UNIT- II: THE INDIVIDUAL IN ORGANIZATION

Foundations of Individual behaviour. Attitudes and Job satisfaction. Personality and

values. Perception and individual decision making. Motivation concepts and applications.

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Foundations of Individual behaviour

People in organizations

To understand the behavior of people in organizations, we first examine the basic nature
of the individual-organization relationship. Understanding this relationship helps us appreciate
the nature of individual differences. These differences play a critical role in determining various
important workplace behaviors of special relevance to managers.

Draw the figure in page No. 64 (figure. 3.1)

Psychological Contracts

A psychological contract resembles a standard legal contract in some ways, but it is less
formal and less well defined. A psychological contract is a person’s set of expectations regarding
what he or she will contribute to an organization and what the organization, in return, will
provide to the individual. Unlike any other kind of business contract, a psychological contract is
not written on paper, nor are all of its terms explicitly negotiated.

The above mentioned figure illustrates the essential nature of a psychological contract.
The individual makes a variety of contributions to the organization. An individual’s
contributions to an organization include such things as effort, skills, ability, time, and loyalty. In
return for these contributions, the organization provides inducements to the individual.
Organizations provide inducements to individuals in the form of tangible and intangible rewards.

All organizations face the basic challenge of managing psychological contracts. They
want value from their employees, and they need to give employees the right inducements. For
instance, underpaid employees may perform poorly or leave for better jobs elsewhere. An
employee may even occasionally start to steal organizational resources as a way to balance the
psychological contract. Overpaying employees who contribute little to the organization, though,
incurs unnecessary costs. Many organizations used to offer at least reasonable assurances of job
permanence as a fundamental inducement to employees. Now, however, job permanence is less
likely, so alternative inducements may be needed. Among the new forms of inducements that
some companies are providing are additional training opportunities and increased flexibility in
working schedules. Increased globalization of business also complicates the management of
psychological contracts.

The Person-Job Fit

One specific aspect of managing psychological contracts is management of the person job
fit. Person-job fit is the extent to which the contributions made by the individual match the
inducements offered by the organization. Each employee has a specific set of needs to be
fulfilled and a set of job-related behaviors and abilities to contribute. If the organization can take
perfect advantage of those behaviors and abilities and exactly fulfill the employee’s needs, it will
have achieved a perfect person-job fit.

Attitudes and Job satisfaction

Attitudes in organizations

People’s attitudes also affect their behavior in organizations. Attitudes are a person’s
complexes of beliefs and feelings about specific ideas, situations, or other people. Attitudes are
formed by a variety of forces, including our personal values, our experiences, and our
personalities. For example, if we value honesty and integrity, we may form especially favorable
attitudes toward a manager whom we believe to be very honest and moral. Similarly, if we have
had negative and unpleasant experiences with a particular coworker, we may form an
unfavorable attitude toward that person. Understanding the basic structure of an attitude helps us
see how attitudes are formed and can be changed.

Attitude Structure

Attitudes are usually viewed as stable dispositions to behave toward objects in a certain
way. In this view, attitudes contain three components: cognition, affect, and intention.
 A person’s cognitions constitute the knowledge a person presumes to have about
something. Cognitions are based on perceptions of truth and reality, and, as we note later,
perceptions agree with reality to varying degrees.

A person’s affect is his or her feelings toward something. An intention is a component of

an attitude that guides a person’s behavior.

Attitude formation

Attitudes are generally formed around a sequence of cognition, affect, and behavioral
intention. That is, we come to know something that we believe to be true (cognition).

This knowledge triggers a feeling (affect). Cognition and affect then together influence
how we intend to behave in the future.

Draw the figure in page No. 72 (figure. 3.3)

Cognitive Dissonance

When two sets of cognitions or perceptions are contradictory or incongruent, a person

experiences a level of conflict and anxiety called cognitive dissonance. Cognitive dissonance
also occurs when people behave in a fashion that is inconsistent with their attitudes. Cognitive
dissonance is the anxiety a person experiences when simultaneously possessing two sets of
knowledge or perceptions that are contradictory or incongruent. For example, a person may
realize that smoking and overeating are dangerous yet continue to do both. Because the attitudes
and behaviors are inconsistent with each other, the person probably will experience a certain
amount of tension and discomfort and may try to reduce these feelings by changing the attitude,
altering the behavior, or perceptually distorting the circumstances.

People in an organization form attitudes about many different things. Employees are
likely to have attitudes about their salary, their promotion possibilities, their boss, employee
benefits, the food in the company cafeteria, and the color of the company softball team uniforms.
Of course, some of these attitudes are more important than others. Especially important attitudes
are job satisfaction.
 Job satisfaction is the extent to which a person is gratified or fulfilled by his or her work.
Extensive research on job satisfaction shows that personal factors such as an individual’s needs
and aspirations determine this attitude, along with group and organizational factors such as
relationships with coworkers and supervisors and working conditions, work policies, and
compensation. A satisfied employee tends to be absent less often, to make positive contributions,
and to stay with the organization. In contrast, a dissatisfied employee may be absent more often,
may experience stress that disrupts coworkers, and may be continually looking for another job.
Contrary to what a lot of managers believe, however, high levels of job satisfaction do not
necessarily lead to higher levels of productivity.

Personality and values

Personality and organizations

Personality is the relatively stable set of psychological attributes that distinguish one
person from another.

The “Big Five” Personality Traits

The “big five” personality traits are a set of fundamental traits that are especially relevant
to organizations. In recent years, researchers have identified five fundamental personality traits
that are especially relevant to organizations. These traits, are commonly called the “big five”
personality traits.

Try to remember this ACRONYM: BIG Five personality (OCEAN – Openness

Conscientiousness Extraversion Agreeableness Neuroticism).

Openness reflects a person’s rigidity of beliefs and range of interests. People with high
levels of openness are willing to listen to new ideas and to change their own ideas, beliefs, and
attitudes in response to new information. They also tend to have broad interests and to be
curious, imaginative, and creative. On the other hand, people with low levels of openness tend to
be less receptive to new ideas and less willing to change their minds. Further, they tend to have
fewer and narrower interests and to be less curious and creative. Openness may also encompass a
person’s willingness to accept change; people with high levels of openness may be more
receptive to change, whereas people with little openness may resist change.
 Conscientiousness refers to the number of goals on which a person focuses. People who
focus on relatively few goals at one time are likely to be organized, systematic, careful,
thorough, responsible, and self-disciplined. Others, however, tend to pursue a wider array of
goals, and, as a result, tend to be more disorganized, careless, and irresponsible, as well as less
thorough and self-disciplined. Research has found that more conscientious people tend to be
higher performers than less conscientious people conscientious people take their jobs seriously
and approach their jobs in a highly responsible fashion.

Extraversion reflects a person’s comfort level with relationships. Extroverts are sociable,
talkative, assertive, and open to establishing new relationships. Introverts are much less sociable,
talkative, and assertive, and more reluctant to begin new relationships.

Agreeableness refers to a person’s ability to get along with others. Agreeableness causes
some people to be gentle, cooperative, forgiving, understanding, and good-natured in their
dealings with others. But lack of it results in others’ being irritable, short-tempered,
uncooperative, and generally antagonistic toward other people. Highly agreeable people are
better at developing good working relationships with coworkers, subordinates, and higher-level
managers, whereas less agreeable people are not likely to have particularly good working
relationships. The same pattern might extend to relationships with customers, suppliers, and
other key organizational constituents.
Neuroticism. People who are relatively more neurotic tend to experience unpleasant
emotions such as anger, anxiety, depression, and feelings of vulnerability more often than do
people who are relatively less neurotic. People who are less neurotic are relatively poised, calm,
resilient, and secure; people who are more neurotic are more excitable, insecure, reactive, and
subject to extreme mood swings. People with less neuroticism might be expected to better handle
job stress, pressure, and tension.

The Myers-Briggs Framework

Another interesting approach to understanding personalities in organizations is the
Myers-Briggs framework. This framework, based on the classical work of Carl Jung,
differentiates people in terms of four general dimensions: sensing, intuiting, judging, and
perceiving. Higher and lower positions in each of the dimensions are used to classify people into
one of sixteen different personality categories. The Myers-Briggs Type Indicator (MBTI) is a
popular questionnaire that some organizations use to assess personality types. Indeed, it is among
the most popular selection instruments used today. Research suggests that the MBTI is a useful
method for determining communication styles and interaction preferences. In terms of
personality attributes
Emotional Intelligence
The concept of emotional intelligence has been identified in recent years and provides
some interesting insights into personality. Emotional intelligence, or EQ, refers to the extent to
which people are self-aware, can manage their emotions, can motivate themselves, express
empathy for others, and possess social skills. Various dimensions can be described as follows:
• Self-awareness. This is the basis for the other components. It refers to a person’s capacity for
being aware of how he or she is feeling. In general, more self-awareness allows a person to more
effectively guide his or her own life and behaviors.
• Managing emotions. This refers to a person’s capacities to balance anxiety, fear, and anger so
that they do not interfere with getting things accomplished.
• Motivating oneself. This dimension refers to a person’s ability to remain optimistic and to
continue striving in the face of setbacks, barriers, and failure.
• Empathy. Empathy refers to a person’s ability to understand how others are feeling even
without being explicitly told.
• Social skill. This refers to a person’s ability to get along with others and to establish positive
relationships.
Preliminary research suggests that people with high EQs may perform better than others,
especially in jobs that require a high degree of interpersonal interaction and that involve
influencing or directing the work of others.
Other Personality Traits at Work
Besides these complex models of personality, several other specific personality traits are
also likely to influence behavior in organizations. Among the most important are locus of
control, self-efficacy, authoritarianism, Machiavellianism, self-esteem, and risk propensity.
 A person’s locus of control is the extent to which he believes his circumstances are a
function of either his own actions or of external factors beyond his control. People who believe
that individuals are in control of their lives are said to have an internal locus of control. Other
people think that fate, chance, luck, or other people’s behavior determines are said to have
external locus of control.
A person’s self-efficacy is that person’s beliefs about his or her capabilities to perform a
task. People with high self-efficacy believe that they can perform well on a specific task,
whereas people with low self-efficacy tend to doubt their ability to perform a specific task.
Authoritarianism is the belief that power and status differences are appropriate within
hierarchical social systems such as organizations. A highly authoritarian manager may be
relatively autocratic and demanding, and highly authoritarian subordinates are more likely to
accept this behavior from their leader. On the other hand, a less authoritarian manager may allow
subordinates a bigger role in making decisions, and less authoritarian subordinates might respond
more positively to this behavior.
People who possess the personality trait of Machiavellianism behave to gain power and
control the behavior of others. Research suggests that the degree of Machiavellianism varies
from person to person. More Machiavellian individuals tend to be rational and non-emotional,
may be willing to lie to attain their personal goals, put little emphasis on loyalty and friendship,
and enjoy manipulating others’ behavior. Less Machiavellian individuals are more emotional,
less willing to lie to succeed, value loyalty and friendship highly, and get little personal pleasure
from manipulating others.
A person’s self-esteem is the extent to which that person believes he or she is a
worthwhile and deserving individual. A person with high self-esteem is more likely to seek
higher-status jobs, be more confident in his or her ability to achieve higher levels of
performance, and derive greater intrinsic satisfaction from his or her accomplishments. In
contrast, a person with less self-esteem may be more content to remain in a lower- level job, be
less confident of his or her ability, and focus more on extrinsic rewards (extrinsic rewards are
tangible and observable rewards like a paycheck, job promotion, and so forth).
A person’s risk propensity is the degree to which he or she is willing to take chances
and make risky decisions. A manager with a high risk propensity, for example, might experiment
with new ideas and gamble on new products. A manager with low risk propensity might lead an
organization to stagnation and excessive conservatism.
Perception and individual decision making
Perception in organizations
Perception is the set of processes by which an individual becomes aware of and
interprets information about the environment. Since perception plays a role in a variety of
workplace behaviors, managers should understand basic perceptual processes. As implied in our
definition, perception actually consists of several distinct processes. Moreover, in perceiving we
receive information in many guises, from spoken words to visual images of movements and
forms.
Through perceptual processes, the receiver assimilates the varied types of incoming
information for the purpose of interpreting it.

Basic Perceptual Processes

Two basic perceptual processes that is particularly relevant to managers—selective
perception and stereotyping.
Selective perception is the process of screening out information that we are
uncomfortable with or that contradicts our beliefs.
Stereotyping is the process of categorizing or labeling people on the basis of a single
attribute.
The nature of decision making
Decision making is the process of choosing from among several alternatives.
Problem solving is finding the answer to a question; it is also a form of decision making
in which the issue is unique and alternatives must be developed and evaluated without the aid of
a programmed decision rule.
Decisions made in organizations can be classified according to frequency and to
information conditions.
Types of Decisions
A programmed decision is a decision that recurs often enough for a decision rule to be
developed.
 A decision rule is a statement that tells a decision maker which alternative to choose
based on the characteristics of the decision situation.
A non-programmed decision is a decision that recurs infrequently and for which there is
no previously established decision rule.
Draw the table in page No. 211 (Table No. 8.1)

Decision-Making Conditions

Under the condition of certainty, the manager knows what the outcomes of each
alternative of a given action will be but has enough information to estimate the probabilities of
various outcomes.
Under a condition of risk, the decision maker cannot know with certainty what the
outcome of a given action will be but has enough information to estimate the probabilities of
various outcomes.
Under the condition of uncertainty, the decision maker lacks enough information to
estimate the probability of possible outcomes.
The rational approach to decision making
The rational decision making approach is a systematic, step-by step process for making
decisions.
Draw the figure in page No. 214 (figure. 8.3)

Steps in Rational Decision Making

State the Situational Goal. The rational decision-making process begins with the
statement of a situational goal—that is, a goal for a particular situation.
Identify the Problem. The purpose of problem identification is to gather information
that bears on the goal. If there is a discrepancy between the goal and the actual state, action may
be needed.
Determine the Decision Type. Next, the decision makers must determine whether the
problem represents a programmed or a non-programmed decision.
Generate Alternatives. The next step in making a non-programmed decision is to
generate alternatives.
Evaluate Alternatives. Evaluation involves assessing all possible alternatives in terms of
predetermined decision criteria. The evaluation process usually includes (1) describing the
anticipated outcomes (benefits) of each alternative, (2) evaluating the anticipated costs of each
alternative, and (3) estimating the uncertainties and risks associated with each alternative.
Choose an Alternative. Choosing an alternative is usually the most crucial step in the
decision-making process. Choosing consists of selecting the alternative with the highest possible
payoff, based on the benefits, costs, risks, and uncertainties of all alternatives.
Contingency plans are alternative actions to take if the primary course of action is
unexpectedly disrupted or rendered inappropriate.
Implement the Plan. Implementation puts the decision into action. It builds on the
commitment and motivation of those who participated in the decision-making process (and may
actually bolster individual commitment and motivation).
Control: Measure and Adjust. In the final stage of the rational decision-making
process, the outcomes of the decision are measured and compared with the desired goal. If a
discrepancy remains, the decision maker may restart the decision-making process by setting a
new goal (or reiterating the existing one). The decision maker, unsatisfied with the previous
decision, may modify the subsequent decision-making process to avoid another mistake.

Motivation concepts and applications

Motivation is vital to all organizations. Indeed, the difference between highly effective
organizations and less effective ones often lies in the motivations of their members. Thus,
managers need to understand the nature of individual motivation, especially as it applies to work
situations.
The nature of motivation
Motivation is the set of forces that leads people to behave in particular ways.
The Importance of Motivation
Job performance depends on ability and environment as well as motivation. This
relationship can be stated as follows:
P + M+ A + E
Where P = performance, M = motivation, A = ability, and E = environment:
To reach high levels of performance, an employee must want to do the job well
(motivation); must be able to do the job effectively (ability); and must have the materials,
resources, equipment, and information required to do the job (environment). A deficiency in any
one of these areas hurts performance. A manager should thus strive to ensure that all three
conditions are met.
The Motivational Framework
This framework provides a useful way to see how motivational processes occur. When
people experience a need deficiency, they seek ways to satisfy it, which results in a choice of
goal-directed behaviors. After performing the behavior, the individual experiences rewards or
punishments that affect the original need deficiency.
Draw the figure in page No. 91 (figure. 4.1)

Need-based perspectives on motivation

Need-based theories of motivation assume that need deficiencies cause behavior. The
best known need theories are the hierarchy of needs and the ERG theory.
The Hierarchy of Needs
The hierarchy of needs, developed by psychologist Abraham Maslow in the 1940s, is the
best-known need theory. Influenced by the human relations school, Maslow argued that human
beings are “wanting” animals: They have innate desires to satisfy a given set of needs. Maslow’s
hierarchy of needs theory assumes that human needs are arranged in a hierarchy of importance.
The three sets of needs at the bottom of the hierarchy are called deficiency needs because
they must be satisfied for the individual to be fundamentally comfortable. The top two sets of
needs are termed growth needs because they focus on personal growth and development.
The most basic needs in the hierarchy are physiological needs. These include the needs
for food, sex, and air. Next in the hierarchy are security needs: things that offer safety and
security, such as adequate housing and clothing and freedom from worry and anxiety.
Belongingness needs, the third level in the hierarchy, are primarily social. Examples include the
need for love and affection and the need to be accepted by peers. The fourth level, esteem needs,
actually encompasses two slightly different kinds of needs: the need for a positive self-image and
self-respect and the need to be respected by others. At the top of the hierarchy are self-
actualization needs. These involve a person’s realizing his or her full potential and becoming all
that he or she can be.
Maslow believed that each need level must be satisfied before the level above it can
become important. Thus, once physiological needs have been satisfied, their importance
diminishes, and security needs emerge as the primary sources of motivation. This escalation up
the hierarchy continues until the self-actualization needs become the primary motivators.
Draw the figure in page No. 93 (figure. 4.2)

ERG Theory
The ERG theory, developed by Yale psychologist Clayton Alderfer, is another
historically important need theory of motivation. The ERG theory describes existence,
relatedness, and growth needs. ERG theory extends and refines Maslow’s needs hierarchy
concept. Existence needs—those necessary for basic human survival—roughly correspond to the
physiological and security needs of Maslow’s hierarchy. Relatedness needs—those involving the
need to relate to others—are similar to Maslow’s belongingness and esteem needs. Finally,
growth needs are analogous to Maslow’s needs for self-esteem and self-actualization.

In contrast to Maslow’s approach, ERG theory suggests that more than one kind of
need—for example, both relatedness and growth needs—may motivate a person at the same
time. A more important difference from Maslow’s hierarchy is that ERG theory includes a
satisfaction-progression component and a frustration-regression component. The satisfaction-
progression concept suggests that after satisfying one category of needs, a person progresses to
the next level. On this point, the need hierarchy and ERG theory agree. The need hierarchy,
however, assumes that the individual remains at the next level until the needs at that level are
satisfied. In contrast, the frustration-regression component of ERG theory suggests that a person
who is frustrated by trying to satisfy a higher level of needs eventually will regress to the
preceding level.