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Learning objectives
By the end of the unit, participants will be able
to:
Explain the nature of organizational behavior
Identify the major internal and external
influences of today’s organization
Discuss the theories of organizational behavior
and apply them to the work situation

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Recite the scientific foundations of human
and organizational behavior
List the major challenges and opportunities
for managers to use OB concepts
Discuss why workforce diversity has become
an important issue in management

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INTRODUCTION
Organizational behavior (OB) is an
interdisciplinary field drawing from numerous
disciplines including psychology, sociology,
economics, organization theory, statistics,
political science and many others behavioral
disciplines

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 The nature of an organization

Organizations are social systems which

comprises of science and people(technology
and humanity) .
Techniques alone do not produce results in
absence of design and implementations. 
Human behavior in an organization is
unpredictable due to their deep-seated needs
and value systems

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Nature of ob……….
As a result there is rarely any idealistic
solution to the problems in an organization.
One way to achieve some close to idealistic
solution is to enhance the understanding and
skill levels of human relations, at work place.

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Meaning of
organizations….
Basically, an organization is a group of people
intentionally organized to accomplish an
overall, common goal or set of goals.
Business organizations can range in size from
two people to tens of thousands.
Organizations have major subsystems, such
as departments, programs, divisions, teams,
etc.

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ORGANISATIONS……….
.

Each of these subsystems has a way of doing

things to, along with other subsystems;
achieve the overall goals of the organization.
Often, these systems and processes are
defined by plans, policies and procedures

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Systems have inputs, processes, outputs and
outcomes.
Inputs to the system include resources such
as raw materials, money, technologies and
people.
These inputs go through a process where
they're aligned, moved along and carefully
coordinated, ultimately to achieve the goals
set for the system.

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Outputs are tangible results produced by
processes in the system, such as products or
services for consumers.
Another kind of result is outcomes, or
benefits for consumers, e.g., jobs for workers,
enhanced quality of life for customers, etc.
Systems can be the entire organization, or its
departments, groups, processes, etc.

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Feedback comes from, e.g., employees who
carry out processes in the organization,
customers/clients using the products and
services, etc.
Feedback also comes from the larger
environment of the organization, e.g.,
influences from government, society,
economics, and technologies.

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Each organization has numerous subsystems, as
well. Each subsystem has its own boundaries of
sorts, and includes various inputs, processes,
outputs and outcomes geared to accomplish an
overall goal for the subsystem.
Common examples of subsystems are departments,
programs, projects, teams, processes to produce
products or services, etc.
Organizations are made up of people -- who are also
systems of systems of systems -- and so on it goes.
Subsystems are organized in an hierarchy needed to
accomplish the overall goal of the overall system.

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The organizational system is defined by,
e.g., its legal documents (articles of
incorporation, by laws, roles of officers, etc.),
mission, goals and strategies, policies and
procedures, operating manuals, etc.

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The organization is depicted by its organizational
charts, job descriptions, marketing materials, etc.
The organizational system is also maintained or
controlled by policies and procedures, budgets,
information management systems, quality
management systems, performance review
systems, etc

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What is Organizational
Behavior?
Organizational Behavior (OB) is the study and
application of knowledge about how people,
individuals, and groups act in organizations.
 It does this by taking a system approach. That
is, it interprets people-organization
relationships in terms of the whole person,
whole group, whole organization, and whole
social system.

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Its purpose is to build better relationships by
achieving human objectives, organizational
objectives, and social objectives.
It is an academic field of study concerned
with human behavior in organizations; also
called organizational psychology.

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It covers topics such as Motivation,
Group Dynamics, leadership, organization
structure, decision making, careers, conflict
resolution, and Organizational Development.
When this subject is taught in business
schools, it is called organizational behavior;
when it is taught in psychology departments,
it is called organizational psychology.

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Organizational behavior is an academic
discipline concerned with describing,
understanding, predicting, and controlling
human behavior in an organizational
environment.

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Organizational behavior has evolved from
early classical management theories into a
complex school of thought—and it continues
to change in response to the dynamic
environment and proliferating corporate
cultures in which today's businesses operate.

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Organizational behavior scientists study four
primary areas of behavioral science: individual
behavior, group behavior, organizational
structure, and organizational processes.
They investigate many facets of these areas
like personality and perception, attitudes and
job satisfaction, group dynamics, politics and
the role of leadership in the organization, job
design, the impact of stress on work, decision-
making processes, the communications chain,
and company cultures and climates.

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They use a variety of techniques and
approaches to evaluate each of these
elements and its impact on individuals,
groups, and organizational efficiency and
effectiveness

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Organization Behavior -
the concept
This is a broad field of study which can be
also thought of as a platform and
environment independent tool which can be
used to study and apply knowledge about
how people act within organizations.
The three determinants of behavior in an
organization are individual, group and
structure. 

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Organizational Behavior covers the core
topics of motivation, leadership behavior and
power, interpersonal communication, group
structure and process, learning, attitude
development and perception, change process,
conflict, job design and work stress. 

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 The scope of OB
1. People: They make up the internal social system
of the organization consisting of individuals and
groups (large and small).Work force is a complicated
resource to be managed. This process deals with.
 Individuals who are expected to perform the task
allotted to them.
Superior-subordinate interactions.
Teams who have the responsibility of getting the job
done.
The outside interface as the customers and the
government officials.

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2. Structure: This defines the official
relationship of individuals in an organization.
Various people with various roles as managers,
accountants, assemblers etc. are related in
some structural way so that the output can be
effective. The key concepts related to this are:
Hierarchy of Authority: Distribution of
authority among positions along with the
rights assigned to them.
 Division of labor: This is the way the duties
are distributed among various members and is
a major element of the social structure

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Span of Control: Total number of
subordinates over whom a manager has
authority
Specialization: Existence of specialties
performed in the organization.
Standardization: existence of procedures
for recurring events.

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 Formalization: extent of rules, procedures
and communication laid out.
Centralization: concentration of authority to
make the decision.
 Complexity: It includes both vertical
differentiation (outline number of hierarchical
levels) and horizontal differentiation (number
of units inside the organization as
departments).

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3. Mechanistic form: A mechanistic system is
characterized by centralized decision making
at the top level management, a rigid hierarchy
of authority, narrowly defined job
responsibilities and extensive rules and
regulations explicitly disclosed to the
employees through written documents.

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Organic form: An organic system can be
defined in terms of decentralization of
decision making which allows people directly
involved in the job to make their own
decisions, few levels in hierarchy with flexible
authority and reporting levels, loosely defined
job responsibilities and very few written rules
and regulations.

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5. Job and tasks: Job is the sum total of an
individual's assignment at the workplace and
the task refers to the various activities that
need to be performed to get the job done.
To provide motivation to the workers five job
characteristics have been grossly defined.
They are Skill variety, Task identity, Task
significance, Autonomy and Feedback from
the job.

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The jobs can be designed to range from
highly simple to highly complex tasks in
terms of the use of the workers skill.
Some of the design options are job
simplification, job rotation, job enlargement
and job enrichment.

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6. Technology: This provides the physical
and economic resources with which people
work.
The organization has the technology for
transforming inputs and outputs.
These consist of physical objects, activities
and process, knowledge, all of which are
brought to bear on raw materials labor and
capital inputs during a transformation
process.

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The technology can be classified in three
categories namely Long linked technology in
which tasks are broken into a number of
sequential and interdependent steps and the
output of one unit becomes the input to the
next, Mediating technology which links
different parties who need to be brought
together in a direct or an indirect way and
Intensive technology which is used when a
group of specialists are brought together to
solve complex problems using a variety of
technologies.

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7. Environment: All organizations operate
within an external environment. All
organizations mutually influence each other in
a complex system that influence the attitudes
of people, affects working conditions and
provides competition for resources and power.
 Two distinct sets of environment exist.
Specific environment which includes the
suppliers, customers, competitors,
government's agencies, employees, unions,
political parties etc.
General environment includes the economic,
political, cultural, technological and social
factors in which the organization embedded.
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Firms facing a fast changing or turbulent
external environment were very effective when
they had more organic structures which
provided flexibility for quick changes to be
make within the internal environment of the
system.
Similarly, firms which operated in a relatively
stable external environment were very effective
when they had more mechanistic structures
since it allows the system to operate in a
predictable manner since authority,
responsibility, procedures, and rules are clearly

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The behavioral disciplines
contributing to ob
Experimental psychology-Learning; motivation,
perception, effects of physical environment on
psychomotor performance, stress
Social Psychology-Group dynamics, attitudes
and attitude change, impression formation,
personality, leadership
 Industrial Psychology-Measurement of
performance, abilities, job performance, abilities,
job characteristics, employee compensation,
applied motivational programs

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Clinical Psychology-Human adjustment, emotional
stress, abnormal behavior, human development
throughout the life cycle
Sociology-Socialization process, social satisfaction,
status systems, effects of major social institutions
such as family, community, religion, organizational
structure
Political science-Interest groups, conflicts, power,
bargaining, coalitions, strategic planning, control

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Anthropology-Comparative organizational
structures, their functions in varying cultures,
cultural influences on organizations,
adaptation of organizations to environment
Economics-Comparative organizational
structures, their functions in varying cultures,
cultural influences on organizations,
adaptation of organizations to environment

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Why study OB?
The bottom line is that:
Tools from Organizational Behavior can be
used to help companies create positive and
effective organizational cultures.
Students who are committed to serving as
positive change agents within companies can
use the OB toolkit to help them achieve their
goals.

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OB model
Dependent variables
 Productivity
 Absenteeism
 Turnover
 Job Satisfaction
Independent variables
Individual-level variables
Group-level variables
Organizational systems-level variables

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Historical
developments of OB
By most estimates, OB emerged as a distinct
field around the 1940s. However, its origins can
be traced much further back in time.
The Greek philosopher Plato wrote about the
essence of leadership. Aristotle, another
respected philosopher, addressed the topic of
persuasive communication.
The writings of sixteenth-century Italian
philosopher Niccolo Machiavelli laid the
foundation for contemporary work on
organizational power and politics.
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In 1776, Adam Smith advocated a new form of
organizational structure based on the division of labor.
One hundred years later, German sociologist Max
Weber wrote about rational organizations and initiated
discussion of charismatic leadership.
Soon after, Frederick Winslow Taylor introduced the
systematic use of goal setting and rewards to motivate
employees.

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In the 1920s, Elton Mayo and his colleagues
conducted productivity studies at Western
Electric’s Hawthorne plant.
They reported that an informal organization –
employees casually interacting with others –
operates alongside the formal organization.
OB has been around for a long time; it just
wasn’t organized into a unified discipline until
after World War II.

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Though it traces its roots back to Max Weber and
earlier, organizational studies is generally considered
to have begun as an academic discipline with the
advent of scientific management in the 1890s, with
Taylorism representing the peak of this movement.

Proponents of scientific management held that

rationalizing the organization with precise sets of
instructions and time-motion studies would lead to
increased productivity.
 Studies of different compensation systems were
carried out.

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After the First World War, the focus of organizational
studies shifted to analysis of how human factors and
psychology affected organizations, a transformation
propelled by the identification of the Hawthorne Effect
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This Human Relations Movement focused on teams,
motivation, and the actualization of the goals of
individuals within organizations.
Prominent early scholars included Chester Barnard,
Henri Fayol, Frederick Herzberg, Abraham Maslow,
David McClelland, and Victor Vroom.

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The Second World War further shifted the field,
as the invention of large-scale logistics and
operations research led to a renewed interest in
rationalist approaches to the study of
organizations.
Interest grew in theory and methods native to
the sciences, including systems theory, the
study of
organizations with a complexity theory perspective
and complexity strategy.
 Influential work was done by
Herbert Alexander Simon and James G. March
and the so-called "Carnegie School" of
organizational behavior.

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In the 1960s and 1970s, the field was strongly
influenced by social psychology and the
emphasis in academic study was on
quantitative research.
An explosion of theorizing, much of it at
Stanford University and Carnegie Mellon,
produced Bounded Rationality,
Informal Organization, Contingency Theory,
Resource Dependence, Institutional Theory, and
Organizational Ecology theories, among many
others.
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Starting in the 1980s, cultural explanations of
organizations and change became an
important part of study. Qualitative methods
of study became more acceptable, informed
by anthropology, psychology and sociology.
A leading scholar was Karl Weick.

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Specific Contributions
Frederick Winslow Taylor (1856-1915) was the
first person who attempted to study human
behavior at work using a systematic approach.
Taylor studied human characteristics, social
environment, task, physical environment,
capacity, speed, durability, cost and their
interaction with each other.
His overall objective was to reduce and/or
remove human variability.

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Taylor worked to achieve his goal of making
work behaviors stable and predictable so that
maximum output could be achieved.
He relied strongly upon monetary incentive
systems, believing that humans are primarily
motivated by money.
 He faced some strong criticism, including being
accused of telling managers to treat workers as
machines without minds, but his work was very
productive and laid many foundation principles
for modern management study.

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Elton Mayo
Elton Mayo, an Australian national, headed
the Hawthorne Studies at Harvard.
In his classic writing in 1931, Human
Problems of an Industrial Civilization, he
advised managers to deal with emotional
needs of employees at work.

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Mary Parker Follett
Mary Parker Follett was a pioneer
management consultant in the industrial
world.
As a writer, she provided analyses on workers
as having complex combinations of attitude,
beliefs, and needs.
She told managers to motivate employees on
their job performance, a "pull" rather than a
"push" strategy.

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Douglas McGregor
Douglas McGregor proposed two
theories/assumptions, which are very nearly
the opposite of each other, about human
nature based on his experience as a
management consultant.
His first theory was “Theory X”, which is
pessimistic and negative; and according to
McGregor it is how managers traditionally
perceive their workers.
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Then, in order to help managers replace that
theory/assumption, he gave “Theory Y” which
takes a more modern and positive approach.
He believed that managers could achieve
more if they start perceiving their employees
as self-energized, committed, responsible and
creative beings.

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By means of his Theory Y, he in fact challenged the
traditional theorists to adopt a developmental
approach to their employees.
 He also wrote a book, The Human Side of
Enterprise, in 1960; this book has become a
foundation for the modern view of employees at
work.

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Current state of the field

Organizational behaviour is currently a

growing field.
Organizational studies departments generally
form part of business schools, although many
universities also have industrial psychology
and industrial economics programs.

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The field is highly influential in the business world
with practitioners like Peter Drucker and Peter Senge
, who turned the academic research into business
practices.
Organizational behaviour is becoming more
important in the global economy as people with
diverse backgrounds and cultural values have to
work together effectively and efficiently.
It is also under increasing criticism as a field for its
ethnocentric and pro-capitalist assumptions

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During the last 20 years organizational behavior
study and practice has developed and expanded
through creating integrations with other
domains:
Anthropology became an interesting prism to
understanding firms as communities, by
introducing concepts like Organizational culture,
'organizational rituals' and 'symbolic acts'
enabling new ways to understand organizations
as communities.
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Leadership Understanding: the crucial role of
leadership at various level of an organization
in the process of change management.
Ethics and their importance as pillars of any
vision and one of the most important driving
forces in an organization.

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Methods used in
organizational studies
A variety of methods are used in
organizational studies.
They include quantitative methods found in
other social sciences such as
multiple regression, non-parametric statistics,
time dependent analysis, and ANOVA.

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 In addition,
computer simulation in organizational studies has
a long history in organizational studies.
 Qualitative methods are also used, such as
ethnography, which involves direct
participant observation, single and multiple
case analysis, and other historical methods.
In the last fifteen years or so, there has been
greater focus on language, metaphors, and
organizational storytelling.

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Classical
organizational theory
Classical organizational theory was driven by the
desire to provide answers to certain questions.
Among these critical questions were:
How should work be divided by departments and
by individuals?
How much authority should be given to the
incumbent of each position?
What should his duties be?
What mean of coordination should be provided?

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Both managers and writers on management
had in the past tried to discover principles to
answer the questions and the quest is
continuing now also.
 Fayol’s analysis of management and
principles that he stated regarding
organization became the basis for many
writers to develop their thinking on this issue.

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The most commonly stated principles from
this approach are expressed as OSCAR:
Objectives, specialization, coordination,
authority, and responsibility (Dale, 1965).
This thinking of this group of writers who
followed and developed Fayol’s thoughts is
termed as classical theory of the organization.

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Criticism-The criticism of the classical theory
includes the opinion that it is too mechanistic.
The theory seemed to assume that top
management only needed to know what is to
be done or what it wanted to be done.
It will arrange for an organization in which all
roles are exactly dovetailed.
It will issue the necessary orders down
through the chain of command, and hold each
person accountable for the performance.
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Each person is spurred into appropriate action
by the hope or reward and fear or penalties.
Classical school expressed the belief that, if
these steps are followed, the organization will
function harmoniously and effectively. No
doubt, they laid stress on the principle of
esprit de corps, but its implication was not
explored.

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Behavioral Theory –
Organization Behavior

The criticism of classical theory as too

mechanistic resulted in a new theory of
organization that emphasized that
organizations are made up of human beings
and orders and policies will be subject to
reinterpretation in the light of psychological
“set” of those who transmit them or carry
them out as well as the social environment.

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 The people in the organization are motivated by many forces
beside those taken into account by the classicists and
employees of an organization are often seeking goals
different from those expressed in the organization manual.
Theory developed in the field of organization design and
management based on behavioral variables of human beings
in the subject of organization behavior.
Chester Barnard was probably the first of the behavioral
theorists of organization (Dale, 1965).

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Theory (1890-1940)

At the turn of the century, the most notable

organizations were large and industrialized.
Often they included ongoing, routine tasks
that manufactured a variety of products.
The United States highly prized scientific and
technical matters, including careful
measurement and specification of activities
and results.

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Management tended to be the same. Frederick
Taylor developed the: scientific management
theory” which espoused this careful specification
and measurement of all organizational tasks.
Tasks were standardized as much as possible.
Workers were rewarded and punished.
This approach appeared to work well for
organizations with assembly lines and other
mechanistic, routinized activities.

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Management THEORY
(1930-1950)
Max Weber embellished the scientific
management theory with his bureaucratic
theory.
 Weber focused on dividing organizations
into hierarchies, establishing strong lines of
authority and control.
He suggested organizations develop
comprehensive and detailed standard
operating procedures for all routinized tasks.

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MOVEMENT (1930-today)

Eventually, unions and government

regulations reacted to the rather
dehumanizing effects of these theories.
More attention was given to individuals and
their unique capabilities in the organization.
A major belief included that the organization
would prosper if its workers prospered as
well. Human Resource departments were
added to organizations.

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The behavioral sciences played a strong role
in helping to understand the needs of workers
and how the needs of the organization and its
workers could be better aligned.
Various new theories were spawned, many
based on the behavioral sciences (some had
name like theory “X”, “Y” and “Z”).

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