Module 1

Fundamentals of
Organisational Behaviour

Mr. Kumar Satyam

Amity University Jharkhand, Ranchi
 Understanding Organisational Behaviour
Introduction:
 Organizational Behaviour (OB) is the study of human behaviour in organizational
settings, the interface between human behaviour and the organization, and the
organization itself.

 Organizational Behaviour researchers study the behaviour of individuals primarily

in their organizational roles.

 One of the main goals of organizational behaviour is to revitalize organizational

theory and develop a better conceptualization of organizational life.

 As a multi­disciplinary field, organizational behaviour has been influenced by

developments in a number of allied disciplines including sociology, psychology,
economics, and engineering as well as by the experience of practitioners.
 Understanding Organisational Behaviour
Introduction…Contd.:
In short, organisational behaviour revolves around two fundamental components:
1. The nature of the man.
2. The nature of the organisation.

 In other words, organisational behaviour may be organisation of individual’s

behaviour in relation to physical means and resources so as to achieve the desired
objective of the organisation.

 Organisational behaviour is the study of both group and individual performance

and activity within an organization.

 This area of study examines human behaviour in a work environment and

determines its impact on job structure, performance, communication, motivation,
leadership, etc.
 Understanding Organisational Behaviour
Introduction…Contd.:
It is the systematic study and application of knowledge about how individuals and
groups act within the organizations where they work. OB draws from other disciplines
to create a unique field.

 For example, when we review topics such as personality and motivation, we will
again review studies from the field of psychology. The topic of team processes
relies heavily on the field of sociology.

 When we study power and influence in organizations, we borrow heavily from

political sciences.

 Even medical science contributes to the field of Organizational Behaviour,

particularly in the study of stress and its effects on individuals.
 Understanding Organisational Behaviour
Definitions:
“Organizational behaviour is directly concerned with the understanding, prediction,
and control of human behaviour in organizations.” - Fred Luthans

“Organisational behaviour is the study and application of knowledge about how

people act within an organisation. It is a human tool for human benefit. It applies
broadly to the behaviour of people in all types of organisation.” - Newstrom and
Davis

“Organisational behaviour is a field of study that investigates the impact that

individuals, groups and structure have on behaviour within the organisations for the
purpose of applying such knowledge toward improving an organization’s
effectiveness.” - Stephens P. Robbins
 Understanding Organisational Behaviour
Features/Characteristics:
1. Behavioural Approach to Management: Organisational behaviour is that part of
whole management which represents the behavioural approach to management.

2. Cause and Effect Relationship: Human behaviour is generally taken in terms of

cause and effect relationship and not in philosophical terms. It helps in predicting
the behaviour of individuals.

3. Organisational Behaviour is a Branch of Social Sciences: Organisational

behaviour is heavily influenced by several other social sciences viz. psychology,
sociology and anthropology.

4. Three Levels of Analysis: Organisational behaviour encompasses the study of

three levels of analysis namely individual behaviour, inter-individual behaviour
and the behaviour of organisations themselves.
 Understanding Organisational Behaviour
Features/Characteristics…Contd.:
5. A Science as well as an Art: Organisational behaviour is a science as well as an
art. The systematic knowledge about human behaviour is a science and the
application of behavioural knowledge and skills is an art.

6. A Body of Theory, Research and Application: Organisational behaviour consists

of a body of theory, research and application which helps in understanding the
human behaviour in organisation.

7. Beneficial to both Organisation and Individuals: Organisational behaviour

creates an atmosphere whereby both organisation and individuals are benefitted by
each other.

8. Rational Thinking: Organisational behaviour provides a rational thinking about

people and their behaviour.
 Understanding Organisational Behaviour
Objectives of Organisational Behaviour:
1. Job Satisfaction: Understanding organizational behaviour 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.

2. Finding the Right People: Organizational behaviour can be helpful for finding
the right mix of talents and working styles required for achievement of the task at
hand.

3. Organizational Culture: Organizational behaviour is useful for understanding

and designing the communication channels and leadership structures that can
reinforce organizational culture.
 Understanding Organisational Behaviour
Objectives of Organisational Behaviour…Contd.:
4. Leadership and Conflict Resolution: Organizational behaviour can assist in
fostering leadership, pro-activity and creative problem-solving.
When creativity is allowed, the divergence of opinions is unavoidable, but
organizational behaviour can provide the leadership and the dynamics required for
turning conflicts into constructive idea exchanges.

5. Understanding the Employees Better: Organizational behaviour studies help us

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

6. Understand how to Develop Good Leaders: Organizational behaviour patterns

help in predicting who among the employees have the potential to become leaders.
They also teach us how to mould these employees so that their leadership potential
is utilized to its fullest.
 Understanding Organisational Behaviour
Objectives of Organisational Behaviour…Contd.:
7. 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.

8. 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 behaviour 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.
 Understanding Organisational Behaviour
Nature:
1. A Separate Field of Study and not a Discipline Only: By definition, a discipline
is an accepted science that is based on a theoretical foundation. But, OB has a
multi-interdisciplinary orientation and is, thus, not based on a specific theoretical
background.

2. An Interdisciplinary Approach: It tries to integrate the relevant knowledge

drawn from related disciplines like psychology, sociology, and anthropology to
make them applicable for studying and analyzing organizational behaviour.

3. An Applied Science: The very nature of OB is applied. What OB basically does is

the application of various research to solve the organizational problems related to
human behaviour.
 Understanding Organisational Behaviour
Nature…Contd.:
4. A Normative Science: Organizational Behaviour is a normative science also.
While the positive science discusses the only cause-effect relationship, OB
prescribes how the findings of applied research can be applied to socially accepted
organizational goals.
Thus, OB deals with what is accepted by individuals and society engaged in an
organization.

5. A Humanistic and Optimistic Approach: Organizational Behaviour applies a

humanistic approach towards people working in the organization. It deals with the
thinking and feeling of human beings. OB is based on the belief that people have
an innate desire to be independent, creative and productive.

6. A Total System Approach: The system approach is one that integrates all the
variables, affecting organizational functioning.
 Understanding Organisational Behaviour
Fundamental Concepts of Organizational Behaviour:
Organization Behaviour is based on a few fundamental concepts which revolve around
the nature of people and organizations:
 Individual differences
 Perception
 A whole person
 Motivated behaviour
 The desire for involvement
 The value of the person
 Human dignity
 Organizations are social system
 Mutuality of interest
 Holistic concept
 Understanding Organisational Behaviour
Scope:
 Elements of organisational behaviour
 Impact of personality on performance
 Motivation of employees
 Leadership
 Structure of teams and groups
 Perception
 Development of soft skills
 Organisational structure
 Improvement/enhancement of individual and organisational development
 Individual behaviour, group behaviour, power and politics, attitude and learning
 Cultural and environmental factors
 Management of change, conflict and stress
 Understanding Organisational Behaviour
Scope…Contd.:
 Organisational development
 Study of emotions
 Transactional analysis
 Understanding Organisational Behaviour
Limitations of Organizational Behavior:
Organizational Behaviour will not abolish conflict and frustration; it can only reduce
them. It is a way to improve, not an absolute answer to problems.
Organizational Behaviour will not make up for our deficiencies, cannot substitute for
poor planning, inept organizing, or inadequate controls.

1. Behavioural Bias: Behavioural Bias is a condition which is a reflection of tunnel

vision, in which people have narrow viewpoints as if they were looking through a
tunnel.
They see only the tiny view at the other end of the tunnel while missing the
broader landscape.
People who lack system understanding may develop a behavioural bias, which
leads them to develop a narrow viewpoint that emphasizes employee satisfaction
while overlooking the broader system of the organization in relation to all its
stakeholders.
 Understanding Organisational Behaviour
Limitations of Organizational Behavior…Contd.:
2. The Law of Diminishing Returns: Overemphasis on an organizational behaviour,
the practice may produce negative results, as indicated by the law of diminishing
returns. It places an overemphasis on an OB practice may produce negative
results.
According to the law of diminishing returns, at some point, increases of a
desirable practice produce declining returns, finally resulting in zero returns, and
then follows negative returns as more increases are added. More of a good thing is
not necessarily good.
The concept means that for any situation there is an optimum level of a desirable
practice, such as recognition or participation.

3. Unethical Manipulation of People: A significant concern about organizational

behaviour is that its knowledge and techniques can be used to manipulate people
unethically as well as to help them develop their potential.
 Understanding Organisational Behaviour
Importance:
a. Skill improvement: It helps to improve skills of employees.

b. Understanding consumer buying behaviour: It helps in improving marketing

process by understanding consumer buying behaviour.

c. Employee motivation: It helps to understand basis of motivation and different

ways to motivate employees properly.

d. Nature of employees: It helps to understand the nature of employees thereby,

understanding people in a better way.

e. Anticipating organisational events: The scientific study of behaviour helps to

understand and predict organisational events, e.g., annual business planning,
demand management, product line management, production planning, and so on.
 Understanding Organisational Behaviour
Importance…Contd.:
f. Efficiency and effectiveness: It helps to increase the efficiency and effectiveness
of the organisation.

g. Better environment of organisation: It helps to create healthy, ethical and

smooth environment in the organisation.

h. Optimum utilisation of resources: It helps to understand employees, their work

styles and skills in a better way. Accordingly, management can train and motivate
employees for optimum utilisation of resources.

i. Goodwill of organisation: OB helps to improve the overall goodwill of the

organisation.
 Understanding Organisational Behaviour
Factors/Forces affecting Organisational Behaviour:
There are a complex set of key forces that affect organisational behaviour today. These
key forces are classified into four areas:
 People
 Structure
 Technology
 Environment

There is an interaction between people, structure, and technology and these elements
are influenced by the environment.
 Foundations of Individual Behaviour
Introduction:
 Individual differences are the cornerstone of organisational behaviour (OB), and
OB has a great challenge as well as a responsibility to deal with the differences in
individual behaviour in the context of the organisations.

 Psychology, a discipline contributing to OB helps us examine how people are

similar, and how they differ in their thinking, feeling and behaviours.

 Many characteristics of human beings are inherited and many others are formed
because of various environmental factors.

 Individual behaviour is influenced by personal factors, organisational factors,

psychological factors and environmental factors.
 Foundations of Individual Behaviour
Personal factors Psychological factors
Age, gender, intelligence, Perception, values,
marital status, emotional attitudes, psychological
intelligence needs

Individual
Behaviour

Organisational factors
Environmental factors
Tenure, organisational
Economic status, political
culture and climate, reward
status
system, leadership style

Factors influencing Individual Behaviour

 Models of OB
The various models of organisational behaviour are as follows:
1. Autocratic Model
2. Custodial Model
3. Supportive Model
4. Collegial Model
5. Systems Model

1. Autocratic Model: This model assumes that workers are lazy and dislike work.
They do not assume responsibility for work and prefer to be directed by managers.
They do not take initiative to work.
Managers work in a formal environment and make use of authority to get the work
done. Employees follow the orders and become dependant on them for fulfilment
of their needs.
Managers issue orders and instructions by virtue of their position and authority.
 Models of OB
Though this model is not much in use in the contemporary business environment, its
use is appropriate when:
• Urgent action is required,
• Employees are unskilled, inexperienced and submissive and
• Employees have strong lower-order needs to satisfy.

2. Custodial Model: In order to overcome the frustration and develop better

relationship with employees, managers follow the custodial model of direction.
Managers use economic resources to provide fringe benefits and other economic
rewards, like pension, gratuity etc. to employees.
Money is used as a strong motivator to satisfy their security needs (job security);
though, however, their physiological needs are largely met in the autocratic model.
 Models of OB
It assumes that managers know what is best for them. They are their custodians
and decide what is good for them.
This approach of paternalism does not work for employees who have strong
higher-order needs of ego satisfaction, recognition and achievement. Workers in
this approach are, thus, happy but not productive.

3. Supportive Model: While autocratic model aims at satisfying physiological needs

through use of power and custodial model aims at satisfying their safety needs
through use of money, the supportive model aims to satisfy their psychological
needs also besides physiological and safety needs through participative style of
management.
Managers adopt relationship-oriented organisation behaviour and allow employees
to participate in the decision-making process.
It provides supportive climate in the organisation where innovative abilities of
employees are exploited to their fullest and they contribute to organisational goals
to the best of their abilities.
 Models of OB
This model is appropriate when:
• Workers’ higher-order needs are predominant,
• They are self-motivated to work, and
• Managers have trust and confidence in the employees.

4. Collegial Model: ‘Collegial’ means a body of people working together for a

common purpose. This model aims at teamwork. People work together as a team.
They are self-directed and take independent charge of their work. They set high
targets, have full potential for development and are skilled at their work.

This model is appropriate when:

• Work is unstructured that requires people to use their innovative abilities.
• Work is intellectually challenging where people are required to exhibit behavioural
flexibility.
• People have freedom to work to fulfill their higher-order needs; achievement;
recognition; challenge at work.
 Models of OB
5. Systems Model: Under this model, people work to satisfy their self-actualisation
needs; need to become what they want to become or to do what they want to do.
They look for challenge and meaning in their work and are not satisfied by mere
financial rewards.
Employees do not see organisations as different from themselves.

Thus, when people have:

(a) Strong physiological needs, managers adopt autocratic model;
(b) In case of strong security needs, custodial model works better;
(c) In case of social and esteem needs, the best results are given when supportive
model is adopted;
(d) High-order needs of achievement and self-actualisation are met through collegial
and systems model.
 Approaches to OB
 Organizational Behaviour relates to the relationship between employees and the
employer in an organization.
 Both are working towards the realization of the goals and objectives of any
organization, and a close and fruitful coordination between the two is one of the
major factors towards this realization.
 Organizational behaviour approaches are a result of the research done by experts
in this field.

The various approaches to Organizational Behaviour studies are as follows:

1. Human resources approach
2. Contingency approach
3. Productivity approach
4. Systems approach
5. Interdisciplinary Approach
 Approaches to OB
1. Human Resources Approach: This approach recognizes the fact that people are
the central resource in any organization and that they should be developed towards
higher levels of competency, creativity, and fulfilment.
The human resources approach is also called as the supportive approach in the
sense that the manager’s role changes from control of employee to active support
of their growth and performance.

2. Contingency Approach: The contingency approach (sometimes called the

situational approach) is based on the premise that methods or behaviours which
work effectively in one situation fail in another.
Results differ because situations differ, the 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.
The contingency approach is more interdisciplinary, more system-oriented and
more research-oriented than any other approach.
 Approaches to OB
3. Productivity Approach: Productivity, which is the ratio of output to input is a
measure of an organization’s effectiveness. It also reveals the manager’s efficiency
in optimizing resource utilization.
Productivity is generally measured in terms of economic inputs and outputs, but
human and social inputs and outputs also are important.

4. Systems Approach: The Systems Approach to OB views the organization as a

united, purposeful system composed of interrelated parts.
This approach gives managers a way of looking at the organization as a whole,
whole person, whole group, and the whole social system.
In doing so, the systems approach tells us that the activity of any segment of an
organization affects, in varying degrees the activity of every other segment. A
systems view should be the concern of every person in an organization.
 Approaches to OB
5. Inter-Disciplinary Approach: Organizational behaviour is an integration of all
other social sciences and disciplines such as psychology, sociology, organizational
theories etc.
They all are interdependent and influence each other. The man is studied as a
whole and therefore, all disciplines concerning man are integrated.
 Multidisciplinary Nature of OB
There are some important disciplines in the organizational behaviour field which
developed it extensively.

Due to an increase in organizational complexity, various types of knowledge are

required and help OB in many ways.

Six contributing Disciplines to the Organization Behaviour Field are:

1. Psychology
2. Sociology
3. Social Psychology
4. Economics
5. Anthropology
6. Political Sciences
 Multidisciplinary Nature of OB
1. Psychology: Psychology deals with studying human behaviour that seeks to
explain and sometimes change the behaviour of humans and other animals.
Psychologists are primarily interested in predicting the behaviour of individuals to
a great extent by observing the dynamics of personal factors.

2. Sociology: The major focus of sociologists is on studying the social systems in

which individuals fill their roles. The focus is on group dynamics.
Sociological concepts, theories, models, and techniques help significantly to
understand better the group dynamics, organizational culture, formal organization
theory and structure, corporate technology, bureaucracy, communications, power,
conflict, and intergroup behaviour.

3. Social Psychology: It has been defined as the scientific investigation of how the
thoughts, feelings, and behaviour of individuals are influenced by the actual,
imagined or implied presence of others.
It deals with how people are affected by other individuals who are physically
present or who are imagined to be present or even whose presence is implied.
 Multidisciplinary Nature of OB
The most important topics relevant to the organizational behaviour field are
behavioural change, attitude change, communication, group process and group
decision making.

4. Anthropology: The main aim of anthropology is to acquire a better understanding

of the relationship between the human being and the environment. The manner in
which people view their surroundings is a part of the culture.
Culture includes those ideas shared by groups of individuals and languages by
which these ideas are communicated. In essence, culture is a system of learned
behaviour.
Anthropologists contribute to study some aspects of organizational settings like
similar values, comparative attitudes, cross-cultural analysis between or among the
employees.
 Multidisciplinary Nature of OB
5. Political Sciences: Political scientists study the behaviour of individuals and
groups within a political environment.
They contribute to understanding the dynamics of power centres, structuring of
conflict and conflict resolutions tactics, allocation of power and how people
manipulate power for individual self-interest.

6. Economics: Economics contributes organizational behaviour to a great extent in

designing the organizational structure. Transaction cost economics influence the
organization and its structure.
Transaction costs economics implies costs components to make an exchange on
the market. Costs of transactions include both costs of market transactions and
internal coordination.
 International Dimensions of OB
The following are the important international dimensions of OB:
 Globalisation
 Knowledge
 Cross-cultural working
 Changed employee expectations
 Organisation structure
 Technology transformation
 Ethical behaviour
 Emerging Challenges in Global Context
Challenges and Opportunities of Organizational Behaviour:
 Improving Peoples’ Skills
 Improving Quality and Productivity
 Total Quality Management (TQM)
 Managing Workforce Diversity
 Responding to Globalization
 Empowering People
 Coping with Temporariness
 Stimulating Innovation and Change
 Emergence of E-Organisation & E-Commerce
 Improving Ethical Behaviour
 Improving Customer Service
 Helping Employees Balance Work-Life Conflicts
 Flattening World
 Emerging Challenges in Global Context
Flattening World:
Thomas Friedman’s book The World Is Flat: A Brief History of the Twenty-First
Century makes the point that the Internet has “flattened” the world and created an
environment in which there is a more level playing field in terms of access to
information.

This access to information has led to an increase in innovation, as knowledge can be

shared instantly across time zones and cultures.

It has also created intense competition, as the speed of business is growing faster and
faster all the time.
 Future of OB
The following are the important points which are/will be shaping the future of OB:
a. Workforce diversity: It means that organisations are becoming a more
heterogeneous mix of people in terms of
 Gender
 Age
 Race
 Lifestyle
 Education
 Personality
 Communication style
 Geographic location
 Family status
 Future of OB
b. Coping with temporariness: Most managers & employees today work in a
climate best characterized as “ TEMPORARY ”.
Evidence of temporariness is everywhere in organization. Employees need to
update their knowledge & skills continuously.
OB will help in better understanding of a work world of continual change, how to
overcome resistance to change, and create an organizational culture.

c. Groups
d. Power
e. Organisational Design
f. Problem finding/Managerial intuition
g. Motivating employees through Job Design
h. Cultural change
i. Organisational change/structure