ORGANIZATIONAL THEORIES AND BEHAVIOUR

THEORIES OF ORGANISATION
The word ''theory' is not explained by many as a theory but it is an approach used by many
organizers/administrators in order to achieve the goals of an organisation. Some of the
approaches commonly explained in literature are:
1. The classical theory
The classical theory of administration was described in different ways such as:
i) The scientific management ii) The bureaucratic theory iii) The formal organisation theory
i) Scientific management – F W Taylor
Frederick Winslow Taylor is also known as father of scientific management, He believed that
the principle "best management is a true science" is applicable to all kinds of human activities,
The fundamental contribution of scientific management movement was the application of
scientific method to discover new knowledge: It is a method of controlled experimentation
with well-defined steps in proper sequence under controlled situation.
He proposed a new system consisting of three parts:
a) Observation and analysis of work through time study to set the rate or standard.
b) A differential rate system of piecework:
c) Paying man and not position.
ii) Bureaucratic Theory
The Bureaucracy explains in terms of power and influence of heads or the word is used for
a group or body of administrative officials. Max Weber described the characteristics of
Bureaucracy in administration and some of them are:
a) There is a clear or definite hierarchy of offices.
b) The functions of offices are clearly specified.
c) Officials are appointed on the basis of contract.
d) They are selected on the basis of professional qualification.
e) They are paid salaries which are graded according to their position in the hierarchy.
f) They are promoted either by seniority or merit and as per the decision of their superiors.
g) The official is subjected to a unified control and a system of discipline.
Bureaucracy helps to, maintain discipline, strictness, continuity etc. But the criticism is that it
is too rigid, less flexible and dominated by unified control. Its focus is on means but not on
end. Human freedom of expression is ignored.
iii) The Formal Organisation Theory
This is also known as Mechanistic theory or the structural theory. The focus is on organisation.
Some of the writers explained that "administration is administration regardless of the kind of
work being undertaken or the context within which the work is performed". The emphasis
is also laid on tasks, authority, control etc. Based on this approach, the elements which are
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explained earlier (Planning, organising etc.) were described by Fayol. The principles (division
of work, authority. discipline etc.) are also explained by him in relation to formal
organisation.
Appraisal of Classical Theory:
The classical theory suffers from some restraints. Some of its drawbacks are given as
follows:
a) Classical thinkers concentrated only on line and staff structures. They did not try to find
out the reasons if a particular structure is more effective than others.
b) This theory did not lay emphasis on decision-making processes.
c) Human behaviour was ignored in this theory. Classical thinkers did not realize the
complexity of human nature. They take human beings as inert instrument of
organisation performing the assigned task.
d) The assumption that organisation in a closed system is unrealistic. Organisation is
greatly influenced by environment and vice-versa. A modern organisation is an open
system which has interaction with the environment.
2. Neo-classical Approach/Human Relations Approach
An American Psychologist Elton Mayo's contribution is very significant in management. Elton
Mayo introduced the concept of human relations. The term "human relations" refers to the
relations between the employees and the employer which are not regulated by legal norms,
but by moral and Psychological factors.
The Human approach lays emphasis on people and their motivations. It believes in analysing
the multidimensional nature of the human beings and their interactions, to understand the
working of the organisation. It gives importance to the study of informal organisation to
understand the working of formal organisations.
In his experiments Elton Mayo concentrated his attention on the behaviour of the workers and
their productive capacity. Elton Mayo conducted many experiments to study the effect of
human relations on work productivity. He also tried to establish cause and effect relationship
between physical work, environment, wellbeing on one hand and productivity of worker on
the other.
The main propositions of neo-classical theory are given as follows:
a) The organisation in general is a social system composed of numerous interacting parts.
b) Informal organisations exist within the formal organisation. Both are affected by and
affect each other.
c) Human being is independent and his behaviour can be predicted in terms of social
factors at work.
d) Motivation is a complex process. Many socio- psychological factors operate to motivate
human beings at work.

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 e) A conflict between organisational and individual goals often exists. There is a need to
reconcile the goals of the individual with those of the organisation.
f) Team-work is essential for higher productivity.
g) Man’s approach is not always rational. Often, he behaves non- logically in terms of
rewards which he seeks from his work.
h) Communication is necessary as it carries information for the functioning of the
organisation and the feelings of the people at work.
Modern Organisation Theories
3. Systems Approach
It is another important approach in the management other than scientific management,
classical and human relations approach. A system is defined as a set of arrangement of things,
which are connected or related so as to form a unity or organic whole. A system is composed
of elements that are related and dependent upon one another but that when in interaction,
from a unitary whole. System approach is based on the thesis that all parts of an organisation
are interrelated, inter-connected and inter dependent. This approach was first developed in
natural and physical sciences. Taylor and others have used system concepts in administrative
and management literature, Chester Bernard a behaviouralist has made his contribution in
describing system approach in management. He laid emphasis on the psychological aspects
of management.
4. Contingency Approach:
Even though systems approach presents a better understanding of organisational and
managerial functioning but it does not provide solution for all types of organisational
structures. Systems approach offers models which may not suit every type of organisation. A
structure suitable for one unit may not be suitable for another. Contingency approach suggests
an organisational design which suits a particular unit. A structure will be suitable only if it is
tailor made for an enterprise.
.5. Social Psychological Approach
Contribution of Douglas Mc Gregor and Abraham Maslaw is significant in administration. Social
Psychological approach is a tool to understand the relationship between a person and the
organisation e.g. why does a person work in an organisation? What are the conditions which
improve the performance of people at work?
In an organisation people work individually as well in groups to accomplish task and purposes.
Chris Argyris Maturity Theory
Chris Argyris, a behavioral scientist, proposes that humans have certain natural development
sequence that could either be enhanced or thwarted by the organization. Like Maslow with his
earlier (1943) motivational theory, Argyris felt that growth was a natural and healthy
experience for people. He proposes that all people progress from a very immature, dependent
personality to a mature, independent one.

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According to Argyris, many organizations prevent their employees from reaching these desired
states of a mature, independent personality through their overreliance on rules, procedures,
and rigid formal structures. In other words, a person’s innate desire to become mature and
independent is squelched by management principles that seek to keep employees in a
dependent state.
Argyris (1971) views the growth process in seven specific stages that transform immature
infants into mature adults.
 First, people are transformed from a passive state to a state of activity, becoming more
active.
 Second, people seek interdependence with others and grow to an independent state
(rather than being dependent).
 Third, people in immature state behave within limited behavior patterns, but when they
become mature, they behave in diverse ways exhibiting unlimited behavior patterns.
 Four, immature people have erratic and shallow interests while mature people develop
deep and intense interests (not shallow).
 Fifth, people move from a concern only for the here and now (a short time perspective)
to a concern for the past, present, and future (a long time perspective).
 Sixth, people move from a subordinate position to an equal or superordinate position.
Seventh, people develop high awareness and control over self in contrast to low self-awareness
which characterizes the immaturity stage

According to Argyris, an individual will be regarded as immature, irrespective of his

chronological age, when he will be basically dependent and submissive with a few shallow
interests and having only a short time perspective. In contrast, a mature personality will be
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endowed with relative independence, autonomy, self-control, many abilities and deep-rooted
not superficial interests in life. He will also have long time orientation unlike the immature
personality.
Essentially, Argyris emphasized that as individuals mature, they have increasing needs to be
more active, desires to move from subordinate positions to superordinate ones, needs to
develop many new and different ways for behaving, and deeper interests than they did when
they were in a more immature state. Argyris added that organizations that acknowledged and
aided this growth would be more likely to prosper than those that ignored or actively inhibited
this growth.
ORGANIZATIONAL BEHAVIOR
According to Keith Davis “organizational behavior is an academic discipline concerned with
understanding and describing human behavior in an organizational environment. It seeks to
shed light on the whole complex human factor in organizations by identifying causes and
effects of that behavior”.
Characteristics/Nature of Organizational Behaviour
1. A field of study – OB is a separate field of study. It has emerged as distinct field of study due
to the significance of human behavior in the organization. It contains a body of theory,
research and application.
2. Part of general management – It is part of general management. It is a behavioral approach
to the study of organizations and their management.
3. Interdisciplinary approach - It integrates the knowledge drawn from psychology, sociology,
anthropology etc.
4. Both science and art – It is a science as it contains systematic body of knowledge about
human behavior. But it is not an exact science because it does not provide specific answers
to organizations’ problems. It is called a social science because its main focus is on people
and their behavior.
5. Multilayered – It involves analysis of behavior in 3 levels – individual, group and
organization.
6. Normative discipline – OB is value oriented as it is based on the belief that human beings
and their needs are important.
7. Goal oriented – OB seeks to fulfill both organizational and individual needs.
8. Total system approach - It takes into account all the variables that influence an
organization’s functioning.
Role of Organizational Behaviour
I. Understanding human behavior
OB is useful for understanding human behaviour in all directions in which human beings
interact. Human behaviour can be understood in the following levels.

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1. Individual behaviour – OB helps to analyze why and how an individual behaves in a
particular way. A large number of psychological, cultural, social and other factors influence
human behaviour. OB integrates these factors for better understanding of individual
behaviour.
2. Interpersonal behaviour – OB provides means for understanding interpersonal relations in
an organization. Analysis of attitudes, perception, reciprocal relationships, role analysis,
transaction analysis etc. facilitates understanding of interpersonal behaviour.
3. Group behaviour – Group norms and pressures modifies a person’s behaviour. Group
dynamics are helpful in understanding how groups are formed, why people join groups and
how groups exert pressures on individuals and management.
4. Intergroup behaviour – An organization consist of several groups and there is complex
relationship between them. Inter group relationships may be in the form of cooperation or
competition. OB provides means to achieve cooperative group relationships for attaining
organizational goals.
II Directing and controlling behaviour
1. Motivation – OB helps managers in understanding employee needs and desires. Suitable
motivational techniques can be used to satisfy these needs and thereby motivate employees
to work hard towards the attainment of the organizational objectives.
2. Use of power and Sanction – managers can use power and sanction prescribed in the formal
organization to control behavior
3. Leadership – OB provides better understanding of leadership theory and practice. It explains
various leadership styles and their appropriateness in different situations.
4. Communication – OB improves the study of the communication process and the factors
affecting it. Analysis of communication process and how it works in interpersonal dynamics
helps managers to make communication effective.
5. Organizational climate - OB suggest a total approach to organizational climate rather than
merely improving physiological conditions and work process. Effective supervision,
participative leadership, two way communication, congenial relations with others at work
place, opportunity for the realization of personal goals, satisfactory working conditions,
adequate compensation and equipment etc. are necessary for a sound organizational climate.
6. Human relations – It useful in creating and maintaining cordial relationship among people
in the organization.
7. Change and Adaptation– Organizations must change and adapt themselves to the changes
in the external environment. OB helps in identifying need for change and in implementing
change without adverse effect on people.

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Concepts of Organizational Behaviour
I. Concepts relating to the Nature of Man
i. Individual differences – OB is based on the assumption that every person is different from
others. Individuals differ in attitudes, physical attributes, intelligence, personality, skills etc.
these differences affects the behaviour and performance of an individual. The principle of
individual differences suggests that managers should be cautious while dealing with
employees.
ii. The whole person – This principle suggest that an individual’s behaviour cannot be studied
in isolation. An employee’s back ground, emotions and sentiments cannot be separated from
his skills used in his job. The behaviour and performance at the work place is often influenced
by private life and vice versa.
iii. Human dignity – A person has a mind which thinks and a heart which feels. He cannot be
treated like raw materials or machinery. The organization must respect his emotions and
aspirations. Management must treat the employees with dignity. Otherwise they feel
dissatisfied.
Causation – Human behaviour is not spontaneous but is caused. Managers must understand
the causes of behaviour before attempting to improve it. The factors influencing the behavior
can be controlled to obtain the desired result from the people
II Concepts Relating to Nature of Organization
i. Social System– An organization is a social system and a part of society. It coordinates the
activities of the members for the accomplishment of common goals. Their behavior is
influenced by several factors inside and outside the organization. Any change in these factors
influence the behavior of individuals and groups in the organization. Therefor organizational
behavior is dynamic in nature. ii. Mutual Interest- Individuals join an organization to achieve
their personal goals. Similarly an organization seeks to achieve its objectives through the
efforts of its members. Thus there is mutuality of interest between an organization and its
members. There for the goals of both must be achieved simultaneously.
Models of Organizational Behaviour
1. Autocratic Model– This OB model is based on traditional or classical approach of
management. It is a power based model forcing the employees of an organization to respect
and obey order of the boss who is in command of power. This model is based on the
assumption that employees have to be directed and pushed into performance and this is the
task of management. Managers see authority as the only means to get things done. Under this
model, employees work reluctantly due to fear of punishment. Their morale and productivity
tends to be low due to insecurity and frustration. The employees are given minimum wages to
satisfy their subsistent needs such as food, clothing and shelter. This model is successful when
the employees are lazy and shirk to work.

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2. Custodial Model – This model aims at developing more satisfaction and security among the
employees by dispelling negative feelings of insecurity and frustration. By doing this the
employees felt like working in the organization, could feel better and could produce more. The
custodial model places more importance on improving physical working conditions of the
employees, satisfying their level of needs particularly security needs and providing them
opportunities to rise further. Application of this model requires more economic resources in
the organization as to satisfy higher order needs of the employees. Under this model,
employees feel satisfied and happy but are not motivated to work hard for the organization.
Because the economic rewards and fringe benefits given to the employees will not provide
strong motivation to the employees but prove only some degree of contentment to them.
Supportive Model – This model depends on managerial leadership rather than on the use of
power or money. Management provides a climate that helps employees grow and accomplish.
The focus is on the participation and involvement of employees in decision making process. In
order to get the desired result, the managers have to display supportive attitude towards the
job performance of the employees, rather than giving them more and more fringe benefits.
Collegial Model – This model is an improved version of supportive model. The term collegial
means body persons having common goals. This model based on team concept wherein each
employee has high degree of understanding towards others and shares common goals. The
organizational climate is very conducive to self-fulfillment and self-actualization. Self-discipline
replaces direction and control from management.
Determinants of Organizational Behaviour
[Link] – The structure refers to authority responsibility relationship between people in
the organization. It defines the roles and relationships of people. Different people are given
different tasks and roles through division of work. The structural design must be appropriate
for people, technology used and the external environment. A sound structure helps in getting
desirable result from individuals and groups working in the organization.
2. Technology – The nature and technology used in the organization depends upon its nature
and size. The technology influences the working conditions and is an important determinant
of organization structure. It provides assistance to people in the form of machines, work
methods and procedures.
3. People – Every organization consist of people, both individuals and groups. People interact
with each other and influence each other. They join the organisation to fulfill their objectives.
The organisation seeks to achieve its goals through people. Management attempts to mould
the behaviour of individuals and groups for attaining organisational goals.
4. Environment –The external environment consist of economic, social, cultural, political, legal,
natural and other forces. These forces exert significant influence on the perception, attitudes,
and motives of people in an organisation.

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Contributing Disciplines to the OB
Psychology – The term Psychology is derived from the Greek word “psyche” which means soul
or spirit. Psychology is a science of human behaviour. It involves the study of the types and
process of human behaviour such as perception, learning, attitudes motivation etc. learning
theories, industrial psychology, personality theories etc. become an integral part of modern
organisational behaviour.
Sociology – It is a branch of behavioral science which deals with the use of scientific methods
for analyzing and understanding individual behaviour in society. It is specially a study of social
groups, social behaviour, society, institutions, customs, social classes, status, social mobility
and prestige. Social scientists have contributed towards the development of organisational
behaviour through the concepts of group dynamics, formal and informal groups,
communication, power, position, team work, conflicts etc.
Anthropology – The term “anthropo” means man and “logy” means science.
Anthropology may be defined as the science of man. It involves the study of origin and
development of human culture. Anthropology contributes in understanding the cultural effects
on organisational behaviour. Value systems,norms, interactions, group cohesiveness,
sentiments are studied in anthropology.
Political Science – Political science studies the political aspects of human life which includes
political environment, political system and other factors which have an impact on human
behaviour. Many aspects of political science such as power politics, power structure, conflicts
and its resolution, political manipulation, coalition of power etc. Management –Management
is also known as the administrative science. It is the study of overseeing activities and
supervising people in the organisation. It emphasizes the design, implementation and
management of various administrative and organisational systems. It is the first discipline
which takes the modern organisation as a unit of analysis. This viewpoint distinguishes the
contribution of management to the study of organisational behaviour.
Engineering - Engineering has made important contributions to our understanding of the
design of the work.
Besides the above mentioned disciplines, some other disciplines such as Ecology and
Geography, Mathematics, Philosophy, Biology etc. has its own importance and influence on
the discipline of organizational behaviour.
Advantages of organizational behavior
1. Enhancing organizational efficiency
2. Improving working behaviour
3. Integration of individual goals with organizational goals.
4. Higher management efficiency 5. Improving interpersonal relations.
Limitations of organizational behavior
1. Lack of understanding

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2. limited use of strategies and stimuli
3. Conflict of goals and values
4. Misuse of knowledge on organisational behaviour
Challenges and opportunities of OB
Business in today’s world is a hectic and dynamic undertaking. The environment in
which organizations operate is ever changing, thereby changing the needs of the organization
and internal operations. The concept of organization behaviour is important as it provides
insights into organizations’ challenges and opportunities.
Some of the major challenges and opportunities faced by the organisations are discussed
below.
1. Improving People Skills:
Technological changes, structural changes, environmental changes are accelerated at a faster
rate in business field. Unless employees and executives are equipped to possess the required
skills to adapt those changes, the achievement of the targeted goals cannot be achieved in
time. There two different categories of skills – managerial skills and technical skills. These skills
can be enhanced by organizing a series of training and development programmes, career
development programmes, induction and socialization etc.
2. Improving Quality and Productivity:
Quality is the extent to which the customers or users believe the product or service surpasses
their needs and expectations. More and more managers are confronting to meet the
challenges to fulfil the specific requirements of customers. In order to improve quality and
productivity, they are implementing programs like total quality management and
reengineering programs that require extensive employee involvement.
3. Managing Workforce Diversity
This refers to employing different categories of employees who are heterogeneous in terms of
gender, race, ethnicity, relation, community, physically disadvantaged, homosexuals, elderly
people etc. The major challenge for organizations is to become more accommodating to
diverse groups of people by addressing their different life styles, family needs and work styles.
4. Responding to Globalization
Today’s business is mostly market driven; wherever the demands exist irrespective of distance,
locations, climatic conditions, the business operations are expanded to gain their market share
and to remain in the top rank etc. Business operations are no longer restricted to a particular
locality or region. Company’s products or services are spreading across the nations using mass
communication, internet, faster transportation etc.
5. Empowering People
Empowerment is defined as putting employees in charge of what they do by eliciting some sort
of ownership in them.

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6. Stimulating Innovation and Change
Today’s successful organizations must foster innovation and be proficient in the art of change;
otherwise they will be vanished from their field of business. Victory will go to those
organizations that maintain flexibility, continually improve their quality, and beat the
competition to the market place with a constant stream of innovative products and services.
7. Improving Ethical behaviour
The complexity in business operations is forcing the workforce to face ethical dilemmas, where
they are required to define right and wrong conduct in order to complete their assigned
activities.
8. Coping with ‘Temporariness”
In recent times, the Product life cycles are slimming, the methods of operations are improving,
and fashions are changing very fast. In those days, the managers needed to introduce major
change programs once or twice a decade. Today, change is an ongoing activity for most
managers. The concept of continuous improvement implies constant change. In yester years,
there used to be a long period of stability and occasionally interrupted by short period of
change, but at present the change process is an ongoing activity due to competitiveness in
developing new products and services with better features.
9. Emergence of E-Organization
The impact of COVID-19 has introduced a strong burning platform for change in many
unforeseen areas with many organisations and individuals that have struggled or have been
simply unable to cope with the pace of change they have encountered. Organisations have
been forced to do business differently and, with most staff required to work remotely or from
home, business processes have had to change rapidly in order for organisations to survive.
The crisis forced many businesses to suddenly adapt to having an entirely remote workforce.
For a virtual organization to function, geographically dispersed teams need effective
communication and delegated and decentralized decision-making.
Organisational behaviour can help the organisations in facing and coping up with these
challenges because these cannot be eliminated. There is no perfect situation to organisational
problems, but if handled with care and diligence, these challenges can be converted into
profitable opportunities. TQM, Reengineering, leadership, organisational culture, group norms
etc. are some of the concepts which can help in facing various challenges.

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