIONAL BEHAVIOR

1.1. What is Organizational Behavior?
Before attempting to define organizational behavior, let us understand what organization and
behavior is. Organization is 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 or it is a set of 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. This definition of
organization covers wide variety of groups such as businesses, schools, hospitals, fraternal
groups, religious bodies, government agencies and so on. In our daily life we come across a lot
of organizations that consists of business, schools, hospitals, transport, banking, government
and such service organizations. Behavior is anything that the human being does. Behavior is a
response to stimulation that can be observed, thus, it is any response or reaction of an
individual.
Some important definitions of organizational behavior (OB);
Organizational behaviour is 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.
 Organizational behavior deals with the study of human beings and their behavior
within the work settings and the interface between human behavior, group behavior and the
organization itself, where an organization can be defined as a social invention for
accomplishing goals through group efforts.
 According to Keith Davis (1980), Organizational behavior is an academic discipline
concerned with understanding and describing human behavior in an organizational
environment. It seeks to shed light on the whole complex human factor in organizations by
identifying causes and effects of that behavior.
 According to Joe Kelly (1970) organizational behavior is the systematic study of the nature
of organizations: how they begin, grow and develop, and their effect on individual members,
constituent groups, other organizations, and large institutions.

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1.2. Characteristics of OB
On the basis of the definitions stated and various other definitions above, we can draw the
following conclusions related to the nature and scope of organizational behavior.
The following are some of the distinctive features of OB;
1. OB is a value centered normative science and not a positive science, which explains
cause effect relationship. It is normative science in the sense that it applies the research findings
to get organizational results that are acceptable to society. What is acceptable to society depends
on the values the people care for. More over the principles of management, management styles
etc. are all ever changing that make OB more normative in nature.
2. OB focuses on humanitarian aspects and believes that people‘s needs are to be attended to and
that motivating people can result in peak performance of the organization. It values individuals
as thinking and feeling organism. OB also is optimistic about the innate potential of people
working in the organization and encourages their creative and productive capabilities to achieve
the objectives of the organization. OB believes in maximization of potential of individuals by
providing proper conditions and environment.
3. OB is objective oriented. It believes in the achievement of individual objectives without
sacrificing the organizational objectives. Though it wants the organizational objective, it will not
be at the cost of individual or group objectives. It actually integrates all these objectives by
suggesting various behavioral approaches.
4. The basic objective of OB is to apply the various findings of the research to solve the
organizational problems with respect to human behavior aspect. While pure science
concentrates on fundamental researches, OB concentrates on applied researches.
Many of OB researches are carried out in laboratory situations and controlled conditions.
These are meant for general applications in organizational analysis. Hence you can say
that OB is an art and science.
5. OB draws ideas and knowledge from different disciplines like psychology, sociology
and anthropology, economics, political science, law and history. Hence it is interdisciplinary in
nature.
6. OB replaces intuition with systematic study. Man is a social animal and hence is subjected to
various pressures from society or organization. Man is a product of socio-psychological factors.
His behavior is influenced by his psychological framework, group influence, interpersonal

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orientation and social and cultural factors. Thus man’s nature and behavior are so complex you
can make only a system approach to find solutions for his and hence for the organization’s
problems. Systems approach is an integrative approach that takes into account all the variables
affecting organizational functioning.
1.3. Significance of Studying OB
A study of organizational behavior is beneficial in many ways. Some of the benefits of
studying organizational behavior are listed below:
 It helps an individual understand oneself. It is a systematic study of the actions and
attitudes that people exhibit within organization.
 It helps managers in getting the work done through effective ways.
 It emphasizes the interaction and relations between the organization and individual behavior,
thus making an attempt to fulfill psychological contract between individuals and the
organization.
 It helps to develop work-related behavior and job satisfaction.
 It helps in building motivating climate.
 It helps in building cordial industrial relations.
 It helps in the field of marketing through deeper insight of consumer behavior, and managing
and motivating field employees.
 It helps in predicting behavior and applying it in some meaningful way to make organizations
more effective.
 It implies effective management of human resources.
1.4. The three basic units of analysis in OB
1. Individual
Organizational behavior deals with individual behaviors in organizations, apart from dealing with
group behaviors and behaviors in organizations. You will get exposure to individual perspective
of organizational behavior in detail as the study continues.
An organization is as good as its people. Therefore, to organizations to grow continuously there
is need for keeping its individuals growing through the following measures:
 Continuous learning
 Creating right perception
 Building positive attitudes and values

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  Having personality and emotions compatible at workplace
 Maintaining stress-free individuals and environment
 Keeping individuals and teams motivated and providing job satisfaction
2. Group
In an organization, an individual does not exist alone. Plurality of people is the essential
ingredient of an organization. An organization makes continuous effort to create synergy in the
group or team, in order to make the team more productive and more effective. Some of the
important measures that organizational behavior suggests at group level interventions
are:
A. Group Formation and Structure: - Group explains the situation where two or more
individuals are interacting and interdependent, who have come together to achieve
particular objectives. It deals with issues like, how groups are formed, how groups develop,
when groups become more effective, what are the undercurrents of group dynamics, and how
group decisions are taken.
B. Communication: - Communication deals with transference and understanding of
meaning.
Organizations make effort through formal structure as well as through informal
interaction to establish sound communication system within and outside organization.
Therefore, establishing effective communication climate through right attitude of people and
through modern technology is crucial for successful collaboration.
C. Conflict Management: Conflict is a process that begins when one party perceives
that another party has negatively affected. Conflict may arise at various levels, like within the
person (intrapersonal level), between two persons (interpersonal level),
intradepartmental level, interdepartmental level, inter-organizational level etc. Conflict is not
necessarily bad, as it promotes difference of opinions, which may help for improving quality of
decision.
Skillful managers make creative use of conflict by turning challenges into opportunities.
D. Team Building and Leadership: These two are highly sought after issues of
organizational behavior. Team building leads to high interaction among team members to
increase trust and openness. For team building, effective leadership styles are required.
Leadership is the ability to influence a group toward the achievement of goals.

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E. Power and Politics: - amount of pushes and pulls are inevitable where more than two
persons exist. Individual tends to exercise power to influence behavior of others, so that
others act in accordance with the wishes of the individual. Political behavior deals with
use of informal networking to make an attempt to influence others. When others are
influenced for narrow gains, politics is dysfunctional, but when influence is used for achieving
overall goals in larger interest, political behavior is functional, and also desirable for
organization.
3. Organizational Level Analysis: OB analysis at organizational level is getting more complex.
As groups are not the sum total of individuals, organizations are also not the sum total of
individuals and groups. More other organizational level factors may put constraints on individual
and group behavior.
A. Productivity: An organization or group is productive if it achieves its goals and does so by
transferring inputs (labor and raw materials) to outputs (finished goods or services) at the lowest
cost. Productivity implies a concern for both effectiveness (achieving goals) and efficiency
(watching costs).
B. Developing Effective Employees: One of the major challenges facing organizations in the
twenty-first century is how to engage employees effectively so that they are committed to the
organization. We use the term organizational citizenship behavior (OCB) to describe
discretionary behavior that is not part of an employee’s formal job requirements, but that
nevertheless promotes the effective functioning of the organization. Recent research has also
looked at expanding the work on OCB to team behavior.
C. Global Competition: The world has come to do business under one umbrella. In recent years,
businesses have faced tough competition with World-wide competitors. Therefore, to survive,
they have to reduce costs, increase productivity, and improve quality.
1.5. Contributing Disciplines to OB
i. Psychology: Psychology is the study of human behavior which tries to identify the
characteristics of individuals and provides an understanding why an individual behaves
in a particular way. Psychologists concern themselves with studying and attempting to
understand individual behavior. This thus provides us with useful insight into areas such as
human motivation, perceptual processes or personality characteristics.

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ii. Sociology: Sociology is the study of social behavior, relationships among social
groups and societies, and the maintenance of social order.
Whereas psychologists focus their attention on the individual, sociologists study the social
system in which individuals’ fulfill their roles; that is, sociology studies people in relation to
their fellow human beings. Specifically, sociologists have made their greatest contribution to OB
through their study of group behavior in organizations, particularly formal and complex
organizations. Some of the areas within OB that have received valuable input from sociologists
are group dynamics, design of work teams, organizational culture, formal organization culture,
formal organization theory and structure, organizational technology, communications, power,
and conflict.
The main focus of attention is on the social system. This helps us to appreciate the functioning
of individuals within the organization which is essentially a socio-technical entity.
iii. Social psychology: Social psychology is an area within psychology, blending concepts from
both psychology and sociology. It focuses on the influence of people on one another. It studies
human behavior in the context of social situations. This essentially addresses the problem of
understanding the typical behavioral patterns to be expected from an individual when he takes
part in a group.
iv. Anthropology: Anthropology is the science of mankind and the study of human
behavior as a whole. The main focus of attention is on the cultural system, beliefs, customs, ideas
and values within a group or society and the comparison of behavior among different
cultures. In the context of today's organizational scenario, it is very important to appreciate the
differences that exist among people coming from different cultural backgrounds as people are
often found to work with others from the other side of the globe.
v. 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.
vi. Political Science: Although frequently overlooked, the contributions of political
scientists are significant to the understand arrangement in organizations. It studies individuals
and groups within specific conditions concerning the power dynamics. Important topics
under here include structuring of conflict, allocation of power and how people
manipulate power for individual self-interest etc.

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1.6. Historical Development of OB
By most estimates, OB emerged as a distinct field around 1940s. However, its origins can be
traced much further back in time. Plato, the Greek Philosopher, wrote about equity in work
relationships. Another Greek philosopher, Aristotle, spoke about the elements of persuasive
communication. The writings of the 16th century Italian philosopher Niccolo Machiavelli laid the
foundation for contemporary work on organizational power and politics. In 1776, Adam Smith
advocated a new form of organizational structure based on the division of labor. One hundred
years later, German Sociologist, Max Weber wrote about rational organizations and initiated
discussions of charismatic leadership. Soon after, Frederick Winslow Taylor introduced the
systematic use of goal setting and rewards to motivate employees. In the 1920s, productivity
studies at Western Electric’s Hawthorne plant reported that an informal organization –employees
usually interacting with each other operates alongside the formal organization. So you can see
that OB ideas have been around for a long time; they just weren’t organized into a unified
discipline until after World War II.
1.7. Replacing Intuition with systematic study
Intuition is your “gut feelings not necessarily supported by research.
Systematic study is looking at relationships, attempting to attribute causes and effects, and
drawing conclusions based on scientific evidence.
People develop intuitive understandings of the behaviors of other people through experience.
This experiential, common sense method of learning human behavior can often lead to
erroneous predictions.
Managers can improve their predictive ability by systematically coupling their individual
experiences with those of others. The best way to do this is through the study of organizational
behavior.
The important thing to remember is that human behavior is not random. Rather, OB has shown
that there are “fundamental consistencies [that] underlie the behavior of all individuals, and
these fundamental consistencies can be identified and then modified to reflect individual
differences.”
Systematic study of behavior means: examining relationships, attempting to attribute causes
and effects, and basing our conclusions on scientific evidence- that is, on data gathered under

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controlled conditions and measured and interpreted in a reasonably rigorous manner.
Intuition: your “gut feelings” about “what makes others tick.”
Our goal is to teach you how to use the systematic study of OB to enhance your intuitive
understanding of behavior and improve your accuracy in explaining and predicting behavior in
the workplace.
1.9. Management and organizational behavior in the 21stcentury
An understanding organizational behavior has never been more important for managers. A quick
look at a few of the dramatic changes now taking place in organizations supports this claim. For
instance, the typical employee is getting older; more and the heavy use of temporary workers are
severing the bonds of loyalty that historically tied many employees to their employers; and
global competition is requiring employees to become more flexible and to learn to cope with
rapid change.
In short, there are a lot of challenges and opportunities today for managers to use OB concepts.
In this section, we review some of the more critical issues confronting managers for which OB
offers solutions-or at least some meaningful insight toward solutions.
Responding to Globalization
Within at least last the decade one might observe many multinational companies and foreign
investors coming to our country? How do you think should managers respond to such
globalization instances?
Organizations are no longer constrained by national borders. For instance, Burger king is owned
by a British firm, and McDonald’s sells hamburgers in Moscow. Exxon, a so-called American
company, receives almost 75 percent of its revenues from sales outside the United States. Toyota
makes cars in Kentucky; General Motors makes cars in Brazil; and Ford (which owns part of
Mazda) transfers executives from Detroit to Japan to help Mazda manage its operations. These
examples illustrate that the world has become a global village. In turn, managers have to become
capable of working with people from different cultures.
Globalization affects a manager’s people skills in at least two ways. First, if you are a manager,
you’re increasingly likely to find yourself in a foreign assignment. You may be transferred to
your employer’s operating division or subsidiary in another country. Once there, you’ll have to
manage a workforce that is likely to be very different in needs, aspirations, and attitudes from the
ones you were used to back home.

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Second, even in your own country, you are going to find yourself working with bosses, peers,
and other employees who were born and raised in different cultures. What motivates you may
not motivate them and you need to how to adapt you management style to their differences.
Managing Workforce Diversity
One of the most important and broad-based challenges currently facing organizations is adapting
to people who are different. The term used describing this challenge is workforce diversity.
Globalization focuses on differences among people from different countries whereas; workforce
diversity addresses differences among people within given countries.
Workforce diversity means that organizations are becoming more heterogeneous in terms of
gender, race, and ethnicity. But the term encompasses anyone who varies from the so-called
norm. In addition to the more obvious groups men -women, black and white, ethnic groups- it
also includes the physically disabled, and the elderly. Moreover, it’s an issue in Canada,
Australia, South Africa, Japan, and Europe as well as the United states. Managers in Canada and
Australia, for instance, are having to adjust to large influxes of Asian workers.
The “new” South Africa will increasingly be characterized by blacks holding important technical
and managerial jobs. Women, long confined to low-paying temporary jobs in Japan, are moving
into managerial positions. And the creation of the European Union cooperative trade
arrangement, which opened up borders throughout much of western Europe, has increased
workforce diversity in organizations that operate in countries such as Germany, Portugal, Italy,
and France.
Managers used to take a melting-pot approach to differences in organizations, assuming people
who were different would somehow automatically want to assimilate. But we now recognize that
employees don’t set aside their cultural and lifestyle preferences when they come to work. The
challenge for organizations, therefore, is to make themselves more accommodating to diverse
groups of people by addressing their different lifestyles, family needs, and work styles. The
melting-pot assumption is being replaced by one which recognizes and values differences.
Improving Quality and Productivity
Managers are confronting the challenges of quality. They have to improve their organization’s
productivity and the quality of the products and services they offer. Toward the goal of
improving quality and productivity, they are implementing programs such as total quality
management and reengineering-programs that require extensive employee involvement.

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Total quality management (TQM) is a philosophy of management that is driven by the constant
attainment of customer satisfaction through the continuous improvement of all organizational
processes. TQM has implications for OB because it requires employees to rethink what they do
and become more involved in workplace decisions.
In times of rapid and dramatic change, it’s sometimes necessary to approach improving quality
and productivity from the perspective of “How would we do things around here if we were
starting over from scratch?” That, in essence, is the approach of reengineering.
Contemporary managers understand that, for any effort to improve quality and productivity to
succeed, it must include their employees. These employees will not only be a major force in
carrying out changes but increasingly will participate actively in planning them. OB offers
important insights into helping managers work through those changes.
Improving People Skills
You recognize that people skills are important to managerial effectiveness. As you proceed
through this material, we’ll present relevant concepts and theories that can help you explain and
predict the behavior of people at work. In addition, you’ll also gain insights into specific people
skills that you can use on the job. For instance, you’ll learn a variety of ways to motivate people,
and how to create more effective teams.
Empowering People
If you pick up any popular business periodical nowadays, you will read about the reshaping of
the relationship between managers and those they are supposedly responsible for managing. You
will find managers being called coaches, advisers, sponsors, or facilitators. In many
organizations, employees are now called associates. And there is a blurring between the roles of
managers and workers. Decision making is being pushed down to operating level, where workers
are being given the freedom to make choices about schedules and procedures and to solve work –
related problems. In the 1980s managers were encouraged to get their employees to participate in
work-related decisions. Now what managers are going on is that they are empowering
employees. They are putting employees in charge of what they do. And in so doing managers
have to learn how to give up control, and employees have to learn how to take responsibility for
their work and make appropriate styles, power relationships, the way work is designed, and the
organizations are structured.

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Stimulating Innovation and Coping with changes
Managers have always been concerned with change. What’s different nowadays is the length of
time between changes. It is used to be that managers needed to introduce major change programs
once or twice a decade. Today, change is an ongoing activity for most managers. The concept of
continuous improvement, for instance implies, constant change. In the past, managing could be
characterized by long periods of stability, interrupted occasionally by short periods of change.
Managing today would be more accurately described as long periods of stability. The world that
most managers and employees face today is one of permanent temporariness. The actual jobs
that workers perform are in a permanent state of flux, so workers need to continually update their
knowledge and skills to perform new job requirements. For example, employees at in production
and service organizations now need to know how to operate on computer. Work groups are also
increasingly in a state of fluctuation.
In the past, employees were assigned to a specific work group, and that assignment was
relatively permanent. There was a considerable amount of security in working with the same
people day in and day out. That predictability has been replaced by temporary work groups.
Teams that include members from different department and whose members change all the time,
and the increased use of employee rotation to fill constantly changing work assignments. Finally,
organizations themselves are in a state of flux. They continually reorganize their various
divisions, sell off poor-performing businesses, downsize operations, subcontract no critical
services and operations to other organizations, and replace permanent employees with
temporaries.
Today’s managers and employees must learn to cope with temporariness. They have to learn to
live with flexibility, spontaneity, and unpredictability.
Today’s successful organizations must foster innovation and master the art of change or they will
become candidates for extinction. Victory will go to those organizations that maintain their
flexibility, continually improve their quality, and beat their completion to the marketplace with a
constant stream of innovative products and services.
Domino’s single-handedly brought on the demise of thousands of small pizza parlors whose
managers thought they could continue doing what they had been doing for years. Amazon.com is
putting a lot of independent bookstores out of business as it proves you can successfully sell
books from an internet web site.

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An organization’s employees can be the impetus for innovation and change or they can be a
major stumbling block. The challenge for managers is to stimulate employee creativity and
tolerance for change. The field of OB provides a wealth of ideas and techniques to aid in
realizing these goals.
Improving Ethical Behavior
You know ethical behavior is the concern of all organizations of the day. Specifically, in an
organizational world characterized by cutbacks, expectations of increasing worker productivity,
and tough competition in the marketplace, it is not altogether surprising that many employees
feel pressured to cut corners, break rules, and engage in other forms of questionable practices.
Members of organization are increasingly finding themselves facing ethical dilemmas, situations
in which they are required to define right and wrong conduct. For example, should they “blow
the whistle” if they uncover illegal activities taking place in their company? Should they follow
orders with which they don’t personally agree? Do they inflate performance evaluation to an
employee whom they like, knowing that such an evaluation could save that employee job? Do
they allow themselves to “play politics” in the organization if it will help their career
advancement?
What constitutes good ethical behavior has never been clearly defined. And, in recent years, the
line differentiating right from wrong has become even more blurred. Employees see people all
around them engaging in unethical practices; elected officials are indicted for padding their
expense accounts or taking bribes; high-powered lawyers, who know the rules, are found to be
avoiding payment of Social security taxes for their household help; successful executives use
insider information for personal financial gain; employees in other companies participate in
massive cover-ups of defective military weapons.
They hear these people, when caught, giving excuses such as “everyone does it,” or “you have to
seize every advantage nowadays,” or “I never thought I would get caught.”
Managers and their organization are responding to this problem from a number of directions.
They’re writing and distributing codes of ethics to guide employees through ethical dilemmas.
They’re offering seminars, workshops, and similar training programs to try to improve ethical
behaviors. They’re providing in-house advisers who can be contacted, in many cases
anonymously, for assistance in dealing with ethical issues. And they’re creating protection
mechanisms for employees who reveal internal unethical practices.

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Today’s manager needs to create an ethically healthy climate for his or her employees, where
they can do their work productively and confront a minimal degree of ambiguity regarding what
constitutes right and wrong behaviors. In upcoming chapters, we’ll discuss the kinds of actions
managers can take to create an ethically healthy climate and to help employees sort through
ethically ambiguous situations.
1.10. Organization as a system
A complete understanding of organizational behavior requires both an understanding of human
behavior and an understanding of the organizational context within which human behavior is
acted out. The organizational context is the specific setting within which organizational behavior
is enacted.
Organizations are systems of interacting components, which are people, task, technology, and
structure. These internal components also interact with components in the organization’s
environment. Organizations as open system have people, technology, structure, and purpose,
which interact with element in the organization’s environment.
Open and Closed Systems
A system is commonly defined as a group of interacting units or elements that have a common
purpose and a subsystem is a set of related parts that work together to achieve an objective as
one component of a larger system. The units or elements of a system can be cogs, wires, people,
computers, and so on. Systems are generally classified as open systems and closed systems and
they can take the form of mechanical, biological, or social systems. Open systems refer to
systems that interact with other systems or the outside environment, whereas closed systems
refer to systems having relatively little interaction with other systems or the outside
environment.

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