CHAPTER ONE

AN OVERVIEW OF ORGANIZATIONAL BEHAVIOR

Before proceeding to define organizational behavior, it is better to see what organization and
behaviors are.

Organization: is a consciously coordinated social unit, made up of a group of people, who work
together on common goals on a relatively continuous basis.

Behavior: Behavior refers to what people do in the organization, how they perform, and what their
attitudes are.

WHAT IS OB?

Organizational behavior (often abbreviated as OB) is a field of study that investigates how
individuals, groups, and structure affect and is affected by behavior within organizations. 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.

Organizational behavior is: a field of study that investigates the impact of individuals, groups,
and structure on behavior within organizations for the purpose of applying such knowledge toward
improving an organization's effectiveness.

Organizational behavior is a field of study. This mean it is a distinct area of expertise with common
body of knowledge. What does it study? It studies three determinants of behavior in organizations:
individuals, groups, and structure. Additionally, knowledge gained about individuals, groups, and
the effect of structure on behavior in order to wake organizations work more effectively.

❖ Organizational behavior is a field of study dedicated to better understanding and managing

people at work.
❖ Organizational behavior studies three determinants of behavior in organizations:
Individuals, Groups, and Structure.
❖ Additionally, organizational behavior applies the knowledge gained about individuals,
groups, and the effect of structure on behavior in order to make organizations work more

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 effectively. In general, organizational behavior is academic disciplines that can help
managers make good decisions while working with people in complex dynamic
environments.

1.2. The Three Basic Units of Analysis in OB

In this section, we will present a general model that defines the field of OB, stakes out its
parameters, and identifies its primary dependent and independent variables. A model is an
abstraction of reality; a simplified representation of some real-world phenomenon. Figure1.1
presents the skeleton on which we will construct our OB model. It proposes three levels of analysis
in OB. These are:
❖ Individuals,
❖ Groups,
❖ Structure.
As we moved from the individual level to the organizational systems level, we add systematically
to our understanding of behavior in organizations. The three basic levels are analogous to building
blocks – each level is constructed on the previous level. Group concepts grow out of the foundation
laid in the individual section; we overlay structural constraints on the individual and group in order
to arrive at organizational behavior.

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 ➢ The individual level includes the characteristics and behaviors of employees as well as the
thought processes attributed to them, such as motivation, perception, personalities,
attitudes, and values.
➢ The group level analysis looks at the way people interact. It includes team dynamics,
decisions, power, organizational politics, conflicts, and leaderships.
➢ At the organization level, we focus on how people structure their working relations and
how organizations work together with their environment.
OB researchers draw conclusions about causal relationships of two (dependent and independent)
variables. Dependent variables are the key factors we want to explain or predict; and independent
variables are the presumed causes of some change in the dependent variables.
The primary independent variables in OB are productivity, absenteeism, turnover, and job
satisfaction.
➢ Productivity is a performance measure, including effectiveness (achievement of goals) and
efficiency. Efficiency is the ratio of effective output to the input required to achieve it.
➢ Absenteeism is failure to report to work.
➢ Turnover is voluntary and involuntary permanent withdrawal from the organization.
➢ Job Satisfaction is a general attitude toward one’s job; the difference between the amount of
rewards workers receive and the amount they believe they should receive. Unlike the previous
three variables, job satisfaction represents an attitude rather than a behavior.
The major determinants of productivity, absenteeism, turnover, and job satisfaction are
independent variables at individual, group, and organizational system level.
Individual Factors: Physical attributes, Personality, Age, Perception, Gender Attitude, Marital
status Values, Number of dependents, Ability and experience.
Group Factors: group dynamics, leadership styles, power, and politics, inter group relations,
levels of conflict.
Organizational Factors: Organizational Design, technology and work processes, and jobs; the
organization's human resource policies and practices (that is, selection processes, training
programs, performance appraisal methods); the internal culture; and levels of work stress.

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1.3. Replacing Intuition with Systematic Study

How accurate are the generalizations you hold? Some may represent extremely sophisticated
appraisals of behavior and may prove highly effective in explaining and predicting the behavior of
others. However, most of us also carry with us a number of beliefs that frequently fail to explain
why people do, what they do. To illustrate, consider the following statements about work related
behavior:

 Happy workers are productive workers.

 Everyone wants a challenging job.
 Everyone is motivated by money.
 The most effective work groups are devoid of conflict.
How many of these statements do you think are true? For the most part, they may not be true.
However, whether these statements are true or false is not important at this time. What is important
is to be aware that many of the views you hold concerning human behavior are based on intuition
rather than fact. As a result, a systematic approach to the study of behavior can improve your
explanatory and predictive abilities.

Intuition is a feeling not necessarily supported by research. Of course, a systematic approach

does not mean those things you have come to believe in an unsystematic way are necessarily
incorrect.

Systematic study looking relationships, attempting to attribute causes and effects, and drawing
conclusions based on scientific evidence, that is, on data gathered under controlled conditions and
measured and interpreted in a reasonably rigorous manner. Therefore, replacing intuition with
systematic study encourage you to move away from your intuitive views of behavior toward a
systematic analysis, in the belief that such analysis will improve your accuracy in explaining and
predicting behavior.

1.4. A Review of a Manager’s Job and its Relation to the study of OB

Managers: are individuals who achieve goals through other people. They make decisions, allocate
resources, and direct the activities of others to attain goals. The people who oversee the activities

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of others and who are responsible for attaining goals in these organizations are managers
(sometimes called administrators, especially in not-for-profit organizations). For this study
purpose the manager’s job will be identified by functions, roles and skills.

1.4.1. Management Functions

Managerial functions are the activities that managers are supposed to perform as result of the
position held in the organization. Regardless of the type of firm, all managers have certain basic
functions-planning, organizing, staffing, leading and controlling.
Planning is the process of selecting mission and objectives and the course of action to attain them.
It is making decisions today about future actions. It is a decision-making process that determines
what to do, how to do it, why it is done, when it is to be done, by whom it is to be done and with
what resources.
Organizing: involves identification of activities to be carried out, grouping these activities in to
working units, assignment of responsibilities to each unit with corresponding authority
Staffing: Staffing involves filling and keeping filled the positions in the organization structure. It
is concerned with locating prospective employees to fill the jobs created by the organizing process.
Staffing is concerned with human resource of the organization.
Leading/Directing: is about inducing or motivating individuals and groups to exert their effort
towards organizational goals. In short, it is concerned with influencing people to work hard.
Leading encompasses three essential elements: motivation, leadership and communication.
Controlling: is the process of setting standards, measuring actual performance results, comparing
actual versus plan, identifying deviations and finally taking remedial actions if the deviation
between actual and plan is significant.
So, using the functional approach, the answer to the question “What do Managers do?” is that they
plan, organize, staff, lead, and control.
1.4.2. Managerial Roles
Role is an organized set of behaviors that is associated with a particular office or position. It is a
pattern of behavior expected by others from a person occupying a certain position in an
organizational hierarchy. A role is any one of several behaviors a manager displays as s/he
functions in the organization. Managerial roles represent specific tasks that managers undertake to
ultimately accomplish the five managerial functions. Factors, which affect managerial roles, are

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manager’s formal job description, and the values & expectations of other managers, subordinates,
and peers.
Henry Mintzberg identified 10 managerial roles, which are in turn grouped into three categories:
Interpersonal, Informational and Decisional Roles.
Role Description
Interpersonal
Figurehead Symbolic head; required to perform a number of routine duties of a legal
or social nature
Leader Responsible for the motivation and direction of employees
Liaison maintains a network of outside contacts who provide favors and
information
Informational
Monitor receives a wide variety of information; serves as nerve center of internal
and external information of the organization
Disseminator Transmits information received from outsiders or from other employees
to members of the organization
Spokesperson Transmits information to outsiders on organization’s plans policies,
actions, and results; serves as expert on organization’s industry.

Decisional
Entrepreneur Searches organization and its environment for opportunities and initiates
projects to bring about change.
Disturbance handler Responsible for corrective action when organization faces important,
unexpected disturbances.
Resource allocator Makes or approves significant organizational decisions.
Negotiator Responsible for representing the organization at major negotiations
Table 1.1 Minztberg’s Managerial Roles
4.1.3. Management Skills
Still another way of considering what managers do is to look at the skills or competencies they
need to achieve their goals. Researchers have identified a number of skills that differentiate
effective from ineffective managers.
Technical skills: encompass the ability to apply specialized knowledge or expertise.
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Human Skills: The ability to understand, communicate with, motivate, and support other people,
both individually and in groups, defines human skills. Many people are technically proficient but
poor listeners, unable to understand the needs of others, or weak at managing conflicts.
Conceptual Skills: The mental ability to analyze and diagnose complex situations. Decision
making for instance, requires managers to identify problems, develop alternative solutions to
correct those problems, evaluate those alternative solutions, and select the best one.
The study of organizational behavior can provide managers with the following practical
advantages:

1. Organizational behavior provides managers with a way of systematically thinking about

the behavior of people at work.

2. Organizational behavior provides managers with techniques for dealing with the problems
and opportunities that commonly occur in a work setting.

1.5 Characteristics of OB

Following are the major characteristics of organization behavior:

1. Interdisciplinary. Organizational behavior has interdisciplinary orientation that integrates

behavioral sciences in understanding behavior and performance. It draws heavily on knowledge
about behavior generated in the social sciences of psychology, sociology, and anthropology.

2. Behavioral Science Foundation. The behavioral sciences—psychology, sociology and

anthropology have provided the basic philosophy, characteristics of science, and principles that
are so freely borrowed by the field of organizational behavior. The social sciences of economics,
political science, and history have had a secondary impact on the field.

3. Scientific Method Foundation. OB had inherited the tradition of scientific method in its
investigations from its parent disciplines. The scientific method emphasizes the use of logic and
theory in formulating research questions and the systematic use of objective data in answering
such questions.

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4. Three Levels of Analysis. The OB is unique in its approach to behavior because it encompasses
three levels of analysis, individual, group, and formal organization. In addition, all three levels are
treated with equal importance and needs to be scientifically studied.

5. Contingency Orientation. The term contingency orientation reflects the need to consider the
situation and individuals involved before drawing conclusions about behavior. The OB field has
no universally applicable set of prescriptions for managers.

6. Concern for Application. The OB researcher must always be concerned with understanding
real events in actual organizations and with communicating results in a meaningful fashion to
practicing managers.

1.6 Development of Organizational Behavior

While the seeds of organizational behavior were planted more than 100 years ago, current OB
theory, and practice are essentially products of the 21 century and what we know today is just one
stage in an evolving body of knowledge. Frederick Taylor’s principles of scientific management
were instrumental in engineering precision and standardization into people’s jobs. The “people
side” of organizations came into its own in the 1930s, predominantly because of the Hawthorne
studies. These studies led to a new emphasis on the human factor in organizations and increased
paternalism by management. In the late 1950s, manager’s attention was caught by the ideas of
people like Abraham Maslow and Douglas McGregor, who proposed that organizational structures
and management practices had to be altered to bring out the full productive potential of employees.

Motivation and leadership theories offered by David McClelland, Fred Fiedler, Frederick
Herzberg, and other behavioral scientists during the 1960s and 1970s provided managers with still
greater insights into employee behavior. Almost all contemporary management and organizational
behavior concepts are contingent based. That is, they provide various recommendations dependent
on situational factors. As a maturing discipline, current OB research is emphasizing the refinement
of existing theories. After industrial revolution, organizations increased in size and complexity and
therefore the need for human concern has increased.

Different management theorist studied employee needs and motives or behavior in an organization
and the impact of employee behavior on productivity. The major contributors to the theory of

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organizational behavior are the classical schools of management theory, the behavioral theory, and
the contingency theory.

1. Classical Schools of Management

This school of thought is made up of two branches: classical scientific and classical administrative,
described in the following sections.

A. Classical scientific school

The classical scientific branch arose because of the need to increase productivity and efficiency.
The emphasis was on trying to find the best way to get the most work done by examining how the
work process was actually accomplished and by scrutinizing the skills of the workforce.

The classical scientific school owes its roots to several major contributors, including Frederick
Taylor, Henry Gantt, and Frank and Lillian Gilbreth.

F.W. Taylor formulated the scientific management approach. According to the scientific
management theory, people are primarily motivated by economic rewards and will take direction
if offered the opportunity to better improve their economic positions. Taylor believed that because
of higher productivity and the wage incentive, both management and workers would be
encouraged to respond positively.

Although, Taylor’s overall contribution to management was significant, his work was criticized
for dehumanizing the workplace, and treating workers like machines. Nevertheless, in
management circles, Taylor’s ideas were and still are, very influential, and his work contains a
number of behavioral assumptions.

B. Classical administrative school

Whereas scientific management focused on the productivity of individuals, the classical

administrative approach concentrates on the total organization. The emphasis is on the
development of managerial principles rather than work methods. Contributors to this school of
thought include Max Weber and Henri Fayol. These theorists studied the flow of information
within an organization and emphasized the importance of understanding how an organization
operated.

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Max Weber (1864-1920) a German sociologist introduced the theory of Bureaucracy. His major
contribution to the theory is the concept of authority, structure and it’s interrelationship.

Henri Fayol (1841-1925) was a French industrialist who put forward and popularized the concept
of the “universality of management principles.

2. BEHAVIORAL MANAGEMENT THEORY:

The behavioral approach to management emphasizes improving management through the

psychological makeup of people.

In contrast to the largely technical emphasis of scientific management, a common theme of the
behavioral approach focuses on the need to understand people.

The behavioral approach is sometimes referred to as the human resources approach because of the
focus on making optimum use of workers in a positive way, such as making jobs motivational

The proponents of behavioral school recognized employees as individuals with concrete human
needs as part of work groups, and as members of a larger society. They viewed employees as assets
that can be developed not nameless robots excepted to follow orders blindly. The different theorists
who had concern for people in the work environment (organizations) included George Elton Mayo,
Abraham Maslow, and Douglas McGregor. Hawthorne studies conducted by G.E. Mayo can be
thought of as the first, founding step in organizational behavior, and it gave rise to a new school
of management thought, the, Human Relations Movement.

3. CONTINGENCY MANAGEMENT THEORY

According to contingency management theory, there is no one best way of managing or managerial
technique universally applicable in all situations; rather, it depends upon a given set of
circumstances. The idea is that what works in one situation may not work in another situation.
According to contingency management approach, then, the task of managers is to identify which
technique will, in particular situation, under particular circumstances and at a particular time, best
contribute to the attainment of management goals.

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1.7 Disciplines that Contributed to Organizational Behavior

Organizational behavior is a blended discipline that has grown out of contributions from numerous
earlier fields of study. Organizational behavior is an applied behavioral science that is built on
contributions from a number of behavioral disciplines. The significant ones are psychology,
sociology, social psychology, anthropology, and political science. Psychology's contribution has
been mainly at the individual or micro level of analysis. However, the other disciplines have
contributed to the understanding of macro concepts such as group processes and organization.

1. Psychology: - is the science of human behavior. The science seeks to measure, explain, and
sometimes change the human behavior. Psychologists study and attempt to understand
individual behavior. Learning theorists, personality theorists, counseling psychologists, and
industrial and organizational psychologists have contributed to organizational behavior field.
Psychology helps in understanding the foundations of motivation, interpersonal perceptions,
learning, and training, or role of personality.

2. Sociology: - is the science of society. Sociology studies people in relation to their fellow
human beings. Sociologists have contributed a lot to organizational behavior through their
study of group behavior in organizations, particularly formal and complex organizations.
Sociologists have provided valuable inputs in the areas of group dynamics, design of work
teams, organizational culture, bureaucracy, communications, power, conflict, and Intergroup
behavior.

3. Social Psychology: - is an area within psychology, but blends concepts from both psychology
& sociology. It focuses on the influence of people on one another. One major area where social
psychologists have investigated considerably is change – how to implement it and how to
reduce barriers to its acceptance. Other areas where social psychologists have made significant
contribution are the areas of measuring, understanding, and changing attitudes; communication
patterns; and the group decision-making process.

4. Anthropology: - is the science of the learned behavior of human beings. It is especially

important to understanding organizational culture. It helps in understanding differences in

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 values, attitudes, and behavior of people from different backgrounds. Anthropologists study
societies to learn about human beings and their activities.

5. Political Science: - is the study of the behavior of individuals and groups within a political
environment. Specific topics of concern include structuring of conflict, allocation of power,
and how people manipulate power for individual self-interest.

6. Economics: study the production, distribution, and consumption of goods and services.
Organizational behaviorists share the economist’s interest on topics such as labor market
dynamics, productivity, human resource planning and forecasting, and cost-benefit analysis.

7. Engineering: has also influenced the field of organizational behavior. Industrial engineering
in particular has long been concerned with work measurement, productivity measurement,
workflow analysis and design, job design, and labor relations. Obviously, these areas are also
relevant to organizational behavior.

8. Most recently, medicine has influenced organizational behavior in connection with the study
of human behavior at work, specifically in the area of stress. Increasing research is showing
that controlling the causes and consequences of stress in and out of organizational
settings is important for the well-being of the individual as well as that of the organization.

1.8 Organizational Behavior in the 21st century

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; 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. In this section,
we review some of the most critical issues confronting managers for which OB offers solutions or
at least meaningful insights toward solutions.

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The Realities of the New Workplace

Organizational behavior is a discipline that can help managers to make good decisions while
working with people in complex and dynamic environments. The managers should have full
awareness of the complex and shifting demands that the dynamic environment will make upon
them. Here are some of the realities of the new workplace.

Managing Workforce Diversity: 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.

Responding to Globalization: globalization is the broadening set of interdependent relationship

among people from different parts of a world that happens to be divided into nations. The world
has become a global village. In the process, the manager’s job has changed.

Changing workforce (workforce is changing): Managers in organizations must be prepared to

deal with workforce diversity- ethnic, racial backgrounds, gender and age, lifestyle, etc. Managers
must also be prepared to deal with the workers whose skills whether gained through formal
education or on-the-job training may not be consistent with the demands of new technologies and
tasks. Furthermore, managers must be prepared to deal with workers values that reflect a dynamic
society in which family values, environmental concerns and the very concept „career are changing.
Thus, the successful manager will value diversity and will always find ways to meet the needs of
complex workforce.

Consumer expectations are changing: In today’s market place, only those organizations that are
able to deliver what consumers want in terms of quality services and cost will prosper. This is the
age of total quality management, where the organization and all of its members operate with
commitments to continuous improvement and to meeting customer needs completely.

Hence, the successful manager will value quality and consumers, and will personally do things
that add value to the organization’s ability to meet customer’s needs.

Changing organizations (organizations are changing): Organizations are changing and will
continue to do, so in order to survive, and prosper in a complex environment. Under different
pressures today, we see organizations downsizing, forming alliances, creating new organizational

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structures, going global and employing more technologies. Thus, the manager must be comfortable
working in and with organizations that are operating in new and different ways.

Managers must change: For the manger to succeed, he/she must be willing to step forward and
make the necessary personal and organizational changes to secure it. Hence, progressive manager
must make behavioral and attitudinal adjustments necessary to succeed in every dynamic times
and situation.

1.9 Organizations as a System

An organization is a managed system designed and operated to achieve a specific set of objectives.
It is based on the concept that an organization is a system, or an entity of interrelated parts. If you
adjust one part of the system, other parts will be affected automatically. A system is a set of
interdependent parts (departments) that processes inputs into outputs. A system is a „series of
functions or activities within an organization that work together for the aim of the organization.

Parts of the system must work to support each other. Subsystems are those parts making up the
whole system. Organization subsystems are functionally related activities. Main functions of
subsystems are to absorb inputs, transform them into outputs, transfer them to users, and coordinate
all of these activities. Think yourself as an ecologist for the organization. Executives should
look/views that they are responsible for the organization and their interaction with the
environment, and they should leave and how to see the company as a living system within the
context of large systems of which it is a part.

There are two types of system; those are open and close system.

I. Open system: are organization and other system, which consists of interdependent
parts of that work together to continuously monitor and interact with the external
environment.

An organizational system acquires resources from its external environment, such as raw materials,
Hrs, information, financial RS, equipment. Technology such as equipment, work methods, and
information transformers these inputs into various outputs that they are exported back to the
external environment.

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The organizations receive feedback from the external environment regarding the use of these
outputs and the availability of the future inputs. It also receives resources in return of outputs.
This process is cyclical and, self-sustaining, so the organization may continue to survive and
prosper.

II. Closed system: it exists independently of anything beyond its boundaries, i.e. it is
closed off from the outside environment and has all resource needed to survive
independently. The organizations are never completely closed system, but those
operating in very stable environments tend to become relatively closed by ignoring
their surroundings for a long period of time, e.g., monopoly is a relatively closed system
they do not need to respond to customers or other stakeholders very much.

To be sustaining as a system, subsystems have to work together as one and create synergy. The
term synergy refers to instances when the sum of individual contributions exceeds the simple
summation of them.

1.10 Ethics and Organizational Behavior

The word “ethics” is important in OB. Ethics is the study of moral values or principles that guide
our behavior and inform us whether actions are right or wrong. Ethical behavior is that accepted
as morally “good” and “right,” as opposed to “bad” or “wrong,” in a particular setting. Is it ethical
to withhold information that might discourage a job candidate from joining your organization? Is
it ethical to ask someone to take a job you know will not be good for his or her career progress? Is
it ethical to ask so much of someone that they continually have to choose between “having a
‘career’ and having a ‘life’?” The list of questions can go on and on, but an important point
remains; the public is increasingly demanding that people in organizations and the organizations
themselves all act in accordance with high ethical and moral standards.

1.10.1. Ways of thinking about ethical behavior

Ethical behavior conforms not only to the dictates of law but also to a broader moral code that is
common to society as a whole. Just exactly what moral code governs a person’s choices, however,
is a subject of debate. At least four ways of thinking about ethical behavior in and by organizations
can be identified.

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I. Utilitarian view: considers ethical behavior to be, that which delivers the greatest good to the
greatest number of people. Those who subscribe to the results-oriented utilitarian logic assess
the moral aspects of their decisions in terms of the consequences they create. Utilitarianism
believes that the needs of the many outweigh the needs of the few. From such a perspective, it
may be ethical to close a factory in one town in order to keep the parent corporation profitable
and operating in several other towns.

II. Individualism view: considers ethical behavior to be, that which is best for an individual’s
long-term self-interests. In principle, at least, someone who acts unethically in the short run—
such as by denying a qualified minority employee a promotion, should not succeed in the long
run because the short-run action will not be tolerated. Thus, if everyone operated with long-
term self-interest in mind, his or her short-run actions would be ethical.

III. Moral-rights view: considers ethical behavior to be, that which respects fundamental rights
shared by all human beings. This view is tied very closely to the principle of basic human
rights, such as those of life, liberty, and fair treatment by law. In an organization, this principle
is reflected in such issues as rights to privacy, due process, and freedom of speech. Ethical
behavior does not violate any of these fundamental human rights.

IV. Justice view: considers ethical behavior to be, that which is fair and impartial in its treatment
of people. It is based on the concept of equitable treatment for all concerned. In OB, two issues
address this view of ethical behavior.

➢ Procedural Justice is the degree to which the rules and procedures specified by
policies are properly followed in all cases under which they are applied. In a sexual
harassment case, for example, this may mean that required hearings are held for every
case submitted for administrative review.
➢ Distributive justice is the degree to which all people are treated the same under a
policy, regardless of race, ethnicity, gender, age, or any other demographic
characteristic. In a sexual harassment case, this might mean that a complaint filed by a
man against a woman would receive the same hearing as one filed by a woman against
a man.

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ORGANIZATIONAL SOCIAL RESPONSIBILITY

Closely related to the ethics of workplace behavior is social responsibility the obligation of
organizations to behave in ethical and moral ways as institutions of the broader society. This
concept suggests that members must ensure that their ethical frameworks extend to the
organization as a whole.

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