Wolaita Sodo University

College of Business and Economics

Department of Public Administration and
Development Management

Course Module
For Organization Theory and Behavior

Course Code: PADM 3111

Credit Hour: 3

March, 2023
Wolaita Sodo, Ethiopia

1
TABLE OF CONTENT

Contents
TABLE OF CONTENT.................................................................................................................iii
Module Introduction........................................................................................................................1
CHAPTER ONE..............................................................................................................................2
OVERVIEW OF ORGANIZATIONAL BEHAVIOR...................................................................2
1.1What is organizational behavior?..........................................................................................2
1.2 The three basic units of analysis in OB.................................................................................5
1.3. Replacing intuition with systematic study............................................................................6
1.4. A review of a manager’s job and it relation to the study of OB.........................................7
1.5. The characteristics of OB...................................................................................................10
1.6 The development of OB and Contributing disciplines........................................................10
I. Historical Foundations of Organizational Behavior.....................................10
II. Contributing disciplines..............................................................................................16
1.7. Management and organizational behavior in the 21st century..........................................17
1.8. Developing an organizational behavior model...................................................................20
1.9. Organizational Behavior and the Work Place....................................................................23
1.10. Managers and Organizational Behavior...........................................................................24
1.11. Organization as a system.............................................................................................25
Chapter Summary......................................................................................................................27
CHAPTER TWO...........................................................................................................................31
FOUNDATION OF INDIVIDUAL BEHAVIOR AND LEARNING IN AN
ORGANIZATION...................................................................................................................31
2.1. The Individual Behavior.....................................................................................................32
2.1.1 Foundations of the Individual Behavior...........................................................................33
a. Perception...................................................................................................................33
Factors affecting Perception..................................................................................................34
Factors That May Distort our Judgment on Others...............................................................36
b.Attitude..................................................................................................................................37
i. Component of attitude...................................................................................................37
ii. How attitudes are formed..........................................................................................38
iii. Source of attitude.......................................................................................................40
iv. Types of attitude.........................................................................................................40

2
 v. Attitudes and consistency..........................................................................................42
c.Personality:.............................................................................................................................43
2.3.3. Matching personality and job....................................................................................44
d.Learning..................................................................................................................................45
1. The Learning Process..................................................................................................46
2. Types of learning..............................................................................................................47
3. Shaping: A Managerial Tool.............................................................................................50
Chapter Summary..........................................................................................................................52
CHAPTER THREE.......................................................................................................................55
FOUNDATION OF GROUP BEHAVIOR...................................................................................55
3.1 Group Behavior...................................................................................................................55
3.2 Types of Groups..................................................................................................................55
3.3. Group Formation................................................................................................................56
3.4. Group Development............................................................................................................57
3.5. The Dynamics of Informal Groups.....................................................................................59
3.6 Factors That Determine Group Performance and Satisfaction............................................60
Chapter Summary..........................................................................................................................65
CHAPTER FOUR.........................................................................................................................67
MOTIVATION AND ITS APPLICATION..................................................................................67
4.1 Foundations of Motivation......................................................................................................69
4.2 Theories of Motivation.......................................................................................................71
4.2.1 Early theories of motivation..............................................................................................71
A. Hierarchy of Needs Theory.........................................................................................71
B. The Two- Factor Theory-Motivation-Hygiene Theory...............................................74
C. Theory ‘X’ and Theory ‘Y’.........................................................................................75
4.2.2 Contemporary theories......................................................................................................77
i. ERG Theory....................................................................................................................77
ii. The Equity Theory.............................................................................................................78
iii. The Expectancy Theory -Victor Vroom...........................................................................81
iv. Goal Setting Theory..........................................................................................................82
v. McCelland’s Theory of Needs...........................................................................................83
vi. Reinforcement Theory......................................................................................................85
Chapter Summary..........................................................................................................................87
CHAPTER FIVE...........................................................................................................................90

3
MANAGEMENT OF ORGANIZATIONAL CONFLICT...........................................................90
5.1 Meaning and Nature of Conflict..........................................................................................90
5.2 Approaches to Conflict........................................................................................................91
5.3 Levels of Conflict................................................................................................................93
5.4. Sources of conflict..............................................................................................................96
5.5. Conflict Outcomes..............................................................................................................97
5.6 Conflict Management........................................................................................................100
5.7 Managing Interpersonal Relations.....................................................................................105
Chapter Summary........................................................................................................................106
CHAPTER SIX............................................................................................................................109
Stress Management......................................................................................................................109
6.1 What is Stress?.......................................................................................................................109
6.2 Understanding Stress and its Consequences......................................................................110
6.2.1 Potential Sources of Stress..........................................................................................111
6.2.2 Individual Differences................................................................................................114
6.2.3 Consequences of Stress...............................................................................................115
6.3 Managing Stress.................................................................................................................116
6.3.1 Individual Approaches...........................................................................................116
6.3.2 Organizational Approaches...................................................................................117
Chapter summary.........................................................................................................................121
Chapter Seven..............................................................................................................................124
Culture and Diversity...................................................................................................................124
7.1. Culture and organization...................................................................................................124
7.1.1 Meaning and Nature of Organizational Culture.........................................................124
7.1.2 Manifestations of Culture......................................................................................127
7.1.3 The Role of Organizational culture.......................................................................127
7.2 Globalization and People at Work.....................................................................................128
7.2.1 Multinational Employers............................................................................................129
7.2.2 Multicultural Workforce.............................................................................................130
7.2.3 Expatriate Work Assignments....................................................................................130
Chapter Summary........................................................................................................................133
CHAPTER EIGHT......................................................................................................................135
Power and Politics in an Organization.........................................................................................135
8.1 A Definition of Power.......................................................................................................135

4
 8.2. Contrasting Leadership and Power...................................................................................136
8.3. Bases of Power.................................................................................................................136
8.4 Power in Groups: Coalitions..............................................................................................139
8.5 Politics: Power in Action...................................................................................................140
Chapter summary.........................................................................................................................142
Chapter Nine................................................................................................................................145
Organizational design and structure............................................................................................145
9.1 Overview of Organizational Structure and Design............................................................146
9.2 Objectives of Organizational Structure and Design..........................................................146
9.3 Organizational Structure and Design Outcomes................................................................147
9.3.1 Mechanistic Organizational Structure........................................................................147
9.3.2 Organic Organizational Structure...............................................................................148
9.4 Factors that Affect Organizational Design........................................................................149
9.5 Guidelines for Organizational Structure and Design.........................................................152
9.6 Steps in the Structure Designing Process..........................................................................152
9.7 Departmentalization...........................................................................................................152
9.7.1 Functional Departmentalization..................................................................................153
9.7.2. Product Departmentalization.....................................................................................153
9.7.3. Geographic Departmentalization...............................................................................154
9.7.4. Matrix Departmentalization.......................................................................................155
9.7.5. Team Organizations...................................................................................................156
9.8 Some Basic Concepts of Organizational Structure and Design.........................................156
9.8.1 Line, Staff & Functional Relationships......................................................................156
9.8.2 Chain of command......................................................................................................157
9.8.3 Span of Control...........................................................................................................157
9.8.4 Centralization and Decentralization...........................................................................157
9.8.5 Delegation...................................................................................................................158
Chapter Summary........................................................................................................................159

5
 Module Introduction
Dear learner welcome to the module. This module has nine chapters which are organized with
aim of providing you the basics of organizational behavior. In addition to furnishing the
information necessary to know about organizational behavior it will also show how the concepts
inculcated in the module can be applied in the real working environment. The following are
some of the major objectives that you need to achieve after completing the module:

 Identify the challenges of modern organizations and their management.

 Know the impact, which individuals, groups and structure have on behavior
within an organization and how this influences the productivity of an
organization.
 Understand the problems of managing an organization and develop the skills
needed to solve these problems.
 Differentiate the basic internal and external factors that determine the behavior
of an organization.
 Know what organizational culture is its and development.
 Understand stress, identify stress causing variables and managing techniques
 Know what power is, bases of power and organizational politics
 Identify various kinds of organizational design models and comprehend how
these designs influence human behavior and productivity
Generally the module has the objective of providing you basic skills that help you to better
explain, predict, influence and manage human behavior in the organization.

CHAPTER ONE

OVERVIEW OF ORGANIZATIONAL BEHAVIOR

6
Introduction
In this chapter, general overview of the course Organizational Behavior is provided. The chapter
presents the major concepts that lay down the foundation of organizational behavior. The first
part presents the definition of organization of behavior with detail explanations. The chapter
identified the three major variables in organizational behavior framework. Moreover, it also
indicated the importance of supporting intuitive thinking with systematic thinking, in addition to
identifying characteristics of organizational behavior. Furthermore, the chapter also indicated the
disciplines that contributed for the growth of organizational behavior. Manager’s jobs are
reviewed, management and organizational behavior in 21 st century are also discussed, and the
importance of inculcating system approached is assessed. While reading, try to understand the
essence of each section before starting the study of the subsequent sections. To this end, you can
use quick check and chapter end self test questions.

Learning Objectives:
Upon the completion of this chapter, you should be able to:
1. Describe what managers do.
2. Define organizational behavior (OB).
3. Understand the basic units analysis of OB
4. Explain the value of the systematic study of OB.
5. Identify the contributions made by major behavioral science disciplines to OB.
6. List the major challenges and opportunities for managers to use OB concepts.

 Dear distance learner what do you think organizational behavior is?

1.1 What is organizational behavior?
Organizational behavior is a discipline that applies the knowledge acquired about individuals,
groups and the effect of structure on behavior in order to make organizations work more
effectively. What people do in an organization shows their behavior and how such behavior
exhibited while on work affects, either positively or negatively, the performance of the
organization. Organizational Behavior is specifically concerned with employment related
situations. It has a paramount importance to managers as management is working with and
through individuals and groups to accomplish organizational goals.

7
As Luthans stated, organizational behavior represents the human side of management, not the
whole of management. Other organized approaches to management include the process,
quantitative systems, knowledge, and contingency approaches. In other words, organizational
behavior does not intend to portray the whole of management.

Agarwal, in his book titled” Organization and Management”, contends that management is the
integrating force in all organized activity. Whenever two or more people work together to attain
a common objective, they have to coordinate their activities. They have to organize and utilize
their resources in such away as to optimize the results. We are all intimately associated with
many kinds of organizations, like government, schools, hospitals and many others which play a
tremendous role in our life. Management is concerned with the process of decision making and
control over the actions of human beings for the expressed purpose of achieving predetermined
goals. Management is very broad which encompasses such functions as planning, organizing,
staffing, leading/directing and controlling whereas organizational behavior mainly deals with the
behavior of individuals and groups and the effect of structure on their behavior. Hence, it can be
said that organizational behavior is only some portion of management.

Generally, management is there in every organization to:-

 Govern the actions of its members towards enhancing their productivity for the
attainment of organizational goals
 Create conducive work environment by encouraging appropriate work habits (culture)
among its members.
 Work with and through people for the common good of the members.
 Coordinate the efforts of the organization for higher performance level.
Thus, management uses organizational behavior to have the knowledge to be utilized in
organizational situations for solving work related social problems.

Before we define exactly what the field of organizational behavior represents, take a moment to
think over the following question: Who was the single worst coworker/friend you’ve ever had?
Picture fellow students who collaborated with you on class projects; colleagues from part-time or

8
summer jobs; or peers, subordinates, or supervisors working in your current organization. What
did this coworker do that earned him or her “worst coworker” status? Now take a moment to
consider the single best coworker you’ve ever had. Again, what did this coworker do to earn
“best coworker” status?
If you ever found yourself working alongside the two people, two questions probably would be
foremost on your mind: “Why does the worst coworker act that way?” and “Why does the best
coworker act that way?” Once you understand why the two coworkers act so differently, you
might be able to figure out ways to interact with the worst coworker more effectively (thereby
making your working life a bit more pleasant). If you happen to be a manager, you might
formulate plans for how to improve attitudes and behaviors in the unit. Such plans could include
how to screen applicants, train and socialize new organizational members, manage evaluations
and rewards for performance, and deal with conflicts that arise between employees. Without
understanding why employees act the way they do, it’s extremely hard to find a way to change
their attitudes and behaviors at work. By taking the above points into consideration, Stephen
Robbins defined organizational in the following way
Organizational behavior (frequently abbreviated as OB) is: a field study that investigates the
impact of individuals, groups, and structure on behavior within organizations for the purpose
of applying such knowledge toward improving organization’s effectiveness.
That's a lot of words, so let's break it down.
Organizational behavior is a field of study. This means it is a distinct area of expertise with a
common body of knowledge. What does it study? It studies three determinants of behavior in
organizations: individuals, groups, structure. Additionally, OB applies the knowledge gained
about individual, groups, and the effect of structure on behavior in order to wake organization
work more effectively.
To sum up our definition, OB is concerned with the study of what people do in an organization
and how-that behavior affects the performance of the organization. And because OB is
specifically concerned with employment-related situations, you should not be surprised to find
that it emphasizes: behavior related to jobs, work, absenteeism, employment turnover,
productivity, human performance, and management.
There is increasing agreement on the components or topics that constitute the subject area of OB.
While there is still considerable debate about the relative importance of each, there appears to be

9
general agreement that OB includes the core topics of motivation, leader behavior and power,
interpersonal communication, group structure and process, learning, attitude development and
perception, change processes, conflict, job design, and work stress.

1.2 The three basic units of analysis in OB

There are three basic units used to analyze organizations behavior. These units are depicted in
the following diagram.

Fig 1.1: Framework for studying organizational behavior

The behavior of any organization believed to be affected by these three factors: individual, group
and organization. Organizations behavior takes into account factors relating to the individual
(employee) like personality, perception, attitude and values. In addition to this, organizational
behavior also addresses the possible impact of behaviors exhibited by employees when they
work in groups by studying their interpersonal relationship, reactions to different leadership
styles, power and organizational politics. Moreover, it assesses the nature of organizational
structures and their respective impact on various dependent variables. In doing so it indicates the
organizational culture, cultural diversity and ways of handling differences at organizational level.
Look at the following exhibit to understand the organizational behavior model.

10
1.3. Replacing intuition with systematic study
Casual or commonsense approaches to obtaining knowledge about human behavior are
inadequate. Underlying this systematic approach is the belief that behavior is not random. It is
caused and directed toward some end that the individual believes, rightly or wrongly, is in his or
her best interest.
Behavior generally is predictable if we know how the person perceived the situation and what is
important to him or her. While people's behavior may not appear to be rational to an outsider,
there is reason to believe it usually is intended to be rational and it is seen as rational by them.
An observer often sees behavior as nonrational because the observer does not have access to the
same information or does not perceive the environment in the same way.
Certainly there are differences between individuals, placed in similar situations; all people do not
act alike. However, certain fundamental consistencies underlie the behavior of all individuals
that can be identified and then modified to reflect individual differences.
What may be less obvious is that there are rules (written and unwritten) in almost every setting.
Therefore, it can be argued that it's possible to predict behavior (undoubtedly not always with

11
100 percent accuracy) in supermarkets, classrooms, doctors' offices, elevators, and in most
structured situations. To illustrate further, do you turn around and face the doors when you get
into an elevator? Almost everyone does, yet did you ever read you're supposed to do this?
Probably not! Just as I make predictions about automobile drivers (where there are definite rules
of the road), I can make predictions about the behavior of people in elevators (where there are
few written rules). In a class of 60 students, if you wanted to ask a question of the instructor, I
would predict you would raise your hand. Why don't you clap, stand up, raise your leg, cough, or
yell, "Hey, over here!"? The reason is that you have learned raising your hand is appropriate
behavior in school. These examples support a major contention in this text: Behavior is generally
predictable, and the systematic study of behavior is a means to making reasonably accurate
predictions.
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.
Systematic study replaces intuition or those gut feelings about "why I do what I do" and "what
makes others tick." Of course, a systematic approach does not mean those things you have come
to believe in an unsystematic way are necessarily incorrect. Some of the conclusions we make in
this course, based on reasonably substantive research findings, will only support what you
always knew was true. But you will also be exposed to research evidence that runs counter to
what you may have thought was common sense. Moreover, what one person considers "common
sense" frequently runs counter to another's version of "common sense”.

1.4. A review of a manager’s job and it relation to the study of OB

Managers perform four management functions: planning, organizing, leading, and controlling. If
you don't know where you're going, any road will get you there. Since organizations exist to
achieve goals, someone has to define these goals and the means by which they can be achieved.
Management is that someone. The planning function encompasses defining an organization's
goals, establishing an overall strategy for achieving these goals, and developing a comprehensive
hierarchy of plans to integrate and coordinate activities.

12
Managers are also responsible for designing an organization's structure. It includes the
determination of what tasks are to be done, who is to do them, how the tasks are to be grouped,
who reports to whom, and where decisions are to be made.
Every organization contains people, and it is management's job to direct and coordinate these
people. This is the leading function. When managers motivate subordinates, direct the activities
of others, select the most effective communication channel, or resolve conflicts among members,
they are engaging in leading.
The final function managers perform is controlling. After the goals are set, the plans formulated,
the structural arrangements delineated, and the people hired, trained, and motivated, there is still
the possibility that something may go amiss. To ensure that things are going as they should,
management must monitor the organization's performance. Actual performance must be
compared with the previously set goals. If there are any significant deviations, it is management's
job to get the organization back on track. This monitoring, comparing, and potential correcting is
what is meant by the controlling function.
So, using the functional approach, the answer to the, question of what managers do is that they
plan, organize, lead, and control.

Management Roles
In the late 1960s, Henry Mintzberg, undertook a careful study of five executives to determine
what these managers did on their jobs. Based on his observations of these managers, Mintzberg
concluded that managers perform ten different highly interrelated roles, or sets of behaviors,
attributable to their jobs. These ten roles can be grouped as being primarily concerned with
interpersonal relationships, the transfer of information, and decision making.
INTERPERSONAL ROLES: All managers are required to perform duties that are ceremonial
and symbolic in nature. When the president of a college hands out diplomas at commencement or
a factory supervisor gives a group of high school 'students a tour of the plant, he or she is acting
in a figurehead role. All managers have a leadership role. This role includes hiring, training,
motivating, and disciplining employees. The third role within the' interpersonal grouping is the
liaison role. Mintzberg described this activity as contacting outsiders who provide the manager
with information. These may be individuals or groups inside or outside the organization. The
sales manager who obtains information from the personnel manager in his or her own company

13
has an internal liaison relationship. When that sales manager has contacts with other sales
executives through a marketing trade association, he or she has an outside liaison relationship.
INFORMATIONAL ROLES: All managers will, to some degree, receive and collect
information from organizations and institutions outside their own. Typically, this is done through
reading magazines and talking with others to learn of changes in the public's tastes, what
competitors may be planning, and the like. Mintzberg called this the monitor role. Managers also
act as a conduit to transmit information to organizational members. This is the disseminator role.
Managers additionally perform a spokesperson role when they represent the organization to
outsiders.
DECISIONAL ROLES: Finally, Mintzberg identified four roles that revolve around the making
of choices. In the entrepreneur role, managers initiate and oversee new projects that will improve
their organization's performance. As disturbance handlers, managers take corrective action in
response to previously unforeseen problems. As resource allocators, managers are responsible
for allocating human, physical, and monetary resources. Lastly, managers perform a negotiator
role, in which they discuss and bargain with other units to gain advantages for their own unit.
Still another way of considering what managers do is to look at the skills or competencies they
need to successfully attain their goals. Three essential managerial skills are:-
1. Technical skill: encompasses the ability to apply specialized knowledge or expertise.
2. Human skill: is about the ability to work with, understand and motivate other people
both individually or in groups.
3. Conceptual skill: is the mental ability to analyze and diagnose complex situations.
Decision making, for example, requires managers to spot problems, identify alternatives
that can correct them, evaluate these alternatives, and select the best one.

�Quick Test Questions

1) Describe the three categories of informational role
2) As management is working with and through people, what skills do you assume are
important to managers holding various positions in a given organizational structure?

14
1.5. The characteristics of OB
According to Ivancevich et al (2008) the following are some of the characteristics of
organizational behavior.
1. It is a way of thinking about individuals, groups and organizations.
2. It is multidisciplinary – it uses principles, models, theories and methods from other disciplines.
3. There is a distinctly humanistic orientation – people and their attitudes, perceptions, learning
capacities, feelings and goals are of major importance.
4. It is performance-orientated – it deals with the factors affecting performance and how it can be
improved.
5. The use of scientific method is important in studying variables and relationships.
6. It is applications-orientated in the sense of being concerned with providing useful answers to
questions which arise when managing organizations.

Can you state some disciplines that contributed for the development of OB?
_____________________________________________________________________________
___________________________________________________________________________
_________________________________________________________________________

1.6 The development of OB and Contributing disciplines

I. Historical Foundations of Organizational Behavior

As organizations increased in size and complexity, the need for human concern also increased.
Different management theorists studied employees’ needs and motives or behavior in an
organization and the impact of employee behavior on productivity. Casual or common sense
approaches to obtaining knowledge about human behavior are inadequate. Underlying the
systematic approach is the belief that behavior is not random. It is caused and directed towards
some end that the individual believes rightly or wrongly, is in his best interest. Behavior
generally is predictable if we know how the person perceived the situation and what is important
to him/her. While people’s behavior may not appear rational to an outsider, there is reason to
believe it usually is intended to be rational and it is seen as rational by them. Certainly there are
differences between individuals. Placed in similar situations all people do not act alike. However,

15
certain fundamental consistencies underlie the behavior of all individuals that can be identified
and then modified to reflect individual differences.

As coined by Luthans, the early management pioneers such as Henry Fayol, Henry Ford, Alfred
P. Salon and even the scientific management advocators at the end of the 19 th century such as
Frederic W. Taylor, recognized the behavioral side of management. However, they did not
emphasize the human dimension; they let it play only a minor role in comparison with the roles
of hierarchical structure, specialization, and the management functions of planning, organizing,
staffing, leading and controlling.

About the time of World War I, Fayol headed up what was at that time the largest coal mining
firm in Europe. Writing the generally considered first book in management, he emphasized that
the purpose of organization was to get the work done in specialized, machine like functions. He
did not emphasize that the organization is made up of people; it is not a machine. Yet, perhaps,
the most widely recognized management expert in modern times, peter Druker, has stated, “The
organization is, above all it is social. It is people.” There are varied and complex reasons for the
emergence of the importance of the organization as social system, but it is the famous Hawthorne
studies that provide historical roots for the notion of a social organization made up of people and
makes the generally recognized starting point for the field of organizational behavior.

The historical background of organizational behavior can be learned by having a through look at
the following theories of management forwarded by various individuals. As forwarded by
Mishra, these theories can be grouped into four main categories as Classical Approach, Neo
Classical Approach, Behavioral approach and Modern Approach.

1. Classical Approach
Theories developed at the early stages were included under classical approach. The theories
included in this category are bureaucratic, administrative, and scientific approaches. They
emphasize on the structural or functional factors. The classical approach stresses on four S’s that
is, structure, specialization, scalar principle, and the span of control. This theory lays emphasis
on the organizational structure. Moreover, it treats employees as economic beings like machines
and money. Their maximum exploitation is suggested by applying the bureaucratic and coercive

16
approach. Hire and fire is the basic approach of this theory. It led to a dehumanized
organizational structure without considering the factors of flexibility and adaptability. The rules
and regulations become the governing factors. Specialization based on the division of labor,
scalar chain hierarchical organization, discipline, are the advantages of the classical approach.
This approach ignores the significance of human beings in organizational growth. There is an
absence of flexibility, adaptability, intrinsic rewards and personal attachment. Ignoring initiative,
innovation and changes is not beneficial for the health of an organization.

Among the categories of classical theories the most recognized one is the scientific management
theory. Hence, now let us have a brief look at scientific management theory as forwarded by
Frederic W. Taylor.

a) Scientific Management Theory

The scientific management theory was propounded by F.W.Taylor and was carried out by Frank
and Lillian Gilbreth, Henry L Gantt and Emerson. Taylor was considered as the father of the
principles of scientific management. His primary concern was to increase productivity through
greater efficiency in production and increase in payment for workers. As to this approach, the
personal talent of the manager guided the workers who were motivated by bonus and monetary
benefits. To this end, he tried to find out the basic principles of management by using time and
work study, detailed analysis, investigation and planning of work allocation. It is known as
scientific management because systematized knowledge is used for work allocation and
assignment of specific jobs. The slary, wages, etc are to be decided as per the work performance
of individuals. Taylor described how the scientific method could be used to define the “one best
way” for a job to be done.

The scientific management approach was concerned with the principles mentioned below among
others:
 developing a standard method of doing a job
 scientific selection of personnel
 assigning workers to jobs depending on their abilities
 training workers on the work method
 eliminating interruptions

17
  offering economic incentives
 specialization
 functional foremanship
 work order and
 coordination
2. Neo Classical Approach
The classical theories concentrated on discipline and the economic well being of people. They
ignored their morale and desires. Neo classical theories while accepting the merits of classical
theories have given more importance to human relations and behavioral sciences. These theories
modified, added, and extended the classical theories by realizing the fact that management exists
in social system wherein human factors have noteworthy roles in performance. Employees can
play crucial roles in decision making process provided that they are allowed to take part. Human
relations and behavioral science have become two important approaches of neo classical
theories.

a) Human Relations:
This theory was developed by Elton Mayo and his colleagues from 1924 to 1932 at the
Hawthorne plant of western Electric Company. Below the Hawthorne study which was
conducted in four phases is described in brief.
Elton Mayo and His Hawthorne Experiment: without any question, the most
important contribution to the human relations movement within organizational behavior came
out of the Hawthorne studies undertaken at the western electric company. The four phases of this
study are:
1. The Illumination Experiments: this phase of the study revealed that light had no
significance impact on productivity of workers. The intensity of light did not influence
the productivity of telephone relays. Here attempts to predict behavior were made by
studying the relationship between physical variables in the work environment such as
illumination, rest periods, length of work weeks, length of work periods, and employee
productivity.
2. Relay Assembly Test: this one provided several facilities to telephone relay assembly
wherein it was observed that special attention and treatment caused employees to

18
 increase their productivity. It was termed as the Hawthorne Effect, where people feel the
pride of belonging to a group. Herein, the relationship between non physical variables
such as improved human relations, supervisory methods, social interaction, incentive
systems, workers’ authority, and productivity was studied.
3. Interviewing Programs: this one tested on human relations rather than on favorable
physical conditions. It revealed that employees are unwilling to answer direct questions.
They gave important clues towards management style when asked indirectly.
4. The Bank Wiring Observation Room Experiments: here sufficient freedom was given
to the informal groups. It revealed that employees were not only economic beings but
social and psychological beings as well. Their productivity was influenced by
sentiments, beliefs and the group behavior of employees.

3. Behavioral Management Theory

The proponents of behavioral school recognized employees as individuals with concrete human
needs as part of the work groups and as members of a large society. This theory believes in
interpersonal relations. It states that employees are assets that can be developed not nameless
robots expected to follow orders blindly.
F. Herzberg and V.Vroom suggested more rational models after Maslow who developed the need
hierarchy. Robbert Owen, a successful textile mill manager in Scotland, is considered as the
father of modern personnel management. He emphasized that management should show concern
for employees.

Abraham Maslow- a humanistic psychologist- proposed a theoretical hierarchy of five needs;

physiological, safety, social, esteem and self actualization needs. From a motivation standpoint,
he argued that each step in the hierarchy must be satisfied before the next can be activated and
that once a need is substantially satisfied, it no longer motivates behavior. Mcgregor, Likert and
others emphasized democratic values and human motivation. Unlike the beliefs of classical
theory, behavioral science believes that human beings like work and but it should not be super
imposed rather be self realized.

Some of the major contributions of the aforementioned theory are described below.

19
 Individual behavior: behavior of individual employees has been considered important
in the field of management. Their behavior is influenced by their respective feelings,
perception, learning, and personality.
Group behavior: the cultural and social backgrounds of employees have a significant
role to play in management. People work together to accomplish the corporate
objective, i.e., group objectives.
Task: effective performance of a task is important while giving due importance to
coordinated efforts and achievement.
Participative management: employees have the right to take part in management
decisions. Giving such opportunities to workers in the management process will help
increase productivity and efficiency.
Motivation: monetary and non monetary incentives should be used for motivating
people. Employee development and worker satisfaction contribute greatly to
production.
Communication: two way communications is essential to establish a common flow of
understanding in any organization. Formal and informal communication is exercised for
managing people, although informal communication has more impact on management
success. Group communication, team sprit, man to man relations and group harmony
have been realized by neo classical theorists.

4. Modern Approach
According to Mishara, the modern organizational theory has become complex for it synthesizes
the classical and neo classical theories, while incorporating technological development. The
modern theory is classified into quantitative, systems and contingency.

Quantitative Theory: this theory includes operations research and quantification of

the problem. It analyses the problem from quantifiable angles and provides solutions to complex
problems only with the help of statistical and mathematical models such as linear and non linear
programming, decision tree, game theory, simulation, probability, and many others.

20
Systems Theory: a system is a set of interconnected and interrelated elements of
management activity. It is an arrangement of components of activities performed for achieving
certain objectives. Here the importance of considering an organization as composed of different
work units/ sections striving to achieve a common goal and thereby the need of paying due
attention to every unit is emphasized. According to this approach, if one section of the
organization fails to accomplish its tasks then the overall wellbeing of the organization would be
in jeopardy.

Contingency Management Theory: this theory is based on the premises that

managers prefer actions or approaches depending on the variables of the situation they face. It
recognizes that there is “no one best way” to manage people in organizations and no single set of
simple principles that can be applied universally. A contingency approach to the study of
organizational behavior is intuitively logical because organizations obviously differ in size,
objectives, and environmental uncertainty. Similarly, employees differ in their values, attitudes,
needs, and experiences. Therefore, it would be surprising to find that there are universally
applicable principles that work in all situations, but it is one thing to say “it all depends.”
�Quick Test Questions
1) The historical development of organizational behavior can be traced to four categories of
theories. Identify these categories along with their sub categories?
2) What are the four phases of Elton Mayo’s Hawthorne Experiment?
3) What is the essence of systems theory?

II. Contributing disciplines

Organizational behavior is an applied behavioral science that is built on contributions from a

number of behavioral disciplines. The predominant areas are psychology, sociology, social
psychology, anthropology, and political science. As we shall learn, psychology's contributions
have been mainly at the individual or micro level of analysis; the other four disciplines have
contributed to our understanding of macro concepts such as group processes and organization.
1. Psychology: is the science that seeks to measure, explain, and sometimes change the
behavior of human and other animals. Psychologists concern themselves with studying

21
 and attempting to understand individual behavior. Those which contributed and continue
to contribute to the knowledge of organizational behavior include learning, motivation,
personality, perception, counseling psychologist, and most important, industrial and
organizational psychologist.

2. Sociology: whereas psychologists focus their attention on the individual, sociologists

study the social system in which individuals fill their roles; that is, sociology studies
people in relation to their fellow human beings. Specifically sociologists have made their
greatest contribution to organizational behavior through their study of group behavior in
organizations, particularly formal and complex organizations. The following are among
the major contributors to organizational behavior. Group dynamics, work teams,
communication, power, conflict, inter group behavior and others.
3. Social psychology: is an area with in psychology, but blends concepts from both
psychology and sociology such as behavioral change, attitude change group processes
and so on.
4. Anthropology: it studies societies to learn about human beings and their activities. The
work of anthropologists on cultures and environments, for instance, has helped us
understand differences in fundamental values, attitudes and between people in different
countries and within different organizations. It focuses on comparative values and
attitudes cross cultural analysis, organizational culture and environment.
5. Political science: this one deals with the behavior of individuals and groups within a
political environment. Areas such as conflict, intra- organizational politics, power and
others are investigated here.

1.7. Management and organizational behavior in the 21st century

There are a lot of challenges and opportunities to day for managers to use organizational
behavior concepts. Some of the more critical issues confronting managers for which
organizational behavior offer solutions or at least some meaningful insights towards solutions
are:
1. Improving Quality and Productivity: most managers are confronting the challenges to
improve their organizations’ productivity and the quality of the products and services

22
 they offer. Towards improving quality and productivity, managers are implementing
programs like Total Quality Management (TQM) and Business Process Reengineering
(BPR)-programs that require extensive employee involvement. Today’s contemporary
managers understand the success of any efforts at improving quality and productivity
must include their employees. These employees will not only be a major force in carrying
out changes but increasingly will participate actively in planning those changes.

2. Improving people skill: since managers work with and get things done through others,
they must have good human skills to communicate, motivate and delegate.
Organizational behavior theories and concepts can help managers explain and predict the
behavior of people at work. In this regard, managers are required to have the skills of
effective listener, the proper way to give performance feedback, how to delegate
authority, and how to create effective teams.

3. Managing Work Force Diversity: one of the most important and broad based challenges
currently facing organizations across the globe is adapting to people who are different.
Organizations are becoming heterogeneous in terms of gender, race, and ethnicity of their
employees. But the term encompasses anyone who varies from the so called norm.
Managers should shift their philosophy from treating every one alike to recognizing
differences and responding to those differences in ways that will ensure employee
retention and greater productivity-while, at the same time not discriminating. Diversity, if
positively managed, can increase creativity and innovation in organizations as well as
improve decision making by providing different perspectives on problems.

4. Responding to Globalization: management is no more constrained by national borders.

Globalization affects a manager’s people skills in at least two ways. First, managers are
increasingly likely to be assigned in foreign country. He/she will be transferred to the
employer’s operating division or subsidiary in another country. Once there, the manager
has to manage a workforce that is likely to be very different in needs, aspirations, and
attitudes from the ones he/she were used to back home. Second, even in one’s own
country, managers find themselves working with bosses, peers, and subordinates who

23
 were born and raised in different cultures. What motivates you may not motivate them.
While your style of communication may be straightforward and open, they may find this
style uncomfortable and threatening. This suggests that if a manager has to work
effectively with these people, he needs to understand their culture, how it is shaped them,
and learns to adapt your management style to these differences.

5. Empowering People: nowadays managers put employees in charge of what they do

previously. They act as coaches, advisers, sponsors, or facilitators; apart from acting as
bosses. In many organizations employees are becoming associates and there is a blurring
between the roles of managers and workers. Decision making is being pushed to the
operating level, where workers are being given the freedom to make choices about
schedule, procedures, and solving work related problems. Managers encourage their
employees to participate in work related decisions. Now managers are going considerably
further by allowing employees’ full control of their work.
6. Stimulating Innovation and Change: employees can be the impetus for innovation &
change or they can be a major stumbling block. The challenge for the manger is to
stimulate employees’ creativity and tolerance for change. 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 competition to the market
place with a constant stream of innovative products and services.

7. Coping with Temporariness: managers have always been concerned with change. What
is different nowadays is the length of time between change implementations. They are
required to deal with flexibility, spontaneity, and unpredictability. Managing today would
be more accurately described as long periods of ongoing change, interrupted occasionally
by short periods of stability. The world that most managers and employees face today is
one of permanent temporariness. Workers need to continually update their knowledge
and skills to perform new job requirements.

24
 8. Declining Employee Loyalty: corporate employees used to believe their employers
would reward their loyalty and good work with job security, generous benefits, and pay
increases. But in response to global competition, unfriendly takeovers, leveraged buyouts,
and the like, corporations began to discard traditional policies on job security, seniority,
and compensation. On the other hand, these changes have resulted in a sharp decline in
employee loyalty. An important challenge for managers would be to devise ways to
motivate workers who feel less committed to their employers while maintaining global
competitiveness.
� Quick Test Question
How would you respond if you were assigned as a leader of certain team that is
concerned with improving quality and productivity of their unit?

1.8. Developing an organizational behavior model

When organizational researchers study human behavior, they usually try to draw conclusions
about casual relationships of two (dependent & independent) variables-what causes what.

According to Stephen P. Robbins, a model is an abstraction of reality; a simplified representation

of some real world phenomenon. There are three levels of analysis in Organizational behavior.
As we move from the individual level to the organization systems 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 model. 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

Organizational System Level

Group Level

Individual Level

25
Figure 1.1 Basic organizational behavior model
1.8.1 Dependent variables: are those which are caused by independent variables. The primary
dependent variables given by different scholars are; productivity, absenteeism, turn-over and job
satisfaction. We use these as the critical determinants of human resource effectiveness in an
organization.

a) Absenteeism: is failure to report to work. It is obviously difficult for an organization to

operate smoothly and to attain its objectives if employees fail to report to their jobs. The work
flow is disrupted and often important decisions must be delayed. In organizations that rely
heavily in assembly line technology, absenteeism can be considerably more than disruption-it
can result in a drastic reduction in quality of output, and in some cases, it can bring about a
complete shutdown of the production facility. Levels of absenteeism beyond the normal range in
any organization have a direct impact on that organization’s effectiveness and efficiency. We can
conceive of situations where the organization may benefit by an employee voluntarily choosing
not to come to work. For instance, fatigue or excess stress can significantly decrease an
employee’s productivity .In jobs where an employee needs to be alert- surgeons and air line
pilots are obvious examples- it may well be better for the organization if the employee does not
report to work rather than show up and perform poorly.

b) Productivity: an organization is productive if it achieves its goals, and does so by transferring

inputs to outputs at the lowest possible cost. As such, productivity implies a concern for both
efficiency and effectiveness. A hospital, for example, is effective when it successfully meets the
needs of its clients. It is efficient when it can do this at a low cost. According to Mishara, the
refined and improved behavior of employees has a direct reflection on productivity. The
effectiveness, efficiency, and economy of the organization are observed at individual and group
levels. An organization achieves effectiveness when it achieves its goals. Efficiency relates to the
wise utilization of available resources so as to achieve the desired end state/goal.

C. Turnover: as coined by Robbins, a high rate of turnover in an organization means increased

recruiting, selection, and training costs. It can also mean a disruption in the efficient running of

26
an organization when knowledgeable and experienced personnel leave and replacements must be
found and prepared to assume positions of responsibility. If the right people are leaving the
organization-the marginal and sub marginal employees, turnover can be positive. It may create
the opportunity to replace an underperforming individual with someone with higher skills or
motivation, open up increased opportunities for promotion, and add new and fresh ideas to the
organization. But turnover often means the loss of people the organization does not want to lose.
All organizations, of course, have some turnover. Turnover is for the good of the organization
when low performing workers are leaving and high performers come in.

d) Job satisfaction: is the difference between the amount of rewards workers receive and the
amount they believe they should receive. Unlike the previous three factors job satisfaction
represents an attitude rather than a behavior. In improved situation and group behavior will
increase the satisfaction of individuals. The expectations of the employees are met. The
difference between the amount of reward and its expectation is the level of satisfaction. The
quality of performance depends on the satisfaction of employees. Individual satisfaction is the
legitimate result of organizational behavior.

1.8.2 Independent variables: is the presumed cause of some change in the dependent variable.
The major determinants of productivity, absenteeism, turnover and job satisfaction are
independent variables at different levels of organizational behavior model. The independent
variables influencing the organization’s model of behavior are individuals, groups and the
structure of the organization.

Individual Level Variables: people enter organizations with certain characteristics that
influence their behavior at work. The common ones include- personality characteristics, value,
attitudes and basic ability levels. Individuals having their own personalities, preferences, values,
attitudes and learning influence the work environment directly. Management cannot control these
variables; rather they have to use these factors for effective performances. The degree of
influences of these factors is studied with perception, learning, and personality which will be
discussed in the next chapter of this module.

27
Group Level Variables: people’s behavior when they are in groups is different from their
behavior when they are alone. The individual in groups are expected to exhibit what the group
considers to be acceptable standard of behavior and the degree to which the group members are
attracted to each other. Group variables are important factors influencing organizational
behavior. A group has more impact than the sum of individual’s contributions. Synergy (i.e.
contribution of people in groups is more than the sum total of the contributions of each
individual) is obtained through group variables. However, if group behavior is not controlled, it
may damage more than the individual employees.

Organization system variables/structural variables: just as groups are more than the sum of
their individual members; so are organizations more than the sum of their member groups. The
structures of an organization have their own functional relations. Straight line communication
and unity of command have disciplined behavior. Multiple commands may create conflicts.
Organizational behavior reaches its highest level of sophistication when we add formal structure
to our previous knowledge of individuals and group behavior. The design of the formal
organization, technology and work processes, and jobs; the organization’s human resource
policies and practices (like selection, training programs, performance appraisal methods); the
internal culture and levels of work stress all have an impact on the dependent variables.

�Quick Test Questions

1) Define what organizational behavior is all about.
2) Differentiate the three levels of basic organizational behavior model.
3) Can you mention situations where it may be better for the organization if an employee
does not report to work/absent from his/her regular job?

1.9. Organizational Behavior and the Work Place

Organizational behavior is a discipline that can assist managers to make appropriate decisions
while working with and through individuals and groups in complex and dynamic work place.
Realities of the new work place include:
1. The work force is changing: managers in a work place must be prepared to deal with a
workforce with a change in diversity, ethnic, racial backgrounds, gender, age, life style
and abilities.

28
 2. Consumer expectations are changing: in today’s market place only those organizations
that are able to deliver what customers want in terms of quality, service and cost will
prosper.
3. Organizations are changing: organizations are changing and will continue to change in
order to survive and prosper in a rapidly changing environment. Under different
pressures nowadays we see organizations down sizing, forming alliances, creating new
structures, going global and employing more technologies.

1.10. Managers and Organizational Behavior

Managers are those individuals who are in charge of ensuring the healthy operation of a given
unit/ organization by coordinating or integrating the various resources available. Since they are
responsible for the overall aspect of the unit they are heading, they should clearly understand
organizational behavior. Knowledge of organizational behavior enables them to lead the unit
effectively and efficiently. Managers need to develop their interpersonal or people skill if they
are going to be effective in their jobs.

Organizational behavior focuses on how to improve productivity, reduce absenteeism turnover

and increase employee job satisfaction. To develop valid generalization about the behavior of
people, organizational behavior uses systematic study to improve behavior predictions that
would be made from intuition alone. Since people are different, we have to look at organizational
behavior in a contingency framework using situational variables to moderate cause effect
relationships. Organizational behavior offers a number of challenges and opportunities for
managers.

Organizational behavior recognizes differences and helps managers see the value of work force
diversity and practice that may need to be made when managing in different countries. It can also
help managers learn to cope in a world of temporariness and declining employee loyalty in terms
of rapid and ongoing changes.
Dear distance learner can you define what system is?
______________________________________________________________________________
______________________________________________________________________________

29
1.11. Organization as a system
Mishra states that an organization is a social system wherein its members try to achieve their
private goals while achieving the organization’s goals. The seemingly contradictory goals are
resolved by effective organizational behavior. The organization, namely a unit, a business
company, government, army, a charitable institution or any association of persons, has some
objectives which are attained by organizing the activities of their members. An organization is a
structure, a process, and a relationship to achieve corporate objectives under the given
environment. An organization is not static; rather it is dynamic and ever changing as per the
needs of society, its members, corporate objectives and environmental changes. People form and
develop organizations because they are unable to achieve the desired goals individually. They
evolve different types of organizations according to their needs. An organization is a
composition of people having different authorities and responsibilities to utilize the existing
resources for achieving the organization’s objectives.

Robins asserts that an organization is a consciously coordinated social unit, composed of two or
more people, that functions on relatively continuous basis to achieve a common goal or set of
goals.

Mooney and Reiley defined an organization as “the form of human associations for attaining
common objectives.” The authority, responsibilities and the relationships between and amongst
the members of an organization are also part of organizational function.

Hence, organizations are mechanisms through which many people combine their efforts together
to accomplish more than any one person could do alone. Since an organization is a group of
people working together to attain some common objectives, understanding, managing and
controlling the behavior of individuals as well as groups is highly important to ensure the smooth
operation of the unit and thereby realizing the set goals is crucial for survival and growth of the
organization. Therefore, it can be concluded that organizations and organizational behavior,
which deals the behavior of workers who make up the organization, are closely linked. If there is
organization, obviously the need arises to have employees who will accomplish the objectives of
the unit.

30
 A system is a whole made up of parts. Each part can affect the way other parts work and the way
all parts work together will determine how well the system works. This is a fundamental
challenge to traditional management thinking. Traditionally we have learned to manage an
organization by managing its separate pieces (sales, marketing, production, logistics, service,
etc.). Managing in this way always causes sub-optimization; parts achieve their goals at the
expense of the whole. Only changing the system solves the problem.
In essence, the systems perspective emphasizes that everything is connected to everything else
and that it's often worthwhile to model businesses and processes in terms of flows and feedback
loops. Systems thinking stress linkages and relationships and flows. It emphasizes that any given
employee or unit or activity is part of a larger entity and that ultimately those entities, working
together, are justified by the results they produce.
To effectively, nimbly, and proactively adapt to the demands of a rapidly changing environment,
all system components – inputs, processes, outputs, and feedback – must be managed.

The organization as open system interacts with various factors operating in their environment.
They acquire different types of inputs from the environment and process them into various forms
of outputs which in return will be provided to the environment. This implies the organization
affects and is being affected by its environment. How well it is doing can be recognized with the
help of feedback which may come to the organization in the form of complaints, suggestions,
showing loyalty and in many other ways. This is depicted in the figure below.

Resources/ inputs
 human
 financial Transformation Output
As o
 material processes Products-goods & services
 information
pen
 facilities -Work activities
 equipments

Feedback
Fig. 1.2 Open system organizations interact with their environment.

31
Chapter Summary
After World War I, experts began paying attention to the human side of organizations. The
famous Hawthorne study provided historical roots for the notion of social organization that is
made up of people. It is generally believed that the Hawthorne study gave rise to the beginning
of the filed of organizational behavior. The historical development of organizational behavior
can be traced to four schools of thought, viz. the classical approach, the neo classical approach,
the behavioral approach and modern approach.

Organizational behavior can be defined as a filed of study that investigates the impact of
individuals, groups, and organizational structure on behavior within organizations for the
purpose of applying such knowledge towards improving an organization’s efficiency. It is the
knowledge of people’s behavior at work. Organizational behavior is an applied behavioral
science that is built on contributions from such disciplines as psychology, sociology, social
psychology, anthropology, economics, and political science.
There are three levels of analysis in organizations behavior, that is, individual, group and
organizational level. Organizational researchers while studying human behavior tried to draw
conclusions about casual relationships of two variables-dependent and independent.
Accordingly, the primary dependent variables given by different scholars are absenteeism,
productivity, turn over and job satisfaction. The independent variables include individual level
variables, group level variables and organizational system variables.

Management is there in every organization to govern the actions of its members towards
enhancing their productivity, create conducive work environment and coordinate the efforts. An
organization is an open system that interacts with various forces operating at its environment.
Managers play ten different but highly interrelated roles and these roles can be grouped into
three as interpersonal, informational and decisional roles.

32
Self Check Exercise 1
Choose the best answer among the alternatives given
1. Which one of the statements below is false?
A. The classical approach treats employees as economic beings like machines and
money.
B. The classical approach includes bureaucratic, administrative and scientific approaches
C. F. W. Taylor’s primary concern was to increase productivity through greater
efficiency in production and increase payment for employees.
D. Taylor described how the scientific method could be used to define “one best way”
for a job to be done.
E. None of the above
2. The phase of Hawthorne study in which the relationship between physical variables in the
work environment such as illumination, rest periods, length of work hours, length of work
weeks, and employee productivity is studied is
A. Relay assembly test D. Interviewing program
B. The illumination experiment E. B&C
C. The bank wiring observation room experiment
3. ______ theory states that employees are assets that can be developed; not nameless robots
expected to follow orders blindly.
A. Scientific management theory
B. Behavioral management theory
C. Contingency theory of management
D. Systems theory
E. None
4. Identify the incorrect statement among the following
A. Quantitative theory analyzes organizational problems from quantifiable angels and
provides solutions to complex problems with the help of statistical and mathematical
models.
B. An organization can be considered as a system composed of different work units
operating towards the achievement of common goal

33
 C. Organizational behavior is the study and application of knowledge about how people
act within organizations.
D. Systems theory contends that there is no ‘one best way’ to manage people in
organizations
E. None
5. Which one of the following is not a dependent variable?
A. Absenteeism C. personality
B. Turnover D. Job satisfaction E. Productivity
6. Realities of the new work place is manifested through
A. Changing consumer expectations C. Changing organizations
B. Changing workforce D. All of the above E. Only B&C
7. All the statements below are true except____
A. Mangers need to develop their interpersonal or people skill if they want to be
effective in their jobs.
B. Organizational behavior focuses on how to improve productivity, reduce absenteeism
and turnover and increase employee job satisfaction
C. An organization is not dynamic; rather it is static
D. Organizations are mechanisms through which many people combine their efforts
together to accomplish more than any one person could do alone.
E. None
8. A manager who hands over certificates to individuals who actively participated in the
establishment of a company at the time of its opening ceremony is playing the role of
A. Leadership C. Spokes person
B. Liaison D. Figure head E. Monitor
9. A discipline that contributed towards the development of organizational behavior and which
manly seeks to measure, explain, and sometimes change the behavior of human and other
animals is
A. anthropology C. psychology
B. sociology D. political science E. social psychology

34
10. The challenges and opportunities for organizational behavior include
A. managing workforce diversity
B. responding to globalization
C. empowering people
D. coping with temporariness
E. all of the above

35
 CHAPTER TWO
FOUNDATION OF INDIVIDUAL BEHAVIOR AND LEARNING IN AN
ORGANIZATION

Introduction
Dear student, welcome to the second chapter of the module! The chapter deals about foundations
of the individual behavior, which is important to study the various behavioral issues of
employees. It will try to teach you why employees act the way they do, identify factors
contributing to individual perception difference and the biases that we make when making
judgment about others. Moreover, the chapter will also discuss how attitudes are formed and
different kinds of job attitudes. Furthermore, personality and determinants of individual
personality might be identified and how different individuals embracing different personality
attribute act in work environment is also indicated. Finally learning methods are presented and
how managers can use different behavior shaping techniques to modify employee’s behavior is
shown. Good reading.

Learning Objectives:
After completing the study of this chapter, you should be able to
 know the foundations of individual behavior
 comprehend what perception is and identify those factors that allow a stimuli to be
perceived or not
 realize the major factors that may distort our perception on others and appreciate their
role in individual as well as organizational life
 understand attitude and how attitudes are formed
 define personality and different personality attributes
 know the possible connection between personality and productivity
 understand learning and forces that shape behavior
 understand different learning theories and their application

36
2.1. The Individual Behavior
The outcomes of an organization depend partly on how its individual members behave. Thus, it
is important to understand individual behavior. According to Agarwal, a manger has to deal with
a large number of people inside as well as outside his organization. Inside his organization, he
interacts with his subordinates, peers, and superiors. He has to get things done through and with
his subordinate, seek the cooperation and support of his peers for his job performance, and
constructively respond to the initiatives of his superiors. Outside the boundaries of his
organization, he has to deal with a large number of people including customers, suppliers,
competitors, legislators, public officials, etc. His success as a manager significantly depends on
his ability to get the desired responses from the people with whom he deals.

In order to achieve his ends with and through others, he must understand why people behave as
they do, why they act, react, and respond the way they do. This understanding of the causation of
behavior will help him in two ways. First, it will help him in being able to predict the actions,
reactions, and responses of others to his initiatives, and to environmental stimuli. For example,
let us assume that a manager wants one of his subordinates to finish some urgent work even if he
has to stay after office hours. Before initiating this request or order, the manager will like to
predict the subordinate’s response. Will he, or will he not comply with it; and if he will comply,
will he do so willingly or unwillingly? Or, if will not, why will not he do it? This will help the
manager in formulating his strategy for dealing with the subordinate. Similarly, if he wants to
ask his superior for additional office space, he ought to anticipate or predict his response. Such
predictions of responses of people with whom a manager deals help him in formulating effective
strategy for dealing with people.

Second, a manager has also to influence other’s behavior in order to achieve his ends. In our
daily lives, we are most of the time directly or indirectly, consciously or unconsciously trying to
influence the behavior of the people with whom we interact. We try to make these others think,
believe, do or not do things to the end of serving our own ends. A manager does the same thing
because he needs others’ help and coordination for his success. In relation to his subordinates, it
is his responsibility as a leader to influence their behavior so as to optimize their contribution to
the organization, and minimize their dysfunctional and negative behavior. He also needs to

37
influence the behavior of his peers in order to secure from them their contribution and support
for his effective performance. He is also required to influence his superiors’ behavior and
policies in such a way that he gains their favor and other things which he wants.

Understanding human behavior with the objective of predicting and influencing it is as difficult
as important it is to the manager. However, some generalizations have been developed about
human behavior which helps us in gaining its understanding.
� Quick Test Questions
1. A manager has to deal with people inside as well as outside his organizations. Identify
those individuals with whom a manager interacts inside and outside his organization.

2.1.1 Foundations of the Individual Behavior

Our behavior is somewhat shaped by our personalities and the learning experience we have
encountered. In this section four individual level variables-perception, attitude, personality and
learning will be discussed. Finally, we will see how these variables affect employee performance
and satisfaction.

a. Perception
What is perception and why is it important?
Perception can be defined as a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment. However, what one perceives can be
substantially different from objective reality. It need not be, but there is often disagreement. For
example, it is possible that all employees in a firm may view it as a great place to work-favorable
working conditions, interesting job assignments, good pay, an understanding and responsible
management-but, as most of us know; it is very unusual to find such agreement.

Luthans opines that the key to understand perception is to recognize that it is unique
interpretation of the situation, not an exact recording of it. In short, perception is a very complex
cognitive process that yields a unique picture of the world, a picture that may be quite different
from reality. Applied to organizational behavior, an employee’s perception can be thought of as a
“filter.” Because perception is largely learned, not one has the same learning and experiences,

38
then every employee has a unique filter, and the same situation/stimuli may produce very
different reactions and behaviors.

Why is perception important in the study of OB? Simply because people's behavior is based on
their perception of what reality is, not on reality itself. The world as it is perceived is the world
that is behaviorally important.

Factors affecting Perception

How do we explain that individuals may look at the same thing yet perceive it differently? A
number of factors operate to shape and sometimes distort perception. These factors can reside in
the perceiver, in the object or target being perceived, or in the context of the situation in which
the perception is made.
The Perceiver
When an individual looks at a target and attempts to interpret what he or she sees, that
interpretation is heavily influenced by personal characteristics of the individual perceiver. Have
you ever bought a new jacket and then suddenly noticed a large number of jackets like yours? It's
unlikely that the number of such jackets suddenly expanded, rather, your own purchase has
influenced your perception so you are now more likely to notice them. This is an example of how
factors related to the perceiver influence what he or she perceives. Among the more relevant
personal characteristics affecting perception are attitudes, motives, interests, past experience, and
expectations.
The Target
Characteristics in the target that is being observed can affect what is perceived. Loud people are
more likely to be noticed in a group than quiet ones. So, too, are extremely attractive or
unattractive individuals. Motion, sounds, size, and other attributes of a target shape the way we
see it.
Because targets are not looked at in isolation, the relationship of a target to its background
influences perception, as does our tendency to group close things and similar things together.
What we see depends on how we separate a figure from its general background. For instance,
what you see as you read this sentence is black letters on a white page. You do not see funny-

39
shaped patches of black and white because you recognize these shapes and organize the black
shapes against the white background.
Objects that are close to each other will tend to be perceived together rather than separately. As a
result of physical or time proximity, we often put together objects or events that are unrelated.
Employees in a particular department are seen as a group. If two people in a four-member
department suddenly resign, we tend to assume their departures were related when, in fact, they
may be totally unrelated. Timing may also imply dependence when, for example, a new sales
manager is assigned to a territory and, soon after, sales in that territory skyrocket. The
assignment of the new sales manager and the increase in sales may not be related-the increase
may be due to the introduction of a new product line or to one of many other reasons-but there is
a tendency to perceive the two occurrences as related. Persons, objects, or events that are similar
to each other also tend to be grouped together. The greater the similarity, the greater the
probability we will tend to perceive them as a common group. Women, blacks, or members of
any other group that has clearly distinguishable characteristics in terms of features or color will
tend to be perceived as alike in other, unrelated, characteristics as well.
The Situation
The context in which we see objects or events is important. Elements in the surrounding
environment influence our perceptions.
I may not notice a 25-year-old female in an evening gown and heavy makeup at a nightclub on
Saturday night. Yet that same woman so attired for my Monday morning management class
would certainly catch my attention (and that of the rest of the class). Neither the perceiver nor the
target changed between Saturday night and Monday morning, but the situation is different.
Similarly, you are more likely to notice your subordinates goofing off if your boss from the head
office happens to be in town. Again, the situation affects your perception. The time at which an
object or event is seen can influence attention, as can location, light, heat, or any number of
situational factors.

� Quick Test Question

What is perception?
What factors determine how we perceive an object, people or event?

40
Factors That May Distort our Judgment on Others
In this section the major factors that may distort our judgment on others like selective perception,
hallo effect, contrast effect, projection, and stereotyping will be discussed.

1. Selective perception: any characteristic that makes a person, object, or event stand out will
increase the probability it will be perceived. Why? Because it is impossible for us to assimilate
everything we see-only certain stimuli can be taken in. Since we cannot observe everything
going on about us, we engage in selective perception. We selectively interpret what we see on
the basis of our interests, attitudes, background and experiences. For example, we are more likely
to notice items like our own. Generally, individuals perceive what they want to perceive not
everything they come across in their surroundings.
2. Hallo Effect: is concerned with drawing general impressions about an individual in the basis
of a single character. When we draw a general impression about an individual based on a single
characteristic such as intelligence, sociability, or appearance, a halo effect is operating. Hallo
effect is operating when interviewers make an error in judging a person’s total personality and/or
performance on the basis of a single positive trait such as intelligence, appearance, dependability,
or cooperativeness.

3. Contrast Effects: we do not evaluate a person in isolation. Other persons we have

encountered influence our reaction to one person. An illustration of how contrast effects operate
is an interview situation in which one sees a pool of applicants. Distortions in any candidate’s
evaluation can occur as result of his or her place in the interview schedule. The candidate is
likely to receive a more favorable evaluation if preceded by mediocre applicants, and a less
favorable evaluation if preceded by strong applicants.

4. Projection: it is easy to judge others if we assume they are similar to us. For instance, if you
want challenge and responsibility in your job, you assume others want the same. People who
engage in projection tend to perceive others according to what they themselves are like rather
than according to what other people being observed is really like. We assume that others are
similar to us. For example, if manager is trust worthy, he may also treat his subordinates as if
they were trustworthy.

41
5. Stereotyping: is judging someone on the basis of one’s perception of the group to which
he/she belongs. Generalization is a means of simplifying a complex world. Assume that you
want to hire someone who is ambitious, hardworking, who can deal well with adversity. You
have had good success in the past by hiring individuals who participated in athletics during
college. So you focus your search by looking for a candidate who participated in college
athletics. In so doing, you have cut down considerably on your search time.

Stereotyping is based on an ideal situation or the type of impression formed about the group. It is
the consideration of individual’s characteristics as being representative of the whole group.
According to it, if an employee is found to well behaved, the whole group of employees is
considered to be good.
� Quick Test Question
Identify common errors that are made while making judgment about others?
Identify the impact of perception errors and shortcuts on organizational effectiveness

b. Attitude
Attitudes are evaluative statements-either favorable or unfavorable-concerning objects,
people, or events. They reflect how one feels about something. When I say “like my job", I
am expressing my attitude about work.
Attitudes are not the same as values, but the two are interrelated. You can see this by
looking at the three components of an attitude: cognition, affect, and behavior.

i. Component of attitude
The belief that "discrimination is wrong" is a value statement. Such an opinion is the
cognitive component of an attitude. It sets the stage for the more critical part of an attitude –
its affective component. Affect is the emotional or feeling segment of an attitude and is
reflected in the statement "I don't like Jon because he discriminates against minorities."
Finally, affect can lead to behavioral outcomes. The behavioral component of an attitude
refers to an intention to behave in a certain way toward someone or something. So, to
continue our example, I might choose to avoid Jon because of my feeling about him.

42
Viewing attitudes as made up of three components - cognition, affect, and behavior is
helpful toward understanding their complexity and the potential relationship between
attitudes and behavior. But for clarity's sake, keep in mind that the term attitude essentially
refers to the affect part of the three components.

ii. How attitudes are formed

Individuals acquire attitudes from several sources but the point to be stressed. It is that the
attitudes are acquired but not inherited. While formulation of attitude, several important
questions are raised below:
• How attitudes are formed?
• How do you develop your attitude?
Essentially attitudes are the outward manifestation of your inner values and beliefs. These
develop over time. The most important sources of acquiring attitudes are direct experience
with the object, association, family, neighborhood, economic and social positions and mass
communications.

Fig. 2.1: Formation of Attitude

Direct Experience with the Object

It is one way to be developed from a personally rewarding or punishing experience with an
object. In this case, employees form attitudes about jobs on their previous experience in a
job.

43
Classical Conditioning and Attitudes
It is one of the basic processes underlying attitude formation. It can be explained on the
basis of learning principles. It learns through people and develops attitudes with associations
between various objects and the emotional reactions that accompany them.
Operant Conditioning and Attitude Acquisition
In this case, attitudes are reinforced either verbally or nonverbally and it tends to be
maintained. It involves to person who states an attitude which elicits ridicule from others
may modify or abandon the attitude.
Vicarious Learning
It involves to a person who learns something through the observance of others. It can also
account for attitude development particularly when the individual has no direct experience
with the object about which the attitude is held. It is through vicarious learning processes
that children pickup the prejudice of their parents or adults.
Family and Peer Groups
A person may learn attitudes through imitation of parents. If parents have a positive attitude
towards an object and the child admires his parents, he or she is likely to be adopt a similar
attitude, even without being told about the object and even without having direct experience.
Similarly attitudes are required form peer groups in colleges and organizations.
Economic Status and Occupations
Our economic and occupational positions also contribute to attitude formation. People are
determined their attitudes towards unions and management and our belief that certain laws
are “good” or “bad”. Our socio economic background influences our present and future
attitudes.

� Quick Test Question

Define attitude and identify its components
List and explain at least five factors that contribute for the development of attitude

44
 iii. Source of attitude

Attitudes, like values, are acquired from parents, teachers, and peer group members. We are
born with certain genetic predispositions. Then, in our early years, we begin modeling our
attitudes after those we admire, respect, or maybe even fear. We observe the way family and
friends behave, and we shape our attitudes and behavior to align with theirs. People also
imitate the attitudes of popular individuals and those they admire and respect.
In contrast to values, your attitudes are less stable. Advertising messages, for example,
attempt to alter your attitudes toward a certain product or service: If the people at Ford can
get you to hold a favorable feeling toward their cars, that attitude may lead to a desirable
behavior (for them)-your purchase of a Ford product.
In organizations, attitudes are important because they affect job behavior. If workers
believe, for example, that supervisors, auditors, bosses, and time- and-motion engineers are
all in conspiracy to make employees work harder for the same or less money, then, it makes
sense to try to understand how these attitudes were formed, their relationship to actual job
behavior, and how they might be changed.

iv. Types of attitude

A person can have thousands of attitudes, but OB focuses our attention on a very limited number
of job-related attitudes. These job-related attitudes tap positive or negative evaluations that
employees hold about aspects of their work environment. Most of the research in OB has been
concerned with three attitudes: job satisfaction, job involvement, and organizational
commitment.
JOB SATISFACTION: The term job satisfaction refers to an individual's general attitude toward
his or her job. A person with a high level of job satisfaction holds positive attitudes toward the
job; a person who is dissatisfied with his or her job holds negative attitudes about the job. When
people speak of employee attitudes, more often than not they mean job satisfaction. In fact, the
two are frequently used interchangeably.
JOB INVOLVEMENT: The term job involvement is a more recent addition to the OB literature.
While there isn't complete agreement over what the term means, a workable definition states that
job involvement measures the degree to which a person identifies psychologically with his or her

45
job and considers his or her perceived performance level important to self-worth. Employees
with a high level of job involvement strongly identify with and really care about the kind of work
they do.
High levels of job involvement have been found to be related to fewer absences and lower
resignation rates. However, it seems to more consistently predict turnover than absenteeism,
accounting for as much as sixteen percent of the variance in the former.
ORGANIZATIONAL COMMITMENT: The third job attitude we discuss is organizational
commitment. It's defined as a state in which an employee identifies with a particular organization
and its goals, and wishes to maintain membership in the organization. So high job involvement
means identifying with one's specific job; high organizational commitment means identifying:
with one's employing organization.
As with job involvement, the research evidence demonstrates negative relationships between
organizational commitment and both absenteeism and turnover. In fact, studies demonstrate that
an individual's level of organizational commitment is a better indicator of turnover than the far
more frequently used job satisfaction predictor, explaining as much as 34 percent of the variance.
Organizational commitment is probably a better predictor because it is a more global and
enduring response to the organization as a whole than is job satisfaction. An employee may be
dissatisfied with his or her particular job and consider it a temporary condition, yet not be
dissatisfied with the organization as a whole. But when dissatisfaction spreads to the
organization itself, individuals are more likely to consider resigning.
Organizational citizenship: refers to the behavior that contributes to the well-being of the
organization. Organizational citizenship behavior results from job satisfaction. It involves more
than just performing your job.

The Effect of Job Satisfaction on Employee Productivity

1. Job satisfaction and productivity: Productivity leads to satisfaction. How? By creating
a sense of accomplishment. The most recent research indicates that when satisfaction and
productivity data is gathered for the organization as a whole, rather than at the individual
level, we find that organizations with more satisfied employees tended to be more
productive than organizations with less satisfied employees.

46
 2. Job Satisfaction and Absenteeism: We find a consistent negative relationship between
satisfaction and absenteeism, but the correlation is moderate. In general satisfied workers
are more regular in attendance and less likely to be absent for unexplained reasons than
dis-satisfied workers.
3. Satisfaction and Turnover: satisfied workers are less likely to quit than dis-satisfied
workers. Satisfaction is also negatively related to turnover, but the correlation is stronger
than what we found for absenteeism.

v. Attitudes and consistency

Did you ever notice how people change what they say so it doesn't contradict what they do?
Perhaps a friend of yours has consistently argued that the quality of Ethiopian cloths isn't up to
that of the imports and that he'd never own anything but a foreign Import. But his dad gives him
late fashion cloths, and suddenly they're not so bad. Or, when going through sorority rush, 'anew
freshman believes sororities are good and that pledging a sorority is important. If she fails to
make a sorority, however, she may say, “I recognized that sorority life isn't all it's cracked up to
be, anyway!" '
Research has generally concluded that people seek consistency among their attitudes and
between their attitudes' and their behavior. This means that individuals seek to reconcile
divergent attitudes and align their attitudes and behavior so they appear rational and consistent.
When there is an inconsistency, forces are initiated to return the individual to an equilibrium
state where attitudes and behavior are again consistent. This can be done by altering either the
attitudes or the behavior or by developing a rationalization for the discrepancy.
For example, a recruiter for the ABC Company; whose job it is to visit college campuses,
identify qualified job candidates, and sell them on the advantages of ABC as a place to work,
would be in conflict if he personally, believes the ABC Company has poor working conditions
and few opportunities for new college graduates. This recruiter could, over time, find his
attitudes toward the ABC Company becoming more positive. He may, in effect, brainwash
himself by continually articulating the merits of working for ABC. Another alternative would be
for the recruiter to become overtly negative about ABC and the opportunities within the firm for
prospective candidates. The original enthusiasm that the recruiter may have shown would

47
dwindle, probably to be replaced by open doubt toward the company. Finally, the recruiter might
acknowledge that ABC is an undesirable place to work, but think that, as a professional recruiter,
his obligation is to present the positive side of working for the company. He might further
rationalize that no place is perfect to work at; therefore, his job is not to present both sides of the
issue, but rather to present a rosy picture of the company.

� Quick Test Question

Elucidate three sources of individual attitudes
A type of attitude that shows employees determination to work for a given
organization even at difficult conditions is known as ____?
What are the impacts of employee’s job dissatisfaction?

c. Personality:
Personality as coined by Luthans, through the years there has not been universal agreement on
the exact meaning of personality. Much of the controversy can be attributed to the fact that
people in general and those in the behavioral science in particular define” personality” from
different perspectives. Personality means how people affect others and how they understand and
view themselves, as well as their pattern of inner and outer measurable traits and the person-
situation interactions.

Robbins asserts that personality is the sum total of ways in which an individual reacts and
interacts with others. This is most often described in terms of measurable personality traits that a
person exhibits.

Popular characteristics include shy, aggressiveness, submissive, lazy, ambitious, loyal, and timid.
These characteristics, when exhibited in a large number of situations are called personality traits.
The more consistent the characteristics and the more frequently it occurs in diverse situations,
the more important that traits is in describing the individual. In recent years, an impressive body
of research supports that five basic personality dimensions underlie all others. They are referred
to as the Big Five Factors. They are:
 Extraversion: sociable, talkative, assertive

48
  Agreeableness: good-natured, cooperative, and trusting
 Conscientiousness: responsible, dependable, persistent, and achievement oriented
 Emotional stability: calm, enthusiastic, secure(positive) to tense, nervous, depressed, and
insecure(negative)
 Openness to experience: imaginative, artistically sensitive, and intellectual.

The major personality attributes influencing organizational behavior include:

 Locus of control: some people believe that they are masters of their own fate. Others see
themselves as pawns of fate; believe that what happens to them in their lives is due to
luck or chance. The first types, those who believe they control their destines, have been
labeled as internals, whereas the latter, who see their lives as being controlled by outside
forces, are called externals.
 Machiavellianism: an individual who is high in Machiavellianism is pragmatic,
maintains emotional distance, and believes that ends can justify the means.
 Self Esteem: people differ in the degree to which they like or dislike themselves. This
trait is called self esteem.
 Self Monitoring: this refers to an individual’s ability to adjust his or her behavior to
external, situational factors.
 Risk Taking: people differ in their willingness to take risks. This propensity to assume or
avoid risk has been shown to have an impact on how long it takes managers to make a
decision and how much information they require before making their choices.

2.3.3. Matching personality and job

In the previous discussion of personality attributes, our conclusions were often qualified to
recognize that the requirements of the job moderated the relationship between possession of the
personality characteristic and job performance.
This concern with matching the job requirements with personality characteristics is best
articulated in John Holland's personality-job fit theory. The theory is based on the notion of fit
between an individual's personality characteristics and his or her occupational environment.
Holland presents six personality types and proposes that satisfaction and the propensity to leave a

49
job depend on the degree to which individuals successfully match their personalities to a
congruent occupational environment.
What does all this mean? The theory argues that satisfaction is highest and turnover lowest
where personality and occupation are in agreement. Social individuals should be in social jobs,
conventional people in conventional jobs, and so forth. A realistic person in a realistic job is in a
more congruent situation than is a realistic person in an investigative job. A realistic person in a
social job is in the most incongruent situation possible. The key points of this model are that (1)
there do appear to be intrinsic differences in personality among individuals, (2) there are
different types of jobs, and (3) people in job environments congruent with their personality types
should be more satisfied and less likely to voluntarily resign than people in incongruent jobs.

d. Learning
As affirmed by Robbins, learning is any relatively permanent change in behavior that occurs as
the result of experience. It is the process by which people acquire the competencies and beliefs
that affect their behavior in organizations. Ironically, we can say that changes in behavior
indicate learning has taken place and that learning is a change in behavior.

Mishra opined that learning is the process by which individuals acquire the knowledge and
experience to be applied in future behavior. The learning process may be intentional or
incidental. It encompasses the total learning process from the beginning of life to its end, going
through reflexive responses to knowing abstract concepts and complex problems solving. The
learning process involves motivation, cues, responses and reinforcement. Motivation acts as a
spur to learning. Motivation decides the degree of involvement for the search of knowledge. The
learning starts with motivation which is given direction by cues. Motives are stimuli, while cues
are attention and recognition of the stimuli for learning. Cues guide employees to behave in the
right way. If behavior is shaped through the learning process, the response is visible. Response
accepted for behavior becomes reinforcement, which moulds the behavior of employees. If an
employee is motivated to learn about computers, he tries to find out the cues of its uses in
employment. Getting favorable cues, he responds to learning. With constant reinforcement of
computer operation, he acquires the changed behavior of computer.

50
 1. The Learning Process
The outcome of learning is a permanent change in behavior. Therefore, learning is a permanent
change in behavior as result of a cognitive process. A temporary change in behavior is not
learning because it is purely reflexive. Change in behavior is the necessary outcome of learning.
It is purely theoretical or attitudinal, it would not be learning. A cognitive change process in the
mind of an employee resulting in behavioral change is learning. Learning is the process by which
an activity originates or is changed by reacting to an encountered situation, provided that the
characteristics of the change in activity cannot be explained on the basis of native response
tendencies, maturation or temporary states of the organism.
Behavior is learned through a cognitive process. It is not a spontaneous and natural process.
Hence, a learning process is a mental and habit formation process. Attention is paid to certain
stimuli used for learning which are recognized and transited into reinforcement and behavior.
The learning process is depicted in the figure below.

Stimuli Attention Recognition Translation

Reinforcement

Behavior

Efforts Motives Habit Reward

Fig. 2.2 The Learning Process: Adopted from S.P.Robbins: ‘Organizational Behavior’, Prentice
Hall of India, 1996, P.105.

Below each of the elements included in the above figure are briefly described for easy
understanding of the matter.
1. Stimuli: are any objects and language which draw the attention of people. The stimuli
available at work are numerous. Social, political, cultural, and geographical factors
provide varieties of stimuli for learning.

51
 2. Attention: the degree of attention depends on the nature of stimuli. All stimuli are not
paid attention to. The personality level of employees influences their desires to learn,
motives for need fulfillment and tension reduction. Attention is the allocation of our
mental capacity to various stimuli that take place in our surroundings.
3. Recognition: attention paid stimuli is recognized as acceptable factors of improvement
and new life styles. The level of recognition depends upon the levels of values,
preferences, needs, and desires of the employee.
4. Translation: recognized stimuli are evaluated at the mental level to eliminate the
irrelevant points for accepting a part of the stimulus for changing behavior. The
evaluation and appraisal of the recognized stimuli helps in reinforcement.
5. Reinforcement: perception itself is not learning unless it is reinforced. Repeated action
is reinforced. Reinforcement can be positive, negative, punishment or extinction.
6. Behavior: employees expect rewards for learning. If the translated behavior provides a
reward, it is accepted; otherwise, it is not accepted.
7. Habits: a permanent change in behavior becomes a habit which helps continuous
improvement in behavior and performance. Habits help the development of capability
and capacity of employees.
8. Motives: depend on the level of satisfaction. Employees getting more satisfaction
through learning develop high motives while less satisfied learners have low motives.
9. Efforts: habits help achieve good efforts and performance. This is a continuous process.
Efforts are the automatic outcomes of good habits which are acquired through the
learning process.

2. Types of learning
There are three types learning as presented in exhibit in

Fig. 2.3 Types of Learning

52
 2.1 Classical Conditioning
It refers to the learning of “involuntary,” reflexive behavior, like as emotional reactions.
Classical conditioning further classified as unconditioned stimulus like as food and conditioned
stimulus as metronome. These outputs are to be considered as reflex response like as salivation.
Essentially, learning a conditioned response involves building up an association between a
conditioned stimulus and an unconditioned stimulus. Using the paired stimuli, one compelling
and the other one neutral, the neutral one becomes a conditioned stimulus and, hence, takes on
the properties of the unconditioned stimulus. For example, at one manufacturing plant, every
time the top executives from the head office were scheduled to visit, the plant management
would clean up the administrative offices and wash the windows. This went on for years.
Eventually, employees would turn on their best behavior and look prim and proper whenever the
windows were cleaned-even in those occasional instances when the cleaning was not paired with
the visit from the top brass. People had learned to associate the cleaning of the windows with the
visit from the head office.
Classical conditioning is passive. Something happens and we react in a specific way. It is elicited
in response to a specific, identifiable event. As such it can explain simple reflexive behaviors.
But most behavior-particularly the complex behavior of individuals in organizations-is emitted
rather than elicited. It is voluntary rather than reflexive. For example, employees choose to arrive
at work on time, ask their boss for help with problems, or goof off when no one is watching. The
learning of these behaviors is better understood by looking at operant conditioning.

2.2 Operant Conditioning

Operant conditioning argues that behavior is a function of its consequences. People learn to
behave to get something they want or avoid something they don't want. Operant behavior means
voluntary or learned behavior in contrast to reflexive or unlearned behavior. The tendency to
repeat such behavior is influenced by the reinforcement or lack of reinforcement brought about
by the consequences of the behavior. Reinforcement, therefore, strengthens a behavior and
increases the likelihood it will be repeated.
Behavior is assumed to be determined from without-that is, learned- rather than from within-
reflexive or unlearned. Skinner, who is the coiner of the theory, argued that by creating pleasing
consequences to follow specific forms of behavior, the frequency of that behavior will increase.

53
People will most likely engage in desired behaviors if they are positively reinforced for doing so.
Rewards, for example, are most effective if they immediately follow the desired response.
Additionally, behavior that is not rewarded, or is punished, is less likely to be repeated.
You see illustrations of operant conditioning everywhere. For example, any situation in which it
is either explicitly stated or implicitly suggested that reinforcements are contingent on some
action on your part involves the use of operant learning. Your instructor says that if you want a
high grade in the course you must supply correct answers on the test. Of course, the linkage can
also work to teach the individual to engage in behaviors that work against the best interests of the
organization. Assume your boss tells you that if you will work overtime during the next three-
week busy season, you will be compensated for it at the next performance appraisal. However,
when performance appraisal time comes, you find you are given no positive reinforcement for
your overtime work. The next time your boss asks you to work overtime, what will you do?
You'll probably decline! Your behavior can be explained by operant conditioning: If a behavior
fails to be positively reinforced, the probability that the behavior will be repeated declines.

2.3 Social Learning

Individuals can also learn by observing what happens to other people and just by being told
about something, as well as by direct experiences. So, for example, much of what we have
learned comes from watching models-parents, teachers, peers, motion picture and television
performers, bosses, and so forth. This view that we can learn through both observation and direct
experience has been called social-learning theory.
While social-learning theory is an extension of operant conditioning that is, it assumes behavior
is a function of consequences-it also acknowledges the existence of observational learning and
the importance of perception in learning. People respond to how they perceive and define
consequences, not to the objective consequences themselves.
The influence of models is central to the social-learning viewpoint. Four processes have been
found to determine the influence that a model will have on an individual. The inclusion of the
following processes when management sets up employee training programs will significantly
improve the likelihood the programs will be successful:
1. Attentional processes. People only learn from a model when they recognize and pay attention
to its critical features. We tend to be most influenced by models that are attractive, repeatedly

54
available, important to us, or similar to us in our estimation.
2. Retention processes. A model's influence will depend on how well the individual remembers
the model's action after the model is no longer readily available.
3. Motor reproduction processes. After a person has seen a new behavior by observing the
model, the watching must be converted to doing. This process then demonstrates that the
individual can perform the modeled activities.
4. Reinforcement processes. Individuals will be motivated to exhibit the modeled behavior if
positive incentives or rewards are provided. Behaviors that are reinforced will be given more
attention, learned better, and performed more often.

3. Shaping: A Managerial Tool

Strategies of reinforcement, punishment and extinction
Because learning takes place on the job as well as prior to it, managers are concerned with how
they can teach employees to behave in ways that most benefit the organization. When we attempt
to mold individuals by guiding their learning in graduated steps, we are shaping behavior.
Consider the situation in which an employee's behavior is significantly different from that sought
by management. If management only reinforced the individual when he or she showed desirable
responses, very little reinforcement might be taking place. In such a case, shaping offers a logical
approach toward achieving the desired behavior.
We shape behavior by systematically reinforcing each successive step that moves the individual
closer to the desired response. If an employee who has chronically been a half hour late for work
comes in only 20 minutes late, we can reinforce this improvement. Reinforcement would
increase as responses more closely approximate the desired behavior.
METHODS OF SHAPING BEHAVIOR
There are four ways in which to shape behavior: through positive reinforcement, negative
reinforcement, punishment, and extinction.
When a response is followed with something pleasant, it is called positive reinforcement. This
would describe, for instance, the boss who praises an employee for a job well done. When a
response is followed by the termination or withdrawal of something unpleasant, it is called
negative reinforcement. If your instructor asks a question and you don't know the answer,
looking through your lecture notes is likely to preclude your being called on. This is a negative

55
reinforcement because you have learned that looking busily through your notes prevents the
instructor from calling on you. Punishment is causing an unpleasant condition in an attempt to
eliminate an undesirable behavior. Giving an employee a two-day suspension from work without
pay for showing up drunk is an example of punishment. Eliminating any reinforcement that is
maintaining a behavior is called extinction. When the behavior is not reinforced, it tends to
gradually be extinguished. For instance, instructors who wish to discourage students from asking
questions in class can eliminate this behavior in their students by ignoring those who raise their
hands to ask questions. Hand raising will become extinct when it is invariably met with an
absence of reinforcement.
Both positive and negative reinforcement result in learning. They strengthen a response and
increase the probability of repetition. In the preceding illustrations, praise strengthens and
increases the behavior of doing a good job because praise is desired. The behavior of looking
busy is similarly strengthened and Increased by its terminating the undesirable consequence of
being called on by the teacher. Both punishment and extinction, however, weaken behavior and
tend to decrease its subsequent frequency.
Reinforcement, whether it is positive or negative, has an impressive record as a shaping tool. Our
interest, therefore, is in reinforcement rather than in punishment or extinction. A review of
research findings on the impact of reinforcement on behavior in organizations concluded that
1. Some type of reinforcement is necessary to produce a change in behavior.
2. Some types of rewards are more effective for use in organizations than others.
3. The speed with which learning takes place and the permanence of its effects will be
determined by the timing of reinforcement.

� Quick Test Questions

1. What are the components of the learning process?
2. Identify and discuss the three types of learning?

56
Chapter Summary
Understanding the behavior of individuals and groups helps a manager in two ways.
First, it allows him in being able to predict the actions, reactions and responses of others to his
initiatives and to environmental stimuli. Second, it helps him influence others’ behavior in order
to achieve his ends. Human behavior is developed not in a vacuum but is shaped every time by
the behavior of others and environmental factors. Major factors that shape individual’s behavior
are perception, attitude, personality and learning.

Perception can be defined as a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their real environment. The perceiver, the target and the
situation are among the major factors that influence perception.
Selective perception, hallo effect, contrast effect, projection and stereotyping are factors that may
distort our judgment on others. We selectively interpret what we see on the basis of our interest,
attitudes, background and experience as we cannot observe everything going on about us. Hallo
effect is concerned with drawing general impressions about an individual on the basis of a single
character. We do not evaluate a person in isolation; instead we compare and contrast him with
others. Projection is assuming that other individuals are similar to us. Due to projection people
tend to perceive others according to what they themselves like rather than according to what
others being observed like. Stereotyping is about judging someone on the basis of one’s
perception of the group to which he/she belongs.
The other important variable that shape people’s behavior is attitude. Attitudes are evaluative
statements either favorable or unfavorable concerning objects, people or events. The main job
related attitudes include: job satisfaction, job involvement, organizational commitment and
organizational citizenship. Determinants of job satisfaction include mentally challenging work,
equitable rewards, supportive working conditions, supportive colleagues, and personality job fit.
Personality can be defined as the sum total of ways in which individuals react and interact with
others. Such factors as heredity, environment, culture, norms among our family, friends and
social groups, religion, and others play a significant role in determining our personality. Learning
is the process by which individuals acquire the knowledge and experience to be applied in their
behavior. It is relatively permanent change in behavior that occurs as a result of experience.

57
Self Check Exercise 2
Choose the best answer among the alternates given
1) Understanding the behavior of individuals and groups helps a manager
A. Predict the actions, reactions and responses of others to his initiatives and to
environmental stimuli
B. Influence the behavior of others
C. Formulate effective strategy for dealing with people.
D. All of the above
E. Only B&C
2) Ability-job-fit can be ensured by employing all the following except____
A. Ensuring effective selection process
B. Conducting promotion and transfer decisions based on abilities
C. Fine tuning the job to better match an incumbent’s abilities
D. Providing training for employees
E. None of the above
3) Which one of the statements below is untrue?
A. An individual’s personality is considered to be made up of both heredity and
environment, shaped by situational conditions.
B. Those individuals who see their lives as being controlled by others are internals
C. Learning can be either intentional or incidental
D. The learning process involves motivation, cues, responses and reinforcement
E. A&C
4) The process by which individuals organize and interpret their sensory impressions to give
meaning to their environment is referred to as
A. personality C. perception
B. attitude D. learning E. values
5) Mr. Daniel while conducting an interview with an applicant to a position in his organization
has made a mistake by concluding that the applicant is best suit to the position based only on
the applicant’s appearance without considering other job related factors. Such a mistake can
be attributed to

58
 A. contrast effect C. stereotyping
B. projection D. hallo effect E. elective perception
6) Dejene, one of the employees of XYZ Company, is disstaified with his current job, but he
considers it as a temporary condition and not dissatisfied with the organization. Dejene’s
attitude shows
A. organizational commitment C. Organizational citizenship
B. job satisfaction D. Job involvement E. None

59
 CHAPTER THREE

FOUNDATION OF GROUP BEHAVIOR

3.1 Group Behavior

Marvin Show defines a group as any number of persons who interact with each other in such
a manner that the behavior of one is influenced by the behavior of other persons. It seems
from this definition that group involves interactions among two or more people. It may be
added that these interactions should be accompanied by psychological awareness of one
another, and interacting people should perceive themselves as a group. Another aspect of
group that emerges from the above definition is that behavior of group members is influenced
by one another. In fact, behavior of group members influenced not so much by one another as
by group norms that develop through continuous interactions among members.

According to Robbins, a group is defined as two or more individuals interacting and

interdependent, who have come together to achieve particular objectives, who thereby
experience process of interdependence, interaction and mutual influence that results in group
behavior. The interactions that exist among group members and between groups are called
group dynamics that involves both enter- group and intra- group behavior.

3.2 Types of Groups

Groups can be either formal or informal. These two forms of groups are described here
under.
1. Formal Groups: are those defined by the organization’s structure, with designated work
assignments to accomplish tasks. In formal groups, the behavior that one should engage
in are stipulated by and directed toward organizational goals.
2. Informal Groups: are alliances that are neither formally structured nor organizationally
determined. These groups are natural formation in the work environment that appears in
response to the need for social contact. Three employees from different departments who
regularly eat lunch together are example of an informal group. Informal groups provide a
very important service by satisfying their member’s social needs.

60
 3. Command Group: are made up of individuals performing the same basic tasks and who
directly report to a given superior in the structure. It is also referred to as a functional
group. It is determined by the organizational chart.
4. Task Groups: refers to employees who work together to complete a project or a job.
These are also organizationally determined. A task group’s boundaries are not limited to
its immediate hierarchical superior. It can cross command relationships.
5. Interest Groups: are people may or may not be aligned into common command or task
groups who may affiliate to attain a specific objective with which each is concerned. For
example, employees who band together to have their vacation schedule altered, to support
a peer who has been fired, or to seek increased fringe benefits represent the formation of
a united body to further their characteristics, that is the formation of interest groups.
6. Friendship Groups: groups often develop because the individual members have one or
more common characteristics. We call this formation friendship group.

3.3. Group Formation

There is no single reason why individuals join groups. Since most people belong to a number of
groups, it is obvious that different groups provide different benefits to their members. Group
formation has certain objectives. The purpose behind group formation may be task achievement,
problem solving, proximity or other socio-psychological requirements. It is based on activities,
interactions and sentiments. The most popular reasons among others why people join a group are
the following:

a) Physical (proximity) reasons: workers placed together in similar jobs as result of their
increased interaction form a group. The most basic theory explaining affiliation is
propinquity which means individuals affiliate with one another because of spatial or
geographical proximity. According to this theory, students sitting next to one another in
class are more likely to form into a group than students sitting at opposite ends of the
room. In an organization, employees who work in same area of the plant or office or
managers with offices close to one another would more probably from into groups than
would those who are not physically located together.

61
 b) Economic reasons: work groups form because individuals believe that they can derive
more economic benefits from their jobs if they are in groups.
c) Socio Psychological reasons: workers are motivated to form work groups to satisfy their
security and social needs. People in groups feel more secured and such social interaction
also helps them feel important. People cooperate with members of the group on social as
well as economic grounds to reach satisfactory levels.
d) Security: by joining a group individuals can reduce the insecurity of standing alone.
People feel stronger, have fewer self doubts, and are more resistant to threats when they
are part of a group.
e) Status: inclusion in a group that is viewed as important by others provides recognition
and status for its members.
f) Self esteem: groups can provide people with feelings of self worth. That is, in addition to
conveying status to those outside the group, membership can also give increased feelings
for its members.
g) Affiliation: groups can fulfill social needs. People enjoy the regular interaction that
comes with group membership.
h) Power: what cannot be achieved individually often becomes possible through group
action. There is power in groups.
i) Goal achievement: there are times when it takes more than one person to accomplish a
particular task-there is a need to pool talents, knowledge, or power in order to get a job
completed. In such cases management relies on formal groups. In any organization, task
accomplishment is the reason for which different groups such as an engineering group,
marketing groups, foremen’s groups and others are formed for achieving certain stated
goals.

3.4. Group Development

Groups do not form over nights. They go through various common stages of development. The
process of developing from a group of strangers to a unit of cohesive, well coordinated team
requires time and a great deal of interaction among group members. Groups usually follow the
following stages of development.

62
1. Forming: this stage is characterized by a great deal of uncertainty about the group’s
purpose, structure, and leadership. As the group comes together communication will be
guarded and members are reluctant to express their true attitudes and feelings. This stage
is trying out stage in which each person attempts to find out as much as possible about
the rest of the group with out exposing much of his/her self.
2. Storming: at this stage the group members begin to communicate more openly with each
other. Member’s individual goals or personal agendas are expected to be revealed. It is
characterized by intra- group conflict – members accept the existence of the group but
resist the constraints the group imposes on individuality. Further, there is conflict over
who will control the group. Members storm their views. They put forth their views
forcibly with strength, and this evidences interpersonal conflicts. Many problems are
brought to the group for discussion and solution. Many conflicting views may be
expressed.

3. Norming: close relationship and cohesiveness characterize this stage. The group
establishes the norms and patterns of work under which it will operate. Disagreements
and conflicts are resolved; group achieves unity, consensus about who holds the power
and understanding of the role of members. This norming stage is complete when the
group structure solidifies and the group has assimilated a common set of expectations of
what defines correct member behavior.

4. Performing: the structure at this point is fully functional and accepted. Members enjoy
belonging to the group and develop synergy. A strong sense of group identity and a
companionship is developed. Group energy has moved from getting to know and
understand each other to performing the task at hand. Here the group dominates the
individuals; group norms have now been established to control individual behavior and
the social structure of the group is now firmly established. The group begins to function
and moves toward accomplishing its objectives.

5. Adjourning: for permanent work groups performing is the last stage in their
development. However, for temporary committees, teams, task forces, and similar groups

63
 that have a limited task to perform, there is an adjourning stage. Adjourning can take
place even before completing the task, due to misunderstandings, and storming. In this
stage the group prepares to disbandment. High task performance is no longer their
propriety. Instead, attention is directed toward wrapping up activities. Responses of group
members vary in this stage. Some may be happy of the group’s accomplishment while
others may be depressed due to the loss of friendships gained during the work group’s
life.

The group development stages are recycled for achieving fresh objectives. A change in
leadership, membership drive, physical location and revitalizing the task recycles the group
development stage from adjoining to forming, storming, norming, performing and adjourning.
Management should try find out which stage the group is passing through and who is the leader
for the effective control and guidance of the group.

3.5. The Dynamics of Informal Groups

As coined by Luthans, besides the formally designed groups and teams, informal groups in the
work place play a significant role in the dynamics of organizational behavior. The major
difference between formal and informal groups is that the formal has officially prescribed goals
and relationships, whereas the informal one does not. Despite this distinction, it is a mistake to
think of formal and informal as two distinctly separate entities. The two types of groups coexist
and are inseparable. Every formal organization has informal groups, and every informal
organization eventually evolves some semblance of formal groups.

Group dynamics describes how a group should be organized and conducted. Democratic
leadership, member participation, and overall cooperation are stressed. Another view of group
dynamics is that it consists of a set of techniques. Here role playing, brain storming, focus
groups, leaderless groups, group therapy, sensitivity training, team building and others are
traditionally equated with group dynamics.

Like the formal organization, the informal organization has both functions and dysfunctions. In
contrast to the formal organization analysis, the dysfunctional aspect of informal organization

64
has received more attention than the functional ones. For example, conflicting objectives,
restriction of output, conformity, blocking of ambition, inertia and resistance to change are
frequently mentioned dysfunctions of the informal organization. More recently, however,
organizational analysis has begun to recognize the functional aspects as well. The following are
some practical benefits that can be derived from the informal organization:
1. makes for a more effective total system
2. lightens the workload of management
3. fills in the gaps on managers’ abilities
4. provides a safety valve for employees emotions
5. improves communication

Because of the inevitability and power of the informal organization, the functions should be
exploited in the attainment of objectives rather than futilely combated by management. Group
dynamics is a fundamental aspect of psychological systems. Human inclination toward
sociability is demonstrated by the number of small groups to which we belong. Group dynamics
stresses face to face relationships and interaction among individuals. It involves many modes of
communication and implies continually changing and adjusting relationships among members.

3.6 Factors That Determine Group Performance and Satisfaction

1. External Conditions Imposed on the Group

 Organizational strategy: strategy is abroad goal established by top management group.
Strategy outlines the organizations goals and the means for attaining these goals. If the
organizational strategy is to help the supervisor on all fronts, the employees will be
directed towards that goal. Similarly, the behavior of employees should be such as to
reduce costs, improve quality, expand market share, etc. The strategy of an organization
influences the power of various groups. The willingness of management to allocate
resources influences the various activities of the organization and the behavior of
employees is influenced accordingly.
 Authority structure: identifies who reports to whom, who makes decisions and what
decisions individuals or groups are empowered to make. This structure typically

65
 determines where a given work group is placed in the organization’s hierarchy, the
formal leader of the group, and formal relationships between groups.
 Formal regulations: Organizations create rules, procedures, policies and other forms of
regulations to standardize employee behavior. The more strictly implements the
organization its regulations, the more predictable the behavior of the group.
 Organizational Resources: what a group actually accomplishes is, to a large degree,
determined by what it is capable of accomplishing. The presence or absence of resources
such as money, time, raw materials and equipment – which are allocated to the group by
the organization, has large bearing on the group’s behavior.
 Personnel selection process: The criteria that an organization uses in its selection
process will determine the kinds of people that will be in its work groups.
 Performance evaluation and reward system: Since work groups are part of the large
organizational system, group members will be influenced by how the organization
evaluates performance and what behaviors are rewarded.
 Organizational culture: every organization has an unwritten culture that defines
standards of acceptable and unacceptable behavior for employees, while many
organizations have sub cultures – often created around work groups -with an additional or
modified set of standards; they still have a dominant culture that conveys to all
employees those values the organization holds dearest.
 Physical work setting: the physical work setting that is imposed on the group by external
parties has an important bearing on work group behavior.

2. Group member resources

A group’s potential level of performance depends to a large extent, on the resources its
members individually bring to the group. The following are among the major resources of the
group members.
 Abilities: expressed capacity is ability. A talented employee demonstrates high
performance abilities. Trained, experienced, and highly motivated employees
perform better because they develop high abilities for task performance. Part of a
group’s performance can be predicted by assessing the task related and
intellectual abilities of its individual members.

66
  Personality characteristics: personal characteristics such as age, sex, physical
features, personality, appearance, and mental aptitudes have an impact on group
behavior and performance. Attributes tending to have a positive connotation in
our culture tend to be positively related to group productivity, morale and
cohesiveness. These include traits such as sociability, self reliance, and
independence.
3. Group structure
Work groups have a structure that shape the behavior of member and makes it possible to
explain and predict a large portion of individual behavior with in the group as well as the
performance of the group itself. As coined by Mishra, group structure is the framework of a
group which has greater influence on the behavior and interaction of members of a group.
Group structure as its outer framework and inner relationships are guiding and controlling
factors of behavior. Group structure has different variables such as interpersonal relations,
roles played, norms, group status, group size and social density.
 Leader ship: Almost every work group has a formal leader. Obviously the way
the leader acts has a direct bearing on the performance as well as behavior of the
group members.
 Roles: are a set of expected behavior patterns attributed to someone occupying a
given position in social unit. All the employees and group members play their
respective roles as per their positions. They not only behave in particular manner,
but expect specific behavior from others. Employees may be required sometimes
to perform more diverse roles than expected. Many organizations have multiple
role performing jobs. To understand role behavior it is essential to note role
identity, role perception, role enactment, role ambiguity, and role conflict.
- Role identity: the behavior and attitude attached to the role together form
what is known as role identity. Role identity simply is certain attitudes
and behaviors consistent with the role being played.
- Role perception: is a set of activities or behavior that an individual is
supposed to perform. It is the supposed role to be performed in a given
situation. It is an individual’s view of how he expects to perform the job
in the given situation.

67
 - Role expectations: is the behavior expected by others from the
employee. How others believe the employee should perform the job in a
given situation is role expectation.
- Role enacted: is the actual behavior of individual and group members.
The enacted role depends on the perceived and expected role. If there is
no difference between the expected role, perceived role and enacted role,
the organization will be free from role ambiguity and role conflict. There
will not be any problems regarding duties, responsibilities, uncertainty
and dissatisfaction. There will not be any deviation, stress, tension, and
anxiety.
- Role ambiguity: the difference between the expected role and the
perceived role creates role ambiguity. It occurs due to lack of clarity
regarding job duties, job descriptions and job designs.
- Role conflict: the differences between the perceived role and the enacted
role create role conflict. When an individual’s perception is influenced
by multiple demands, and directions from one or more supervisor,
employees face uncertainty.
Role behavior discussed above is depicted in the following figure for easy understanding.

Role ambiguity Role conflict

Role Expectation Role perception Role enactment

Fig. 3.1 role behavior

 Norms: group structure incorporates certain norms to be followed by group
members. Norms are acceptable standards of behavior shared by the group’s
members. Norms tell members what they ought and out not to do under certain
circumstances. From an individual’s point of view, they tell what is expected of
you in certain situations. Norms are traditionally accepted rules of behaviors
which are developed through explicit statement, critical events, and primary and
carry over behavior.

68
 Status: is a socially defined position or rank given to groups or group members
by others. Members of a group are recognized by their status. Group members are
proud of the status of their group and organization. Status is a significant
motivator as it influences the behavioral pattern of employees. Status may be
formal or informal. Formal status is given by a particular group. Status is attached
to an impressive title, high pay, preferred work style and so on.
 Size: Large groups are good for gaining diverse input, but smaller groups are
better at doing something productive with that input. People feel free when they
work collectively, because they get the chance to relax while this is not possible
during individual working. A large group encourages social loafing, i.e. the
tendency to extend less effort when working collectively. A small size group is
more easily managed and can produce more qualitative goods. Small groups result
in faster completion of work than proportionately higher groups.
 Composition: Heterogeneous groups those composed of dissimilar individuals
would be more likely to have diverse abilities, information and should be more
effective. Cultural diversity brings diverse views and attitudes to improve
efficiency. Heterogeneous groups perform more effectively than homogenous
groups. Heterogeneous groups give high performance because members are
motivated by other groups. Problems are solved through diverse approaches
because of multiple choices. However, diversity receive unification by higher
authority, otherwise, it would create conflicts.
 Group cohesiveness: group cohesiveness is an atmosphere of closeness or
common attitudes, behavior and performance. There is common agreement on
group views. Group members develop a cooperative spirit which is important for
the successful completion of tasks. It refers to the degree to which members are
attracted to one another and motivated to stay in the group. The frequencies of
interaction, favorable evaluation, and inter group competition are increased under
group cohesiveness. Cohesiveness can be affected by such factors as time
spent together, group size, the gender make up of the group members, external
threats, previous success, group goals, frequency of interaction, severity of
initiation, personal characteristics and the like..

69
� Quick Test Questions
1) Mention the reasons why workers join a group in organizations
2) A group does not form overnight; rather before becoming a well functioning one, it goes
through various stages of development. What are the stages of development a group
usually follows?
3) Define the following words/ phrases
 Roles
 Norms
 Group cohesiveness
 Role conflict
 Role ambiguity

Chapter Summary
A group can be defined as two or more individuals interacting and interdependent, who have
come together to achieve some common goal. Individuals in groups exhibit behavior that is
different from the one they exhibit while they are alone. We can have formal, informal,
command, task, interest, and friendship groups. The main reasons why people join groups are
physical/ proximity reasons, economic reasons, socio psychological reasons, security, status, self
esteem, affiliation, power and goal achievement. Groups go through various common stages of
development including forming, storming, norming, performing and adjourning.
Group performance and satisfaction are affected by various factors. External conditions imposed
on the group, group structure, and the group member resources are the major factors that
determine their performance.

70
Self Check Exercise 3
Choose the best answer among the alternates given
1) ____ refers to employees who work together to complete a project or a job.
A. interest group C. command group
B. informal group D. task group E. friendship group
2) A group development stage whereby disagreements and conflicts are resolved, the group
achieves unity, consensus about who holds the power and understanding of the role of
members takes place is
A. forming C. performing
B. norming D. storming E. adjourning
3) Identify the statement which is right among the following
A. norms are acceptable standards of behavior shared by group members
B. set of expected behavior pattern attributed to someone occupying a given position in
social unit is termed as status
C. role identity is a set of activities or behavior that an individual is supposed to perform
D. the difference between perceived role and enacted role creates role ambiguity
E. B&D
4) Unwritten rules and regulations that govern organizational members is known as

A. Role
B. Status
C. Norms
D. All
5) What can help to improve the cohesiveness of a group?
A. Increasing the number of group members
B. Creating clear role requirements
C. Developing a group goal that is compatible with the goals of individual members.
D. A and B
E. B and C
6) How other believe a person should act is known as
A. Role perception
B. Role conflict
C. Role expectation
D. Role identity

71
 CHAPTER FOUR

MOTIVATION AND ITS APPLICATION

Introduction
Hoping that you enjoyed reading the third chapter, in this chapter you will be learning about
motivation. Motivation is one of the important factors that greatly determine the performance of
a given unit. There are four sub sections in this part. The first section is concerned with
foundations of motivation wherein the definitions and nature of motivation will be discussed.
The second section deals with early theories of motivation. The third part addresses the
contemporary theories of motivation and the final part presents implication of motivation for
performance and satisfaction. You have learnt some of these theories in your Introduction to
Management course; hence you can refresh your memory by recalling/ revising those you have
seen in the stated course and expand your knowledge of motivation further by reading the
theories given here. The theories of motivation which you will learn include: Abraham Maslow’s
hierarchy of needs theory, Theory X&Y, the two factor theory, ERG Theory, equity theory,
expectancy theory, goal setting theory, McCelland’s theory of needs and reinforcement theory.
Have nice study session!

72
Learning objectives:
After completing the study of this chapter, you are supposed to
 define motivation
 comprehend the basic model of motivation and thereby identify how individuals become
motivated
 be familiar with the theories of motivation mentioned above
 understand the effect of motivation on employees performance as well as satisfaction

Brainstorming question
What factors can create motivation in work area and how they can be used to motivate
employees?
______________________________________________________________________________
______________________________________________________________________________
____________________________________________________________

73
4.1 Foundations of Motivation
Mishra states that motivation is related to motives of the people- by what they are moved
and activated to achieve their goals. The Latin word ‘Movere’ is the basis of motivation.
Motivation is the spirit of the people which is ignited by something, such as a message,
appeal and so on. In organizations, the job design, managerial relationship, reward
system, performance appraisal and interaction with employees are important components
of motivation. The same author contends that motivation is an inner condition of people
which energizes people to work hard. Motivation is used to direct employees to achieve
goals in the right perspective.

Many people incorrectly view motivation as a personal trait-that is, some have it and
others do not. But motivation is the result of the interaction of the individual and the
situation. Certainly, individuals differ in their basic motivational drive. So as we analyze
the concept of motivation, keep in mind that level of motivation varies both between
individuals and within individuals at different times.

Robbins defines motivation as the willingness to exert high level of efforts toward
organizational goals, conditioned by the effort’s ability to satisfy an individual’s need.
While general motivation is concerned with efforts toward any goal, we narrow the focus
to organizational goals in order to reflect our singular interest in work related behavior.
The three key elements in our definition are effort, organizational goal, and needs. The
effort element is a measure of intensity. When someone is motivated, he/she tries hard.
But high level of efforts is unlikely to lead to favorable job performance outcomes unless
the effort is channeled in a direction that benefits the organization. Therefore, we must
consider the quality of the effort as well as its intensity. Effort that is directed towards
and consistent with the organization’s goals is the kind of effort we should be seeking.

Finally we treat motivation as a need satisfying process. A need, in our definition, means
some internal state that makes certain outcomes appear attractive. An unsatisfied need
creates tension that stimulates drives within the individual. These drives generate a search

74
behavior to find particular goals that if attained, will satisfy the need and lead to the
reduction of tension. But since we are interested in work behavior, this tension reduction
effort must also be directed toward organizational goals. Therefore, inherent in our
definition of motivation is the requirement that the individual’s needs be compatible and
consistent with the organizational goals. Where this does not occur, we can have
individuals exerting high levels of effort that actually run counter to the interests of the
organization. For example, some employees regularly spend a lot of time talking with
friends at work in order to satisfy their social needs. There is a high level of effort, only it
is being unproductively directed.

According to Mishra, motivation is based on need which is a feeling of lacking

something. A feeling of need or unsatisfied need creates tension that stimulates drives
within individuals. These drives generate search behavior to find ways of satisfying the
needs. It will try to achieve the goals. Satisfied needs reduce the tension and provide
satisfaction. Basic model of motivation is depicted below.

Motivation Model

Environment Opportunity Goals

Unsatisfied Reward or Reduction of

Need punishment Tension
n
Search
Tension Drives Behavior Action Satisfaction
Fig. 4.1 Basic model of motivation n

Need is a feeling of deficiency. It creates physiological and psychological imbalances

which creates tension in the mind of the employees. The employee’s drives are energized
and activated to find satisfaction through goal achievement. Drives are strong feelings of
deprivation which target certain goals. They lead to action and provide energy for
achievement. Drives lead to search for the proper action which provides satisfaction.

75
Goal achievement leads to reduction of tension. It resorts physiological and psychological
balance. Motivation is a natural process, wherein felt needs are recognized. Needs create
a state of disequilibrium, i.e. tension which is to be reduced through behavior. An
individual will search for the right for getting satisfaction. He/she will select suitable
strategies for the purpose if he is adequately qualified. Motivation, therefore, depends on
ability, experience, education, background, and skills of individuals. The satisfying tools
may be financial and non financial rewards and punishment. The motivation cycle leads
to satisfaction.

�Quick Test Questions

1. What is motivation?
2. What are the three key issues that ought to be incorporated the definition of
motivation?
3. Based on the basic motivation model, show how an unsatisfied need leads a
person to motivation.

4.2 Theories of Motivation

4.2.1 Early theories of motivation

A. Hierarchy of Needs Theory
It is probably safe to say that the most well known theory of motivation is Abraham
Maslow’s hierarchy of needs. This theory is derived from a general understanding of
people’s needs, which can be instrumental to motivate employees at their work. The
figure below shows the five categories of needs as proposed by Abrham Maslow.

76
 Self
Actualization Needs
Esteem Needs

Social Needs

Safety Needs
Physiological Needs

Fig. 4.2 Abraham Maslow’s Hierarchy of Needs

Maslow hypothesized that within every human being there exists a hierarchy of the
following five needs.
1. Physiological Needs: includes the need for biological maintenance such as food,
water, shelter, sex, air and other bodily needs. These are used as motivators till
they are fulfilled. Once they are fulfilled, they do not remain important factors of
motivation. Employees need salaries and wages, healthy working conditions, a
canteen and other basic amenities at their workplace.
2. Safety Needs: includes security and protection from physical and emotional
harm. Maslow laid emphasis on emotional and physical safety after basic needs
are satisfied. People become highly cautious about increasing problems of
pollution of air, water and the environment. If employees are given with fresh air,
water and hygienic working conditions, they will be motivated to work hard.
3. Social Needs: includes need for affection, belongingness, acceptance and
friendship. Employees like comradeship interaction with colleagues, a friendly
boss, a compatible work group, professional friendship and group enjoyment.
4. Esteem Needs: Includes internal esteem factors such as self respect, autonomy
and achievement and external esteem factors such as status, recognition and
attention. Some employees work for more than the allotted period, because they

77
 need job satisfaction, work achievement, and responsibility. They need more
appreciation and recognition by bosses and peers. They develop self confidence,
prestige, and performance.
5. Self Actualization Needs: The drive to become what one is capable of becoming
includes growth, achieving one’s potential and self, fulfillment. Self actualization
is the highest of needs where people want self satisfaction. They need self
realization and self satisfaction. The soul and universe become topics of
realization for such people. Since they have fulfilled the other needs, they search
for new things and to work differently in a better manner.

The following Assumptions were made while hypothesizing the theory by Maslow.
a. A fully satisfied need is no more a motivator. So if we want to motivate someone,
according to Maslow, we need to understand at what level of the hierarchy an
employee currently is and focus on satisfying those needs at or above that level.
As each of these needs becomes substantially satisfied, the next need becomes
dominant.
b. The needs are put in the order of importance. Maslow separated the five needs in
to higher and lower orders. Physiological and safety needs were described as
lower order and social, esteem and self actualization needs as the higher order
needs. The differentiation between the two orders was made on the premises that
higher order needs are satisfied internally (within the person), whereas lower
order needs are predominantly satisfied externally (by pay, union contracts, and
tenure).
c. One should minimally satisfy the lower level need in order to think of the next
higher level needs.
d. If a need is not fully satisfied or threatened by something, the individual will
regret/retreat back to it from the one above it. When an employee gets his already
satisfied need disturbed, he redirects his effort towards the satisfaction of that
particular need.

78
 B. The Two- Factor Theory-Motivation-Hygiene Theory
Robbins contends that an individual’s relation to his/her work is a basic one and that
his/her attitude toward his work can very well determine the individual’s success.
Herzberg investigated the question “what do people want from their jobs?” he asked
people to describe, in detail, situations when they felt exceptionally good and bad about
their jobs. The findings of the two- factor theory suggested that the work characteristics
associated with dissatisfaction are different from those pertaining to satisfaction, which
formulated the notion that two factors influence work motivation factors. They are
hygiene factors and motivation factors.

Hygiene Factors/dissatisfires
 Salary
 Job security
 Working conditions Job Context Factors
 Status
 Company policy and administration
 Quality of technical supervision

When present in sufficient quantity they have no effect (People will neither be
satisfied nor be dissatisfied), when absent they can lead to job dissatisfaction.

Motivation factors
 Achievement
 Recognition Related with the job content
 Responsibility
 Advancement
 The work itself and possibility of growth
These are the characteristics that people find intrinsically rewarding.

According to Herzberg, the factors leading to job satisfaction are separate and distinct
from those that lead to job dissatisfaction. Therefore, managers who seek to eliminate

79
factors that create job dissatisfaction can bring about peace, but not necessarily
motivation.
Satisfaction No satisfaction
Dissatisfaction No dissatisfaction

The motivation-hygiene theory is not without drawbacks. The criticisms of the theory
include the following:
1. The procedure that Herzberg used is limited in its methodology. When
things are going well, people tend to take credit themselves. Contrarily,
they blame on the external environment.
2. The reliability of Herzberg’s methodology is questioned. Since raters have
to make interpretations, it is possible they may contaminate the findings
by interpreting one response in one manner while treating another similar
response differently.
3. The theory, to the degree it is valid, provides an explanation of job
satisfaction. It is not really a theory of motivation.
4. No overall measure of satisfaction was utilized. In other words, a person
may dislike part of his or her job, yet still think the job is acceptable
5. The theory is consistent with previous research. The motivation hygiene
theory ignores situational variables.
6. Herzberg assumed a relationship between satisfaction and productivity.
But the research methodology he used looked only at satisfaction, not at
productivity. To make such research relevant, one must assume a high
relationship between satisfaction and productivity.

C. Theory ‘X’ and Theory ‘Y’

Douglas McGregor proposed two distinct views of human beings: one basically negative,
labeled theory x, and the other basically positive labeled theory y. After viewing the way
in which mangers dealt with managers, McGregor concluded that a manager’s view of
the nature of human beings is based on certain grouping of assumptions and that he or she
tends to mold his or her behavior toward subordinates according to these assumptions.

80
According to Theory X, the four assumptions held by managers are as follows:
1. Employees inherently dislike work and whenever possible will attempt to
avoid it.
2. Since employees dislike works, they must be coerced, controlled or threatened
with punishment to achieve goals.
3. Employees will avoid responsibilities and seek formal direction whenever
possible.
4. Most workers place security above all other factors associated with work and
well display little ambition.

In contrast to these negative views about the nature of human beings McGregor listed
four positive assumptions which he called Theory Y.
1. Employees can view work as being as natural as rest or play.
2. People will exercise self-direction and self control if they are committed to the
objectives.
3. The average person can learn to accept, even seek responsibility.
4. The ability to make innovative decisions is widely dispersed through out the
population and is not necessarily the sole province of those in management
positions.

To sum up, even today, less educated and traditionally labor dominated industries have to
depend on theory x for driving workers to work more. It should be noted that like Theory
X, Theory Y is not useful for all sort of industrial undertakings. Theory X can be
effective for less developed and educated workers whereas Theory Y is feasible for
developed and educated workers. Individuals with creative thinking and high ambitions
are more successful under Theory Y and the opposite holds true for those who lack
creativity and ambition.

81
 4.2.2 Contemporary theories
i. ERG Theory
Clayton Alderfer had conducted some empirical research and converted Maslow’s theory
into ERG theory. ERG theory is a modification of the need hierarchy theory that proposes
three categories of needs-existence, relatedness and growth.
1. Existence needs: Concerned with providing our basic material existence
requirements. It includes the items that Maslow considered as physiological and
safety needs.
2. Relatedness needs: the desire we have for maintaining important interpersonal
relationships. These social and status desires require interaction with others if they
are to be satisfied, and they align with Maslow’s social need and the external
component of esteem classification.
3. Growth needs: focuses on an intrinsic desire for personal development and the
need for increased competence. These include the intrinsic component from
Maslow’s esteem category and the characteristics included under self-
actualization.
The ERG theory is less rigid than Maslow’s need hierarchy theory suggesting that
individuals may move up as well as down the hierarchy depending on their ability to
satisfy needs. A person can, for example, be working on growth even though existence or
relatedness needs are unsatisfied, or all three need categories could be operating at the
same time. If a person fails to satisfy the already satisfied and passed need due to
different reasons, he redirects his effort to start satisfying it by leaving the one above it.
Inability to gratify for social interaction for instance, might increase the desire for more
money or better working conditions. The theory reduced Maslow’s five needs in to three
and allowed for more than one need to be activated at a time. He suggested that
frustration in attempting to satisfy a higher level need can result in regression to lower
level need.

In summary, ERG theory argues, like Maslow, that satisfied lower order needs lead to the
desire to satisfy higher order needs; but multiple needs can be operating as motivators at
the same time, and frustration in attempting to satisfy a higher need can result in

82
regression to a lower need. ERG theory is more consistent with our knowledge of
individual differences among people. Variables such as education, family background,
and cultural environment can alter the importance or driving force that a group of needs
holds for particular individual .The evidence demonstrating that people in other cultures
rank the need categories differently- for instance, natives of Spain and Japan place social
needs before their physiological requirements-would be consistent with the ERG theory.
In general, ERG theory represents a more valid version of the need hierarchy.

�Quick Test Questions

1. Differentiate between social and esteem needs as proposed by Maslow
2. The ERG theory is less rigid than Maslow’s need hierarchy theory. Do you agree
with this?
3. Identify the components of the two factor theory

ii. The Equity Theory

Equity theory focuses on individual’s perception of how fairly they are treated compared
with others. Individuals compare their job inputs and outcome with those of others and
then respond so as to eliminate any inequalities. We perceive what we get from a job
situation (outcomes) in relation to what we put into it (inputs), and then we compare
outcome input ratio with the outcome input ratio of relevant others. When we see the
ratio as unequal, we experience equity tension. The referent that an employee selects adds
to the complexity of equity theory. Evidence indicates that the referent chosen is an
important variable in equity theory.

There are four referent comparisons an employee can use:

1. Self- inside: an employee’s experiences in a different position inside his or her
current organization.
2. Self-outside: an employee’s experience in a situation or position outside his/her
current organization.
3. Other-inside: another individuals or group of individuals inside the employee’s
organization.

83
4. Other- out side: another individual or group of individuals outside the employee’s
organization.

So employees might compare themselves to friends, neighbors, coworkers, colleagues

in other organizations, or past jobs they themselves have had. Which referent an
employee chooses will be influenced by the information the employee holds about
referent as well as by the attractiveness of the referent. Employees with short tenure
in their current organizations tend to have little information about others inside the
organization, so rely on their own personal experience. However, employees with
long tenure rely more heavily on coworkers for comparison.

If employees perceive their compensation is equal to what others receive for similar
contributions, they will believe that their treatment is fair and equitable. Employees
evaluate equity by a ratio of inputs to outcomes. Inputs to a job include education,
experience, effort and ability (competence). Outcomes from a job include pay,
recognition, benefits and promotions. A state of equity exists whenever the ratio of
one person’s outcomes to input equals the ratio of another person’s outcomes to
inputs. That is, a manager allocates rewards, individuals make equity comparisons
and job satisfaction and performance are affected.

As per equity theory, when employees perceive an inequity they can be predicted to
make one of six choices.
1. Change their inputs: for example, do not exert as much effort.
2. Change their outcomes: e.g. individuals paid on a piece-rate basis can increase
their pay by producing a higher quantity of units of lower quality.
3. Distort perception of self: e.g. “I used to think I worked at a moderate pace but
now I realize that I work a lot harder than everyone else.”
4. Distort perception of others: e.g. “Abebe’s job is not as desirable as I previously
thought it was.”
5. Choose a different referent. E.g. I may not make as much as my brother, but I am
doing a lot better than my Dad when he was my age.

84
 6. Leave the field: e.g. quit the job.

Equity theory recognizes that individuals are concerned not only with the absolute
amount of rewards they receive for their efforts, but also with the relationship of this
amount to what others receive. Based on one’s inputs, such as effort, experience,
education, and competence, one compares outcomes such as salary levels, raises, and
recognition and other factors. When people perceive an imbalance in their outcome-input
ratio relative to others, tension is created. This tension provides the basis for motivation,
as people strive for what they perceive as equity and fairness.

Specifically, the theory establishes four propositions relating to inequitable pay.

1. Given payment by time, over rewarded employees produce more than
equitably paid employees. Hourly and salaried employees generate high
quantity or quality of production in order to increase the input side of the
ratio and bring about equity.
2. Given payment by quantity of production, over rewarded employees
produce fewer, but higher quality, units than equitably paid employees.
3. Given payment by time, under rewarded employees produce less or poorer
quality of output. Effort is decreased which brings about lower
productivity or poorer quality output than equitably paid subjects.
4. Given payment by quantity, under rewarded employees produce a large
number of low-quality units in comparison with equitably paid employees.

It is also important to note that while most research on equity theory has focused on pay,
employees seem to look for equity in the distribution of other organizational rewards. For
instance, it has been shown that the use of high-status job titles as well as large and
lavishly furnished offices may function as outcomes for some employees in their equity
equation. In conclusion, equity theory demonstrates that, for most employees, motivation
is influenced significantly by relative rewards as well as by absolute rewards.

85
iii. The Expectancy Theory -Victor Vroom
This theory argues that the strength of a tendency to act in a certain way depends on the
strength of an expectation that the act will be followed by a given outcome and on the
attractiveness of those outcomes to the individual. In more practical terms, expectancy
theory says an employee is motivated to exert a high level of effort when he/she believes
effort will lead to a good performance appraisal. A good appraisal will lead to
organizational rewards like a bonus, a salary increase, or a promotion and the rewards
will satisfy the employee’s personal goals. An employee is motivated to exert a high level
of effort when he/she believes that the effort will lead to good performance and rewards.
Generally, this theory is based on the relationships among the individual’s effort,
performance and the desirability of outcomes associated with high performance.

1. Effort- Performance (E-P) Expectation: involves whether putting effort into a

task will lead to high performance. For this expectancy to be high, the individual
must has the ability to perform. If I give a maximum effort, will it be recognized
in my performance appraisal? For a lot of employees, the answer is no. why?
Their skill level may be deficient, which means no matter how hard they try, they
are not likely to be a high performer. The organization’s performance appraisal
system may be designed to assess nonperformance factors like loyalty, initiative,
or courage, which means more effort will not necessarily result in a higher
evaluation.
2. Performance outcome (p-o) Expectancy: involves whether successful
performance will lead to the desired reward. This expectancy concerns the belief
that high performance will truly lead to reward. If I get a good performance
appraisal, will it lead to organizational rewards? Many employees see the
performance- reward relationship in their job as weak. The reason is that
organizations reward things besides just performance.
3. Valence or preference: the value of outcomes or attractions for outcomes for the
individual. If employees do not value the outcomes that are available from high
effort and good performance, motivation will be low. If I am rewarded, are they
the rewards I find personally attractive? The employee works hard in hope of

86
 getting a promotion, but gets a pay raise instead. Or the employee wants a more
interesting and challenging job, but receives only a few words of praise.

Note: For an employee to be highly motivated, all three factors in the expectancy model
must be high.

E-P expectancy- probability that effort Valence- value of outcome

will lead to desired performance

Performance Outcomes: pay, recognition and

Effort other rewards

P-O expectancy: probability that

performance will produce
desired outcomes

Fig. 4.3 Major dimensions of expectancy theory

To conclude, the key to expectancy theory is the understanding of an individual’s goals

and the linkage between effort and performance, between performance and rewards, and
finally, between the rewards and individual’s goal satisfaction.

iv. Goal Setting Theory

This theory states that specific and difficult goals lead to higher performance. Goals tell
an employee what needs to be done and how much effort will need to be expended. More
to the point, we can say that specific goals increase performance; that difficult goals
when accepted result in higher performance than do easy goals; and that feedback leads
to higher performance than does non feedback. Specific hard goals produce a higher level
of output than does the generalized goal of “do your best.” The specificity of the goal
itself acts as an internal stimulus. If factors like ability and acceptance of the goals are

87
held constant, we can also state that the more difficult the goal, the higher will be the
level of performance. However, it is logical to assume that easier goals are more likely to
be accepted.

Goal setting theory presupposes that an individual is committed to the goal that is,
determined not to lower or abandon the goal. This is most likely to occur when goals are
made public, when the individual has an internal locus of control, and when the goals are
self set rather than assigned. Self- efficacy refers to an individual’s belief that he/she is
capable of performing a task. The higher your efficacy, the more confidence you have in
your ability to succeed in a task.

v. McCelland’s Theory of Needs

McCelland’s theory of needs focuses three needs: achievement, power and affiliation.
Each of the needs is discussed in greater detail as follows:
1. Needs for Achievement: the desire to excel, to achieve in relation to a set of
standards, to strive to succeed. Need for achievement has requirement for
motives and achievement. It discusses the present requirements and future
motives simultaneously. A motive of achievement is a desire to perform in
terms of a standard of excellence. Many people have a thrust or compelling
drive to succeed. Individuals strive for personal achievement and want to do
something better to distinguish themselves from lower performers.

The following are some of the characteristics of high performers.

 Personal responsibility: high performers seek personal responsibility for
solving problems. They desire to establish outstanding goals. Gambling or
windfall gain is not the motive of high performers because they prefer to
hard work and challenging job and enjoy performance without caring
much about the result derived thereof. They feel personally responsible for
their success or failure. Chance, luck or favorable conditions have no
place in their minds as they believe in work.

88
  Satisfaction with performance: They are not dissatisfied with the low
result, but are dissatisfied if they are unable to perform the job. They do
not leave a job unfinished. Satisfaction is derived from a completed job.
They feel satisfied when they put in maximum efforts.
 Need for feedback: Money is not a motivator for high achievers, but they
use it as feedback or measurement of their performance. They prefer
accomplishment to monetary rewards. They are self-reformers and need
immediate feedback.
 Moderate risk: when a high probability of success is attached to a job,
high performers do not get satisfaction. They take moderate risks. They
like to establish realistic goals which can be achieved with the given
strength and opportunities.
 Job autonomy: high achievers like personal freedom to complete the job.
A lonely job has a definite responsibility which is a motivating factor to
them. They have the desire to excel which is possible when they are given
job autonomy.

2. Need for power: is the desire to influence and control others. Individuals like
power as they enjoy being in charge. They prefer to be placed in competitive
and status oriented situations. They enjoy prestige and gaining influence over
others. They do not believe in performance. Power is enjoyable and effective for
influencing others. Hence, people strive for superiority by gaining power rightly
or wrongly. They need conquest and drive for upward movement.

3. Need for Affiliation: people being social beings, desire friendship and
associations. They prefer cooperation rather than competitive situations.
Individuals desire relationships involving a high degree of mutual understanding
and cohesiveness. It is the unlearned behavior as has been observed in animals
that move about in groups. People working in groups get more energy to
perform the job. Synergy developed through group behavior is always an
effective motivator.

89
To summarize, high achievers are motivated by entrepreneurial activities, self oriented
units and personal relationships. High need people are generally not good managers. The
need for power makes leaders. Similarly, the need for affiliation is an essential quality of
managers. Employees should be motivated based on the above three needs as per their
characteristics and individual differences and personalities.

vi. Reinforcement Theory

According to Mishra, persons tend to repeat behavior that is accompanied by favorable
outcomes and tend not to repeat behavior that is accompanied by unfavorable outcomes.
This theory is based on the learning process. It tries to develop the behavior of employees
because favorable behavior automatically motivates people to exert their effort.
Reinforcement is contingent upon stimuli, attention and translation. The reinforcement
period should be shortened as much as possible for getting effective behavior.

There are four types of reinforcement, namely, positive, negative, punishment and
extinction.
1. Positive Reinforcement: this increases the favorable behavior of employees.
It provides favorable consequences that reinforce the behavior. Regular
feedback and recognition provides the employees positive reinforcement. For
example, if a manger gives a prize to an outperforming employee, the
receiver will be highly likely to maintain his/her performance.
2. Negative Reinforcement: is concerned with the removal of an unfavorable
consequence. Unfavorable behavior is repeatedly removed until it is avoided.
A mechanic working on machines listens to abnormal sounds and tries to stop
the machine to prevent unpredictable danger. Negative reinforcement is
avoidance learning. For instance, a manager can reinforce attendance of
employees by making them aware of the possible consequences of being
absent from work.
3. Punishment: is reprimand to prevent unfavorable consequences. It is used to
influence employees not to resort to any undesirable behavior. It is used to

90
 decrease undesirable behavior. Punishment minimizes or eliminates
undesirable behavior through reprimand which leads to unfavorable
consequences. A manager can minimize the number of absences by
penalizing the employee for being absent for insufficient reasons.
4. Extinction: is similar to punishment and is the reinforcement to reduce or
dominate undesirable behavior. It is the withholding of positive
reinforcement. With continuous non reinforcement, undesirable behavior may
disappear or may totally be eliminated.

�Quick Test Questions

1. According to the expectancy theory, what is valence?
2. What are the assumptions held by McGregor while proposing theory Y?
3. Identify the three needs upon which McCelland’s Theory of Needs focuses.
4. Differentiate between negative reinforcement and punishment

91
Chapter Summary
Motivation can be defined as an inner condition of people which energizes them to work.
It is a need satisfying process. The key elements in that need to be incorporated in a
definition of organizational motivation are effort, goals and needs. An unsatisfied need
creates tension that stimulates drives within the individual. These drives generate a search
behavior to find particular goals that if attained, will satisfy the need and hence reduce
the tension.

Abraham Maslow has proposed the need hierarchy theory of motivation; which states
within every human being a hierarchy of five needs exists. These needs are physiological
needs, safety needs, social needs, esteem needs and self actualization needs. ERG theory
is a modification of the need hierarchy theory of Maslow. This theory proposes three
categories of needs, that is, E-existence, R- relatedness, G- growth needs. As to
Herzberg’s two-factor theory, the work characteristics associated with satisfaction are
different from those pertaining to dissatisfaction. He stated two factors, hygiene factors/
dis-satisfiers and motivation factors/satisfiers, influence work motivation. Equity theory
contends that individuals compare their job inputs and outcomes with those of others and
then respond to eliminate any inequalities.

According to the expectancy theory, an employee is motivated to exert a high level of

effort when he/she believes that the effort will lead to good performance and rewards.
McGregor’s theory X&Y asserts that managers may consider their subordinates as if they
belong to theory X-which hold a negative attitude towards, or theory Y- that holds a
positive attitude towards them. Specific and difficult goals lead to higher performance as
they tell employees what needs to be done and how much effort ought to be exerted.
Need for achievement, power and affiliation are the three components of McCelland’s
theory of needs. Finally, the reinforcement theory suggests that individuals tend to repeat
behavior that is accompanied by favorable outcomes; otherwise, they quit it. Four types
of reinforcement are given, viz. positive, negative, punishment and extinction.

92
Self Check Exercise 4
I. Multiple Choice Questions
Choose the correct answer
1. Which one of the statements below is not true?
A. motivation is a personal trait which some people have and others do not have
B. from organizational perspective, only effort that is directed towards and
consistent with its goals is useful
C. when someone is motivated, he/she tries hard
D. motivation is a need satisfying process
E. None
2. Which one of the following is different from others?
A. need for affection C. need for recognition
B. need for belongingness D. need for friendship E. B&D
3. Identify the one that is not among motivation factors according to the two factor
theory.
A. achievement C. responsibility
B. advancement D. Salary E. recognition
4. As to equity theory, when employees perceive inequity they can
A. change their outcomes C. distort perception of self
B. change their inputs D. leave the organization E. all of the above
5. All the statements below are true about theory Y except____
A. employees view work as natural as rest or play
B. an average person can learn to accept, even seek to responsibility
C. since employees dislike work, they must be coerced, controlled or threatened
with punishment to achieve goals
D. people exercise self direction and self control if they are committed to the
objectives
E. None

93
6. If a manger of certain company reinforces attendance of employees by emphasizing
on the undesirable consequence that would follow if they are absent, he is using
A. Positive reinforcement
B. Extinction
C. Punishment
D. Negative reinforcement
E. None

II. Short Answer Questions

1. State the assumption held by Maslow while proposing hierarchy of needs theory.
2. What are the four referent comparisons an employee may use to determine whether
his/her reward is equitable or not?
3. Explain performance outcome (p-o) expectancy
4. List down the characteristics of high performers

94
 CHAPTER FIVE

MANAGEMENT OF ORGANIZATIONAL CONFLICT

Introduction
Dear student, in this chapter you will learn about one of the pervasive issues in
organizations, i.e., conflict. With respect to conflict, you are going to learn about its
meaning and nature, approaches to it, the levels of conflict, sources of conflict, its
outcomes, its management and how to manage interpersonal relations. Since conflict is
common in our day to day activities, in family, organizations and the like, I hope you will
gain valuable knowledge and even you will be benefited by applying such knowledge
while dealing with conflict of various natures. Therefore, it will be advisable to
comprehend the subject matter so that you will be in a position to get the stated benefits.

Learning objectives:
Upon the completion of this chapter, you are expected to
 realize what conflict is all about and its nature
 identify the approaches to conflict
 know the different levels of conflict
 elucidate the sources of conflict and conflict outcomes
 become aware of how conflict can be managed
 recognize the methods through which interpersonal relations can be managed

Brainstorming question
Can you recall any conflict related experiences you had? If so, please, say something
about what conflict mean to you and state the things that caused the conflict.

5.1 Meaning and Nature of Conflict

According to Robbins, conflict can be defined as a process that begins when one party
perceives that another party has negatively affected or is about to negatively affect
something that the first party cares about. This definition is broad. It describes that point
in any ongoing activity when an interaction crosses over to become an inter-party

95
conflict. It encompasses a wide range of conflicts that people experience in
organizations-incompatibility of goals, differences over interpretations of facts,
disagreements based on behavioral expectations, and the like. Additional commonalities
in the definitions are opposition or incompatibility and some form of interaction. Conflict
must be perceived by the parties to it; whether or not a conflict exists is a perception
issue. If no one is aware of a conflict, then it is generally agreed no conflict exists.

It can also be defined as all oppositions or antagonistic interactions by a person or a

group. Mishra stated that Conflict is the incompatibility of goals and differences or
disagreements over a fact. Conflict arises when an interpersonal relationships which is
expected to be productive, cooperative, and satisfying does not fulfill the expectations.

5.2 Approaches to Conflict

Conflict in management has attracted significant attention because managers devote
much of their time to conflict management. One school of thought has argued that
conflict must be avoided because it refers to malfunctioning within the group. Another
school considers that conflict is natural and inevitable where human behavior is involved,
while the third group believes that conflict is a positive force in organizations, as it helps
effective performance. These approaches to conflict are known respectively as the
traditional approach, human relation approach and interactional approach.

a) Traditional Approach: The traditional approach believes conflicts are violent

and destructive. It is viewed as a negative instrument of performance. Conflict is
the outcome of the malfunctioning of an organization such as poor
communication, lack of trust, failure of the management to meet the aspirations of
employees and so on. The causes of conflict are revealed to avoid the conflict,
because conflict avoidance increases performance.

The view that all conflict is bad certainly offers a simple approach to looking at
the behavior of people who create conflict. Since all conflict is to be avoided, we

96
 need merely direct our attention to the causes of conflict and correct these
malfunctioning in order to improve group and organizational performance.

a) Human Relations Approach: The human relations approach argued that conflict
was a natural occurrence in all groups and organizations. Since conflict is
inevitable, this approach advocated acceptance of conflict. They rationalized its
existence. It cannot be eliminated, and there are even times when conflict may
benefit a group’s performance. Conflict has to be used by management for its
positive results.

b) The Interactionist Approach: this approach encourages conflicts for converting

them into force. Employees are encouraged to express their views so that the
reasons for differences are brought to the surface. Employees are developed to
understand their viewpoints so that they can improve themselves. They should be
self critical and creative for improving their respective performance. This
approach believes that minimum level of conflict is essential for performance, as
some conflicts are helpful for performance. These are known as functional
conflicts because they are constructive and are essential part of an organization.
On the other hand, there are dysfunctional conflicts which hinder the performance
of an organization. The functional and dysfunctional types of conflicts will be
discussed in greater detail in the subsequent sections of the chapter.

�Quick Test Questions

1. How would you define conflict?
2. What is the precondition to say there is conflict between two parties?
3. Describe the three approaches to conflict

5.3 Levels of Conflict

Conflict arises at different level. They are viewed accordingly for resolution. Intra
individual conflict, interpersonal conflict, inter-group, and organizational conflicts are
discussed in this section separately.

97
a) Intrapersonal Conflict
Employees are expected to perform their respective roles. However, in reality, employees
having different needs and roles are unable to cooperate with the management. There are
positive and negative aspects of goal compatibility which causes conflicts. Intra-
individual conflicts arise due to frustration, goals and roles.

 Conflict Due to Frustration: frustration occurs when expectations are not

fulfilled. There are several barriers to achievement of desired goals. These
barriers create frustration. Employees react to the barriers and resort to
aggression, withdrawal, fixation and compromise techniques. The expectation
arises out of a need deficiency. When employees feel the need, they develop
drives to achieve the goal after overcoming the barriers. The drive to achieve
goals is reduced by barriers which may be overt and covert. Over barriers are
outward and physical. Covert barriers are inward and mental. The employees
resort to defense mechanisms for reducing the impacts of barriers. First, they
blame the barriers and abuse them for non achievement of the goal. Secondly
they withdraw from the barriers and abuse them for non-achievement of the
goal. Thirdly, they fix the goal and try again to attain the goal. Fourthly, they
compromise with the situation if they are unable to achieve the goals, and
satisfy themselves with whatever is achieved.

 Goal Compatibility: employees face intra-individual conflicts on the account

of goal incompatibility. Frustration arises when a single motive is blocked
before the goal is achieved; and in goal conflicts, two or more motives are
blocked in the process. Goal conflicts are witnessed in approach- approach
conflicts, approach-avoidance conflicts, and avoidance-avoidance conflicts.
The approach-approach conflicts are related to two or more positive but
exclusive goals. The choice between two goals becomes more difficult and
hence causes goal conflict. Approach-avoidance conflict here both positive

98
 and negative characteristics are observed. Individuals are sometimes
motivated to achieve the goal and at other times they are motivated to avoid
the goal. When this happens, employees are anxious to take corrective
decisions. Internal conflict and stress are visible in such cases. The avoidance-
avoidance conflict reveals two or more negative but mutually exclusive goals.
It is easily resolved. People may leave the organization if they are unable to
get adequate salary. It is an example of avoidance conflict.

 Role conflicts: role ambiguity is another cause of intra individual conflict.

People play their respective roles in an organization as per their status and
cadre. An employee has to also perform different roles outside the
organization as father, son, teacher, friend, and so on. Considering the
different roles to be played in and outside an organization, it becomes for an
employee to perform all the roles successfully. Conflicts are bound to arise.
Organizational roles are more important than multiple individual roles in
organizational behavior.

b) Interpersonal Conflicts
Interpersonal conflict is visible in organization and group behavior, as employees have to
act and react with other employees. The interdependence causes interpersonal conflict.
Interpersonal conflict is analyzed under three sub parts, viz. transactional analysis, Johari
window and strategies for interpersonal conflict resolution.
 Transactional Analysis: it refers to people’s interaction with reference to social
transactions. This analysis provides a better understanding of how people react
with one another while communicating and behaving in society.

 Johari window: pints out interpersonal styles and possible interpersonal conflict
situations. It helps to solve conflicts through feedback, disclosure, self perception
and late strategies. Accordingly, subordinates should be encouraged to provide
feedback. Feedback is the willingness of others to open and frank to provide fair
and correct feedback. Disclosure is related to the extent to which a leader

99
 willingly shares his feelings with others. The subordinates should be looked at
from their viewpoints. Only then can the manager really understand them and
have them understand his feelings. Self perception of the manager means that
whether he knows himself as well as he enters the public and private arena. Late
strategies if anything has gone wrong, the manager has to set things right. Mere
regret and feeling of sorry for the mistake cannot cure the problem. He should try
to avoid errors in the future. It is never too late to amend the situation.

 Strategies for interpersonal conflict resolution: apart from transactional

analysis and Johari window, other strategies are used for resolving interpersonal
conflict.

They are: lose-lose, win-lose, win-win, role set, linking pin and resolving conflicting
groups.
- Lose- lose: under this strategy both parties lose and this may take several
forms. A middle path is taken to resolve conflicts where both parties lose to a
certain extent. Arbitrators or judges are appointed to resolve the problem,
where both the parties suffer.
- Win-lose: here two parties are fighting to achieve success, but only one of
them can win while the other loses the struggle. For example, a manager may
be successful in suppressing the employees’ demand or the employees will be
successful in getting their demand addressed resulting in loss of money by the
organization.
- Win-win: both the conflicting parties win the battle. No one is the loser.
Creativity, productivity, and profitability are increased by mutual agreement.
The manager asks striking employees to raise productivity for getting more
bonuses, for which they are on strike.
- Role set: many interpersonal conflicts are due to overlapping and ambiguous
role sets. Rearranging of overlapping and interlocking role sets is crucial for
resolving conflicting problems.

100
 - Linking pin: each group has linking pins which is used for resolving the
conflicts. Linkages for communication, influence, motivation and
coordination are considered for resolving the conflicts.
c) Organizational conflict
Organizational conflicts include intra-individual, inter-group conflicts and structural
conflicts. Multiple organs such as production, marketing, fiancé, personnel,
subordinate-supervisor relations and customer’s expectations create problems and
conflicts.

5.4. Sources of conflict

The major sources of conflicts, discussed under three levels above, among others are:
1. Competition for limited resources: Resources of an organization are finite. As a
result there are times when groups or individuals in an organization fight for
resources. The greater the scarcity of resources, the greater the potential for
conflict.
2. Work flow relationship: When group’s performance is dependent on another
group or if interdependence allows one group gain at another’s expense, opposing
sources are stimulated.
3. Communication problems: May arise because all groups may not have the same
information or may not have adequate information or information overload.
Supervisors should consider the status, education and experience of subordinates
while communicating with them, for their proper understanding or instructions.
Poor communication leads to conflicts while open and frank communication
reduces it. Insufficient exchange of information, noise in the communication
channel and semantic difficulty arises as the result of differences in training,
selective perception, in values, and attitudes.
4. Overlapping or unclear boundaries. If which activities or resources are allocated
to whom is not clearly delineated, it can lead to conflict the parties working
around the overlapping responsibilities/ authorities.
5. Unclear authority structure: people may not know how far their authority extends.

101
 6. Unreasonable or unclear procedures or rules: When rules and regulations are
stipulated in ambiguous manner, conflict may arise.
7. Collective decision making: The greater the number of people participating in a
decision, the greater the potential for conflict as group members may have
different background, level of information, experience and the like. They can
view the thing upon which decision is to be made from different perspective.
� Quick Test Questions
1. Give an example of intrapersonal conflict
2. What are the strategies that can be employed to resolve interpersonal conflict?
3. List down the major sources of conflict
4. How work flow relationship can lead to conflict?

Please, state any consequences of conflict from your personal life experience and
readings.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

5.5. Conflict Outcomes

Conflict outcomes may be either functional, in that the conflict results in an improvement
in the group’s performance, or dysfunctional, in that it hinders group performance.

1. Functional outcomes
It is hard to visualize a situation where open or violent aggression could be functional.
But there are a number of instances where it is possible to envision how low or moderate
levels of conflict could improve the effectiveness of a group. Generally, conflict is
constructive when it stimulates creativity and innovation, improves the quality of
decisions and encourages interest among group members, provides the medium through
which problems can aired and tensions released, and fosters environment of self
evaluation and change. The evidence suggests that conflict can improve the quality of

102
decision making by allowing all points, particularly the ones that are unusual or held by a
majority, to be weighted in important decisions. Conflict is an antidote for groupthink.
Conflict challenges the status quo and therefore, furthers the creation of new ideas,
promotes reassessment of group goals and activities, and increases the probability that the
group will respond to change.

Not only do better and more innovative decisions result from situations where there is
conflict, but evidence indicates that conflict can be positively related to productivity. It
was demonstrated that, among established groups, performance tended to improve more
when there was conflict among members than when there was fairly close agreement.
The investigators observed that when groups analyzed decisions that had been made by
the individual members of that group, the average improvement among the high conflict
groups was 73 percent greater than was that of those groups characterized by low conflict
conditions. Generally speaking, groups composed of members with different interests
tend to produce higher quality solutions to a variety of problems than do homogeneous
groups.

Basic positive outcomes of conflict include:

- The energy level of individuals or groups increases with conflict.
- Group cohesion increases – external threats tend to cause a group to pull together
as a unit.
- Blind faith is replaced by logical understanding
- Minorities views are given due attention
- Inactive decisions are revealed due to conflict

2. Dysfunctional outcomes
The destructive consequences of conflict on a group or organization’s performance are
generally well known. Uncontrolled opposition breeds discontent which acts to dissolve
commonalities, and eventually leads to the destruction of the group.

103
The more undesirable consequences of conflict are:
- Decline in communication between conflicting parties
- Reduction in group cohesiveness
- Subordination of group goals to the primacy of infighting between members.
- Delay in decision making which need to be done urgently
- Common links are broken and destructive ideas crop up
- Hostility and aggression development which disrupts harmony and peace among
groups from the organization’s point of view.
- Over conformity to group demands – members of a group faced with outside
threats may over conform to the group demands.
- At the extreme, conflict can bring group functioning to halt and potentially
threaten the group’s survival.
- Conflicts increase employee turnover, decrease employee satisfaction and
increases inefficiencies of work units.

To conclude, the two extremes of conflict (too little and too much) are dysfunctional
whereas the optimum level of conflict is functional. Therefore, managers should strive to
maintain optimum level of conflict in their organizations. Evidence indicates that the type
of group activity is significant factor for determining functionality. The more non routine
the tasks of a group are, the greater the probability that internal conflict will be
constructive. Groups that are required to tackle problems demanding new and novel
approaches- as research, advertising and other professional activities- will benefit more
from conflict than will groups performing highly routine activities.

What possible techniques you recommend managers to control conflict levels and
keep conflicts functional?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

104
5.6 Conflict Management
In this sub section, three important issues, that is, analysis of the conflict situation,
conflict stimulation and conflict resolution are discussed as tools of conflict management.

3.6.1 Analysis of the conflict situation

A viable strategy for conflict management begins with an analysis of the conflict
situations and then moving to the development of strategy options. Management can
analyze a conflict situation by identifying:
 The conflicting parties – the conflict may be between individuals, between
individuals and groups, or between departments.
 The source of conflict – competition, personal difference, inadequate
communication and the like.
 The level of conflict – the situation may be at a stage where the manager must
deal with it immediately or the conflict may be at a moderate level of intensity.

5.6.1 Conflict stimulation

We can stimulate conflict by employing the following mechanisms:
 Competition: At times a manager may wish to increase the level of conflict
and competition in work situations. For instance, a conflict between new
individuals and existing employees may result in new approaches or methods
of work. A conflict raised from restructuring an organization may bring about
better way of doing a task. Encouraging competition by offering bonuses,
incentive pay and citation of outstanding performance may lead to productive
conflicts as groups struggle to outdo each other.
 Bringing outsiders: - adding employees to a group whose back grounds,
values, attitudes or managerial styles differ from those of present members
can be adopted as means of stimulating conflict to its functional level.
 Restructuring the organization: realigning work groups, altering ruler and
regulations, increasing interdependence and making similar structural changes
to disrupt the status quo is also used to further conflict within or among
individuals/groups.

105
  Appointing devil’s advocate: - designating a critic to purposely argue against
the majority positions held by the group. The devil’s advocate role can help
prevent group think

5.6.2 Conflict Resolution

Managers as well as other individuals who are in charge of resolving conflicts that arise
in their organizations or units can employ one or more of the following tools towards
their target. The situation, the parties involved in conflict, its cause, and extent highly
determines which technique ought to be used at a time.
a) Dominance and suppression: they create a win- lose situation in which the loser
is forced to give way. Usually ends up disappointing and breeds hostile
environment.
b) Avoidance: this strategy calls for a manager to withdraw or ignore the conflict.
Letting the participants resolve it themselves.
c) Smoothing: in this strategy an obliging person neglects his/ her own concern to
satisfy the concern of the other party. This option involves playing down
differences while emphasizing commonalities.
d) Compromise: with compromise each party is required to give up something of
value in order to get another thing. Each party moves to find a middle ground.
There is no clear winner or loser, rather there is a willingness to share the object
of the conflict and accept a solution that provides incomplete satisfaction for both
parties concerned.
e) Collaboration: here the manager promotes mutual problem solving by both
parties. It is a situation where the parties to a conflict each desire to satisfy fully
the concern of all parties.
f) Confrontation: if this option is used, conflicting parties are forced to verbalize
their positions and disagreements. The objective is to identify a reason to favor
one solution or another and thus resolve the conflict.
g) Accommodation: Use accommodations when you find you are wrong, and to
allow a better position to be heard, to learn and to show that you are responsible.

106
 h) Negotiation: negotiation can be defined as a process in which two or more parties
exchange goods or services and attempt to agree on the exchange rate of for them.
Negotiation permits the interactions of almost everyone in groups and
organizations. It occurs when two or more parties- either individuals or groups-
discuss specific proposals in order to find out a mutually acceptable agreement.
For example, when organizations use it to solve internal disputes (between labor
and management) and external conflict (when dealing with customers or
suppliers).

Due to its wide application and importance in our daily lives, negotiation is discussed in
more detail below.

I. Negotiation strategies: there are two general approaches to negotiation: distributive

bargaining and integrative bargaining.
a) Distributive Bargaining: - the most identifying feature of it is that it operates
under zero sum conditions. That is, any gain A makes is at B’s expense, and vice
versa. Assume you see a used car advertised for sale in the newspaper. It appears
to be just what you have been looking for. You go out to see the car. It is great
and you want it. The owner tells you the asking price. You do not want to pay that
much. The two of you then negotiate over the price. The negotiating strategy you
are engaging in is called distributive bargaining because every Birr you can get
the seller to cut from the car’s price is a Birr you save. Conversely, every Birr he
can get from you comes at your expense. So the essence of distributive bargaining
in negotiating is negotiating over who gets what share of a fixed pie.

When engages in distributive bargaining, one’s tactics focus on trying to get one’s
opponent to agree to one’s specific target or to get as close as possible. Examples of such
tactics are persuading your opponent of the impossibility of getting to his or her target
point and advisability of accepting a settlement near yours; arguing that your target is
fair, but your opponent’s is not; and attempting to get your opponent to feel emotionally
generous toward you and thus accept an outcome close to your target point.

107
 b) Integrative Bargaining: in contrast to distributive bargaining, integrative
problem solving operates under the assumption that there exists one or more
settlements that can create a win-win solution. In terms of intra-organizational
behavior, all things being equal, integrative bargaining is preferable to distributive
bargaining. Because the former builds long term relationships and facilitates
working together in the future. It bonds negotiators and allows each to leave the
bargaining table feeling he/she has achieved a victory. Distributive bargaining, on
the other hand, leaves one party a loser. It tends to build animosities and deepen
divisions when people have to work together on an ongoing basis.

II. Decision Making Biases That Hinder Effective Negotiation

All of us have had negotiating experiences where the results have been less than we
had hoped for. As we tend to be blind to opportunities that prevent us from getting as
much as possible out of a negotiation. The following identifies seven decision making
biases that can blind us.
1) Irrational escalation of commitment- people tend to continue a previously
selected course of action beyond what rotational analysis would
recommend. Such misdirected persistence can lead to wasting a great deal
of time, energy, and money.
2) The mythical fixed pie- bargainers assume their gain must at the expense
of the other party. As noted with integrative bargaining, that need not be
the case. There are often win- win solutions.
3) Anchoring and adjustments- people often have a tendency to anchor their
judgments on irrelevant information, such as an initial offer. Many factors
influence the initial positions people take when entering a negotiation.
4) Framing negotiations- people tend to be overly affected by the way
information is presented to them.
5) Availability of information- negotiators often rely too much on readily
available information while ignoring more relevant data. Things or events

108
 that people have encountered more often are usually easy to remember-
they are more available in their memory.
6) The winners curse- the regret one feels after closing a negotiation- because
your opponent accepted your offer, you become concerned that you
offered too much. This post negotiation reaction is not unusual. In most
negotiations, one side, usually the seller, has much better information than
the other.
7) Overconfidence- many of the previous biases can combine to inflate a
person’s confidence in his or her judgment and choices. When people hold
certain beliefs and expectations, they tend to ignore information that
contradicts them.

III. Third party negotiation: occasionally, individuals or group representatives reach a

settlement and are unable to solve their differences through direct negotiation. In such
cases they may turn to a third party to help them find a solution.

1. Arbitration: it is used where a neutral third party acts as a judge and issues a
binding decision affecting parties at negotiation. However, the authority of the
arbitrator may also vary according to the rules set by the negotiators. Arbitration
can be voluntary (requested) or compulsory (forced on the parties by law or
contract.)
2. Mediation: is used when a neutral third party acts/facilitates negotiated
solutions by using reasoning and persuasion, suggesting alternatives, etc.

5.7 Managing Interpersonal Relations

A manager can effectively manage interpersonal relations by devising things such as:
 establishing rules and regulations, hierarchy, planning specific goals to be
attained,
 designing liaison roles to facilitate communication between two independent
work units,
 assigning task forces to solve a particular problem,

109
  naming permanent teams to handle frequently occurring problems and
 Finally, creating interacting departments to integrate tasks between two or more
departments.

�Quick Test Questions

1) Can you mention a situation where conflict outcome is positive?
2) When do you think is conflict outcome will be dysfunctional?
3) How would you stimulate conflict?
4) Differentiate between arbitration and mediation.

Chapter Summary
Conflict is a natural occurrence in all groups and organizations. It can be defined as a
process that begins when one party perceives that another party has negatively affected or
is about to negatively affect something that the first party cares about. It can also be
stated as all oppositions and antagonistic interactions by person or a group. The three
approaches to conflict are traditional, human relations and inter-actionist approach. The
first approach argues that conflict must be avoided as it refers to malfunctioning within
the group. The second approach contends that conflict is natural and inevitable where
human behavior is involved. Finally, the third one believes that conflict is positive force

110
in organizations which helps effective performance. The levels of conflict include
intrapersonal conflict-conflict within oneself, interpersonal conflict, and organizational
conflict.

The major sources of conflict are competition for limited resources, work flow
relationship, communication problems, overlapping boundaries, unclear authority
structure, unclear procedures and collective decision making. The outcomes of conflict
can be either functional or dysfunctional. While managing conflict, it is important to
analyze the situation, stimulate the conflict when it is below the desired level, and resolve
it.

Self Check Exercise 5

i. Choose the right answer among the alternatives given.
1) Conflict is a natural process which is inevitable wherever human behavior is
involved. This statement best describes
A. human relations approach
B. traditional approach
C. inter-actionist approach
D. all
2) Which one of the following shows approach-avoidance conflict?

111
 A. it is related to two or more positive but exclusive goals
B. it involves both positive and negative characteristics
C. It reveals two or more negative but mutually exclusive goals.
D. B&C
3) In win-lose strategy for interpersonal conflict resolution
A. both the conflicting parties win the battle
B. both parties lose
C. only one of the parties wins while the other loses
D. None
4) If which activities or resources are allocated to whom is not clearly delineated, it can
lead the parties working around to conflict. To which source of conflict can this be
attributed?
A. work flow relationship
B. communication problem
C. competition for limited resources
D. overlapping boundary
E. unclear authority
5) Identify the one that is not a dysfunctional outcome of conflict?
A. reduction in group cohesiveness
B. blind faith is replaced by logical understanding
C. decline in communication
D. delay in decision making
E. None
6) A conflict resolution technique whereby conflicting parties are forced to verbalize
their positions and disagreements so that the judges can identify the reason to favor
one solution or another is
A. negotiation
B. compromise
C. confrontation
D. smoothing
E. collaboration

112
7) when a neutral third party acts/ facilitates negotiated solutions by using reasoning,
persuasion and suggesting alternatives, we say
A. arbitration is used
B. mediation is exercised
C. distributive bargaining has taken place
D. integrative bargaining has taken place
E. None
ii. Match column ‘A’ with ‘B’
Column ‘A’ Column ‘B’
1. intrapersonal conflict A. win-win
2. source of conflict B. conflict due to frustration
3. appointing devil’s advocate C. conflict stimulation method
4. the winners curse D. collective decision making
5. managing interpersonal relations E. the regret one feels after closing a
negotiation
F. assigning taskforce to solve a particular
Problem

CHAPTER SIX

Stress Management

Introduction
This chapter will introduce of you to the concept of stress management in organizations.
In this chapter we will have one common definition to stress in organizational context,

113
understand the sources of stress and its consequences, strategies applied to manage stress
and finally performance and satisfaction implication of stress will be reviewed.

6.1 What is Stress?

Stress is a dynamic condition in which an individual is confronted with an opportunity,
constraint, or demand related to what He or she desires and for which the outcome is
perceived to be both uncertain and important. This is a complicated definition. Let's look
at its components more closely.
Stress is not necessarily bad in and at itself. While stress is typically discussed in a
negative context, it also has positive value. It is an opportunity when it offers potential
gain. Consider for example, the superior performance that an athlete or stage performer
gives in "clutch" situations. Such individuals often use stress positively to rise to the
occasion and perform at or near their maximum.
More typically, stress is associated with constraints and demands. The former prevent
you from doing what you desire. The latter refers to the loss of something desired. So
when you take a test at school or you undergo your annual performance review at work,
you feel stress because you confront opportunities, constraints, and demands. A good
performance review may lead to a promotion, greater responsibility, and a higher salary.
But a poor review may prevent you from getting the promotion. An extremely poor
review might even result in your being fired.
Two conditions are necessary for potential stress to become actual stress. There must be
uncertainty over the outcome and the outcome must be important. Regardless of the
conditions, it is only when there is doubt or uncertainty regarding whether the
opportunity will be seized, the constraint removed, or the loss avoided that there is stress.
That is, stress is highest for those individuals who perceive they are uncertain as to
whether they will win or lose and lowest for those individuals who think that winning or
losing is a certainty. But importance is also critical. If winning or losing is an
unimportant outcome, there is no stress. If keeping your job or earning a promotion
doesn't hold any importance for you, you have no reason to feel stress over having to
undergo a performance review.

114
Before reading the coming section give your opinion for the following points
1. What factors can cause stress?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
2. Identify possible positive and negative consequences of stress?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________

6.2 Understanding Stress and its Consequences

What causes stress? What are its consequences for individual employees? Why is it that
the same set of conditions which creates stress for one person seems to have little or no
effect on another person? Figure 6.1 provides a model that can help to answer questions
such as these?

115
Fig. 6.1: A Model of Stress
The model identifies three sets of factors- environmental, organizational, and individual-
that act as potential sources of stress. Whether they lead to actual stress depends on
individual differences such as job experience and personality. When stress is experienced
by an individual, its symptoms can surface as physiological, psychological, and
behavioral outcomes.

6.2.1 Potential Sources of Stress

The model in Figure 6.1 shows three categories of potential stressors: environmental,
organizational, and individual. Let's take a look at each.
ENVIRONMENTAL FACTORS - Just as environmental uncertainty influences the
design of an organization's structure, it also influences stress levels among employees in
that organization. Changes in the business cycle create economic uncertainties. When the
economy is contracting, people become increasingly anxious about their security. It was
not a chance occurrence that suicide rates skyrocketed during the Great Depression of the
1930s. Minor recessions, too, increase stress levels. Downward swings in the economy
are often accompanied by permanent reductions in the workforce, temporary layoffs,
reduced pay, shorter work weeks, and the like.
Political uncertainties don't tend to create stress among North Americans as they do for
employees in countries like Somalia or Iraq. The obvious reason is that the United States
and Canada have stable political systems where change is typically implemented in an
orderly manner. Yet political threats and changes, even in countries like the United States
and Canada, can be stress inducing.
New innovations can make an employee's skills and experience obsolete in a very short
period of time. Technological uncertainty, therefore, is a third type of environmental
factor that can cause stress. Computers, robotics, automation, and other forms of
technological innovation are a threat to many people and cause them stress.
ORGANIZATIONAL FACTORS - Numerous factors within the organization can cause
stress. Pressures to avoid errors or complete tasks in a limited time period, work
overload, a demanding and insensitive boss; and unpleasant coworkers are a few

116
examples. We've categorized these factors around task, role, and interpersonal demands,
organization structure, organizational leadership, and the organization's life stage.
Task demands are factors related to a person's job. They include the design of the
individual's job (autonomy, task variety, degree of automation), working conditions, and
the physical work layout. Assembly lines can put pressure on people when their speed is
perceived as excessive. The more interdependence between a person's tasks and the tasks
of others, the more potential stress there is. Autonomy, however, tends to lessen stress.
Jobs where temperatures, noise, or other working conditions are dangerous or undesirable
can increase anxiety. So, too, can working in an overcrowded room or in a visible
location where interruptions are constant.
Role demands related to pressures placed on if person as a function of the particular role
he or she plays in the organization. Role conflicts create expectations that may be hard to
reconcile or satisfy. Role overload is experienced when the employee is expected to do
more than time permits. Role ambiguity is created when role expectations are not clearly
understood and the employee is not sure what he or she is to do.
Interpersonal demands are pressures created by other employees. Lack of social support
from colleagues and poor interpersonal relationships can cause considerable stress,
especially among employees with a high social need.
Organization structure defines the level of differentiation in the organization, the degree
of rules and regulations, and where decisions are made. Excessive rules and lack of
participation in decisions that affect an employee are examples of structural variables that
might be potential sources of stress.
Organizational leadership represents the managerial style of the organization's senior
executives. Some chief executive officers create a culture characterized by tension, fear,
and anxiety. They establish unrealistic pressures to perform in the short run, impose
excessively tight controls, and routinely fire employees who don't measure up.

INDIVIDUAL FACTORS - The typical individual only works about 40 to 50 hours a

week. The experiences and problems that people encounter in those other 120-plus non
work hours each week can spillover to the job. Our final category, then, encompasses

117
factors in the employee's personal life. Primarily, these factors are family issues, personal
economic problems, and inherent personality characteristics.
National surveys consistently show that people hold family and personal relationships
dear. Marital difficulties, the breaking off of a relationship, and discipline troubles with
children are examples of relationship problems that create stress for employees and aren't
left at the front door when they arrive at work.
Economic problems created by individuals over extending their financial resources is
another set of personal troubles that can create stress for employees and distract their
attention from their work.
It has been found that stress symptoms reported prior to beginning a job accounted for
most of the variance in stress symptoms reported nine months later. This indicates that
some people may have an inherent tendency to accentuate negative aspects of the world
in general. If true, then a significant individual factor influencing stress is a person's basic
dispositional nature. That is, stress symptoms expressed on the job may actually originate
in the person's personality.

6.2.2 Individual Differences

Some people thrive on stressful situations; others are overwhelmed by them. What is it
that differentiates people in terms of their ability to handle stress?
What individual difference variables moderate the relationship between potential
stressors and experienced stress? At least five variables-perceptions, job experience,
social support, belief in locus of control, and hostility-have been found to be relevant
moderators.
PERCETION - Employees react in response to their perception of reality rather than to
reality itself. Perception, therefore, will moderate the relationship between a potential
stress condition and an employee's reaction to it. One person's fear that he'll lose his job
because his company is laying off personnel maybe perceived by another as an
opportunity to get a large severance allowance and start his own business. Similarly, what
one employee perceives as an efficient and challenging work environment may be viewed
as threatening and demanding by others. So the stress potential in environmental,

118
organizational, and individual factors doesn't lie in their objective condition. Rather, it
lies in an employee's interpretation of those factors.
JOB EXPERIENCE - Experience is said to be a great teacher. It can also be a great stress
reducer. Think back to your first date or your first few days in college. For most of us, the
uncertainty and newness of these situations created stress. But as we gained experience,
that stress disappeared or at least significantly decreased. The same phenomenon seems
to apply to work situations.
That is, experience on the job tends to be negatively related to work stress. Two
explanations have been offered. First is the idea of selective withdrawal. Voluntary
turnover is more probable among people who experience more stress. Therefore, people
who remain with the organization longer are those with more stress-resistant traits or
those who are more resistant to the stress characteristics of their organization. Second,
people eventually develop coping mechanisms to deal with stress. Because this takes
time, senior members of the organization are more likely to be fully adapted and should
experience less stress.
SOCIAL SUPPORT - Increasing evidence shows that social support-that is, collegial
relationships with co-workers or supervisors can buffer the impact of stress. The logic
underlying this moderating variable is that social support acts as a palliative, mitigating
the negative effects of even high-strain jobs. For individuals whose work associates are
unhelpful or even actively hostile, social support may be found outside the job.
Involvement with family, friends, and community can provide the support-especially for
those with a high social need-that is missing at work and this can make job stressors more
tolerable.
BELIEF IN LOCUS OF CONTROL - Evidence indicates that internals perceive their
jobs to be less stressful than do externals. When internals and externals confront a similar
stressful situation, the internals are likely to believe they can have a significant effect on
the results. They, therefore, act to take control of events. Externals are more likely to be
passive and defensive. Rather than do something to reduce the stress, they acquiesce. So
externals, who are more likely to feel helpless in stressful situations, are also more likely
to experience stress.

119
HOSTILITY - By looking at various components of Type A behavior, it's been found
hostility and anger associated with Type A behavior is actually related to heart disease.
The chronically angry, suspicious, and mistrustful person is the one at risk.

6.2.3 Consequences of Stress

Stress shows itself in a number of ways. For Instance, an individual who is experiencing
a high level of stress may develop high blood pressure, ulcers, irritability, difficulty in
making routine decisions, loss of appetite, accident proneness, and the like. These can he
subsumed under three general categories: physiological, psychological, and behavioral
symptoms.
PHYSIOLOGICAL SYMPTOMS - Most of the elderly concern with stress was directed
at physiological symptoms. This was primarily because the topic was researched by
specialists in the health and medical sciences. This research led to the conclusion that
stress could create changes in metabolism, increase heart and breathing rates, increase
blood pressure, bring on headaches, and induce heart attacks.
PSYCHOLOGICAL SYMPTOMS - Stress can cause dissatisfaction. Job-related stress
can cause job-related dissatisfaction. Job dissatisfaction, in fact, is lithe simple stand most
obvious psychological effect of stress. But stress shows itself in other psychological
states-for instance, tension, anxiety, irritability, boredom, and procrastination.
When people are placed in jobs that make multiple and conflicting demands or in which
there is a lack of clarity as to the incumbent's duties, authority, and responsibilities, both
stress and dissatisfaction are increased. Similarly, the less control people have over the
pace of their work, the greater the stress and dissatisfaction. While more research is
needed to clarify the relationship, the evidence suggests that jobs providing a low level of
variety, significance, autonomy, feedback, and identity to incumbents create stress and
reduce satisfaction and involvement in the job.
BEHAVIORAL SYMPTOMS - Behaviorally related stress symptoms include changes in
productivity, absence, and turnover, as well as changes in eating habits, increased
smoking or consumption of alcohol, rapid speech, fidgeting, and sleep disorders.

120
6.3 Managing Stress
From the organization's standpoint, management may not be concerned when employees
experience low to moderate levels of stress. The reason, as we showed earlier, is that such
levels of stress maybe functional and lead to higher employee performance. But high
levels of stress, or even low levels sustained over long periods of time, can lead to
reduced employee performance and; thus, require action by management.
While a limited amount of stress may benefit an employee's performance, don't expect
employees to see it that way. From the individual's standpoint, even low levels of stress
are likely to be perceived as undesirable. It’s not unlikely, therefore, for employees and
management to have different notions of what constitutes an acceptable level of stress on
the lob. What management may consider as "a positive stimulus that keeps the adrenaline
running" is very likely to be seen as "excessive pressure" by the employee. Keep this in
mind as we discuss individual and organizational approaches toward managing stress.

6.3.1 INDIVIDUAL APPROACHES

An employee can take personal responsibility for reducing his or her stress level.
Individual strategies that have proven effective include implementing time-management
techniques, increasing physical exercise, relaxation training, and expanding the social
support network.
Many people manage their time poorly. The things they have to accomplish in any given
day or week are not necessarily beyond completion if they manage their time properly.
The well-organized employee, like the well-organized student, can often accomplish
twice as much as the person who is poorly organized. So an understanding and utilization
of basic time-management principles can help individuals’ better cope with tensions
created by job demands. A few of the more well-known time-management principles are
(1) making daily lists of activities to be accomplished; (2) prioritizing activities by
importance and urgency; (3) scheduling activities according to the priorities set; and (4)
knowing your daily cycle and handling the most demanding parts of your job during the
high part of your cycle when you are most alert and productive. Non competitive physical
exercise such as aerobics, walking/jogging, swimming, and riding a bicycle have long
been recommended by physicians as a way to deal with excessive stress levels. These

121
forms of physical exercise increase heart capacity, lower at-rest heart rate, provide a
mental diversion from work pressures, and offer a means to let off steam.
Individuals can teach themselves to reduce tension through relaxation techniques such as
meditation, hypnosis, and biofeedback. The objective is to reach a state of deep
relaxation, where one feels physically relaxed, somewhat detached from the immediate
environment, and detached from body sensations. Fifteen or 20 minutes a day of deep
relaxation releases tension and provides a person with a pronounced sense of
peacefulness. Importantly, significant changes in heart rate, blood pressure, and other
physiological factors result from achieving the deep relaxation condition. As we noted
earlier in this chapter, having friends, family, or work colleagues to talk provides an
outlet when stress levels become excessive. Expanding your social support network
therefore, can be a means for tension reduction. It provides you with someone to hear
your problems and a more objective perspective on the situation. Research also
demonstrates that social support moderates the stress-burnout relationship. That is, high
support reduces the likelihood that heavy work stress will result in job burnout.

6.3.2 ORGANIZATIONAL APPROACHES

Several of the factors that cause stress particularly task and role demands, and
organization structure-are controlled by management. As such, they can be modified or
changed. Strategies that management might want to consider include improved personnel
selection and job placement, use of realistic goal setting, redesigning of jobs, increased
employee involvement, improved organizational communication, and establishment of
corporate wellness programs.
While certain jobs are more stressful than others, we learned earlier in this chapter that
individuals differ in their response to stress situations .We know, for example, that
individuals with little experience or an external locus of control tend to be more stress
prone: Selection and placement decisions should take these facts into consideration.
Obviously, although management shouldn't restrict hiring to only experienced individuals
with an internal locus, such individuals may adapt better to high-stress jobs and perform
those jobs more effectively.

122
Based on an extensive amount of research, we concluded that individuals perform better
when they have specific and challenging goals and receive feedback on how well they are
progressing toward these goals. The use of goals can reduce stress as well as provide
motivation. Specific goals that are perceived as attainable clarify performance
expectations. Additionally, goal feedback reduces uncertainties as to actual job
performance. The result is less employee frustration, role ambiguity, and stress.
Redesigning jobs to give employees more responsibility, more meaningful work, more
autonomy, and increased feedback can reduce stress because these factors give the
employee greater control over work activities and lessen dependence on others. If
individuals prefer structure and routine, reducing skill variety should also reduce
uncertainties and stress levels.
Role stress is detrimental to a large extent because employees feel uncertain about goals,
expectations, how they'll be evaluated, and the like. By giving these employees a voice in
those decisions that directly affect their lob performances, management can increase
employee control and reduce this role stress. So managers should consider increasing
employee involvement in decision making.
Increasing formal organizational communication with employees reduces uncertainty by
lessening role ambiguity and role conflict. Given the importance that perceptions play in
moderating the stress response relationship, management can also use effective
communications as a means to shape employee perceptions. Remember that what
employees categorize as demands, threats, or opportunities are merely an interpretation,
and that interpretation can be affected by the symbols and actions, communicated by
management.
Our final suggestion is to offer organizationally supported wellness programs. These
programs focus on the employee's total physical and mental condition. For example, they
typically provide workshops to help people quit smoking, control alcohol use, lose
weight, eat better, and develop a regular exercise program. The assumption underlying
most wellness programs is that employees need to take personal responsibility for their
physical and mental health. The organization is merely a vehicle to facilitate this end.

123
Organizations, of course, aren't altruistic. They expect a payoff from their investment in
wellness programs. And most of those firms that have introduced wellness programs have
found the benefits to exceed the costs.
We found that the existence of work stress, in and of itself, need not imply lower
performance. The evidence indicates that stress can be either a positive or negative
influence on employee performance. For many people, low to moderate amounts of stress
enable them to perform their jobs better, by increasing their work intensity, alertness, and
ability to react. However, a high level of stress, or even a moderate level sustained over a
long period of time, eventually takes its toll and performance declines. The impact of
stress on satisfaction is far more straight forward. Job-related tension tends to decrease
general job satisfaction. Even though low to moderate levels of stress may improve job
performance, employees find stress dissatisfying.

124
Fig. 6.2: Inverted-U Relationship between Stress and Job Performance

Chapter summary
Stress is a dynamic condition in which an individual is confronted with an opportunity,
constraint, or demand related to what He or she desires and for which the outcome is
perceived to be both uncertain and important.
Employees could be exposed to different stress causing conditions. The level and nature
of stress employees feel determine whether it is important to improve or negatively affect
their job performance. Hence, managers are expected to track stress causing variables and
issues related with stress.

Factors that have the potential to create stress are broadly classified into three major
categories: environmental, organizational and personal factors. Though, individuals are
exposed to similar conditions the stress level that they experience might significantly

125
differ because of their perception, job experience, social support, belief in locus of
control, self-efficacy, and hostility feelings. In spite of the roles these variables play in
moderating the effect level of the stressful situation the person could end up at one of the
three consequences of stress: physiological, psychological or behavioral symptoms.
To manage stress we can use either individual approaches such as implementing time
management, relaxation training, expanding social support and making physical exercise
or organization approaches which might include having improved selection and job
placement systems, providing training, redesigning jobs, etc.. There is also the possibility
of applying both approaches together.

Self Check Exercise 5

i. Choose the right answer among the alternatives given.
1. Identify the different one
A. Economic uncertainty C. Terrorism
B. Political uncertainty D. Role demand
2. Which one might be a reason why the levels of stress level individuals feel differ
though they are exposed to similar stress creating environment?
A. Experience related with the situation
B. The different meaning they attached to the condition
C. The level of self-efficacy
D. The belief they have regarding internal control
E. All

126
 F. None
3. Mr. Getachew identified one major factor that is responsible to high level of stress
employee feeling. He said that the job content is so complex and very difficult to be
handled by any employee in the organization. Which strategy could be highly
effective if applied to solve the problem?
A. Encouraging employees to do physical exercise
B. Having relaxation training in the organization
C. Applying time management
D. Redesigning the job
4. Which one is not the behavioral symptom of stress?
A. High blood pressure
B. Increased alcohol consumption
C. Smoking
D. None
5. Which one is not necessary to implement time management as a technique to manage
stress
A. Prioritizing activities to be done
B. Having daily list of activities to be done
C. Developing schedules that might help to do activities as per our priority
D. Handling important activities during the time you become very alert and
productive
E. None
6. If employees have their own techniques that might help them to be free from
destructive stress level is known as
A. Organizational approach
B. Individual approach
C. Both A and B
D. None

127
 Chapter Seven

Culture and Diversity

Introduction
Dear student, welcome to the ninth chapter of the module! Here you will be learning
about one of the fundamental issues in organizations, culture. You have about seven
sub sections to be covered. First, meaning and nature of organizational culture will be
introduced. Then, manifestations and role of culture will follow. Barriers to culture,
creating and sustaining organizational culture and dominant, sub cultures and strong
culture are discussed in the remaining sections of the chapter. Finally, you will see
how culture is learnt. Try the quick check questions that are provided at the end of
two or three sub section to ensure whether you have internalized the points
emphasized therein. Have good study time!

128
 Learning Objectives
When you finalize studying this chapter, you should be able to
 Grasp the nature and meaning of organizational culture
 Know how culture is disclosed
 Be familiar with the roles of organizational culture
 Understand the barriers to culture
 Know how culture is created and sustained
 Distinguish among dominant, sub and strong culture

7.1. Culture and organization

7.1.1 Meaning and Nature of Organizational Culture
Robbins asserts that organizational culture is a dynamic system of shared meaning
held by members that distinguishes the organization from other organizations. This
system of shared meaning is a set of key characteristics that the organization values
such as beliefs, philosophies, experiences, habits, expectations, norms and behaviors
that give an organization its distinctive characters.

Edgar Schein defines organizational culture as a pattern of basic assumptions-

invented, discovered, or developed by a given group as it learns to cope with its
problems of external adaptation and internal integration-that has worked well enough
to be considered valuable and, therefore, to be taught to new members as the correct
way to perceive, think, and feel in relation to those problems.

J. Martin emphasizes the different perspective of culture as: when individuals come
into contact with the organization, they come into contact with dress norms, stories
people tell about what goes on, the organization’s formal rules and procedures, its
formal codes of behavior, rituals, tasks, pay systems, jargon, and jokes only
understood by insiders, and so on. These elements are some of the discernible
features of organizational culture. When cultural members interpret the meanings of
these manifestations, their perceptions, memories, beliefs, experiences and values will

129
 vary, so interpretations will differ-even of the same phenomenon. The patterns or
configurations of these interpretations and the ways they are enacted constitute
organizational culture.

Organizational culture is quite complex. Although there are a number of problems

and disagreements associated with the conceptualization of organizational culture,
most definitions recognize the importance of shared norms and values that guide
organizational members’ behavior.

The following seven primary characteristics, in aggregate, capture the essence of

organization’s culture.
1. Innovation and risk taking: the degree to which employees are encouraged to
be innovative and take risk.
2. Attention to detail: the degree to which employees are expected to exhibit
precision analysis, and attention to detail.
3. Outcome orientation: the degree to which management focuses on results or
outcomes rather than on the techniques and processes used to achieve these
outcomes.
4. People orientation: the degree to which management decisions take into
consideration the effect of outcomes on people within the organization.
5. Team orientation: the degree to which work activities are organized around
teams rather than individuals.
6. Aggressiveness: the degree to which people are aggressive and competitive,
rather than easygoing
7. Stability: the degree to which the organization’s activities emphasize
maintaining the status in contrast to growth.

Appraising the organization on these seven characteristics, then, gives a composite

picture of the organization’s culture. This picture becomes the basis for feelings of shared
understanding that members have about the organization, how things are done in it, and
the way members are supposed to behave. Note that none of the above characteristics by

130
themselves represent the culture of an organization. However, collectively they can
reflect the organizational culture and organizational culture is concerned with how
employees perceive the above characteristics, not whether they like them or not.

In nut shell, organizational culture defines what is important to the organization, the way
decisions are made, the methods of communication, the degree of structure, the freedom
to function independently and how people should behave and the like.

These shared beliefs, values and norms help employees develop a sense of group identity.
Culture facilitates the generation of commitment to something larger than one’s
individual self interest. It enhances social system stability. Culture is the social glue that
helps hold the organization together by providing appropriate standards for what
employees should say and do.

Culture by definition is elusive, intangible implicit, and taken for granted. But every
organization develops a core set of assumptions, understandings and implicit rules that
govern day to day behavior in the work place. Until new comers learn the rules, they are
not accepted as full fledged members of the organization. Transgressions of the rules on
the part of high level executives or front line employees result in universal disapproval
and powerful penalties. Conformity to the rules becomes the primary basis for reward and
upward mobility.

7.1.2 Manifestations of Culture

Culture is disclosed through the following manifestations:
1. Statements of principle: written expressions of basic principles help control the
organization’s conduct
2. Slogans: a phrase or saying clearly expressing a key organization value. Example,
Customer is a king!
3. Ceremonies: presentation of awards to high performers as an example of
reinforcing company values.

131
 4. Organizational climate: the quality of the work environment experienced by
employees

� Quick Test Questions

1) Define organizational culture
2) State some of the ways through which culture is manifested

7.1.3 The Role of Organizational culture

 Culture shapes behavior: it can be used as a mechanism to mold
unnecessary behavior and encourage positive behavioral conducts.
 Culture also helps to gain competitive advantage: what employees believe
and how they behave influences the organization’s success. If the strategy
is consistent with the organization’s culture, employees can believe that
the strategy is right. Their shared values and norms keep them pulling
together to carry out the strategy.
 Culture has a boundary defining role: creates distinctions between one
organization and another
 Conveys a sense of identity for organization members
 Enhances social system stability: it is social glue that holds the
organization together by providing appropriate standards for what
employees should say and do. Hence, people prefer to continue with the
organization. Employees, customers, financers and other related persons
prefer to remain with the organizations due to its culture among other
things.

7.2 Globalization and People at Work

Most organizations today must achieve high performance in the context of a
competitive and complex global environment. As we begin the twenty-first century,
we find ourselves fully in the age of globalization with its complex economic
networks of competition, resource supplies, and product markets transcending
national boundaries and circling the globe.

132
Globalization involves growing worldwide interdependence of resource suppliers,
product markets, and business competition.
None of us can have failed to notice its impact of globalization on organizations, the
people who work in them, and our everyday lives. Consider the potential effects of
globalization in terms of your own life and career:
(1) You already purchase many products made by foreign firms;
(2) You may someday work overseas in the foreign operation of a domestic firm;
(3) You may someday work overseas as an expatriate employee of a foreign firm; and
(4) You may someday work as a domestic employee of a foreign firm operating in
your home country.
OB scholars are increasingly sensitive to the need to better understand how
management and organizational practices vary among the world’s cultures. In this
sense, we must be familiar with the importance of multinational employers, the
diversity of multicultural workforces, and the special demands of international work
assignments.

7.2.1 MULTINATIONAL EMPLOYERS

A true multinational corporation, or MNC, is a business firm that has extensive

international operations in more than one foreign country. MNCs are more than just
companies that “do business abroad;” they are global concerns—exemplified by Ford,
Royal-Dutch Shell, Sony, and many others. The missions and strategies of MNCs are
worldwide in scope. In the public sector, multinational organizations (MNOs) are
those with nonprofit missions whose operations also span the globe. Examples are
Amnesty International, the International Red Cross, the United Nations, and the
World Wildlife Fund.
The truly global organization operates with a total world view and does not have
allegiance to any one national “home.” Futurist Alvin Toffler labels them
transnational organizations that “may do research in one country, manufacture
components in another, assemble them in a third, sell the manufactured goods in a
fourth, deposit surplus funds in a fifth, and so on.”

133
Although the pure transnational corporation may not yet exist, large firms like Nestle,
Gillette, and Ford are striving hard to move in that direction. Greatly facilitating those
moves are new information technologies, which allow organizations to operate
through virtual linkages with components and suppliers located around the world. The
MNCs have enormous economic power and impact. Toffler, in particular, warns that
“the size, importance, and political power of this new player in the global game has
skyrocketed.”
Their activities can bring both benefits and controversies to host countries. One
example is in Mexico, where many foreign-owned plants assemble imported parts and
ship finished products to the United States. Labor is relatively inexpensive for the
foreign operators, while Mexico benefits from industrial development, reduced
unemployment, and increased foreign exchange earnings. But some complain about
the downsides of stress on housing and public services in Mexican border towns,
inequities in the way Mexican workers are treated (wages, working conditions,
production quotas) relative to their foreign counterparts and the environmental impact
of pollution from the industrial sites.
7.2.2 MULTICULTURAL WORKFORCE
What is the best way to deal with a multicultural workforce? There are no easy
answers. Styles of leadership, motivation, decision making, planning, organizing,
leading, and controlling vary from country to country. Managing a construction
project in Saudi Arabia with employees from Asia, the Middle East, Europe, and
North America working side by side will clearly present challenges different from
those involved in a domestic project. Similarly, establishing and successfully
operating a joint venture in Kazakhstan, Nigeria, or Vietnam will require a great deal
of learning and patience. In these and other international settings, political risks and
bureaucratic difficulties further complicate the already difficult process of working
across cultural boundaries.
The challenges of managing across cultures, however, are not limited to international
operations. In this connection, a new term has been coined—domestic
multiculturalism, which describes cultural diversity within a given national
population: This diversity will be reflected in the workforces of local organizations.

134
Los Angeles, for example, is a popular home to many immigrant groups. Some 20
percent of the city’s school children speak other languages more fluently than they
speak English; in Washington D.C, Amharic is also the mother tongue of significant
percent of the population.

7.2.3 EXPATRIATE WORK ASSIGNMENTS

People who work and live abroad for extended periods of time are referred to as
expatriates. The cost of an expatriate worker can be very expensive for the employer.
An executive earning $100,000 per year in the United States, for example, might cost
her company more than $300,000 in the first year of an assignment in England—with
the added cost tied to compensation, benefits, transfer, and other relocation expenses.
Estimates are that a three-year expatriate assignment will cost the employer an
average of $1 million.
To get the most out of the investment, progressive employers will maximize the
potential of expatriate performance success by taking a variety of supportive actions.
They carefully recruit employees who have the right sensitivities and skills, provide
them with good training and orientation to the foreign culture, actively support them
while working abroad, give extra attention to the needs of the expatriate’s family
members, and pay careful attention to relocation when the expatriate and family
return home.
Expatriates usually face their greatest problems when entering and working in a
foreign culture, and when experiencing repatriation on the return home. Figure 7.2
illustrates phases in the typical expatriate work assignment, beginning with the initial
assignment shock the person experiences upon being informed of a foreign posting.
How recruitment, selection, and orientation are handled during this stage can have an
important influence on the assignment’s eventual success. Ideally, the employee,
along with his or her spouse and family, is allowed to choose whether or not to accept
the opportunity. Also ideally, proper pre-departure support and counseling are given
to provide “realistic expectations” of what is to come.

135
The expatriate undergoes three phases of adjustment to the new country. First is the
tourist stage, in which the expatriate enjoys discovering the new culture. Second is
the disillusionment stage, in which his or her mood is dampened as difficulties
become more evident. Typical problems include conversing well in the local language
and obtaining personal products and food supplies of preference. Third, the
expatriate’s mood often hits bottom in the stage of culture shock. Here confusion,
disorientation, and frustration in the ways of the local culture and living in the foreign
environment set in. If culture shock is well handled, the expatriate begins to feel
better, function more effectively, and lead a reasonably normal life. If it isn’t, work
performance may suffer, even deteriorating to the point where a reassignment home
may be necessary.
At the end of the expatriate assignment, perhaps after three or four years, the reentry
process can also be stressful. After an extended period away, the expatriate and his or
her family have changed and the home country has changed as well. One does not
simply “fall back in”; rather, it takes time to get used to living at home again.
Furthermore, in too many instances little thought may be given to assigning the
returned expatriate a job that matches his or her current skills and abilities. While
abroad, the expatriate has often functioned with a great degree of independence -
something that may or may not be possible at home. Problems caused by reentry
shock can be minimized through careful planning. This includes maintaining
adequate contact with the home office during the expatriate assignment as well as
having all possible support for the move back. Employers should also identify any
new skills and abilities, and assign returned expatriates to jobs commensurate with
their abilities. As organizations utilize more and more expatriate assignments, their
career planning and development systems must also operate on a global scale.

136
 Figure 7.2: Stages in the expatriate international career cycle: potential adjustment
problems in the home and foreign countries.

Quick Test Questions

1) What is globalization?
2) Identify impacts of globalization on your personal life as well as in the environment
you live in.
3) Who are expatriate employees?

Chapter Summary
Organizational culture is a dynamic system of shared meaning held by members that
distinguishes the organization from other organizations. This system of shared meaning is
a set of key characteristics that the organization values such as beliefs, philosophies,
experiences, habits, expectations, norms and behaviors that give an organization its
distinctive characters. Culture is the social glue that helps hold the organization together
by providing appropriate standards for what employees should say and do. Culture shapes
behavior, helps gain competitive advantage, has a boundary defining role, conveys a
sense of identity for members of the organization and it enhances social system stability.

137
These days we are witnessing different changes on organizational cultures and how
business is carried out across the world because of globalization. The increased
interdependence between different players that are found in different corners of the world
is facilitating sharing different resources of a given organization including human
resource. Now adays even small companies do have employees from different nations
and as a result cultural diversity is increasing fast. For all these and other changes
multinational companies (MNC) are the major instruments. Managers in those MNC’s
are expected to have different support programs to employees who are assigned in
counties other than their own country. The pre-departure and post-departure supports
should be there to help the expatriate not to suffer from disillusionment and cultural
shocks.

Self Check Exercise 7

Choose the best answer among the alternatives given
1) Which one of the following does not correctly describe organizational culture?
A. it is a dynamic system of shared meaning held by members of an organization
B. it is a set of beliefs, philosophies, experiences, habits expectations, norms and
behaviors
C. it defines what is important to the organization, the way decisions are made,
method of communication, degree of structure, degree of freedom and others
D. it is the social glue that helps hold the organization together
E. None of the above

138
2) Culture does all the following but__
A. shapes behavior
B. helps gain competitive advantage
C. has a boundary defining role
D. hinders the organization’s prosperity
E. conveys sense of identity for organizational members
3) Managers help develop culture by all the following except___
A. identifying values
B. forming subcultures
C. developing reward systems that reinforce values
D. defining the company’s mission
E. structuring the work according in accordance with the values
4) Culture is learnt through
A. Instructions C. rituals
B. Stories D. language E. all

139
 CHAPTER EIGHT

Power and Politics in an Organization

8.1 A Definition of Power

Power refers to a capacity that A has to influence the behavior of B, so B does something he or
she would not otherwise do. This definition implies (1) a potential that need not be actualized to
be effective, (2) a dependency relationship, and (3) the assumption that B has some discretion
over his or her own behavior. Let's look at each of these points more closely.
Power may exist but not be used. It is, therefore, a capacity or potential. One can have power but
not impose it. Probably the most important aspect of power is that it is a function of dependency.
The greater B's dependence on A, the greater is A's power in the relationship. Dependence, in
turn, is based on alternatives that B perceives and the importance that B places on the
alternatives that A controls. A person can have power over you only if he or she controls
something you desire. If you want a college degree and have to pass a certain course to get it,
and your current instructor is the only faculty member in the college who teaches that course, he
or she has power over you. Your alternatives are highly limited and you place a high degree of
importance on obtaining a passing grade. Similarly, if you're attending college on funds totally
provided by your parents, you probably recognize the power they hold over you. You're
dependent on them for financial support. But once you're out of school, have a job, and are
making a solid income, your parents power is reduced significantly.
For A to get B to do something he or she otherwise would not do means B must have the
discretion to make chokes, A the extreme, if B's job behavior is so programmed he is allowed no
room to make choices, he obviously is constrained his ability to do something other than what he
is doing. For instance, job descriptions, group norms, and organizational rules and regulations, as
well as community laws and standards, constrain people's choices. As a nurse, you may be
dependent on your supervisor for continued employment. But, in spite of this dependence, you're
unlikely to comply with her request to perform heart surgery on a patient or steal several
thousand dollars from petty cash. Your job description and laws against stealing constrain your
ability to make these choices.

140
8.2. Contrasting Leadership and Power
A careful comparison of our description of power with our description of leadership reveals that
the two concepts are closely intertwined. Leaders use power as a means of attaining group goals.
Leaders achieve goals, and power is a means of facilitating their achievement.
What differences are there between the two terms? One difference relates to goal compatibility.
Power does not require goal compatibility, merely dependence. Leadership, on the other hand,
requires some congruence between the goals of the leader and the led. A second difference
relates to the direction of influence. Leadership focuses on the downward influence on one's
subordinates. It minimizes the importance of lateral and upward influence patterns. Power does
not. Still another difference deals with research emphasis. Leadership research, for the most
part, emphasizes style. It seeks answers to such questions as: How supportive should a leader be?
How much decision making should be shared with subordinates? In contrast, the research on
power has tended to encompass a broader area and focus on tactics for gaining compliance. It has
gone beyond the individual as exerciser because power can be used by groups as well as by
individuals to control other individuals or groups.

8.3. Bases of Power

Where does power come from? What is it that gives an individual or a group influence over
others? The answer to these questions is a five-category classification scheme identified by
French and Raven. They proposed five bases or sources of power: coercive, reward, legitimate,
expert, and referent.
1. Coercive Power

The coercive power base is defined by French and Raven as being dependent on fear. One reacts
to this power out of fear of the negative results that might occur if one failed to comply. It rests
on the application, or the threat of application, of physicals actions such as the infliction of pain,
the generation of frustration through restriction of movement, or the controlling by force of basic
physiological or safety needs.
In the 1930s, when robbers went into a bank, held a gun to a teller's head, and asked for money,
he was incredibly successful at getting compliance with his request. Their power base was

141
coercive. A loaded gun gives its holder power because others are fearful they will lose something
they hold dear-their lives.
Of all the bases of power available to man, the power to hurt others is possibly most often used,
most often condemned, and most difficult to control...the state relies on its military and legal
resources to intimidate nations, or even its own citizens. Businesses rely upon the control of
economic resources. Schools and universities rely upon their rights to deny students formal
education, while the church threatens individuals with loss of grace. At the personal level
individuals exercise coercive power through reliance upon physical strength, verbal facility, or
the ability to grant or withhold emotional support from others. These bases provide the
individual with the means to physically harm, bully, humiliate, or deny love to others.
At the organizational level, A has coercive power over B if A can dismiss, suspend, or demote B,
assuming B values his or her job. Similarly, if A can assign B work activities that B finds
unpleasant or treat B in a manner B finds embarrassing, A possesses coercive power over B.

2. Reward Power

The opposite of coercive power is reward power. People comply with the wishes or directives of
another because it produces positive benefits; therefore, one who can distribute rewards that
others view as valuable will have power over them. These rewards can be anything another
person values. In an organizational context, we think of money, favorable performance
appraisals, promotions, interesting work assignments, friendly colleagues, important information,
and preferred work shifts or sales territories.
Coercive and reward power are actually counterparts of each other. If you can remove something
of positive value from another or inflict something of negative value upon him or her, you have
coercive power over that person. If you can give someone something of positive value or remove
something of negative value, you have reward power over that person. Again, as with coercive
power, you don't need to be a manager to be able to exert influence through rewards. Rewards
such as friendliness, acceptance, and praise are available to everyone in an organization. To the
degree an individual seeks such rewards, your ability to give or withhold them gives you power
over that individual.

142
 3. Legitimate Power

In formal groups and organizations, probably the most frequent access to one or more of the
power bases is one's structural position. This is called legitimate power. It represents the power a
person receives as a result of his or her position in the formal hierarchy of an organization.
Positions of authority include coercive and reward powers. Legitimate power, however, is
broader than the power to coerce and reward. Specifically, it includes acceptance by members of
an organization of the authority of a position. When school principals, bank presidents, or army
captains speak assuming their directives are viewed to be within the authority of their positions,
teachers, tellers, and first lieutenants listen and usually comply.

4. Expert Power

Expert power is influence wielded as a result of expertise, special skill, or knowledge. Expertise
has become one of the most powerful sources of influence as the world has become more
technologically oriented. As jobs become more specialized, we become increasingly dependent
on "experts" to achieve goals. So, while it is generally acknowledged that physicians have
expertise and hence expert power-most of us follow the advice doctors gives us-you should also
recognize that computer specialists, tax accountants, solar engineers, industrial psychologists,
and other specialists are able to wield power as a result of their expertise.

5. Referent Power

The last category of influence that French and Raven identified was referent power. Its base is
identification with a person who has desirable resources or personal traits. If I admire and
identify with you, you can exercise power over me because I want to please you.
Referent power develops out of admiration of another and a desire to be like that person. In a
sense, then, it is a lot like charisma. If you admire someone to the point of modeling your
behavior and attitudes after him or her, this person possesses referent power over you. Referent
power explains why celebrities are paid millions of dollars to endorse products in commercials.
People like Salhadin Said, Tewodross Kassahun (Tedi), and Meseret Mebrate can have the
power to influence your choice of different kinds of goods. With a little practice, you or I could
probably deliver as smooth a sales pitch as these celebrities, but the buying public doesn't

143
identify with you and me. In organizations, if you are articulate, domineering, physically
imposing, or charismatic, you hold personal characteristics that maybe used to get others to do
what you want.

8.4 Power in Groups: Coalitions

Those "out of power" and seeking to be "in" will first try to increase their power individually.
Why spread the spoils if one doesn't have to? But if this proves ineffective, the alternative is to
form a coalition. There is strength in numbers.
The natural way to gain influence is to become a power holder. Therefore, those who want power
will attempt to build a personal power base. But, in many instances, this may be difficult, risky,
costly, or impossible. In such cases, efforts will be made to form a coalition of two or more
"outs" who, by joining together, can combine their resources to increase rewards for themselves.
Historically blue collar workers in organizations who were unsuccessful in bargaining on their
own behalf with management resorted to labor unions to bargain for them. In recent years, white-
collar employees and professionals have increasingly turned to unions after finding it difficult to
exert power individually to attain higher wages and greater job security.
What predictions can we make about coalition formation? First, coalitions in organizations often
seek to maximize their size. In political science theory, coalitions move the other way-they try to
minimize their size. They tend to be just large enough to exert the power necessary to achieve
their objectives. But legislatures are different from organizations. Specifically, decision making
in organizations does not end just with selection from among a set of alternatives. The decision
must also be implemented. In organizations, the implementation of and commitment to the
decision is at least as important as the decision itself. It's necessary, therefore, for coalitions in
organizations to seek a broad constituency to support the coalition's objectives .This means
expanding the coalition to encompass as many interests as possible. This coalition expansion to
facilitate consensus building, of course, is more likely to occur in organizational cultures where
cooperation, commitment, and shared decision making are highly valued. In autocratic and
hierarchically controlled organizations, this search for maximizing the coalition's size is less
likely to be sought.
Another prediction about coalitions relates to the degree of interdependence within the
organization. More coalitions will likely be created where there is a great deal of task and

144
resource interdependence. In contrast, there will be less interdependence among subunits and less
coalition formation activity where subunits are largely self-contained or resources are abundant.
Finally, coalition formation will be influenced by the actual tasks that workers do. The more
routine the task of a group, the greater the likelihood that coalitions will form. The more that the
work people do is routine the greater their substitutability for each other and, thus, the greater
their dependence. To offset this dependence, they can be expected to resort to a coalition.
We see, therefore, that unions appeal more to low-skill and non professional workers than to
skilled and professional types. Of course, where the supply of skilled and professional employees
is high relative to their demand or where organizations have standardized traditionally non
routine jobs, we would expect these incumbents to find unionization attractive.

8.5 Politics: Power in Action

When people get together in groups, power will be exerted. People want to carve out a niche
from which to exert influence, to earn awards, and to advance their careers. When employees in
organizations convert their power into action, we describe them as being engaged in politics.
Those with good political skills have the ability to use their bases of power effectively.
Definition of Politics
There has been no shortage of definitions for organizational politics. Essentially, however, they
have focused on the use of power to affect decision making in the organization or on behaviors
by members that are self-serving and organizationally nonsanctioned. For our purposes, we
define political behavior in organizations as
Those activities that are not required as part of one's formal role in the organization, but that
influence, or attempt to influence, the distribution or advantages and disadvantages within the
organization.
This definition encompasses key elements from what most people mean when they talk about
organizational politics. Political behavior is outside one's specified job requirements. The
behavior requires some attempt to use one's power bases. Additionally, the definition
encompasses efforts to influence the goals, criteria, or processes used for decision making when
we state that politics is concerned with the distribution of advantages and disadvantages within
the organization. The definition is broad enough to include such varied political behaviors as
withholding key information from decision makers, whistle blowing, spreading rumors, leaking

145
confidential information about organizational activities to the media, exchanging favors with
others in the organization for mutual benefit, and lobbying on behalf of or against a particular
individual or decision alternative.
A final comment relates to what has been referred to as the "legitimate-illegitimate" dimension in
political behavior. Legitimate political behavior refers to normal every day politics-complaining
to your supervisor, bypassing the chain of command, forming coalitions, obstructing
organizational policies or decisions through inaction or excessive adherence to rules, and
developing contacts outside the organization through one's professional activities. However,
there are also illegitimate political behaviors that violate the implied rules of the game. Those
who pursue such extreme activities are often described as individuals who play hardball.
Illegitimate activities Include sabotage, whistle-blowing, and symbolic protests such as wearing
unorthodox dress or protest buttons and groups of employees simultaneously calling in sick.
The vast majority of all organizational political actions are of the legitimate variety. The reasons
are pragmatic: The extreme illegitimate forms· of political behavior pose a very real risk of loss
of organizational membership or extreme sanctions against those who use them and then fall
short in having enough power to ensure they work.

146
Chapter summary
Power is the capacity or ability to direct or influence the behavior of others or the course of
events. It could be potential or something actualized and require the existence of relationship that
involve dependency between the parties under consideration. It also demands the discretion over
the behavior of others.
There are different sources that might be used to drive power. The five major sources of power
are coercive power, reward power, legitimate power, expert power, and referent power. Coercive
power involves making influence over others out of fear. Reward power works by distributing
benefits to those who comply with the directives and wishes of leaders. Individuals can also
experience the chance to influence others as a result of the special knowledge, skill, or
experience they have. Expert power is the term coined to address this power source. Finally, we
have referent power, which is the result of being identified with a person who has desirable
resources or personal trait.
We have the opportunity of seeing various kinds of political behaviors in organizations.
Activities those are not required as part of one's formal role in the organization, but that
influence, or attempt to influence, the distribution or advantages and disadvantages within the
organization is known as organization politics. The political behaviors that employees exhibit
could be considered as legitimate political behavior or illegitimate political behavior depending
on their consequences.

147
Self check exercise 8
Choose the right answer
1. A power base that is dependent on the person knowledge and skills is
A. Referent power
B. Expert power
C. Coercive power
D. Legitimate power
2. Which one of the following helps to get more power over others?
A. To control the resources needed by others
B. To get further educational opportunity and specializing in a given field of study
C. Trying to make outcomes of a given process uncertain
D. All
E. All except C
3. Which is true about power?
A. The one who has the power should discretion to make modification on the behavior of the
target.
B. Power should be something that is actualized and used
C. It involves downward movement of information
D. In organizational context Presidents and others who assume different positions are the
only groups that have the power to influence others.
4. Identify the incorrect one?
A. Leadership and power are one and the same
B. Leadership demands maintaining harmony between follower’s goals and the leader’s
goals
C. Power require controlling something which is deemed important by others
D. None
5. Throwing stones to windows and breaking machines of the organization is considered as
A. Legitimate political behavior
B. Exhibiting patriotism and determination to protect ones right
C. Illegitimate political behavior
D. All

148
6. Who will be participant on organizational politics?
A. Managers
B. Employees
C. Trade unions
D. All

149
 Chapter Nine

Organizational design and structure

Introduction
Here, you will be learning about the third determinants of behavior apart from individuals and
groups which you have already seen in the second chapter of the module. This chapter includes
eight sub topics dealing with different aspects of organizational structure and design. Overview,
objectives and outcomes of organizational structure and design are discussed in the first three sub
topics. Factors affecting organizational structure and design, guidelines to organizational
structure and design and steps to be gone through while designing such a structure are assesses in
sub sections four to six respectively.

The rest two sub sections are devoted to departmentalization and some basic concepts of
organizational structure and design. In light of departmentalization, the basis for
departmentalization will be taken care of. Finally, concepts which are highly interlinked with
organizational structure and design such as line, staff and functional relationships, power and its
basis, chain of command, span of control, centralization vs. decentralization, and delegation will
be discussed. Expand your knowledge of management by digesting the essence of each section.
Have pleasant study session!

Learning Objectives
At the end of this chapter, you are expected to:
 Define what organizational structure is
 State the objectives of designing structure
 Identify the outcomes of organizational structure and design
 Know factors that affect organizational design
 Comprehend departmentalization and its basis
 be familiar with concepts related to organizational structure and design

150
9.1 Overview of Organizational Structure and Design
Robbins asserts that organizational structure and design are important factors that influence the
behavior of individuals and groups that comprise the organization. Through the design of the
structure, management establishes expectations for what individuals and groups will do to
achieve the organization’s purposes. Managers achieve coordinated efforts through the design of
a structure of tasks and authority relationships. Design in this context implies that managers
make a conscious effort to predetermine the way employees do their work. Structure refers to
relatively stable relationships and processes of the organization. Organizational structure is
considered by many to be the anatomy of the organization-providing a foundation within which
the organization functions. Thus, the structure of an organization similar to the anatomy of a
living organism can be viewed as a framework. The idea of structure as a framework focuses on
the differentiation of positions, formulation of rules, and regulations, and prescriptions of
authority. Therefore, the purpose of structure is to regulate or at least to reduce uncertainty in the
behavior of individual employees.

Organizations are purposive and goal oriented, so it follows that the structure of organizations
also is purposive and goal oriented. Our concept of organizational structure takes into account
the existence of purposes and goals and our attitude is that management should think of structure
in terms of its contributions to organizational effectiveness, even though the exact nature of the
relationship between structure and effectiveness is inherently difficult to know.

9.2 Objectives of Organizational Structure and Design

Managers design an organizational structure in order to achieve the following objectives among
others:

1. Create new institution for new organization

2. Responding to changes: for an organization to stay adaptive, it must respond to changes
in the environment, technology and customer’s needs as well as to changes that emerge
from the organizations revolutionary development.

151
 3. Integrating new elements: as organizations grow and respond to changes they add new
positions and departments to deal with factors in the external environment or with new
strategic needs.
4. Coordinate the components: simply placing a department in a structure is not enough.
Managers need to find a way to tie all the departments to ensure coordination and
collaboration across the department. If this objective is not accomplished, the
departments may not work together whether through reporting relationships, team or task
forces, work groups. Departments must collaborate so as to avoid conflicts and problems.

�Quick Test Questions

1. What is organizational structure?
2. Describe the objectives which managers strive to achieve through design of
organizational structure.

9.3 Organizational Structure and Design Outcomes

The outcome of organizational design decisions is the framework or structure of the
organization. In this section we briefly examine two general organizational design models that
have had significant impact on management theory and practice. While there is a little uniformity
in the terms used to designate the models, we refer to them as mechanistic and organic.

9.3.1 Mechanistic Organizational Structure

The term mechanistic aptly describes organizations that function in a machine like manner to
accomplish the organization’s goals in a highly efficient manner. Mechanistic organizations
emphasize the importance of achieving high levels of production and efficiency through the use
of extensive rules and procedures, centralized authority and high specialization.

It is characterized by the following assumptions:

1. Activities are specialized into clearly defined jobs and tasks
2. Persons of higher rank typically have greater knowledge of the problem facing the
organization than those at lower levels. Unresolved problems are thus passed up the
hierarchy.

152
 3. Standardized policies, procedures and rules guide much of the decision making in the
organization.
4. Rewards are chiefly obtained through obedience to instructions from superiors.

The mechanistic model achieves high levels of efficiency due to its structural characteristics. It is
highly complex because of its emphasis on specialization of labor, it is highly centralized
because of its emphasis on authority and accountability; and it is highly formalized because of its
emphasis on function as the primary basis of departmentalization.

9.3.2 Organic Organizational Structure

The organic model of organizational design stands in sharp contrast to the mechanistic
organizational structure model. The organizational characteristics and practices that underline the
organic model are distinctly different from those that underlie the organic model. The most
distinctive differences between the two models result from the different effectiveness criteria that
each seek to maximize. While the mechanistic model seeks to maximize efficiency and
production, the organic model seeks to maximize flexibility and adaptability.

The organic structure is characterized by the following assumptions:

1. There is a de-emphasis on job descriptions and specialization.
Persons become involved in problem solving when they have the knowledge and skill
that will help solve the problem.
2. It is not assumed that persons holding higher positions are necessarily better informed
than those at lower levels.
3. Horizontal and lateral organizational relationships are given much more attention as
vertical relationships
4. Status and rank differences are de-emphasized
5. The formal structure of the organization is less permanent and more changeable.

The organic organization is flexible and adaptable to changing environmental demands because
its design encourages greater utilization of the human potential. Managers are encouraged to
adopt practices that tap the full range of human motivations through job design which stresses

153
personal growth and responsibility. Decision making, control, and goal setting processes are
decentralized, not simply down the chain command. These practices are intended to implement a
basic assumption of organic model, which states that an organization will be effective to the
extent that its structure allows to ensure the maximum probability that in all interactions and in
all relationships with the organization, each member in light of his background, values decisions
and expectations will view the experiences as supportive and one which builds and maintains a
sense of personal worth and importance.

An organizational design that provides individuals with this sense of personal worth and
motivation and that facilitates flexibility and adaptability would have the following
characteristics:
 It would be relatively simple because of its de-emphasis on specialization and its
emphasis on increasing job range.
 It would be relatively decentralized because of its emphasis on delegation of authority
and increasing job depth.
 It would be relatively in formalized because of its emphasis on product and customer as
basis for departmentalization.

9.4 Factors that Affect Organizational Design

The major factors that have been identified as causes or determinants of an organization’s design
are:
1. Strategy: an organization’s structure is a means to help management achieve its
objectives. Since objectives are derived from the organizations overall strategy, it is only
logical that strategy and structure should be closely linked. More specifically, structure
should follow strategy. If management makes significant changes in its organization’s
strategy, the structure will need to be modified to accomplish and support this change.
Most current strategy frameworks focus on three strategic options, that is, innovation,
cost minimization and imitation & the structural design that works best with each. An
innovation strategy does not mean a strategy merely for simple or unique innovations;
rather it is a strategy that emphasizes the introduction of major products and services. An
organization pursuing a cost minimization strategy controls costs, refrains from incurring

154
 unnecessary innovation or marketing expenses and cuts in the prices in selling basic
products. Organizations following an imitation strategy try to capitalize on the best of
both of the previous strategies. They seek to minimize risk and maximize opportunity for
profit. Their strategy is to move into new products or new markets only after viability has
been proven by innovators. They take the successful ideas of innovators and copy them.

2. Size of the organization: a quick glance at organizations we deal with regularly in our
lives would lead most of us to conclude that size would have some bearing on an
organization’s structure. Considerable evidence supports the idea that an organization’s
size significantly affects its structure. Large organizations those typically employing
2000 or more employees tend to have more specialization, more departmentalization,
more vertical level and more rules and regulations than do small organizations.

3. Technology: this term refers to how an organization transfers its inputs in to outputs.
Every organization has at least one technology for converting financial, human and
physical resources in to products or services. Although the relationship between
technology and structure is not overwhelmingly strong, we find that routine tasks are
associated with taller and more departmentalized structure. The relationship between
technology and formalization, however, is stronger. Studies consistently show routine
ness to be associated with the presence of rule manuals, job descriptions and other
formalized documentation.

Finally, there has been found to be an interesting relationship between technology and
centralization. It seems logical that routine technologies would be associated with a
centralized structure, where as non routine technologies, which rely more heavily on the
knowledge of specialists, would be characterized by delegated decision authority.

4. Environment: an organization’s environment is composed of those institutions or forces

that are outside the organization and potentially affect the organization’s performance.
These typically include suppliers, customers, competitors, government regulatory
agencies, public pressure groups and the like. Some organizations face relatively static

155
 environment-few forces in their environment are changing. There are for example, no
new competitors, no new technological breakthroughs by current competitors, or little
pressure by public. Other organizations face very dynamic environment-rapidly changing
government regulations, new competitors, difficulties in acquiring raw materials,
continuously changing product preferences by customers and the like. Static
environments create significantly less uncertainty for managers than do dynamic ones.

5. Characteristics of personnel: not everyone responds in the same way to organizational

rules, policies, procedures and control methods. One reason is that young workers who
have been raised in more affluent conditions than their elders are usually less willing to
be subjected to bureaucratic rules. For these people more flexible designs are needed.
Conversely, older employees tend to accept restrictions more willingly. Professional and
experienced employees tend to work more effectively under democratic rule. They want
more freedom to make decisions and lose supervision as compared with unqualified
employees.

6. Age of the organization: the longer an organization operates, the more formalized it is
likely to become. With age come standardized systems, procedures, and regulations.
Therefore, older organizations have characteristic of mechanistic structure whereas new
or young organizations tend to have organic structure.

�Quick Test Questions

1) Differentiate between mechanistic and organic organizational structure with respect to
their characteristics
2) How do characteristics of personnel affect organizational design?
3) State the relationship between structure and technology

9.5 Guidelines for Organizational Structure and Design

Organizational structure is the differentiation of functions to facilitate the achievement of goals.
Jobs are differentiated according to the nature and specialization of the jobs. The major
guidelines among others for organizational structure and design are:

156
 1. There should be clear definition of the duties and responsibilities of personnel employed
in the organization.
2. The structure must be directed towards promoting effective working at all level is of
management.
3. Adequate decentralization of decision making through the delegation of responsibilities
4. Clear lines of responsibility linking the chief executive to the various points of decisions
or operations.
5. The span of responsibility of a manager should be limited to a reasonable number of
subordinates
6. The structure should make accountable each manager in every level for his/her actions
and the actions of his/her subordinates
7. The organizational structure should define the policies, procedures and rules that guide
the activities and relationship of people in the organization.

9.6 Steps in the Structure Designing Process

The following steps need to be followed while designing an organizational structure.
1. Reviewing plans and objectives
2. Determining work activities that are necessary to accomplish the objectives
3. Classifying and grouping activities into manageable work units-departments
4. Assigning work and delegating authority to accomplish the task
5. Designing a hierarchy relationship to determine the vertical and horizontal operating
relationships of the organization as a whole

9.7 Departmentalization
The process of defining the activities and authority of jobs is analytical that is, the total task of
the organization is broken down into successively smaller ones. But the management must
combine the divided tasks into groups or departments. The crucial managerial consideration
when creating departments is the determination of the basis for grouping jobs. These bases are
termed as departmentalization bases and some of the most widely used ones are described below.

157
 9.7.1 Functional Departmentalization
Managers can combine jobs according to the functions of the organization. Every organization
must undertake certain activities in order to do its work, and these necessary activities are the
organization’s functions. The necessary functions of a manufacturing firm include products,
marketing, finance, accounting and personnel activities necessary to create, produce, and sell a
product. Departmentalization by function can be used in all types of organizations. Only the
functions change to reflect the organization’s objectives and activities. The major advantage of
this type of grouping is obtaining efficiencies from putting like specialists together. Functional
departmentalization seeks to achieve economies of scale by placing people with common skills
and orientation in to common units.
An organization that has divided its operations among various functional units can adopt the
following type of structure.

Top Level Management

Production
Research
Marketing Human Resource Finance
&Development
Management
Fig. 9.1 Functional Departmentalization

9.7.2. Product Departmentalization

Many large and diversified companies group jobs on the basis of product where all jobs
associated with producing and selling a product or a product line are placed under the direction
of one manager. As a firm grows by increasing the number of products it markets, it is difficult
to coordinate the various functional departments, and it becomes advantageous to establish
product unit. This form of organization allows personnel to develop total expertise in
researching, manufacturing, and distributing a product line. Centralization of the authority,
responsibility, and accountability in a specific product department allows top management to
coordinate actions. The major advantage of this type of grouping is increased accountability for
product performance, since all activities related to a specific product are under the direction of a

158
single manager. If an organization’s activities are services rather than product related, each
service would be autonomously grouped.
An organization which is engaged in the manufacturing of five different product types can frame
its structure as depicted below.

Top Level Management

Product A Product B Product C Product D Product E

Fig. 9.2 Product Departmentalization

9.7.3. Geographic Departmentalization

Another commonly adopted method for departmentalization is to establish groups on the basis of
geographic area. The logic is that all activities in a given region should be assigned to one
manager who would be in charge of all operations in that particular geographical area. In large
organizations territorial arrangements are advantageous because physical dispersion of activities
makes centralized coordination difficult. Territorial departmentalization provides a training
ground for managerial personnel. The companies are able to place managers in territories and
then assess their progress in that geographical region. The experience that managers acquire in a
territory away from head quarters provides valuable insights about how products and or services
are accepted in the field.

A firm which undertakes its operation in various parts of a country or region may frame its
structure as follows.
Top Level Management

159
North Branch South branch East Branch West Branch

Fig. 9.3 Geographic Departmentalization

9.7.4. Matrix Departmentalization

Essentially the matrix departmentalization combines the two forms of departmentalization;
functional and product. The strength of functional departmentalization lies in putting like
specialists together, while it allows the pooling and sharing of specialized resources across
products. Its major disadvantage is the difficulty of coordinating the tasks of diverse functional
specialists so that their activities are completed on time and within budget.

Product departmentalization on the contrary, has exactly the opposite benefits and disadvantages.
It facilitates coordination among specialists to achieve on time completion and meet budget
targets. Therefore, the matrix attempts to gain the strengths of both while avoiding their
weakness. The most obvious structural characteristic of the matrix is that it breaks the unity of
command concept. Employees in the matrix have two bosses-their functional department
manager and their product manager. Therefore, matrix has a dual chain of command. The
strength of matrix departmentalization lies in its ability to facilitate coordination when the
organization has a multiplicity of complex and interdependent activities. Still another advantage
of matrix is it facilitates the efficient allocation specialists. The major disadvantages of the
matrix lie in the confusion it creates, its propensity to foster power struggles and the stress it
places on individuals.

9.7.5. Team Organizations

Teams have become an extremely popular means around which to organize work activities.
When management uses teams as its central coordination device, you have a team structure. The
primary characteristics of the team structure are that it breaks down departmental barriers and
decentralizes decision making to the level of the work team. Team structure also requires

160
employees to be generalists as well as specialists. In smaller organizations the team structure can
define the entire organization. Particularly among larger organizations the team structure
complements what is typically a bureaucracy. This allows the organization to achieve the
efficiency of bureaucracy’s standardization while gaining the flexibility that teams provide.

�Quick Test Questions

1) List down the steps that need to be followed while designing organizational structure
2) What is the major advantage of product departmentalization?
3) What are the two components of matrix departmentalization?

9.8 Some Basic Concepts of Organizational Structure and Design

9.8.1 Line, Staff & Functional Relationships
Three distinct types of authority are evident in business organizations, that is, line, staff &
functional.
1. Line authority: enables managers to tell subordinates what to perform. Both line and
staff managers have line authority over their subordinates. Line authority may be defined
as those in the organization directly responsible for achieving goals.
2. Staff authority: people in staff position assist and advise line managers. They relieve
some of the line mangers’ burdens by giving them the information they need to make
operational decisions. People in these positions have the authority to offer advice and
make recommendations.
3. Functional authority: is exercised over people or activities in other departments.
Usually limited in scope and duration, it is exercised one level below the person who has
it. The safety director may be given functional authority over people who work under the
production supervisor when it comes to establish safety procedures for instance.

9.8.2 Chain of command

Is an unbroken line of authority that extends from the top of the organization to the lowest
echelon and clarifies who reports to whom. It answers for employees questions such as “who do
I go to if I have a problem?” and” whom am I responsible to?” Authority refers to the rights
inherent in a managerial position to give orders and expects the orders to be obeyed. To facilitate

161
coordination, each managerial position is given a place in the chain of commands; and each
managerial position is given a degree of authority in order to meet his/her responsibilities. The
unity of command principle helps preserve the concept of an unbroken line of authority. It states
that a person should have one and only one superior to whom he/she is directly responsible. The
concept of chain of command, authority, and unity of command have substantially less relevance
today because of advancements in computer technology and the trend toward empowering
employees.

9.8.3 Span of Control

How may subordinates can a manager effectively and efficiently direct? This question of span of
control is important because to a large degree it determines the number of levels and managers
an organization has. All things being equal, the wider or larger the span, the more efficient the
organization will be. Wide span of control are consistent with recent efforts by companies to
reduce costs, cut overhead, speedup decisions, increase flexibility, get closer to customers and
empower employees.

9.8.4 Centralization and Decentralization

In some organizations, top managers make all the decisions. Lower level managers merely
carryout top managements’ directions. At the other extremes, are organizations where decision
making is pushed down to those mangers that are closer to the action. The former organizations
are highly centralized, the latter are decentralized. The term centralization refers to the degree to
which decision making is concentrated at a single point in the organization. In contrast, the more
that lower level personnel provides input or are actually given the discretion to make decisions,
the more decentralization is there.

9.8.5 Delegation
Delegation means to delegate or grant authority to the subordinates to reach the peak of
achievement. A superior sets goals and tells his subordinates what he wants to get accomplished.
He decides what to do and how to do it. It includes communication element. The information is
accompanied with the power to perform. The subordinates while performing their respective jobs
are given some power so that they perform effectively. Delegation is pressure or a push on the
men, so that work is performed as per the schedule.

162
Delegation becomes essential because superiors have no sufficient time to perform all the work
effectively and efficiently. They are responsible for the ultimate results which are achieved by
specialists. Generally, superiors are not as specialized as the subordinates. Superiors are unable
to perform the total work efficiently. If they delegate the work to their subordinates, quality work
will be performed as the subordinates are specialized in different fields. The talents and abilities
of subordinates will be developed through delegation.

Managers decide how much authority is to be delegated to each job and each job holder. As we
have noted authority refers to the right of individuals to make decisions without approval by
higher management and to exact obedience from others. It is important to understand that
delegation refers specifically to making decisions-not to doing work. For any particular job there
is a range of alternative configuration of authority delegation and managers must balance the
relative gains and losses of these alternatives. Relatively high delegation of authority encourages
the development of professional mangers.

�Quick Test Questions

1) Give examples that help distinguish between staff and functional authority
2) From power and influence, which one is broader? Why?
3) Explain referent power by giving examples
4) What is meant by delegation?

Chapter Summary
Organizational structure and design are important factors that influence the behavior of
individuals and groups that comprise the organization. Structure refers to relatively stable
relationships and processes of the organization. It is analogous to the anatomy of a living
organism. The two major outcomes/ models of organizational design are mechanistic and
organic. Mechanistic model describes an organization in a machine like manner which

163
emphasizes on the importance of achieving high levels of production and efficiency through the
use extensive rules and procedures, centralized authority and high specialization. The organic
model seeks to maximize flexibility and adaptability.

The factors that affect the design of an organization’s structure include: strategy, size of the
organization, technology, environment, characteristics of personnel and age of the organization.
Departmentalization is the process of defining the activities and authority of jobs, that is, the
total task of the organization is broken down into successively smaller ones. The commonly
employed bases of departmentalization are product, geographic, functional, matrix and team.

Power is the ability to get an individual to do something he/she would not otherwise do.
The most important aspect of power is that it is a function of dependency. The five bases of
power are coercive, reward, legitimate, referent and expert power. Chain of command is an
unbroken line of authority that extends from the top of the organization to the lowest echelon. It
clarifies who reports to whom. Line authority enables one to tell followers what to do. Staff
authority is concerned with providing assistance to the line managers. Functional authority is
exercised over people in other departments. Span of control refers to the number of subordinates
directed by one manager/ boss. Delegation becomes essential because superiors have no
sufficient time to perform all the work effectively and efficiently.

Self Test Exercise 9

I. Multiple Choice Questions
1) Which one of the following is true about organizational structure?
A. it refers to relatively stable relationships and processes of the organization
B. it provides the foundation within which the organization functions
C. its purpose is to regulate or at least to reduce uncertainty in the behavior of employees

164
 D. all E. only A&B
2) Which one of the following does not correctly characterize mechanistic organizational
structure?
A. activities are specialized into clearly defined jobs and tasks
B. there is de-emphasis on job description and specialization
C. rewards are chiefly obtained through obedience to instructions from superiors
D. standardized policies, procedures and rules guide much of decision making
E. None
3) Identify the one that does not affect organizational structure?
A. Technology D. characteristics of personnel
B. size of the organization E. None
C. age of the organization
4) The first step in organizational structure and design is
A. assigning work and delegating authority to accomplish the task
B. reviewing plans and objectives
C. classifying and grouping activities into manageable work units
D. determining work activities that are necessary to accomplish the objectives
E. None
5) Which one of the following is strength of matrix departmentalization?
A. it provides a training ground for managerial personnel
B. it allows putting like specialists together
C. it breaks the unity of command principle
D. it attempts to gain the strengths of product and functional departmentalization while
avoiding their weakness
E. B&D
6) Identify the false statement
A. power is ability to get an individual to do something he/she would not otherwise
do
B. authority is the source of power and it legitimatizes power
C. authority is different from power because of its legitimacy and acceptance
D. influence is broader than power

165
 E. None
7) How many subordinates can a manager effectively and efficiently direct? This question is
related to
A. chain of command C. span of control
B. Unity of command D. delegation E. None

166