Module – I

Introduction to Organization

ORGANIZATION

Meaning

Organization is a consciously coordinated social unit, composed of two or more people, which functions
on a relatively continuous basis to achieve a common goal or set of goals.

Organization is the process of establishing relationship among the members of the enterprise. The
relationships are created in terms of authority and responsibility. To organize is to harmonize, coordinate
or arrange in a logical and orderly manner.

An organization is a social unit or human grouping, deliberately structured for the purpose of attending
specific goals. Organization involves the grouping of activities necessary to accomplish goals and plans,
the assignments of these activities to appropriate department and the provision of authority delegation
and co-ordination.

Schein describes “Organisation as the planned coordination of the activities of a number of people for
the achievement of some common, explicit purpose or goal, through division of labour and function, and
through hierarchy of authority and responsibility.”

According to this definition, Organisations have following characteristics:

• Coordination of efforts;

• Common goal;

• Division of labour;

• Hierarchy of authority.

Types of Organisation

The general types of organizational design which are well recognized are given as under:

• Formal Organization

• Informal Organization

Formal Organization

The formal organization refers to the structure of jobs and positions with clearly defined functions and
relationships as prescribed by the top management.
This type of organization is built by the management to realize objectives of an enterprise and is bound
by rules, systems and procedures. Formal organization is a form of organization where people work
together because of their official placements and assigning of work.

The features of formal organization are:

i) Formal organization structure is laid down by the top management to achieve organizational goals.

ii) Formal organization prescribes the relationships amongst the people working in the organization.

iii) The organization structures is consciously designed to enable the people of the organization to work
together for accomplishing the common objectives of the enterprise

iv) Organization structure concentrates on the jobs to be performed and not the individuals who are to
perform jobs.

v) In a formal organization, individuals are fitted into jobs and positions and work as per the managerial
decisions. Thus, the formal relations in the organization arise from the pattern of responsibilities that are
created by the management.

vi) A formal organization is bound by rules, regulations and procedures.

vii) In a formal organization, the position, authority, responsibility and accountability of each level are
clearly defined.

viii) Organization structure is based on division of labour and specialization to achieve efficiency in
operations.

ix) A formal organization is deliberately impersonal. The organization does not take into consideration
the sentiments of organizational members.

x) The authority and responsibility relationships created by the organization structure are to be honoured
by everyone.

Advantages of Formal Organization

i) A formal organization is bound by rules, regulations and procedures. It thus ensures law and order in
the organization.

ii) The organization structure enables the people of the organization to work together for accomplishing
the common objectives of the enterprise.

iii) The formal organization structure concentrates on the jobs to be performed.

It, therefore, makes everybody responsible for a given task.

Disadvantages of Formal Organization

i) The formal organization does not consider the goals of the individuals. It is designed to achieve the
goals of the organization only.

ii) The formal organization is bound by rigid rules, regulations and procedures. This makes the
achievement of goals difficult.

iii) The formal organization does not take into consideration the sentiments of organizational members.

Types of Formal Organization

1. Line Organization

2. Line and staff Organization

3. Functional Organization

4. Matrix Organisation

Line Organization

It is one of the oldest forms of organizational structure; all other forms are modifications of it they directly
or indirectly relay on it. Line organization is a basic framework for the whole organization. This is the
simplest form of organization structure, in which the line of authority flows vertically downward from
top to bottom throughout the organization. This organization is a vertical structure where one person
delegates authority to his/her subordinate and who in turn delegates to his/her subordinate and so on.

Types of Line Organization

The line organization can be of two types:

1. Pure line organization

2. Departmental Line organization

1. Pure line Organization

In pure line organization activities at any level of organization are same with each employee performing
same type of work and departments are created only to facilitate control and direction.
For example, if three sales managers work under the command of marketing manger dealing with sales
activities of same product in different area, it is known as pure line organization.

2. Department line Organization

In this type of organization, the whole unit is divided into different departments that are convenient for
control purposes. Again even within a department, there may be several sub departments.

For example, in production department, there may be number of foreman each in charge of a sub
department and controlling a certain number of workers.

Advantages Line Organization

1. Line structure is quite simple to understand and to implement and no complications are involved in
it.

2. There is a clear-cut division of authority and responsibility among various positions in the
organization.

3. The operational cost of line structure is minimum as compared to other forms.

4. In line organization, there is high degree of flexibility because when organization grows in size and
volume, additional work either can be shared by existing departments or new department can be
crated easily.

5. Line structure serves as ground for training and development of all managerial personnel.

6. In line structure decisions can be made promptly by the manager because enough authority is
delegated to them for this purpose.

7. It is ideal form of organization especially for small sized enterprise engaged in a business of simple
nature.

8. It facilitates communication by providing line of command as channel.

9. Due to unity of command, discipline can be maintained among employees, their activities can be
effectively controlled and they cannot sidetrack their responsibility.

Limitations Line Organization

1. On account of excess working load their working efficiency is also bound to decrease.

2. Duplication of similar type of activities in every department may further enhance operating cost of
organizational and it remains no more economical.

3. Line organization doesn't encourage and permit use of specialized services from outside and no
provisions are made to introduce specialized supportive services in organizational structure.
4. Line managers are preoccupied with heavy workload. They have to perform all kinds of activities,
not only key activities but supportive activities also. Consequently, they so not get enough time to
devote on basic managerial functions.

5. One of the major drawbacks is that it tilts towards bureaucratic form and ignores human needs and
values which are affecting working behaviour of the employees.

6. The line mangers don't normally possess required knowledge for performing each and every activity
assigned to them. Due to changes in the nature of business many new dimensions have been added
to existing set of activities which calls for specialized knowledge on the part of managers. But it is
not possible for the line manger to acquire all sort of specialization.

7. In the event of growth and development of organization further differentiation in activities is needed;
this does not seem to be feasible in case of line organization.

Line and staff Organization

In a line and staff organization, the work administration of business units is divided into two broad
divisions namely the staff which is responsible for planning and the line for actual execution of the work.
The staffs are attached to the line to assist the line in discharging its duties efficiently.

Line and staff organization is a modification of line organization and it is more complex than line
organization. According to this administrative organization, specialized and supportive activities are
attached to the line of command by appointing staff supervisors and staff specialists who are attached to
the line authority. The power of command always remains with the line executives and staff supervisors
guide, advise and council the line executives.

Hence in line and staff organization both line activity units as well as staff activity units coexist. Staff
units render various types of services to line activity units, so as to facilitate performance of line activities
in a satisfactory manner.
Advantages of Line and staff Organization

1. Line mangers get the benefit of specialists' advice on all important matters at various levels.

2. Specialized advice improves the quality of decisions resulting in operational efficiency and
economy.

3. Staff specialists relieve the line authorities of botheration of concentration on specialized staff
function like selection and training, purchasing, public relations.

4. Line and staff has greater flexibility, since required specialists can be added to help line mangers
at various levels.

5. The enterprise besides taking advantage of functional organization, maintain the principle of unity
of command.

Disadvantages of Line and staff Organization

1. By introducing staff relationship in the line structures the overall organizational structure becomes
more complicated and complex.

2. Line and staff structure also suffers from the drawback of poor co-ordination, because of dual
relationship in organization.

3. Line and staff structure, may also results in high operating cost especially if the services of staff
specialists are not properly used in a desirable manner.

4. The position of staff specialists in organization seems to be very weak because they do not have
any authority to assert on line mangers and do not assume any responsibility.

5. In this type of organizational structure difference of perceptions and orientation of line and staff
managers does create serious problem with respect to smooth functioning of the organization.

6. Due to many reasons clash and conflict occur between line mangers and staff specialist.

Functional Organization

Functional organisation refers to the classic organizational structure where the employees are grouped
hierarchically, managed through clear lines of authority, and report ultimately to one top person.

In functional organization, all the activities are grouped together according to certain functions like
production, marketing, finance, personnel etc. and are put under the charge of different persons. All the
persons in the organization dealing with a particular function are put under the charge of person
controlling that particular function.

Advantages of Functional Organization

1. It facilitates prompt decision making because required authority with regard to particular group of
activity is delegated to the departmental head.

2. The functional organization provides wide scope for the growth and mass production. The
employment of specialist at various levels of work enables the organization to grow as per the needs
of the situation.

3. Consistency and uniformity can be maintained with regard to functioning of various work units
operating under the command of functional heads.

4. The use of specialists helps in controlling the waste of materials, money and time. The consolidation
of activities leads to optimum use of facilities like office accommodation, plant and machinery.

5. Functional organization allows changes in organization without disturbing the whole work. The span
of supervision can also be adjusted according to the organization.

6. Every superior is an expert in his/her own area and she/he will be successful in making proper
planning and execution. The superiors being well acquainted with the work, will be able to improve
the level of supervision.

7. This type of organization eliminates one man control. There will be a joint control and supervision
in the organization. This boosts the morale of employees and also encourages a sense of co-operation
among them. The democratic approach motivates workers to go deep into their work and make
suggestions for work improvement.

Disadvantages of Functional Organization

1. Due to multiplicity of command in organization its structure becomes very complicated and complex.

2. It becomes very difficult to coordinate functioning of several work units under the command of
functional mangers, because each work unit is subject to many more functional commands.

3. It is also found in functional structure that specialization exceeds desired limit and beyond which its
advantage may be outnumbered by the cost incurred to achieve it.

4. The principle of unity of command is violated as result of which indiscipline crops in among the
employees, they can sidetrack their responsibility and their activities cannot be controlled efficiently.

5. Divided loyalty of head of the work units may also result in the creation of conflicting situations.

Matrix Organization

Matrix Organisation is an organizational structure that facilitates the horizontal flow of skills and
information. It is used mainly in the management of large projects or product development processes,
drawing employees from different functional disciplines for assignment to a team without removing them
from their respective positions. In its simplest form, a matrix configuration may be known as a cross-
functional work team, which brings together individuals who report to different parts of the company in
order to complete a particular project or task.

For example, a product group wants to develop a new addition to its line; for this project, it obtains
personnel from functional departments such as research, engineering, production, and marketing. These
personnel then work under the manager of the product group for the duration of the project.

Advantage of a Matrix Organisation

i) Resource Coordination: The matrix structure allows supervisors to focus on their areas of expertise.

Functional supervisors focus on hiring, training and managing employees in their field, while project
supervisors can focus on achieving the goals of their specific projects or products.

ii) Specialization: Placing employees in functional areas allows them to specialize in a particular field.
Instead of being good at a variety of tasks, specialized employees can excel at tasks in their field of focus.

iii) Breadth of Skill: When isolated in a functional area, employees may have more difficulty benefiting
from the skills and experiences of those in other areas. In a matrix structure, employees have constant
contact with members of other functional areas via their membership in project teams. Through the
project team, employees have the opportunity to develop a wider set of skills than they would in a purely
functional structure.

iv) Communication: Since employees have constant contact with members of different functional areas,
the matrix structure allows for information and resources to travel more fluidly between those functional
areas. The collaboration between functional areas allows a project team to better handle complex
challenges and objectives.

v) Flexibility: The matrix structure allows for human resources to be shared flexibly across different
projects or products. Functional areas maintain a stock of talented employees to meet projects'
requirements.

Disadvantages of a Matrix Organization

i) Members of project teams may have divided loyalties as they report to two line managers. Equally,
this scenario can put project team members under a heavy pressure of work

ii) There may not be a clear line of accountability for project teams given the complex nature of matrix
structures.

iii) Difficult to co-ordinate.

iv) It takes time for matrix team members to get used to working in this kind ofstructure.

v) Team members may neglect their functional responsibilities.

Informal Organization

Informal organization refers to the relationship between people in the organization based on personal
attitudes, emotions, prejudices, likes, dislikes etc. An informal organization is an organization which is
not established by any formal authority, but arises from the personal and social relations of the people.
A manager can establish or cancel any of the formal organizations. However he can neither create nor
cancel an informal organization.

Features of Informal Organisation

i) Formation of informal organizations is a natural process. It is not based on rules, regulations and
procedures.

ii) Informal organization is not established by any formal authority. It is unplanned and arises
spontaneously.

iii) Informal organizations reflect human relationships. It arises from the personal and social relations
amongst the people working in the organization.

iv) The inter-relations amongst the people in an informal organization cannot be shown in an organization
chart.

v) In the case of informal organization, the people cut across formal channels of communications and
communicate amongst themselves.

vi) The membership of informal organizations is voluntary. It arises spontaneously and not by deliberate
or conscious efforts.

vii) Membership of informal groups can be overlapping as a person may be member of a number of
informal groups.

vii) Informal organizations are based on common taste, problem, language, religion, culture, etc. it is
influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of the people in the
organization.

Advantages of Informal Organization

1. When an informal systems operating effectively, it encourages delegation, decentralization and

greater support of the manager. This results in improvements in performance and overall
productivity.

2. For example, if a manager is weak in planning his subordinates may assist him informally.

3. Informal system provides a means for relieving employees from frustration, tension and emotional
problems with management and other employees.
4. There will be improved relations with the subordinates. A manager at times consults the informal
leaders and seeks their cooperation in getting the things done from the workers.

5. Member of the informal group confining to certain norms of behaviour brings discipline and order
among the employees of the organization.

6. Informal leaders will have high talents and skills can be picked up by the management and giving
them required training can develop future executives.

Disadvantages of Informal Organization

1. Informal groups may have tendency to resist changing because of perpetuation of values and life-
styles.

2. Negative attitude of informal leaders may become a source of conflict between the management and
worker. The leader may induce the group member to work against the policies and interests of the
organization.

3. Social control promotes and encourages conformity among informal group members, thereby making
them reluctant to act too aggressively or perform at a high a level. This can harm the formal
organization by shifting initiative, creativity and diversity of performance.

4. Very often, ill-informed employees communicate unverified and untrue information which may
create conflict and misunderstanding and a devastating effect on employees.

Organisational Behaviour

Organizational Behaviour is the study and application of knowledge about how people act within
organization. Organisational Behaviour also explores how organisations can more effectively manage,
modify, and enhance behaviour to attain desired results, such as productivity, employee well-being, or
job satisfaction.

Organisational behaviour is the study and application of knowledge about how people - as individuals
and as groups- act within organisations. Organisational behaviour comes from two words: -

• Organisation and

• Behaviour.

Organisation is a place where two or more people work together in a structured way to achieve a specific
goal or set of goals.

Behaviour is response of an individual to stimulation.

So organisational behaviour is the behaviour of an individual in an organisation to achieve some

objective.
Organizational Behaviour examines patterns of behaviour to enhance output, elevate job happiness,
stimulate innovation, and streamline procedures. Numerous topics are covered, such as motivation,
team dynamics, communication, leadership, and corporate culture.

There are three major factors that affect OB. The working environment being the base for all three factors,
they are also known as the determinants of OB. The three determinants are −

• People

• Structure

• Technology

People

An organization consists of people with different traits, personality, skills, qualities, interests,
background, beliefs, values and intelligence. In order to maintain a healthy environment, all the
employees should be treated equally and be judged according to their work and other aspects that affects
the firm.

Example − A company offers campus placement to trainees from different states like Orissa, Haryana,
Arunachal Pradesh and many more. However, during and after training, all trainees are examined only
on the basis of their performance in the tasks assigned.

Organizational Structure

Structure is the layout design of an organization. It is the construction and arrangement of relationships,
strategies according to the organizational goal.

Example − Organizational structure defines the relation of a manager with employees and co-workers.

Technology

Technology can be defined as the implementation of scientific knowledge for practical usage. It also
provides the resources required by the people that affect their work and task performance in the right
direction.

Example − Introduction of SAP, big data and other software in the market determines individual and
organizational performance.

Environment

All companies function within a given internal and external environment. Internal environment can be
defined as the conditions, factors, and elements within an enterprise that influences the activities, choices
made by the firm, and especially the behaviour of the employees. While external environment can be
defined as outside factors that affect the company's ability to operate. Some of them can be manipulated
by the company’s marketing, while others require the company to make adjustments.

Some examples of internal environment include employee morale, culture changes, financial changes or
issues, and some examples of external environment include political factors, changes to the economy and
the company itself.

Study of organizational behaviour helps in studying:

i. Why do people behave in a particular way?

ii. Why one person is more effective than the other?

iii. Why one group is more effective than the other?

iv. Why one person is more effective in one organization as compared to the other organizations?

Definitions:

In the words of K Aswathappa, “OB is the study of human behaviour in the organizational setting, of
the interface between human behaviour and organization and of the organization itself.”

In the words of Stephen P. Robbins, “OB is a field of study that investigates the impact that individuals,
groups, and structures have on behaviour within organizations for the purpose of applying such
knowledge towards improving an organization’s effectiveness.”

According to L. M. Prasad, “Organisational behaviour can be defined as the study and application of
knowledge about human behaviour related to other elements of an organization such as structure,
technology, and social systems.”

According to Davis and Newstram, “Organisational behaviour is the study and application of knowledge
about how people act within organizations.”

According to Fred Luthans, “Behaviour is directly concerned with the understanding, prediction, and
control of human behaviour in organizations.”

Nature of Organizational Behaviour

1. Interdisciplinary Approach: OB takes an interdisciplinary approach, including ideas from

management science, anthropology, psychology, and sociology. This methodology allows it to
investigate many aspects of human behaviour in organizational settings in a thorough manner.

2. Attention on Individuals and Groups: Organizational Behaviour Science (OB) studies both
individual and group behaviour. It explores individual characteristics including motivation, perception,
personality, and attitudes as well as group dynamics like cooperation, leadership, and communication.
3. Applied and Practical Orientation: OB places a lot of focus on practical applications even if it is
grounded in theoretical frameworks. It aims to tackle issues that enterprises really face in the real world
by providing solutions and insights to raise worker productivity, happiness, and well-being.

4. Continuous Learning and Adaptation: Organizational Behaviour is dynamic and ever-changing,

requiring constant learning and adaptation. It recognizes that in order for companies to prosper in
quickly changing contexts, they must constantly learn, adapt, and innovate. Thus, agility, flexibility,
and resilience in reacting to both internal and external difficulties are emphasized in OB research and
practice.

5. Humanistic and Optimistic Approach: Organizational Behaviour applies humanistic approach

towards people working in the organization. It, deals with the thinking and feeling of human beings. O.B.
is based on the belief that people have an innate desire to be independent, creative and productive. It also
realizes that people working in the organization can and will actualize these potentials if they are given
proper conditions and environment. Environment affects performance or workers working in an
organization.

History and Development of Organizational Behavior (OB)

Organizational Behavior (OB) has evolved over time through various stages, incorporating insights from
psychology, sociology, anthropology, and management science. It has progressed from early
management theories focused on efficiency to modern approaches emphasizing employee well-being,
motivation, and organizational culture.

1. Early Foundations (Pre-20th Century)

Before the formal study of OB, organizations were primarily focused on maximizing efficiency and
controlling workers with strict rules.

a. The Industrial Revolution (18th–19th Century)

The shift to industrial economies led to large-scale production and factory systems. Early managers
sought ways to increase productivity without considering human factors. Workers were treated as
replaceable resources rather than individuals with needs.

b. Adam Smith’s Division of Labor (1776)

In The Wealth of Nations, Smith argued that breaking tasks into smaller specialized parts increases
efficiency. Each worker focused on a single task, leading to higher productivity but lower job satisfaction.

c. Robert Owen (1800s)

He was one of the first industrialists to recognize the importance of employee well-being. He advocated
for better working conditions, shorter work hours, and education for workers.
2. Classical Management Theories (1900–1930s)

The focus was on scientific approaches to improving productivity and efficiency.

a. Scientific Management (Frederick Taylor, 1911)

Taylor introduced Scientific Management to improve efficiency by analyzing workflows scientifically.

Key Principles:

§ Develop the best method for each task.

§ Train workers to follow standardized methods.

§ Use performance-based incentives.

b. Bureaucratic Management (Max Weber, 1920s)

He proposed a structured, rule-based system for managing large organizations.

Key Features:

§ A clear hierarchy of authority.

§ Impersonal relationships in decision-making.

§ Standardized rules and procedures.

c. Administrative Theory (Henri Fayol, 1916)

Fayol introduced 14 Principles of Management, including division of work, authority, and unity of
command. He focused on organizational structure rather than individual worker efficiency.

3. Human Relations Movement (1930s–1950s)

Managers realized that human emotions, relationships, and motivation significantly impact productivity.

a. Hawthorne Studies (Elton Mayo, 1924–1932)

It was initially aimed at studying lighting effects on worker productivity.

Findings:

§ Productivity increased because workers felt valued.

§ Social factors and group dynamics influence performance more than physical conditions.

§ Highlighted the importance of human relations, motivation, and teamwork.

b. Maslow’s Hierarchy of Needs (1943)

It proposed that employees are motivated by five levels of needs:

1. Physiological (food, water, shelter).

2. Safety (job security, health).

 3. Social (relationships, belonging).

4. Esteem (recognition, achievement).

5. Self-actualization (growth, creativity).

4. Behavioral Science Approach (1950s–1970s)

OB became an interdisciplinary field incorporating psychology, sociology, and anthropology.

a. McGregor’s Theory X and Theory Y (1960)

• Theory X: Employees dislike work and need strict supervision.

• Theory Y: Employees are self-motivated and seek responsibility.

• Example: Companies with Theory Y cultures, like Tesla, encourage innovation by giving
employees autonomy.

b. Herzberg’s Two-Factor Theory (1959)

• Hygiene Factors (salary, work conditions) prevent dissatisfaction.

• Motivators (recognition, growth) drive job satisfaction.

5. Modern Organizational Behavior (1990s–Present)

Focuses on innovation, globalization, technology, and employee well-being.

a. Organizational Culture and Leadership (Edgar Schein, 1990s)

Culture shapes employee behavior and performance.

b. Workforce Diversity and Globalization

Modern companies manage diverse, multicultural teams.

c. Technology and Virtual Work

Digital transformation has changed the way employees work.

d. Positive Organizational Behavior (POB)

Focuses on employee well-being, engagement, and resilience.

Contributing Disciplines in the Organizational Behaviour Field

1. Psychology;

2. Social Psychology;

3. Sociology;

4. Anthropology;

5. Political Sciences; and

6. Economics.

1. Psychology: – The word psychology comes from the Greek word ‘psyche’ which means spirit.
Psychology is the science that attempts to measure, explain and sometimes change the behaviour of
human beings. Modern psychology is almost universally defined as the science of behaviour that is
almost identical to the science of behaviour in general.

Psychology has a great influence on the field of organizational behaviour. Psychology deals with
individual behaviour. Psychology studies the behaviour of different people in different situations. It also
studies the processes of human behaviour, such as learning, motivation, perception, individual and group
decision-making – organization, group process, satisfaction, communication, selection, and pattern-
making of influence in training.

It is a science, which describes the change of behaviour of human and other animals. It is concerned with
the more study of human behaviour. Understanding Psychological principles and its models help
significantly in gaining the knowledge of determinants of individual behaviour such as: –

1. Learning;
2. Personality;

3. Perception;

4. Individual decision-making;

5. Performance appraised;

6. Attitude measurement;

7. Employee selected;

8. Work design;

9. Motivation;

[Link];

[Link] strain; and

[Link] satisfaction.

2. Social Psychology: – Social psychology is that part of psychology that integrates the concepts of
psychology and sociology. In other words, social psychology studies all aspects of social behaviour and
social thought – how people think about and interact with others.

Additionally, social psychology is useful in the areas of measuring and understanding changing attitudes;
communication patterns; The ways in which group activities can satisfy individual needs and group
decision- making processes. It focuses on the effect people have on each other. It is a field within
psychology that focuses on the impact of people on each other.

The major contributions of social psychology to OB are as follows: –

1. Behaviour change

2. Attitude change

3. Communication

4. Group process

5. Group decision-making

3. Sociology: – Sociology is the study of group behaviour. It can be described as an academic discipline
that uses the scientific method to accumulate knowledge about the social behaviour of an individual. In
other words, it studies the behaviour of people in relation to their fellow human beings.

Some of the areas within the OB that have received valuable input from sociologists include group
dynamics, organizational culture, formal organization theory and structure, organizational technology,
bureaucracy, communication power, conflict, and inter-group behaviour.
Sociological concepts, theories, models, and techniques help significantly to understand better the group
dynamics, organizational culture, formal organization theory and structure, corporate technology,
bureaucracy, communications, power, conflict, and intergroup behaviour.

4. Anthropology: – The word anthropology combines the Greek word ‘anthropo’ meaning man and the
noun ending ‘logi’ meaning science. Thus, anthropology can be defined as the science of man. The main
aim of anthropology is to acquire a better understanding of the relationship between the human being and
the environment. Adaptations to surroundings constitute culture. The manner in which people view their
surroundings is a part of the culture. It is also known as the ‘Science of Humanity’ which covers a wide
range of studies including the evolutionary history of humans and the characteristics of different
societies, cultures and human groups.

In other words, the field of anthropology studies the relationship between individuals and their
environment.

It is the study of society to learn human beings and their activities. The major contributions of
Anthropology in the field of OB are as follows: –

a. Comparative values

b. Comparative attitudes

c. Cross-culture analysis

d. Organization environment

e. Organization culture

5. Political Science: – Political science is the branch of social science that deals with politics in its theory
and practice and with the analysis of various political systems and political practices. Political scientists
study the behaviour of individuals and groups in the political environment. They contribute to
understanding the dynamics of power centers, structuring of conflict and conflict resolution tactics,
allocation of power and how people manipulate power for individual self-interest. In other words,
political science helps us understand the dynamics of power and politics within organizations, as there is
usually a hierarchical structure of different organizational levels of managers and subordinates.

It is the study of the behaviour of individuals and group within or political environment. The main
contribution of political science in the field of OB have been concerned with: –

1. Conflict

2. Intra-organizational policies

3. Power
6. Economics: – Economists study the distribution, consumption and production of goods and services.
Economics contributes to the behaviour of the organization by designing structure. The organization and
its structure are influenced by transaction cost economics. It identifies the extent to which the structure
and size of the organization varies as a result of efforts to avoid market failures by reducing production
and transaction costs within the limits of human and environmental factors.

Significance of Organizational Behavior

The significance of Organizational Behaviour (OB) lies in its ability to enhance individual, group, and
organizational performance by understanding and managing human behaviour within an organizational
context. Here are the key areas of its importance:

1. Enhances Individual and Organizational Performance

• Improves Productivity: By understanding what motivates employees and how they behave,
managers can design strategies to boost productivity.

• Employee Satisfaction: OB helps create a positive work environment that aligns organizational
goals with individual needs, enhancing job satisfaction and morale.

2. Facilitates Better Management Practices

• Informed Decision-Making: OB equips managers with knowledge of human behaviour,

enabling them to make better decisions regarding staffing, conflict resolution, and resource
allocation.

• Effective Leadership: OB provides insights into different leadership styles and their impact,
helping managers adopt styles suited to specific teams or situations.

3. Promotes Team Dynamics and Collaboration

• Enhances Teamwork: By understanding group behaviour, managers can foster better team
dynamics, encouraging collaboration and minimizing conflicts.

• Improves Communication: OB emphasizes the importance of effective communication,

bridging gaps between employees and management.

4. Drives Organizational Change and Adaptability

• Change Management: OB principles help organizations manage resistance to change by

addressing employee concerns and fostering a culture of adaptability.

• Innovation and Creativity: A deeper understanding of human behaviour encourages innovation

by promoting a safe environment for creative thinking.

5. Addresses Workplace Diversity and Inclusion

• Cultural Sensitivity: OB aids in understanding diverse workforces, helping organizations

 embrace cultural differences and enhance inclusivity.

• Conflict Resolution: It provides tools to resolve conflicts arising from misunderstandings in

diverse teams, promoting harmony.

6. Develops Ethical and Social Responsibility

• Ethical Practices: OB emphasizes ethics and values, helping organizations maintain a socially
responsible image and gain trust from stakeholders.

• Sustainability: OB also addresses issues like environmental awareness and sustainable work
practices.

7. Enhances Employee Well-Being

• Stress Management: Understanding stressors in the workplace helps organizations implement

strategies to reduce employee burnout and improve mental health.

• Work-Life Balance: OB helps in designing policies that promote a healthy balance between
personal and professional lives.

8. Facilitates Strategic Planning and Goal Achievement

• Alignment of Goals: OB ensures that employees contribute effectively to the organization’s

success by aligning individual and organizational goals.

• Long-Term Sustainability: OB focuses on building strong organizational cultures, ensuring

long-term sustainability in a competitive environment.

9. Provides a Framework for Predictive Analysis

• Anticipating Behaviour: OB helps predict potential employee behaviours based on past patterns,
allowing proactive measures to address issues.

• Data-Driven Insights: Applying OB principles through technology and analytics helps

understand trends and make informed decisions.

Organizational behaviour is significant in today’s dynamic and complex business environment. It not
only enhances the performance and well-being of individuals but also contributes to the overall success
and adaptability of organizations. By leveraging OB, organizations can create a harmonious, efficient,
and innovative workplace that thrives in a competitive global economy.

Importance of OB to the field of management.

Organizational Behaviour (OB) is of critical importance to the field of management as it provides

insights and tools to effectively manage individuals, teams, and organizations. By understanding the
dynamics of human behaviour in the workplace, managers can make informed decisions to achieve
organizational objectives. Here's how OB benefits the field of management:
1. Enhances Managerial Effectiveness

• Improved Decision-Making: OB equips managers with the knowledge to anticipate and respond
to employee behaviours, making decisions that align with organizational goals.

• Leadership Development: Insights from OB help managers adopt suitable leadership styles to
inspire and guide teams effectively.

2. Facilitates Motivation and Engagement

• Employee Motivation: OB provides theories (e.g., Maslow’s Hierarchy of Needs, Herzberg’s

Two-Factor Theory) to understand what drives employees, enabling managers to foster
motivation.

• Engagement Strategies: By focusing on employee engagement, OB helps managers reduce

turnover and enhance productivity.

3. Strengthens Team and Group Dynamics

• Team Building: Managers use OB principles to form cohesive teams, manage group behaviour,
and resolve conflicts constructively.

• Effective Collaboration: OB emphasizes the importance of communication and trust, which are
essential for team success.

4. Aids in Organizational Change and Development

• Change Management: OB offers frameworks for managing resistance to change and creating a
culture that embraces transformation.

• Organizational Development: Managers can use OB to improve organizational processes,

structures, and practices for long-term growth.

5. Promotes Effective Communication

• Overcoming Barriers: OB helps managers identify and address communication barriers,

ensuring clarity and transparency in messaging.

• Improved Feedback: Managers can leverage OB principles to provide constructive feedback

and foster open communication channels.

6. Supports Workplace Diversity and Inclusion

• Managing Diversity: OB helps managers understand and value differences in the workforce,
leading to a more inclusive work environment.

• Conflict Resolution: By understanding cultural and behavioural differences, OB aids managers

in resolving conflicts within diverse teams.
7. Aligns Employee and Organizational Goals

• Goal Setting: OB emphasizes the alignment of individual, team, and organizational goals,
ensuring that efforts are directed toward common objectives.

• Performance Management: Managers use OB to develop performance appraisal systems that

recognize and reward employee contributions.

8. Addresses Ethical and Social Responsibility

• Ethical Decision-Making: OB highlights the importance of ethics and values in managerial

practices, ensuring responsible decision-making.

• Corporate Social Responsibility (CSR): Managers can implement CSR initiatives effectively
by understanding stakeholder expectations through OB.

9. Improves Managerial Skills

• Problem-solving: OB enhances critical thinking and analytical skills, enabling managers to

address complex workplace issues.

• Conflict Management: Managers learn strategies to handle conflicts constructively, maintaining

harmony and productivity.

10. Prepare for Future Challenges

• Adaptability: OB helps managers prepare for and adapt to technological advancements,

globalization, and changing workforce dynamics.

• Innovation: Understanding human behaviour fosters creativity and innovation, helping

organizations remain competitive.

The importance of Organizational Behaviour to the field of management lies in its ability to enhance
understanding of human dynamics, improve interpersonal skills, and create effective organizational
systems. By applying OB principles, managers can build a productive, motivated, and resilient
workforce, driving organizational success in a rapidly changing environment.