INTRODUCTION TO OB

1. ORGANISATIONAL
BEHAVIOUR
UNIT 1
NATURE OF ORGANISATIONAL BEHAVIOUR

2. DEFINITION OF ORGANISATION
 Louis Allen, “Organization is the process of identifying and grouping work
to be performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.” In the words of Allen,
organization is an instrument for achieving organizational goals. The work
of each and every person is defined and authority and responsibility is
fixed for accomplishing the same.
 Koontz and O’Donnell, ‘The establishment of authority relationships with
provision for co-ordination between them, both vertically and horizontally
in the enterprise structure.”
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3. FORMAL ORGANISATION
 Formal organisation is “a system of well-defined jobs, each bearing a
definite measure of authority, responsibility and accountability, the whole
consciously designed to enable the people of the enterprise to work most
effectively together in accomplishing their objectives.”
 It is a deliberately designed structure with formal authority, responsibility,
rules, regulations and channels of communication. Some degree of
formalization is necessary for organisations to function effectively; to avoid
taking time-consuming decisions, to handle conflicting situations and
exercise control over the activities of subordinates.
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5. ADVANTAGES OF FORMAL ORGANISATION
 It clearly defines objectives of the organisation and authority- responsibility relationships
amongst people to attain those objectives.
 It results in optimum utilisation of scarce organisational resources.
 Division of work and relationships amongst people develops effective system of
communication in the organisation.
 The organisational hierarchy avoids overlapping of activities between two individuals or
two departments. Two individuals are not assigned the same task.
 Career advancement and promotional avenues are clearly defined in the formal
structure of organisation.
 The rate of absenteeism and labour turnover (the rate at which people join and leave the
organisation) remains low. (because of clear objectives, policies, strategies etc.).
 Formal organisation integrates formal goals of the organisation with goals of individuals
working in the organisation. There is, thus, synthesis of individual, group and organisational
goals.
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6. DISADVANTAGES OF FORMAL
ORGANISATION
 As too much emphasis is placed upon formal rules and regulations, workers do not use their
creative and innovative skills to perform organisational tasks. There is loss of initiative and
innovative abilities due to strict adherence to rules.
 Man is a social being. He needs to interact with people and share his feelings at-work and off-
work with others. In a formally designed organisation structure, social needs remain unsatisfied as
people are related to each other through a formal chain of command to discuss only official
matters with each other. Social interactions are altogether ignored.
 Decision making is slow in a formal organisation. It is important to realise that any organisational
need has to flow through the respective chain of commands before being addressed.
 Formal organisation is very rigid in nature. This means that there prevails perfect discipline
coupled with no deviations from the procedures. Hence, this can lead to low recognition of
talent.
 Lastly, the formal organisation does not take into account the social nature of humans as it talks
about only structure and work. Interestingly, we cannot eliminate this integral part of our nature.
Hence, it does not entirely display the functioning of the organisation.
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7. INFORMAL ORGANISATION
 As formal organisation grows in size, parallel existence of informal
relationships along with formal relationships becomes unavoidable.
Informal organisations have always existed with formal organisations. They
arise because of inevitable social and personal needs of individuals which
cannot be satisfied by the principles of formal organisation. They represent
non-planned, unofficial, social interactions amongst people working in
formal structures. They arise out of common interests of people.
 These organisations are not governed by formal set of principles but they
are an important and integral part of formal organisations. E. Wight Bakke
calls the creation of informal organisations along with formal organisations
a fusion process.
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9.  “When an individual and an organisation come together in such a way that the individual
is a participant in, and a member of, the organisation and the two are mutually
dependent on each other, both are reconstructed in the process. The organisation to
some degree remakes the individual and the individual to some degree remakes the
organisations.”
 Keith Davis defines informal organisation as “a network of personal and social relations not
established or required by formal organisation but arising spontaneously as people
associate with one another.”
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10. ADVANTAGES OF INFORMAL
ORGANISATION
 Promotes social and cultural values
 Relief to top managers
 Supplement to managers’ capacities
 Social satisfaction and security
 Communication
 Better relationships
 Promotes creativity:
 Self-control
 Restraint on discretion
 Social satisfaction
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11. DISADVANTAGES OF INFORMAL
ORGANISATION
 Conformity
 Attitude of leaders
 Role conflict
 Rumour
 Resistance to change:
 Conflicting goals
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12. Organizational BEHAVIOUR
 Organizational behavior is a field of study that investigates the impact that
individuals, groups, and structures have on behavior within the
organization. This impact works towards improving the organization's
effectiveness
 “Organisational behaviour is a subset of management activities
concerned with understanding, predicting and influencing individual
behaviour in organisational setting.”—Callahan, Fleenor and Kudson
 “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.
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13.  The concept of OB is based on two key elements namely −
 Nature of people
 Nature of the organization
 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
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14. Nature of People
 Individual Difference
 Perception
 A whole person
 Motivated behavior
 Positive motivation
 Negative motivation
 Value of person
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15. Nature of Organization
 Social system
 Formal
 Informal
 Mutual interest
 Ethics
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16. Evolution of Organizational Behaviour
 Concepts of OB in Vedas —
 Four Varna (Allocation of work), Four Purusarth (allocation of activities), Home
and work distance (Township)
 Kautilaya’s Arthsastra
 Relationship with friend, superior, subordinate, ministers, servant etc.
 Wage rate and differences
 Values in organizations
 1800 BC Babylonian Code
 Minimum Wage Rate
 Incentive Wage Rate
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17.  1800 – Robert Owen
 Father or Personnel Management
 Emphasize the human factor in organization
 Refused to give employment to children
 Teach workers the importance of working conditions and cleanliness
 1835 – Andrew Ure
 The philosophy of Manufacturers
 Provide snacks, medical treatment and sickness benefits
 1840 – J N Tata
 Emphasize the dignity of labor at organization
 Improve the working conditions
 1886 – introduce pensions plans
 1895 – accident compensations schemes
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18.  1880 – Scientific Management
 Frederiek Taylor decides to time each and every worker at the Midvale Steel Company.
His view of the future becomes highly accurate:
 1922: Max Weber gives the concept of Bureaucracy
 1930-1950 –Human Relation Management
 Elton Mayo
 Non economic and Social factors were considered
 1932 – The Hawthorne Studies
 Elton Mayo becomes the first to question the behavioural assumptions of scientific
management. The studies concluded that human factors were often more important
than physical conditions in motivating employees to greater productivity
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19.  1954 – Hierarchy of Needs
 Maslow’s theory of hierarchy need is published in his book Motivation and
Personality. This provides a framework for gaining employees’
commitment.
 1954 – Leadership/Management
 Drucker writes The Practice of Management and introduces the 5 basic
roles of managers. He writes, “The first question in discussing organization
structure must be: What is our business and what should it be?
Organization structure must be designed so as to make possible the
attainment of objectives of the business for five, ten, fifteen years hence.”
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20.  1959 – Hygiene and Motivational Factors
 Frederick Herzberg developed a list of factors which are closely based on Maslow’s
Hierarchy of Needs, except it more closely related to work. Hygiene factors must be
present in the job before motivators can be used to stimulate the workers.
 1960s – Organization Development
 In the 1950s and 1960s a new, integrated approach originated known as Organization
Development (OD): the systematic application of behavioral science knowledge at
various levels (group, intergroup, and total organization) to bring about planned change
 1960 – Theory X and Theory Y
 Douglas McGregor’s Theory X and Theory Y principles influence the design and
implementation of personnel policies and practices.
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21.  1964 – Management Grid
 Robert Blake and Jane Mouton develop a management model that conceptualizes
management styles and relations. Their Grid uses two axes. “Concern for people” is
plotted using the vertical axis and “Concern for task” is along the horizontal axis. The
notion that just two dimensions can describe a managerial behavior has the attraction of
simplicity.
 1990 – Learning Organization
 Peter Senge popularized the “Learning Organization” in The Fifth Discipline: The Art and
Practice of the Learning Organization. He describes the organization as an organism with
the capacity to enhance its capabilities and shape its own future. A learning organization
is any organization (e.g. school, business, government agency) that understands itself as a
complex, organic system that has a vision and purpose. It uses feedback systems and
alignment mechanisms to achieve its goals.
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22.  1995 – Ethics
 On December 11, 1995 a fire burned most of Malden Mills to the ground
and put 3,000 people out of work. Most of the 3,000 thought they were out
of work permanently. CEO Aaron Feuerstein says, “This is not the end” —
he spent millions keeping all 3,000 employees on the payroll with full
benefits for 3 months until he could get another factory up and running.
Why? He answers, “The fundamental difference is that I consider our
workers an asset, not an expense.”
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23. SCOPE OF OB
 Organizational behavior sheds light on the complex human factor in
organization by identifying causes and effects of human behavior.
Organization behavior is called social science because its main concern is
people and their behavior.
 It is the field of study that integrates behavioral sciences like psychology,
and anthropology for the study of human behavior in land around
organizations
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24. Individual Behavior
 It is the study of individual’s personality, learning, attitudes, motivation, and
job satisfaction. In this study, we interact with others in order to study about
them and make our perception about them.
 Example − The personal interview round is conducted to interact with
candidates to check their skills, apart from those mentioned in the resume.
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25. Inter-individual Behavior
 It is the study conducted through communication between the employees
among themselves as well as their subordinates, understanding people’s
leadership qualities, group dynamics, group conflicts, power and politics.
 Example − A meeting to decide list of new board members.
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26. Group Behavior
 Group behavior studies the formation of organization, structure of
organization and effectiveness of organization. The group efforts made
towards the achievement of organization’s goal is group behavior. In short,
it is the way how a group behaves.
 Example − Strike, rally etc.
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27. People
 The people constitute the internal social system of the organization. They
consist of individuals and groups. Groups may be large or small, formal or
informal, official or unofficial.
 They are dynamic. They form, change and disband. Human organization
changes every day. Today, it is not the same as it was yesterday. It may
change further in the coming days.
 People are living, thinking and feeling being who created the organization
and try to achieve the objectives and goals. Thus, organizations exist to
serve the people and not the people exist to serve the organization
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28. Structure
 Structure defines the sole relationship of people in an organization.
Different people in an organization are given different roles and they have
certain relationship with others.
 It leads to division of labour so that people can perform their duties or work
to accomplish the organizational goal. Thus, everybody cannot be an
accountant or a clerk.
 Work is complex and different duties are to be performed by different
people. Some may be accountant, others may be managers, clerks,
peons or workers.
 All are so related to each other to accomplish the goal in a co-ordinated
manner.
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29. Technology
 Technology imparts the physical and economic conditions within which
people work.
 With their bare hands people can do nothing so they are given assistance
of buildings, machines, tools, processes and resources.
 The nature of technology depends very much on the nature of the
organization and influences the work or working conditions.
 Thus, technology brings effectiveness and at the same restricts people in
various ways.
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30. Social System
 Social system provides external environment which the organization
operates. A single organization cannot exist also.
 It is a part of the whole. One organization cannot give everything and
therefore, there are many other organizations.
 All these organizations influence each other. It influences the attitudes of
people, their working conditions and above all provides competition for
resources and power.
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31. MODELS OF OB
 Models are frameworks or possible explanations why do people behave as
they do at work.
 There are so many models as many are organizations. Varying results
across the organizations are substantially caused by differences in the
models of organizational behaviour.
 All the models of organizational behaviour are broadly classified into four
types: autocratic, custodial, supportive and collegial.
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32. Autocratic Model
 The root level of this model is power with a managerial orientation of
authority. The employees in this model are oriented towards obedience
and discipline.
 They are dependent on their boss. The employee requirement that is met is
subsistence. The performance result is less.
 The major drawbacks of this model are people are easily frustrated,
insecurity, dependency on the superiors, minimum performance because
of minimum wage.
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33. Custodial Model
 The root level of this model is economic resources with a managerial
orientation of money. The employees in this model are oriented towards
security and benefits provided to them.
 They are dependent on the organization. The employee requirement that
is met is security.
 This model is adapted by firms having high resources as the name suggest.
It is dependent on economic resources.
 This approach directs to depend on firm rather than on manager or boss.
They give passive cooperation as they are satisfied but not strongly
encouraged.
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34. Supportive Model
 The root level of this model is leadership with a managerial orientation of
support. The employees in this model are oriented towards their job
performance and participation.
 The employee requirement that is met is status and recognition. The
performance result is awakened drives.
 This model is dependent on leadership strive. It gives a climate to help
employees grow and accomplish the job in the interest of the
organization.
 Management job is to assist the employee’s job performance. Employees
feel a sense of participation
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35. Collegial Model
 The root level of this model is partnership with a managerial orientation of
teamwork. The employees in this model are oriented towards responsible
behavior and self-discipline.
 The employee requirement that is met is self-actualization. The
performance result is moderate zeal.
 This is an extension of supportive model. The team work approach is
adapted for this model.
 Self-discipline is maintained. Workers feel an obligation to uphold quality
standard for the better image of the company. A sense of “accept” and
“respect” is seen.
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36. System model
 The final organisational model is referred to as the system model.
 This is the most contemporary model of the five models. In the system model, the
organisation looks at the overall structure and team environment, and considers
that individuals have different goals, talents and potential.
 The intent of the system model is to try and balance the goals of the individual with
the goals of the organisation.
 Individuals obviously want good remuneration, job security, but also want to work in
a positive work environment where the organisation adds value to the community
and/or its customers.
 The system of model should be an overall partnership of managers and employees
with a common goal, and where everybody feels that they have a stake in the
organisation.
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38. Interpretation of Different Models :
Various conclusions may be drawn from the study of different models
as follows :
 (i) As soon as the understanding of human behaviour develops or social
conditions change, the model is bound to change. No one model is best
for all times.
 (ii) Models or organizational behaviour are related to hierarchy of human
needs. As society advances on the need hierarchy, new models are
developed to serve the higher order needs that is paramount at that time.
 (iii) Present tendency towards more democratic models of organizational
behaviour will continue to develop for long run.
 (iv) Different models will remain in use though new model predominates as
most appropriate for general use at any given time as task conditions differ
from time to time and organization to organization.
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