Organizational Behavior 1

Organizational Behavior

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Fundamentals of Organizational Behavior • Success of an Orgn depends on the ability to understand, manage and combine humanity (people) and technology ( science) • Technology is rapidly changing, can be mastered • Understanding & predicting human behavior is more difficult as every individual is unique & different from each other • Study of OB to understand human behavior, improve interpersonal skills, manage people in more efficient manner 2

Fundamentals of Organizational Behavior DEFINITIONS John Newstrom & Keith Davis – “study & application of knowledge about how people, as individuals & as groups, act within organizations” Greenberg & Baron – “ field that seeks knowledge of behavior in Orgnal settings by systematically studying individuals, group and orgnal processes” Stephen Robbins – “ a field of study that investigates the impact of individuals, groups & structure have on behavior within orgns for the purpose of applying such knowledge towards improving an Orgn’s effectiveness”

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Fundamentals of Organizational Behavior • OB is an applied science • Seeks to discover new ways of increasing effectiveness of people’s behavior in orgns • Continuous research & development of new concepts • OB can be applied to all types of orgns – businesses, government, educational institutions 4

Fundamentals of Organizational Behavior OB studies behavior of people at different levels – 2. Individual – individual attitude, personality, motives 3. Interpersonal – interaction bet employees 4. Group – impact of formal & informal groups 5. Intergroup – coordinating efforts of different groups for smooth attainment of objectives 6. Organizational – structure, culture, impact on individuals & groups 7. Inter-organizational – impact of mergers, acquisitions, joint ventures, external environment on people 5

Fundamentals of Organizational Behavior OB has 4 main objectives – 2. Describe behavior – gather info to describe human behavior accurately & completely, how people behave under different conditions, helps mgrs to describe & communicate 3. Understand behavior – understand & explain causes of behavior, find reasons behind actions, helps mgrs to understand better & deal effectively with employees 4. Predict behavior – helps mgrs to identify productive/ unprod employees, sincere, dedicated/ disruptive 5. Control behavior – motivate, reduce stress & improve team effort 6

Fundamentals of Organizational Behavior FORCES AFFECTING OB People  Most vital aspect of an org  Operate as individual / groups  Groups – large/ small/ official/ unofficial and are dynamic as they are formed, changed, disbanded  Employees come from diverse backgrounds, differ in education, talent, culture, lifestyle, values  Orgn must focus on building rel-ships, show care concern, attend to problems, build competence & sense of pride, create an environment of openness & 7 confidence

Fundamentals of Organizational Behavior Structure  Number of people working at diff levels & performing diff jobs  Structure is the formal rel-ship & use of people in orgn  Modern struc is flatter (fewer levels) & more complex Technology  Set of processes to transform resources into goods/ services  Significant impact on working rel-ships  Advantages & disadvantages of technology

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Fundamentals of Organizational Behavior Environment  Internal & external  Family, government, economic factors, competitors  Consumers have become more demanding expect more in terms of products / services

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NATURE OF PEOPLE Individual Differences – every human is unique & different from the other, on account of heredity (nature) and environment (nurture), mgrs cannot deal with all employees in the same way and each must be handled differently Perception – way in which each person sees, organizes and interprets things, perceptions differ in 2 individuals because of differences in their personality, needs and values. 10

Fundamentals of Organizational Behavior Selective perception is tendency to interpret what one sees on basis of their interests, backgrounds, experiences and attitudes. E.g. A mgr quickly notices mistake committed by a person he dislikes but fails to spot a mistake by his favourite subordinate Individual behavior is based on perception of situation and perception determines how people respond to situations 11

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A Whole Person – impossible to separate home & family life of a person from work life, or to separate physical characteristics of an individual from his emotional characteristics. Employees play many more roles outside the work place, what happens outside affects his performance at work.

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Motivated Behavior – human actions are intentional & purposeful, behavior has causes which may be related to his needs or consequences 12

Fundamentals of Organizational Behavior 2 basic ways in which mgrs can motivate 2. By showing employees how certain desirable behavior will be rewarded 3. By threatening employees that undesirable actions will be punished 

Desire for Involvement – employees have a strong desire to contribute to their orgn, they seek opportunities to utilise their knowledge, talents & skills for success of orgn, they have a strong desire to share ideas & be involved in decision making. 13

Fundamentals of Organizational Behavior Meaningful involvement of employees is possible through Empowerment – passing of responsibility and authority from mgrs to employees. It provides greater autonomy to employees through sharing of relevant information and is beneficial to both Empowerment makes employees feel competent and valued, their talents being used 

Value of Person (Human Dignity) – orgn must treat their employees with care, respect & dignity, not as mere economic tools, human beings need to be valued for their skills & abilities 14

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NATURE OF ORGANIZATIONS Social Systems : People interact as individuals & groups, 2 types of social systems exist together in orgn - formal (official) & informal. Behavior is governed by social laws & psychological laws

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Mutual Interest : Orgn needs people & people need orgns, for achieving objectives fulfilling individual needs

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Ethics : OB strongly advocates ethical practice, no breaking rules under pressure

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Fundamentals of Organizational Behavior When Orgns engage in ethical practice, result is Triple Reward System – objectives of people, orgn & society are met, everyone benefits and gains Individuals gain by better job satisfaction, spirit of cooperation & teamwork develops Orgns function more effectively & are successful, quality improves & costs are reduced Society gains as it gets better products/ services, more capable citizens & faster progress Orgns adopt ethical practices & take steps to promote high standards of ethics 16

Fundamentals of Organizational Behavior APPROACHES TO STUDY OF OB 

HUMAN RESOURCES APPROACH : considers people as most imp resource, primary focus is on growth & developmt, making people competent, creative & fulfilled, this approach is supportive & hence also called Supportive Approach.

This approach aims at creating a work environmt that provides employees with opportunities to develop their abilities to maximum extent & thereby resulting in Work Satisfaction & Greater Effectiveness 17

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CONTINGENCY APPROACH : This approach recognizes that each orgn is unique & so are its problems, hence diff methods of behavioral practices need to be adopted for diff situations.

This approach stress that mgrs must carefully analyse each situation, identify imp variables/ factors & select the method that is best suited for that situation Orgns are affected by a large number of interacting factors & the best way is contingent upon the situation & circumstances 18

Fundamentals of Organizational Behavior RESULTS ORIENTED APPROACH : Productivity is ratio of output to input, it is greater if an orgn is able to increase its output & reduce inputs, OB wants to improve productivity & effectiveness, but OB also takes into account human, social & economic inputs. E.g. by improving employee job satisfaction, OB creates positive human output, employee developmt programs create better employee & better citizens which are a valuable social output A popular measure to attain triple objectives is Total Quality Management or TQM, which aims at continuous improvement of all orgn processes. 

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Fundamentals of Organizational Behavior SYSTEMS APPROACH : All depts of an orgn are interconnected and interdependent parts of a larger system, this approach emphasizes that orgn is a system of many variables, each variable is affected by others, there are many subsystems in a large system, every subsystem requires some input & produces some output, systems have the ability to produce positive & negative results/ consequences, these consequences may be intended or unintended, there are long term and short term effects of these outcomes. 

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Fundamentals of Organizational Behavior Managers in orgns, while taking decisions must look not only at the immediate situation but also at the impact it will have on the orgn as a whole Managers need to carry out cost-benefit analysis to determine the impact of their action Eg to introduce a new snack item in the canteen of the company

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Fundamentals of Organizational Behavior LIMITATIONS OF OB 2. Behavioral Bias : Mgrs tend to overlook other imp issues, they may develop a tunnel vision – looking at problems from a narrow perspective & overlooking much larger, broader picture Mgrs must not only involve themselves in developing satisfied work force but also think of customer satisfaction Behavioral bias may cause Dependence, Over Contentment, Indiscipline & Irresponsible employees Rather than taking responsibility & learning from failures, employees may look for excuses to explain poor performance

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Fundamentals of Organizational Behavior Law of Diminishing Returns : Beyond a certain point, there is decline in output with each additional unit of input, it may decline to zero & may end up in negative It implies that more of a good or positive factor is not necessarily beneficial & will work only to a certain point As per the law, for any situation there is an optimal level of a desirable practice, beyond that optimal point results will gradually decline. E.g. increasing pay may initially lead to an improvement in performance but they will work only up to a certain point, beyond this point there will no further improvement in performance 

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Fundamentals of Organizational Behavior Mgrs must keep in mind this law before making imp decisions It is difficult to predict the exact point at which the law comes into effect, point may vary with circumstances There are several variables in a given situation, it is possible that excess of one variable reduces benefits of other variables Orgnal effectiveness is attained by paying attention to all variables in a situation or system, merely maximizing one variable is no guarantee that it will increase orgnal effectiveness 24

Fundamentals of Organizational Behavior UNETHICAL PRACTICES & MANIPULATION Mgrs may use knowledge of OB for benefit of people and society at large or for their own selfish means Mgrs may use knowledge to manipulate people & exploit people, use it to satisfy their selfish ends, such unethical use will be a total violation of the philosophy of OB Ethical leadership is based on the principles of Social responsibility & obligations, open communication, costbenefit analysis of human & social costs, not just economic costs 25

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NEW CHALLENGES FOR OB Need for Quick fix solutions : Extremely competitive business environment, mgrs are under pressure to deliver good results in shortest possible time, decisions may be taken without deep thought & unrealistic expectations Challenging Environments : how applicable are OB methods & techniques in fast changing business environment, good/ bad economic conditions OB needs clear definition : with regard to unit of analysis- individual / group, whether OB is source of info or only theory, whether to have micro / macro focus, make a list of contributions in improving OB 26