organizational behaviour module 1 MBA notes. basics of organizational behaviour and business structure. management thoughts by management gurus, management vs. administration. management as ans art or science. functions of management. basics of principles of business management

1. O R G A N I Z A T I O N
B E H A V I O R -
M O D U L E 1
F O U N D A T I O N O F
M A N A G E M E N T
Dr.Vaidehi Shukla
Asst.Professor,
Shri Chimanbha Patel Institute of
Management & Research, Ahmedabad.

2. CONCEPT OF MANAGEMENT
• Management is an art of getting things done through and with the people in formally organized
groups. It is an art of creating an environment in which people can perform and individuals and
can co-operate towards attainment of group goals.
• According to Henri Fayol, "to manage is to forecast and to plan, to organize, to command, to
co-ordinate and to control.
• Fredmund Malik defines it as "the transformation of resources into utility."

3. MANAGEMENT ART OR SCIENCE?
• Management as an art
Mary parker, koontz & several others management authors called management ‘as an art of
getting things done through people’
Art refers to creative skills and talent which people required to conduct certain activities
effectively.
Art is an inbound talent however it can be refined through learning and practice.

4. • Management is an art due to the following
reasons:
Intelligence
Initiative
Innovation
Individual approach
Application and dedication
Result oriented

5. • Management as a science
Science is a systematic body of
knowledge which is universally
accepted.
Fredrick Taylor- the first person to
consider management as a science, he
believed management should conduct
their business affairs by following
certain well-established standards.
Science can be broadly divided into two
groups:
a. Physical science.
b. Social science.

6. Physical sciences like physics, chemistry &
mathematics are exact and accurate as they deal with
human beings, whereas social science are not exact
and accurate as they deal with human beings.
Management is a social science because it deals
with human beings, since human nature cannot be
predicted with accuracy, the decision taken in
management may just be one way of doing things in
a given situation & not the only way of doing things

7. COMPARISON:
MANAGEMENT AN ART VS SCIENCE
Art Science
Based on practice and creativity Based on experimentation
It is theoretical body of knowledge It is a systematized body of
knowledge
Has personalized application Has a universal application

8. From the above study we conclude that art & science both
According to ‘American society of mechanical engineers’
“Management is the art & science of preparing, organizing ,directing human efforts to control the
forces & utilize the material of nature for the benefit of men does it has now been accepted that a
“management is an art & science”

9. MANAGEMENT VS ADMINISTRATION
• According to Theo Haimann, “administration means overall determination of policies, setting of
major objectives, the identification of general purposes and laying down of broad programmes
and projects”. It refers to the activities of higher level. It lays down basic principles of the
enterprise.
• Whereas, management involves conceiving, initiating and bringing together the various
elements; coordinating, actuating, integrating the diverse organizational components while
sustaining the viability of the organization towards some pre-determined goals. In other words,
it is an art of getting things done through & with the people in formally organized groups.

10. Basis Management Administration
Meaning Management is an art of
getting things done
through others by
directing their efforts
towards achievement of
pre-determined goals.
It is concerned with
formulation of broad
objectives, plans &
policies.
Nature Management is an
executing function.
Administration is a
decision-making
function.
Process Management decides
who should as it & how
should he dot it.
Administration decides
what is to be done &
when it is to be done.
Function Management is a doing
function because
managers get work done
under their supervision.
Administration is a
thinking function
because plans & policies
are determined under it.
Skills Technical and Human
skills
Conceptual and Human
skills
Level Middle & lower level
function
Top level function

11. Applicability It is applicable to
business concerns
i.e. profit-making
organization.
It is applicable to
non-business
concerns i.e. clubs,
schools, hospitals
etc.
Influence The management
decisions are
influenced by the
values, opinions,
beliefs & decisions
of the managers.
The administration
is influenced by
public opinion, govt.
policies, religious
organizations,
customs etc.
Status Management
constitutes the
employees of the
organization who
are paid
remuneration (in the
form of salaries &
wages).
Administration
represents owners of
the enterprise who
earn return on their
capital invested &
profits in the form of
dividend.

12. FUNCTIONS OF MANAGEMENT
• Planning, Organizing, Leading & Controlling (Newman & Summer)
• Planning, Organizing, Commanding, Coordinating and Controlling (Henri
Fayol)
• ‘POSDCORB’: Planning, Organizing, Staffing, Directing, Coordinating,
Reporting & Budgeting (Luther Gulick)
• Decision Making, Organizing, Staffing, Planning, Controlling, Communicating
& Directing (Warren Haynes & Joseph Massie)
• Planning, Organizing, staffing, directing & Controlling (Koontz O’Donnell)

13. FUNCTIONS OF MANAGEMENT
There are various functions of management stated by various authors. Here we
have listed down the most common and largely ace[ted management functions:
• Planning
• Organizing
• Staffing
• Directing
• Controlling

14. Planning
Deciding in advance :
• What to do
• How to do
• When to do
• Who is going to do it
Bridges a gap between where we are today and where we want to reach.
Sets the goal of an organization.
It is the basic function of management. It deals with chalking out a future course of
action & deciding in advance the most appropriate course of actions for achievement of
pre-determined goals.
Thus, planning is a systematic thinking about ways & means for accomplishment of pre-
determined goals. Planning is necessary to ensure proper utilization of human & non-
human resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties

15. Organizing
It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, “To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”.
To organize a business involves determining & providing human and non-human resources to the
organizational structure.
Establishing the framework of working:
• How many units or sub-units or departments are needed.
• How many posts or designations are needed in each department.
• How to distribute authority and responsibility among employees
• Once these decisions are taken, organizational structure gets set up.

16. Staffing
• Recruiting, selecting, appointing the employees, assigning duties, maintaining
cordial relationship and taking care of grievances of employees.
• Training and Development of employees, deciding their remuneration, promotion
and increments.
• Evaluating their performance.
It is the function of manning the organization structure and keeping it manned. Staffing
has assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc.
The main purpose o staffing is to put right man on right job i.e. square pegs in square
holes and round pegs in round holes.

17. Staffing involves:
• Manpower Planning (estimating manpower in terms of
searching, choose the person and giving the right place).
• Recruitment, selection & placement.
• Training & development.
• Remuneration.
• Performance appraisal.
• Promotions & transfer.

18. Directing
• Giving direction or instruction to employees to get the job done.
• Leadership qualities are required.
• Motivating employees by providing monitory and non-monitory incentives
• Communicating with them at regular intervals.
It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes.
It is considered life-spark of the enterprise which sets it in motion the action of people
because planning, organizing and staffing are the mere preparations for doing the
work. Direction is that inert-personnel aspect of management which deals directly
with influencing, guiding, supervising, motivating subordinate for the achievement of
organizational goals.

19. • Supervision- implies overseeing the work of subordinates by their superiors. It is
the act of watching & directing work & workers.
• Motivation- means inspiring, stimulating or encouraging the sub-ordinates with
zeal to work. Positive, negative, monetary, non-monetary incentives may be used
for this purpose.
• Leadership- may be defined as a process by which manager guides and influences
the work of subordinates in desired direction.
• Communications- is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding

20. Controlling
Matching actual performance with the planed goal.
• If problem, tries to find out the reasons of deviation.
• Suggesting corrective measures come on the path of plan
• It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals.
The purpose of controlling is to ensure that everything occurs in conformities with the
standards. An efficient system of control helps to predict deviations before they occur.
According to Theo Hayman, “Controlling is the process of checking whether or not
proper progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation”.

21. Therefore controlling has following steps:
1. Establishment of standard performance.
2. Measurement of actual performance.
3. Comparison of actual performance with the standards
and finding out deviation if any.
4. Corrective action.

22. MANAGEMENT THOUGHTS BY MANAGEMENT GURUS
• Peter F Drucker
• Henry Fayol
• Frederick W. Taylor

23. 14 PRINCIPLES OF MANAGEMENT BY HENRY FAYOL

24. • Division of Work: This is the principle of specialization, which is very well expressed by
economists as being a necessary factor for efficiency in the utilization of labor.
• Authority and Responsibility: In this principle, Fayol conceives authority as a combination of
official authority deriving from a manager’s official position and personal authority, which is
compounded of intelligence, experience, moral worth, past services etc.
• Discipline: Holding the notion that discipline is ‘respect for agreements which are directed as
achieving obedience, application, energy and the outward marks of respect’, Fayol declares that
discipline requires good superiors at all levels, clear and fair agreements and judicious application
of penalties.
• Unit of Command: This is the principle, which states that on employee should receive orders from
one superior only.
• Unity of Direction: According to Fayol, the unity of direction principle implies that each group of
activities having the some objectives must have one head and one plan. As distinguished from the
principle of unity of command, Fayol perceives unity of direction as related to the functioning of
personnel.

25. • Subordination of Individual Interest to General Interest: In any group, the interest of the group should
supersede that of the individual. When the interests differ, it is the function of the management to
reconcile them.
• Remuneration of Personnel: Fayol perceives that remuneration and methods of payment should be fair
and also should be able to afford the maximum satisfaction to employee and employer.
Centralization: Although Fayol does not use the term, Centralization of Authority, his principle
definitely refers to the extent to which authority is concentrated or dispersed in on enterprise.
Individual circumstances determine the degree of centralization that gives the best over all yields.
• Scalar Chain: Fayol thinks of the scalar chain as a line of authority, a chain of superiors from the
highest to the lowest ranks. And, because it is an error of a subordinate to depart needlessly from the
lines of authority, the chain should be short-circuited.
• Order: Breaking this principle into material order and social order, Fayol thinks of it as a simple edge
for everything. This organization is the principle, which refers to arrangement of things and persons in
an organization.

26. • Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel with a
combination of kindliness and justice in managers while dealing with subordinates.
• Stability of Tenure of Personnel: Finding that instability is both the cause and effect of bad
management, Fayol points out the dangers and costs of unnecessary turnover.
• Initiative: Initiative is conceived as the process of thinking out and executing a plan. Since it is one of
the keenest satisfactions for an intelligent man to experience, Fayol exhorts managers to sacrifice
personal vanity in order to permit subordinates to exercise it.
• Esprit de corps: This principle implies that union is strength and an extension of the principle of unity
of command. Fayol here emphasizes on the need for teamwork and the importance of
communication in obtaining it.

27. SCIENTIFIC MANAGEMENT THEORY BY FREDERICK W.
TAYLOR
• Frederick W. Taylor, Henry L. Gantt, and Frank and Lillian Gilbreth devised the body of
principles known as scientific management theory.
• Taylor based his management system on production-line time studies. Using time study as his
base, he broke each job down into its components and designed the quickest and best methods
of performing each component.
• The modem assembly line pours out finished products faster than Taylor could ever have
imagined. This production "miracle" is the gift of scientific management.
• In addition, its efficiency techniques have been applied to many tasks in non-industrial
organizations, ranging from fast-food service to the training of surgeons.

28. Scientific Management & Taylor’s viewpoint
• It is the art of knowing what exactly you want from your men to do & then seeing that it is done
in best possible manner.
• In simple words it is just an application of science to management.
• Taylor believed that the industrial management of his day was amateurish, that management
could be formulated as an academic discipline.
• Best results would come from the partnership between trained and qualified management and a
cooperative and innovative workforce.
• Each side needed the other and there is no need for trade unions.

29. Principles by F.W Taylor
1. Science not the rule of thumb: scientific investigation should be used for taking managerial
decisions instead of basing on opinion, institution or thumb rule.
2. Harmony not discard/ cooperation between employers and employees: Harmonious
relationship between employees and employers. Cooperation of employees that managers can
ensure that work is carried in accordance with standards
3. Scientific selection training and development: selection means to choose the best employee
according to the need. Their skill and experience must match the requirement of the job.
Scientific development refers to criteria for promotions, transfers etc.. So that work is done with
full efficiency.

30. 4. Division of work/ responsibility: The responsibility of workers and management should be
properly divided & communicated so that they can perform them in an effective way and
should be reward for the same.
5. Mental revolution: Acc. To Taylor, the workers and managers should have a complete new
outlook; a mental revolution in respect to their mutual relations. Workers should be
considered as a part of Organization. Employers shouldn’t treat workers as mere wage
earners.

31. Peter Drucker’s contribution in management

34. TYPES OF BUSINESS ORGANIZATIONS
The types of structures put in broad category are:
1. Mechanistic/ Classical Structure
2. Organic/ Behavioral Structure
3. Collateral Organization
4. Virtual Organization
5. Product/ Market Organization
6. Matrix Organization
7. Functional Organization
8. Formal & Informal Organization

35. 1) Mechanistic/ Classical structure:
Pyramid shaped, tall org.

36. 2)Organic/ Behavioural:
• Flat org.
• No centralization
• Low supervision

37. 3) FUNCTIONAL ORGANISATION STRUCTURE
• Functional structure is created by grouping the activities on the basis of functions required for
the achievement of organisational objectives
• For this purpose all the functions required are classified into basic, secondary and supporting
functions
Features:
• The whole activities of an organisation are divided into various functions
• Each functional area is put under the charge of one executive
• For any decision, one has to consult the functional specialist
• Limited span of control is there.

38. FUNCTIONAL ORGANISATION STRUCTURE

39. 4) MATRIX organization structure
• Matrix organization structure is essentially a violation of unity of command
• Matrix structure is the realization of two-dimensional structure which emanates directly from
two dimensions of authority.
• In matrix organization structure, a project manager is appointed to co-ordinate the activities of
the project.
• Personnel are drawn from their respective functional departments.
• Each functional staff has two bosses his administrative head and his project manager.

40. MATRIX organization structure

41. 5) virtual organization structure
• It facilitates competitiveness in the global markets
• There can be alliance & partnership with other organizations
• It is a flexible organization remove all traditional boundaries
• It is a temporary network of companies that come together quickly to exploit fast changing
opportunities
• It is bigger than traditional organizations
• It requires strong IT platform
• It is going to eliminate & avoid all boundaries for the business purpose

42. 6) Formal Organisation & Informal Organisation
FORMAL ORGANIZATION
• -Formal organisation is a well-defined structure of authority and responsibility that defines
delegation of authority and relationships amongst various organisational members.
• -It works along pre-defined sets of policies, plans, procedures, schedules and programmes.
• -Most of the decisions in a formal organisation are based on pre-determined policies.
• - Formal organisation is a deliberately designed structure with formal authority, responsibility,
rules, regulations and channels of communication.

43. Benefits of Formal Organisation
1. It clearly defines objectives of the organisation and authority- responsibility relationships amongst
people for attainment of those objectives.
2. It results in optimum utilisation of scarce organisational resources.
3. Clear division of work and relationships amongst people develops effective system of
communication in the organisation.
4. The organisational hierarchy avoids overlapping of activities between two individuals or two
departments. Two individuals are not assigned the same task.
5. Career advancement and promotional avenues are clearly defined in a formal structure of
organisation.
6. The rate at which people join and leave the organisation is reduced (because of clear objectives,
policies, strategies etc.). The rate of labour turnover and absenteeism, thus, remains low.
7. Formal organisation attempts to integrate formal goals of the organisation with goals of
individuals working in the organisation. There is, thus, synthesis of individual, group and
organizational goals.

44. INFORMAL ORGANISATION
As the formal organisation grows in size, parallel existence of informal relationships along with
formal relationships becomes unavoidable. They arise because of inevitable social and personal needs
of individuals which cannot be satisfied by the principles of formal organisations. 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 nevertheless, are an important and integral part of formal organisations.

45. Benefits of Informal Organisation
1. Promotes social and cultural values
2. Relief to top managers
3. Supplement to managers‟ capacities
4. Social satisfaction and security
5. Communication
6. Better relationships
7. Solve work-related problems
8. Promotes creativity
9. Self-control
10. Restraint on manager’s discretion
11. Social satisfaction
12. Quick feedback to managers

46. MANAGEMENT PROCESS

47. Mintzberg’s managerial roles

51. Meaning of Organisations
Social Organisation – Family or community made of members of the same caste where membership is by
birth.
Work Organisation – are created to accomplish work goals and they are different criteria for membership.
Organisations are made by people who operate within them, and when these people enter organisations, they
bring in with them their ‘soft’ luggage of beliefs, experiences and much more.
For example – The outlet of Pizza hut ,they are not the same everywhere, even when the organisations have the
same product.
Concepts of OB

52. Meaning of OB
Peter Drucker (1974) - “Effectiveness is doing the right things. Efficiency is concerned with doing things
right.”
We can say that effectiveness is equivalent to success in achieving the goals that matter. Since organisations
are likely to have several goals and often competing ones, we can also say that effectiveness reflects how
many goals can be achieved and how well.
Organisational behaviour is an applied field of inquiry encompasses the study of all aspect of behaviour in
and by formal organisations. It treats as units of analysis everything from individuals acting, feeling and
thinking in an organisations to groups, larger subunits such as departments or divisions, the organisations
as a whole and even populations of organisations and their relationship to larger social structures such as
the state and the society.”

53. Features of OB
1. A Field of Inquiry
2. Focus on Behaviour Within the Organisation
3. Humanistic and Positive
4. Importance of Groups
5. Ongoing Process

54.  A field of inquiry
A field open to inquiry is open to anyone who wants to examine, explore and understand. Even evaluate and
predict. That makes all of us ‘lay scientists of sorts, because all of us have our own theories that describe,
explain and prescribe behaviour and some of us want to test them, share them and improvise upon them. A
scientific theory explains a phenomenon on the basis of a plausible general principle or body of principles.
 Focus on behaviour within the organisation
OB requires not just individual or group focus and inquiring how they behave at work, but also the
characteristic patterns of organisational actions over time, which reflect that organisation’s knowledge, values
and goals, the kind of people, the system, and the control methods it employs, as well as the sociopolitical and
economic context in which those actions occur
 Humanistic and positive
Everyone in organisations has such a potential for development, learning and choice, then collective human
effort should be organized in a democratic manner and through goodwill and fairness and to nurture, support
and facilitate the effort to realize the human potential. This would lead to satisfaction and a feeling of well-
being for the individual and effectiveness of the organisation.

55.  Importance of Groups
A work group is generally understood as a collectivity of people who have individual as common
work goals, and who depend on each other for achieving those goals. Just like the family, work
group also has a strong impact on the individual’s behaviour.
 Ongoing Process
Organisational effectiveness as an objective for OB implies continuous effort to change and
develop in the context of dynamic environment. Thus, OB assigns special importance to planned
change, individual as well as organisational learning and creation of organisational culture that
supports these.

56. DISCIPLINES CONTRIBUTING
TO THE KNOWLEDGE OF OB
Sociology
Psychology
Economics
Political Science
Anthropology

57. • Sociology Concerned with the study of groups, and how membership of formal and informal groups
affects the behaviour of people.
• Psychology How the mental functions of a person – including physiological and neurological processes
affect human behaviour
• Economics Views all human behaviour as a relationship between limited means and their alternative uses
- after all, the work organisations are systems created for business, even if not-for-profit.
• Political Science How power for decision-making and action is allocated and transferred across diverse
groups.
• Anthropology It traces evolution of human behaviour over long term and its branches like cultural
anthropology studies differences in human behaviour across cultural groups.

58. Division of Organisation Behaviour
Organisational
Behaviour
Micro OB
Individual
Group
Behaviour
Macro OB
Whole
Organisations
Micro OB deals with the dynamics individual and group behaviour within organisations,
Macro OB, also called Organisational Theory, studies whole organisations, how they adapt,
and the strategies and structures that guide them.

59. • OB Model

60. Features of OB model
1. The central concerns for study and practice of Organizational Behavior concepts are two-fold: the
first is the core focus on organizational effectiveness, and not the traditional concern for
“understanding, managing and controlling the behavior within the organizations.” The emphasis on
understanding and managing that would be instrumental in controlling can be put to dysfunctional,
self-serving or arbitrary ends, just like the two faces of power.
2. The central role of leadership in enhancing the organizational effectiveness reflects the need of the
hour. In the face of the unprecedented decline, slow-down and down-turn in the developed world
since the World War – II, India has just entered a phase that promises to be a sustained phase of
growth and development for the economy, but at the same time remarkable contribution to the
world economy and markets.
3. The individual, group and organisational dynamics of behaviour determine the organisational
effectiveness under the OB perspective. The three factors leading to organisational effectiveness are
related to one another: The individuals influence the organisational design and systems through their
role relationships. Individuals are also related to others in the organisation through interpersonal and
group relationships. Similarly, the groups are related to the rest of the organisation through the work
systems and processes.