INTRODUCTION TO ORGANIZATIONAL/INDUSTRIAL PSYCHOLOGY

I) WHAT IS ORGANIZATIONAL BEHAVIOR?

An organization is a social unit of people that is structured and managed to meet a need or pursue
collective goals. All organizations have a management structure that determines relationships
between different activities & the members, and subdivides & assigns roles, responsibilities, and
authority to carry out different tasks. Organizations are open systems- they affect and are affected
by the environment. “Organizational behavior is directly concerned with the understanding,
production and control of human behavior in organizations”, Luthans (1973).

The behavior of individuals in formal organizational settings has a tremendous impact on many
aspects of our lives. Organizational behavior is a field of study that investigates how individuals,
groups, and structure affect, and are affected by behavior within organizations. Behavior refers to
what people do in the organization, how they perform, and what their attitudes are. Because the
organizations studied are often business organizations, OB is frequently applied to address
workplace issues such as absenteeism, turnover, productivity, motivation, working in groups, and
job satisfaction. Managers often apply the knowledge gained from OB research to help them
manage their organizations more effectively.

Levels of analysis in organizational behavior:

OB considers that organizations are made up of levels, moving up from the individual, to the
group, to the entire organizational structure. Each level contributes to the variety of activities that
occur in today’s workplace.
The diagram shows that as we move from the individual level to the organization systems level,
we deepen our understanding of behavior in organizations. The three basic levels are like
building blocks, each level is constructed upon the previous level.

Individual level- At the individual level of analysis, organizational behavior involves the study
of learning, perception, creativity, motivation, personality, turnover, task performance, cooperative
behavior, deviant behavior, ethics, and cognition. At this level of analysis, organizational behavior
draws heavily upon psychology, engineering, and medicine.

Group level- At the group level of analysis, organizational behavior involves the study of group
dynamics, intra- and intergroup conflict and cohesion, leadership, power, norms, interpersonal
communication, networks, and roles. At this level of analysis, organizational behavior draws
upon the sociological and socio-psychological sciences.

Organization system level- At the organization level of analysis, organizational behavior

involves the study of topics such as organizational culture, organizational structure, cultural
diversity, inter-organizational cooperation and conflict, change, technology, and external
environmental forces. At this level of analysis, organizational behavior draws upon anthropology
and political science. Other fields of study that are of interest to organizational behavior are
ergonomics, statistics, and psychometrics.

However, there has been a shift in research trends with respect to these three levels. A variety of
research studies have examined topics at the group level of analysis rather than exclusively at the
individual level of analysis. For example, while empowerment has largely been investigated as an
individual-level motivation construct, researchers have begun to study
team empowerment as a means of understanding differences in group performance. Another
research trend is an increasing focus on personality as a factor in individual- and group-level
performance. This stems from the movement toward more organic organization designs,
increased supervisory span of control, and more autonomous work designs. All of these factors
serve to increase the role that personality plays as a determinant of outcomes such as stress,
cooperative or deviant behavior, and performance.
 1) Nature

The value of organizational behavior is that it isolates important aspects of the manager’s job and
offers specific perspective on the human side of management:

● People as organizations,
● People as resources,
● People as people.

In other words, it involves the understanding, prediction and control of human behavior and
factors affecting their performance and interaction among the organizational members.
Organizational behavior is built on contributions from a number of behavioral disciplines such as
psychology, sociology, social psychology, anthropology, and economics.

Individuals do not work in isolation. They come in contact with other people and with the
organization in a variety of ways. Points of contact include managers, coworkers, the formal
policies and procedures of the organization, and various changes implemented by the
organization. Over time, the individual changes as a function of both personal experiences and
maturity and of work experiences with the organization. The organization, in turn, is affected by
the presence and eventual absence of the individual. Clearly, then, the study of organizational
behavior must consider the ways in which the individual and the organization interact. Thus, the
consultant studying turnover at Texas Instruments might choose to look at the orientation
procedures for newcomers to the organization. The goal of this phase of the study would be to
understand some of the dynamics of how incoming individuals interact within the broader
organizational context.
An organization, of course, exists before a particular person joins it and continues to exist long
after he or she has left. Therefore, the organization itself represents a crucial perspective from
which to view organizational behavior. For instance, the consultant studying turnover would also
need to study the structure and culture of Texas Instruments. An understanding of factors such as
the performance evaluation and reward systems, the decision-making and communication
patterns, and the design of the firm itself can provide additional insight into why some people
decide to stay while others elect to leave.
Clearly, the field of organizational behavior can be both exciting and complex. Myriad variables
and concepts impact the interactions described, and together these factors can greatly complicate
a manager’s ability to understand, appreciate, and manage others in an organization. However,
they can also provide unique opportunities to enhance personal and organizational effectiveness.

The four important approaches to the study of organizational behavior are:

a) Human resource approach

This approach recognizes that human resources in an organization are the central force. Their
development will contribute to the success of the organization. Human resources approach
provides for the changes in the managerial role. It requires that the managers, instead of
controlling the employees, should provide active support to them by treating them as part of the
group. The superiors and managers should practice a style where workers are given the
opportunities and encouragement to perform under loose supervision. By treating individuals as
mature adults, organizations can increase productivity and at the same time meet the needs of
individuals for independence and growth.

b) Contingency approach

The approach stresses that there is no single way to manage effectively under all circumstances.
The methods of behaviors which work effectively in one situation may fail in another. The
organizational structure and the processes of management are governed by the external
environment and several aspects of the internal environment. Effective management processes
will vary in different situations depending on the individuals and groups in the organization, the
nature of the job and technology, the environment facing the organization and its structure. A
manager's task therefore, is to identify which method will, in a particular situation, under
particular circumstances and at a particular time, best contribute to the attainment of
organization’s goals. Thus, the manager will have to analyze each situation prior to action and
different managerial practices and styles are needed for effective management.
c) Productivity approach

Productivity means the numerical value of the ratio of output to input. Higher the value of this
ratio, greater is the efficiency and effectiveness of the management. The traditional concept of
productivity was concerned with economic inputs and output only. But nowadays human and
social inputs and outputs are equally important. Productivity, a significant part of organizational
behavior decisions, is recognized and discussed extensively. These decisions relate to human,
social and economic issues. For example if better organizational behavior can reduce worker’s
turnover or the number of absentees, a human output or benefit occurs.

d) System approach

The systems approach is of the view that an organization is a powerful system with several
subsystems which are highly and closely interconnected. Any action taken to solve the problems
in one subsystem will have its effect on the other subsystems as well; since all the parts of the
organization are closely connected. Thus, this approach gives the managers a way of looking at
the organization as a whole, whole group, and the whole social system. According to this
approach, an organization receives several inputs from its environment such as material, human
and financial. These inputs are then processed so as to produce the final output in terms of
products or services.

2) Characteristics

-multidisciplinary: Though OB concerns with the study of human behavior within organization,
the area of study of OB is developed from different traditional disciplines like psychology,
sociology, anthropology, political science, economics, industrial engineering and some emerging
disciplines such as communication, information system, women's studies and machine etc. This
covers such diverse areas to understand the individual behavior in a group. The concepts like
learning, perception, attitude, motivation, etc. are borrowed from psychology, sociology and
anthropology. Thus organizational behavior is multidisciplinary in nature.

-goal-oriented: OB is goal-oriented and action oriented discipline. Main concern of OB is to

obtain the organizational goals with fulfilling individual goals of employees concerning the
organization.

-multi-level study: OB is studied in different levels. It concerns individual level, group level and
organizational level. OB investigates the influence of each level in the overall organizational
effectiveness.

-situational: OB is situational. It is a very dynamic discipline. OB studies human behavior under

a variety of situations. Every organization needs to operate in a dynamic environment. Changes
in the political, legal, economic, socio-cultural and technological environment make the decision
making and implementation more complex and challenging. By studying OB, we can predict the
future behavior and control deviant behaviors. For this, new issues and concepts need to be
addressed in organization. This makes the OB also situational

-systematic and scientific: OB is the systematic study and it concerns with causes and effects
relationship. Conclusions are drawn with evidence but not in intuitions of the managers. It
completely follows system. Similarly, the study of OB follows scientific tools, techniques and
decision making criteria.

-normative science: Organizational behavior is a normative science as it prescribes various

findings of researches to apply to get organizational results acceptable to the society. OB, thus,
concerns with values of the society and people concerned.

-dynamic: Organizational behavior is dynamic as it concerns with changing behavior of

individual. Group norms, values and interests are the matter of change which are directly or
indirectly influence the individual behavior. In another way, OB tries to change the behavior of
individual to make them socially acceptable. Its essence is reflected in change in behavior of
individuals in organization.

3) Goals

The main objective of organizational behavior is to understand the human interactions in an

organization, find what is driving it, and influence it for getting better results in attaining business
goals. The organizations in which people work have an effect on their thoughts, feelings, and
actions. These thoughts, feelings, and actions, in turn, affect the organization itself. Organization
behavior’s objective is to set up an organizational culture, hiring best people and creating
meaningful connections among them, resolving the conflicts, developing the qualities of the
employees, and establish firm and clear leadership chain. The four major goals of organizational
behavior are:
-To describe: The first objective is to describe how people behave under various conditions.
-To understand: The second goal of organizational behavior is to understand why people behave
as they do. Managers have to understand the reasons behind a particular action.
-To predict: Predicting future behavior of employee is another goal of organizational behavior.
Usually, managers would have the capacity to predict why the employees are committed to the
organization or not.
-To control: The final goal of organizational behavior is to control and develop a friendly
atmosphere for the organization. Since managers are responsible for the overall performance of
an organization, they must develop workers’ teamwork, skill and commitment. Managers should
take necessary action for themselves.

Apart from these, several other goals/objectives have been specified, including:

-Job Satisfaction: Understanding organizational behavior can shed light on the factors that can
foster or hamper job satisfaction, such as physical settings, organizational rewards and
punishments or work-group characteristics. Job satisfaction, in turn, can foster higher
productivity and reduced turnover, while providing more leverage for the recruitment of top
talent.

-Finding the Right People: Organizational behavior can be helpful for finding the right mix of
talents and working styles required for achievement of the task at hand. This can assist in
deciding who to include in a team or task force, as well as in deciding who to promote to a
leadership position or even the ideal profile for new hires.

-Organizational Culture: As organizations grow larger, it may become difficult to keep a sense
of common purpose and unity of direction. Organizational behavior is useful for understanding
and designing the communication channels and leadership structures that can reinforce
organizational culture. As rapidly evolving business environments force organizations to adapt,
entering, for example, into global markets or utilizing virtual workforce, organizational behavior
can assist in maintaining a clear identity without losing flexibility and adaptability

-Leadership and Conflict Resolution: Playing by the book and not making waves may be fine
for some organizations, but the command-and-control mentality of the manufacturing age may
become counterproductive in the knowledge market. Organizational behavior can assist in
fostering leadership, pro-activity and creative problem-solving. When creativity is allowed, the
divergence of opinions is unavoidable; but- organizational behavior can provide the leadership
and the arbitrage dynamics required for turning conflicts into constructive idea exchanges

-Understanding the Employees Better: Organizational behavior studies help us understand

why employees behave the way they do, and also thereby predict how they are going to behave in
the future.

-Understand how to Develop Good Leaders: Organizational behavior patterns help in

predicting who among the employees have the potential to become leaders. They also teach us
how to mold these employees so that their leadership potential is utilized to its fullest.

-Develop a Good Team: An organization is only as good as the weakest member of its team. It
is essential that all members of the team work in coordination and are motivated to work together
to achieve the best results. The teamwork theories of organizational behavior are an essential tool
in the hands of any manager

-Higher Productivity: All of this leads us to the most important goal of achieving the highest
productivity in realizing the visions and goals of any organization. If implemented well, the
organizational behavior principles help in motivating all the members to do their best. The levels
of motivation can be the difference between a good and a bad result.
4) Models
Autocratic Custodial Supportive Collegial

Basis of model Power Economic Leadership Partnership

resources

Managerial Authority Money Support Teamwork

orientation

Employee Obedience Security and Job performance Responsible

orientation benefits behavior

Employee Dependence Dependence Participation Self-discipline

psychological result on boss on
organization

Employee needs met Subsistence Security Status and Self-actualization

recognition

Performance result Minimum Passive Awakened drives Moderate

cooperation enthusiasm

Models of organizational behavior are frameworks of possible explanations about how things
work. They constitute the belief system that dominates management’s thoughts and affects its
actions in each organization. The model a manager hold usually begins with an assumption about
people, and leads to certain interpretations, implications, and even prediction of events.
Underlying paradigms become powerful guides to managerial behavior. The selection of a model
depends on a number of factors, such as prevailing philosophy vision, goals, environmental
conditions, etc.

a) Autocratic model

The model depends on power. Those who are in command must have the power to demand. In an
autocratic environment the managerial orientation is formal and official. This authority is
delegated by right of command over people to whom it applies. Management does the thinking,
employees obey the orders. The employee orientation is obedience to a boss. The psychological
result of employees is a dependence on the boss, whose power to hire/fire/perspire them is almost
absolute. The boss pays minimum wages because minimum performance is given by employees.
This model is a useful way to accomplish work, and hence it isn’t a complete failure. Its principal
weakness is its high human cost.

b) Custodial model

Managers soon realized that employees were filled with insecurity, frustrations, and aggression
towards the bosses. To satisfy the security needs, a number of companies began welfare programs
in the 1890s and 1900s. These programs later came to be known as paternalism. In the 1930s
they were evolved into a variety of fringe benefits. A successful custodial approach depends on
economic resources. If an organization doesn’t have the wealth to provide extra benefits, it can’t
follow this model. The approach also leads to employee dependence on the organization.
Employees depend on the organization for their security and welfare. They end up becoming
psychologically preoccupied with these benefits that the organization provides. While they are
well maintained, happy and contended, they aren’t strongly motivated, so they may only give
passive cooperation. As a result, they don’t produce much more vigorously than under the old
autocratic approach.

c) Supportive model

This model depends on leadership instead of power and money. Through leadership,
management provides a climate to help employees grow and accomplish, in the interests of the
organization, the things which they are capable of. The management’s orientation is to support
the employee’s job performance, rather than to simply support employee benefits. The
psychological result is a feeling of participation and task involvement in the organization. The
model works well with both employees and managers, and has been widely adopted. The model
is especially effective in affluent nations as it awakens employee drives toward a wide array of
needs.
d) Collegial model

This is a useful extension of the supportive model. The term collegial relates to a body of people
of having a common purpose. It depends on management’s building a feeling of partnership with
employees. The result is that employees feel needed and useful. They feel that the managers are
also contributing, so it is easy to accept and respect their roles in the organization. Here,
management is the coach that builds a better team. The model tends to produce improved results
in situation where it is appropriate.

The models, in practice, are subject to evolutionary change, they are a function of prevailing
employee needs, there is always a trend toward newer models, and any of the models can be
successfully applied in some situations. In addition, the models can be modified and extended in
a variety of ways.

e) Robbins’s model of organizational behavior

Apart from the aforementioned models, a three-step model has been proposed by Robbins et al.
(2013). It proposes three types of variables (inputs, processes, and outcomes) at three levels of
analysis (individual, group, and organizational). The model proceeds from left to right, with
inputs leading to processes and processes leading to outcomes. Notice that the model also shows
that outcomes can influence inputs in the future.
Inputs are the variables like personality, group structure, and organizational culture that lead to
processes. These variables set the stage for what will occur in an organization later. Many are
determined in advance of the employment relationship. If inputs are like the nouns in
organizational behavior, processes are like verbs. Processes are actions that individuals, groups,
and organizations engage in as a result of inputs and that lead to certain outcomes. Outcomes are
the key variables that you want to explain or predict, and that are affected by some other
variables. In a way, the outcomes could be referred to as the “goals of organizational behavior”.

5) Scope
Like psychology in general, organizational psychology is a diversified science containing several
subspecialties. The professional activities are classified into 6 broad general fields.

-selection and placement: organizational psychologists working in this area are concerned with
developing assessment methods for the selection, placement, and promotion of employees. They
are involved in studying jobs and determining to what degree tests can predict performance in
those jobs. They’re also concerned with placement, which is directed towards identifying those
jobs that are compatible with the individual.

-training and development: this field is concerned with the identification of employee skills that
need to be enhanced to improve job performance. The areas of training include technical
skills enhancement, managerial development programs, and training of all employees to work
together effectively. Organizational psychologists who work in this field must design ways to
determine whether training and development programs have been successful.

-performance management: This is the process of identifying criteria or standards for

determining how well employees are performing their jobs. Organizational psychologists
working in this field are also concerned with determining the utility or value of job performance
to the organization. They may be involved with measuring the performance of work teams, units
within the organization, or the organization itself.

-organization development: This is the process of analyzing the structure of an organization to

maximize the satisfaction and effectiveness of individuals, work groups, and customers.
Organizations grow and mature just as people do; thus the field of organization development is
directed towards facilitating the organization growth. Organizational psychologists working in
this field are sensitized to the wide array of factors that influence behavior in organizations.

-quality of work life: Organizational psychologists working in this field are concerned with
factors that contribute to a healthy and productive workforce. They may be involved in
redesigning jobs to make them more satisfying and meaningful to the people who perform them.
A high quality worklife contributes to greater productivity of the organization and to the
emotional health of the individual.

-ergonomics: Ergonomics is a multidisciplinary filed that includes organizational psychologists.

It is concerned with designing tools, equipment, and machines that are compatible with human
skills. Organizational psychologists working in this field draw upon knowledge derived from
physiology, industrial medicine, and perception to design work systems that humans can
effectively operate.

In summary, organizational psychology has many subspecialties. Although some of these

overlap, many are quite distinct from each other. Thus, organizational psychology isn’t a single
discipline; it is a mix of subspecialties bonded together by a concern for people at work.

II) HISTORICAL DEVELOPMENTS

Considering that the field of psychology itself has been around for only a relatively short time, it
is not surprising that I/O psychology has a correspondingly short history. Although various
experts disagree about the precise beginning of I/O psychology, it is generally thought to have
started either in 1903 when Walter Dill Scott wrote The Theory of Advertising, in which
psychology was first applied to business; in 1910 when Hugo Munsterberg wrote Psychology and
Industrial Efficiency; or in 1911 when Scott wrote the book Increasing Human Efficiency in
Business (Koppes & Pickren, 2007). Regardless of the official starting date, I/O psychology was
born in the early 1900s.

1) Scientific approach
Ironically, the beginnings of the organizational side of the field can also largely be traced to the
work of several non-psychologists. Perhaps the best known of these was Frederick Winslow
Taylor, who developed the principles of scientific management (Taylor, 1911). Although the term
scientific management typically conjures up images of time-and-motion study, as well as
piece-rate compensation, it was actually much more than that. Scientific management was, to a
large extent, a philosophy of management, and efficiency and piece-rate compensation were the
most visible manifestations of that philosophy. However, Scientific Management came under fire,
primarily due to the charge that it was inhumane to workers.

3) Classical organizational theory

Another early non-psychologist who contributed greatly to the development of organizational

psychology was Max Weber. Weber is best known for his development of the notion of
“bureaucracy” as an organizing principle. The basic idea of bureaucracy is that organizations
should be designed so that employees know exactly what they are supposed to be doing, and the
lines of authority are clearly stated. Another major principle of bureaucracy was that
advancement and rewards should be based on merit and not on things such as nepotism.

4) HR movement and Hawthorne studies

In the 1930s, I/O psychology greatly expanded its scope. Until then, it had been involved
primarily in personnel issues such as the selection and placement of employees. However, in the
1930s, when the findings from the famous Hawthorne studies were published, psychologists
became more involved in the quality of the work environment, as well as the attitudes of
employees. Industrial psychology underwent a sea change when Elton Mayo, a psychologist
from Australia, arrived in the United States in 1924 (Griffin, Landy, & Mayocchi, 2002) and
immediately began studying not the efficiency of workers, but their emotions. He was particularly
interested in the possibility that work “caused” workers to act in pathological ways. When Mayo
was given a faculty appointment at Harvard in 1926 (Trahair, 1984), research was being done at
the Hawthorne, Illinois, plant of the Western Electric Corporation. These studies, now classics,
are known collectively as the Hawthorne studies. The research had begun as simple attempts to
increase productivity by manipulating lighting, rest breaks, and work hours (Roethlisberger &
Dickson, 1939). But the results of the experiments were puzzling. Sometimes, when conditions
were actually made worse (e.g., lighting was reduced), production improved; when conditions
were made better (e.g., lighting was enhanced), production sometimes dropped. Mayo suggested
the workers be interviewed to see what was going on. This led to the rather dramatic discovery
that workers’ attitudes actually played a role in productivity. In the context of the Hawthorne
experiments, the very fact that someone was finally paying
attention to the workers seemed to have affected behavior. This has become known as the
“Hawthorne effect”. The results of these studies ushered in a radically new movement known as
the Human Relations Movement. Researchers in this movement were interested in more
complicated theories of motivation, as well as in the newly discovered emotional world of the
worker. Studies of job satisfaction became more common.

5) 1950s-1990s

It was after World War II that industrial/organizational psychology truly began to blossom and
specialty areas began to emerge. A distinct focus on personnel issues, such as testing, selection,
and the evaluation of employees, was helped in part by the publication of a new journal,
Personnel Psychology, in 1948. During the Cold War years of the 1950s and 1960s, the growth
of the defense industry further spurred the development of a specialty area called engineering
psychology. The 1960s through the early 1990s was a time when research and practice in I/O
psychology flourished. Many of the topics currently associated with I/O psychology were
developed and explored in depth during this period, particularly topics such as motivation and
goal setting, job attitudes, organizational stress, group processes, organizational power and
politics, and organizational development.
The 1960s were characterized by the passage of several major pieces of civil rights legislation.
These laws focused the attention of HR professionals on developing fair selection techniques. As
a result, the need for I/O psychologists greatly increased. The 1960s were also characterized by
the use of sensitivity training and T-groups for managers (Carson, Lanier, Carson, & Guidry,
2000).
The 1970s brought great strides in the understanding of many organizational psychology issues
that involved employee satisfaction and motivation. The decade also saw the development of
many theories about employee behavior in organizations. B. F. Skinner’s (1971) Beyond
Freedom and Dignity resulted in the increased use of behavior-modification techniques in
organizations.
The 1980s and 1990s brought four major changes to I/O psychology. The first involved an
increased use of fairly sophisticated statistical techniques and methods of analysis. A second
change concerned a new interest in the application of cognitive psychology to industry. For
example, articles written about performance appraisal in the 1970s primarily described and tested
new methods for evaluating employee performance. In the 1980s and early 1990s, however,
many articles approached the performance appraisal issue by examining the thought process used
by managers when they conduct such appraisals. The third change was the increased interest in
the effects of work on family life and leisure activities (McCarthy, 1998). The final major
change in the 1980s and 1990s came about when I/O psychologists took a renewed interest in
developing methods to select employees.
In 1986, there were 23 I-O master’s degree programs in the United States; in 2008, there were at
least 75; in 2012, there were over 100. In 1986, there were 44 I-O PhD degree programs in the
United States; in 2008, there were at least 65; in 2012, there were over 70.

6) 21st C
In the 2000s, perhaps the greatest influence on I/O psychology is the rapid advances in
technology. Many tests and surveys are now administered on the Internet, employers recruit and
screen applicants online; job seekers use such social media outlets as Twitter, LinkedIn, and
Facebook to find jobs; employees are being trained using e-learning and distance education; and
managers are holding meetings in cyberspace rather than in person.
Another important factor impacting I/O psychology is the changing demographic makeup of the
workforce. Women are increasingly entering the workforce and taking on managerial roles;
Hispanics and Latinos are now the largest minority group in the United States; Asian Americans
are the fastest-growing segment of the U.S. population; and an increasing number of workers,
vendors, and customers have English as their second language. Thus, diversity issues will
continue to be an important factor in the workplace.
The global economy is also affecting the role of I/O psychology. As many manufacturing jobs
 are shifted to developing countries with lower wages, there will be an increased emphasis on
service jobs requiring human relations skills. As an increasing number of employees work in
other countries (as expatriates) and as rates of immigration (both legal and illegal) increase,
efforts must be made for understanding various cultures, and training must be conducted so that
employees and managers can successfully work not only in other countries, but at home with
expatriates from other countries.
Other factors that are currently impacting I/O psychology include high unemployment rates,
movements toward flexible work schedules, family-friendly work policies, accommodation of an
increasing number of employees with child-care and elder-care responsibilities, flatter
organizational structures with fewer management levels, population shifts from urban to
suburban locations, and increasing costs of health-care benefits. In addition, potential changes in
the retirement age for Social Security may result in employees working into their late sixties.

III) INDUSTRIAL PSYCHOLOGY

Industrial psychology refers to the applied organizational psychology used to study, analyze and
understand human behavior in the workplace, mainly how business works and how employees
function. Industrial psychology uses a range of scientific methods, including quantitative and
qualitative research. An industrial psychologist contributes by improving the workplaces,
satisfaction and motivation levels of the employees, and helping the overall productivity of the
organization. There is research done, after which suggestions, additions and improvements are
made to various aspects like the feedback procedures, training of employees, job designs, team
performances, organizational research, employee policies, recruitment policy etc.

1) Organizational psychology v/s industrial psychology

Parameter Organizational Psychology Industrial Psychology

Meaning This refers to areas that focus on Industrial psychology uses
maximizing organizational psychometrics, statistics and other
performance. Those working with quantitative tools to design impartial
organizational psychology typically and unbiased hiring systems for
focus on interpersonal relationships at employees, such as tests that measure
work, the role of individual differences skills required for certain jobs. Job
as they influence organizations, group analysis and design, performance
and team dynamics, leadership, management, safety, and training all
organizational development and fall under the industrial umbrella.
change. It addresses the emotional and Industrial psychology is also known
motivational side of work. It includes as personnel psychology. Personnel
topics such as attitudes, fairness, psychology addresses issues such as
motivation, stress, leadership, teams, recruitment, selection, training,
and the broader aspects of

organizational and work design. In performance appraisal, promotion,

some senses, it concentrates on the transfer, and termination. The
reactions of people to work and the approach assumes that people are
action plans that develop as a result of consistently different in their
those reactions. Both work and people attributes and work behaviors and
are variables of interest, and the issue that information about these
is the extent to which characteristics of differences can be used to predict,
the people match the characteristics or maintain, and increase work
demands of the work. Of course, performance and satisfaction
organizational psychology has
implications for performance, but they
may not be as direct as is the case with
personnel psychology.
Activities Recruitment, selection, classification, Socialization, motivation, leadership,
compensation, performance appraisal, occupational stress, group
training. performance, organizational
development.

2) Organizational behavior v/s human resource management

Parameter OB HRM

Meaning Organizational behavior is the basis of According to Flippo (2007), “Human

human resource management and Resource /Personnel Management
development. The former is concept may be defined as the planning,
oriented whereas the latter is concerned organising, directing, and controlling
with the technology of human of the procurement, development,
development. The variables influencing compensation, integration and
human development are scientifically maintenance and separation of human
studied under organizational behavior. resources to the end that individual,
organizational and societal objectives
are accomplished.” Human resource
management, is activated, directed
and

channelized by the application of the

knowledge of organizational behavior
which has become a field of study,
research and application for the
development of human resources and
the organization as a whole
Emphasis Organizational Behavior studies human Human Resource Management
behavior in social settings with an emphasizes human resource systems,
emphasis on explaining, predicting, and design and implementation of various
understanding behavior in personnel tests, collection and
organizations. Empirical validation of employee demographic
generalizations data, job classification techniques,
and theories emanating from the examination of psychometric
cognitive and reinforcement paradigms requirements in compensation
and models of social influence are programming, training impact
examined as the basis for analysis and analysis, and issues in performance
understanding of topics such as appraisal systems.
motivation, leadership behavior, task
performance, problem solving and
decision making, group functioning,
and other classes of behavior relevant
to organizational effectiveness.

IV) CHALLENGES OF MODERN DAY ORGANIZATIONS

Understanding organizational behavior has never been more important for managers. Take a
quick look at the dramatic changes in organizations. The typical employee is getting older; more
women and people of color are in the workplace; corporate downsizing and the heavy use of
temporary workers are severing the bonds of loyalty that tied many employees to their
employers; and global competition requires employees to become more flexible and cope with
rapid change. The global recession has brought to the forefront the challenges of working with
and managing people during uncertain times. In short, today’s challenges bring opportunities for
managers to use OB concepts..

a) Responding to economic pressures

When the U.S. economy plunged into a deep and prolonged recession in 2008, virtually all other
large economies around the world followed suit. Layoffs and job losses were widespread, and
those who survived the ax were often asked to accept pay cuts. During difficult economic times,
effective management is often at a premium. Anybody can run a company when business is
booming because the difference between good and bad management reflects the difference
between making a lot of money and making a lot more money. When times are bad, though,
managers are on the front lines with employees who must be fired, who are asked to make do
with less, and who worry about their futures. The difference between good and bad management
can be the difference between profit and loss or, ultimately, between survival and failure.
Managing employees well when times are tough is just as hard as when times are good—if not
more so. But the OB approaches sometimes differ. In good times, understanding how to reward,
satisfy, and retain employees is at a premium. In bad times, issues like stress, decision making,
and coping come to the fore.

b) Responding to globalization

Organizations are no longer constrained by national borders. Burger King is owned by a British
firm, and McDonald’s sells hamburgers in more than 100 countries in six continents.
ExxonMobil, a so-called U.S. company, reported that less than 6 percent of their 2011 earnings
were from gas and products sales in the United States. New employees at Finland-based phone
maker Nokia are increasingly being recruited from India, China, and other developing
countries—non-Finns now outnumber Finns at their renowned research center in Helsinki. And
all major automobile makers now manufacture cars outside their borders: Honda builds cars in
Ohio, Ford in Brazil, Volkswagen in Mexico, and both Mercedes and BMW in South Africa. The
world has become a global village. In the process, the manager’s job has changed.
c) Increased foreign assignments

A manager is likely to find himself in a foreign assignment—transferred to his employer’s

operating division or subsidiary in another country. Once there, he’ll have to manage a workforce
very different in needs, aspirations, and attitudes from those he is used to back home.

d) Working with people from different cultures

Even in one’s own country, a person will find himself/herself working with bosses, peers, and
other employees born and raised in different cultures. What motivates person A may not motivate
others; or the communication style may be straightforward and open, which others may find
uncomfortable and threatening. To work effectively with people from different cultures, one
needs to understand how their culture, geography, and religion have shaped them and how to
adapt the management style to their differences.

e) Overseeing movement of jobs to countries with low-cost labor

It’s increasingly difficult for managers in advanced nations, where minimum wages are typically
$6 or more an hour, to compete against firms that rely on workers from China and other
developing nations where labor is available for 30 cents an hour. It’s not by chance that many
people in the United States wear clothes made in China; work on computers whose microchips
came from Taiwan, and watch movies filmed in Canada. In a global economy, jobs tend to flow
where lower costs give businesses a comparative advantage, though labor groups, politicians, and
local community leaders see exporting jobs as undermining the job market at home. Managers
face the difficult task of balancing the interests of their organizations with their responsibilities to
the communities in which they operate.

f) Managing workforce diversity

One of the most important challenges for organizations is workforce diversity, the concept that
organizations are becoming more heterogeneous in terms of gender, age, race, ethnicity, sexual
orientation, and inclusion of other diverse groups. Whereas globalization focuses on differences
among people from different countries, workforce diversity addresses differences among people
within countries. Workforce diversity acknowledges a workforce of women and men; many racial
and ethnic groups; individuals with a variety of physical or psychological abilities; and
people who differ in age and sexual orientation. Managing this diversity is a global concern. For
example, most European countries have experienced dramatic growth in immigration from the
Middle East. Argentina and Venezuela host a significant number of migrants from other South
American countries, and nations from India to Iraq to Indonesia find great cultural diversity
within their borders. Employers need to ensure diversity issues are addressed in their
organizations, including:
Gender: nearly half of the U.S. workforce is now made up of women, and women are a growing
percentage of the workforce in most countries throughout the world. Organizations need to
ensure that hiring and employment policies create equal access and opportunities to individuals,
regardless of gender.

Race: the percentage of Hispanics, blacks, and Asians in the U.S. workforce continues to
increase. Organizations need to ensure that policies provide equal access and opportunities,
regardless of race.

Nationality: a growing percentage of U.S. workers are immigrants or come from homes where
English is not the primary language spoken. Because employers in the United States have the
right to demand that English be spoken at the workplace during job-related activities,
communication problems can occur when employees’ English-language skills are weak.

Age: U.S. workforce is aging, and recent polls indicate that an increasing percentage of
employees expect to work past the traditional retirement age of 65. Organizations cannot
discriminate on the basis of age and need to make accommodations for the needs of older
workers.

Disability: organizations need to ensure that jobs and workplaces are accessible to the mentally,
physically, and health challenged.

Domestic partners: an increasing number of gay and lesbian employees, as well as employees
with live-in partners of the opposite sex are demanding the same rights and benefits for their
partners that organizations have provided for traditional married couples.

Religion: organizations need to be sensitive to the customs, rituals, and holidays, as well as the
appearance and attire, of individuals of non-Christian faiths such as Judaism, Islam, Hinduism,
Buddhism, and Sikhism, and ensure that these individuals suffer no adverse impact as a result of
their appearance or practices.
g) Improving people skills

Relevant OB concepts and theories can help you explain and predict the behavior of people at
work. You’ll also gain insights into specific people skills that you can use on the job. For
instance, you’ll learn ways to design motivating jobs, techniques for improving your listening
skills, and how to create more effective teams.

h) Stimulating innovation and change

Whatever happened to Montgomery Ward, Woolworth, Smith Corona, TWA, Bethlehem Steel,
and WorldCom? All these giants went bust. Why have other giants, such as General Motors,
Sears, Boeing, and Lucent Technologies, implemented huge cost-cutting programs and
eliminated thousands of jobs? The answer is to avoid going broke. Today’s successful
organizations must foster innovation and master the art of change, or they’ll become candidates
for extinction. Victory will go to the organizations that maintain their flexibility, continually
improve their quality, and beat their competition to the marketplace with a constant stream of
innovative products and services. Domino’s single-handedly brought on the demise of small
pizza parlors whose managers thought they could continue doing what they had been doing for
years. [Link] is putting a lot of independent bookstores out of business as it proves you
can successfully sell books (and most anything else) from a website. After years of lackluster
performance, Boeing realized it needed to change its business model. The result was its 787
Dreamliner and a return to being the world’s largest airplane manufacturer. An organization’s
employees can be the impetus for innovation and change, or they can be a major stumbling block.
The challenge for managers is to stimulate their employees’ creativity and tolerance for change.
The field of OB provides a wealth of ideas and techniques to aid in realizing these goals.

i) Coping with temporariness

Globalization, expanded capacity, and advances in technology have required organizations to be

fast and flexible if they are to survive. The result is that most managers and employees today
work in a climate best characterized as “temporary.” Workers must continually update their
knowledge and skills to perform new job requirements. Production employees at companies such
as Caterpillar, Ford, and Alcoa need to keep up with changes in CAD/CAM equipment. That was
not part of their job descriptions 20 years ago. In the past, employees were assigned to a specific
work group, gaining a considerable amount of security working with the same people day in, day
out. That predictability has been replaced by temporary work groups, with members from
different departments, and the increased use of employee rotation to fill constantly changing
work assignments. Finally, organizations are in a state of flux. They continually reorganize their
various divisions, sell off poorly performing businesses, downsize operations, subcontract
noncritical services and operations to other organizations, and replace permanent employees with
temporary workers. Today’s managers and employees must learn to cope with temporariness,
flexibility, spontaneity, and unpredictability. The study of OB can help us better understand a
work world of continual change, overcome resistance to change, and create an organizational
culture that thrives on change.

j) Working in networked organizations

Networked organizations allow people to communicate and work together even though they may
be thousands of miles apart. Independent contractors can telecommute via computer to
workplaces around the globe and change employers as the demand for their services changes.
Software programmers, graphic designers, systems analysts, technical writers, photo researchers,
book and media editors, and medical transcribers are just a few examples of people who can
work from home or other non-office locations. The manager’s job is different in a networked
organization. Motivating and leading people and making collaborative decisions online require
different techniques than when individuals are physically present in a single location. As more
employees do their jobs by linking to others through networks, managers must develop new
skills. OB can provide valuable insights to help with honing those skills.

k) Helping employees balance work-life conflicts

The typical employee in the 1960s or 1970s showed up at a specified workplace Monday through
Friday and worked for clearly defined 8- or 9-hour chunks of time. That’s no longer true for a
large segment of today’s workforce. Employees are increasingly complaining that the line
between work and non-work time has become blurred, creating personal conflicts and stress.9 At
the same time, today’s workplace presents opportunities for workers to create and structure their
own roles. How do work–life conflicts come about? First, the creation of global organizations
means the world never sleeps. Many employees of global firms are “on call” 24 hours a day
because they need to consult with colleagues or customers 8 or 10 time zones away. Second,
communication technology allows many technical and professional employees to do their work
at home, in their cars, or on the beach in Tahiti—but it also means many feel like they never
really get away from the office. Third, organizations are asking employees to put in longer hours.
Over a recent 10-year period, the average U.S. workweek increased from 43 to 47 hours; and the
number of people working 50 or more hours a week jumped from 24 to 37 percent. Finally, the
rise of the dual-career couples makes it difficult for married employees to find time to fulfill
commitments to home, spouse, children, parents, and friends. Millions of single-parent
households and employees with dependent parents have even more significant challenges in
balancing work and family responsibilities. Employees increasingly recognize that work
infringes on their personal lives, and they’re not happy about it. Recent studies suggest
employees want jobs that give them flexibility in their work schedules so they can better manage
work–life conflicts. In fact, balancing work and life demands now surpasses job security as an
employee priority. The next generation of employees is likely to show similar concerns. Most
college and university students say attaining a balance between personal life and work is a
primary career goal; they want “a life” as well as a job. Organizations that don’t help their people
achieve work–life balance will find it increasingly difficult to attract and retain the most capable
and motivated employees.

l) Improving ethical behavior

In an organizational world characterized by cutbacks, expectations of increasing productivity,

and tough competition, it’s not surprising many employees feel pressured to cut corners, break
rules, and engage in other questionable practices. Increasingly they face ethical dilemmas and
ethical choices, in which they are required to identify right and wrong conduct. What constitutes
good ethical behavior has never been clearly defined, and, in recent years, the line differentiating
right from wrong has blurred. Employees see people all around them engaging in unethical
practices— elected officials pad expense accounts or take bribes; corporate executives inflate
profits so they can cash in lucrative stock options; and university administrators look the other
way when winning coaches encourage scholarship athletes to take easy courses. When caught,
these people give excuses such as “Everyone does it” or “You have to seize every advantage
nowadays.” Determining the ethically correct way to behave is especially difficult in a global
economy because different cultures have different perspectives on certain ethical issues. Fair
treatment of employees in an economic downturn varies considerably across cultures, for
instance. Is it any wonder employees are expressing decreased confidence in management and
increasing uncertainty about what is appropriate ethical behavior in their organizations? Today’s
manager must create an ethically healthy climate for their employees, where they can do their
work productively with minimal ambiguity about right versus wrong behaviors. Companies that
promote a strong ethical mission, encourage employees to behave with integrity, and provide
strong leadership can influence employee decisions to behave ethically.

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Muchinsky, P. M. (2000). Psychology Applied to Work (6th ed.). Australia: Wadsworth- Thomas
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Riggio, R. E. (2018). Introduction to Industrial/Organizational Psychology (7th ed.). London:

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