Meaning of Organizational
Behavior
Organizational Behavior refers
to the systematic examination of how people act within formal organizations,
including workplaces, institutions, and corporations. It focuses on three core
levels of analysis—individual behavior, team interactions, and overall
organizational systems. The main objective is to apply this understanding to
improve workplace effectiveness, employee well-being, and long-term business
performance.
Importance of Organizational
Behavior
1. Better Comprehension of
Employee Actions
Organizational Behavior helps managers and leaders understand why employees
behave in specific ways. It explores factors such as personality traits,
motivational drivers, perceptual differences, and emotional states. With this
insight, leaders can identify the real causes behind performance issues,
dissatisfaction, or resistance, rather than relying on assumptions.
2. Boosting Organizational
Performance
By applying OB principles, organizations can align human efforts with strategic
goals. Understanding how groups function, how rewards influence output, and how
structure affects workflow enables companies to design better processes. This
leads to improved productivity, efficient resource use, and a stronger
competitive position.
3. Increasing Worker
Satisfaction and Mental Health
OB stresses the value of a supportive work climate. When organizations pay
attention to job design, fair treatment, recognition, and work-life balance,
employees experience lower stress and higher engagement. Satisfied workers stay
longer, perform better, and contribute positively to the workplace atmosphere.
4. Building Effective Leadership
Skills
Leadership is not just about giving orders—it requires understanding people. OB
provides practical knowledge about different leadership styles, influence
strategies, and power relationships. Managers learn to adapt their approach
based on situations and individual needs, which builds trust and encourages
innovation among team members.
5. Handling Change and Workplace
Disputes
Modern organizations constantly face changes in technology, markets, and
structures. OB offers tools to reduce employee resistance during transitions
through transparent communication and involvement. It also helps identify
sources of conflict—whether personal or departmental—and provides constructive
methods for resolution, turning disputes into opportunities for improvement.
Historical Development of
Organizational Behavior
1. Classical Era (1900–1930)
During this period, the focus was mainly on efficiency and formal structure.
Contributors like F.W. Taylor promoted scientific management through time and
motion studies. Henry Fayol introduced administrative functions such as
planning and coordination. Max Weber described bureaucracy based on rules,
hierarchy, and impersonal relationships. The human side of work was largely
ignored.
2. Human Relations Movement
(1930–1950)
This phase emerged from the Hawthorne Studies conducted by Elton Mayo and his
colleagues. Researchers discovered that social factors and emotional needs
strongly influence productivity. When workers felt valued and included, their
performance improved. This movement shifted attention toward communication,
team bonding, and informal relationships within organizations.
3. Behavioral Science Period
(1950–1970)
Psychologists and sociologists began applying scientific methods to workplace
behavior. Abraham Maslow proposed the hierarchy of needs, suggesting that unmet
needs drive motivation. Douglas McGregor introduced Theory X and Theory Y,
contrasting controlling versus empowering management styles. Frederick Herzberg
studied factors that create satisfaction or dissatisfaction at work. Employees
were now seen as complex human beings rather than simple resources.
4. Systems Thinking (1960–1980)
Organizations came to be viewed as open systems composed of interconnected
parts—people, tasks, technology, and external environment. A change in one area
affects all others. This perspective encouraged managers to think holistically,
improve coordination, and adapt to outside pressures. Stability and growth
depend on how well internal elements work together.
5. Contingency Perspective
(1980–Present)
According to this view, there is no universal best way to manage or organize
behavior. The right approach depends on the situation, task characteristics,
and people involved. Managers must assess each scenario and choose methods accordingly.
For example, a directive leadership style may work in a crisis but fail in a
creative team. Flexibility and situational judgment are key.
Scope of Organizational Behavior
1. Study of Individual
Characteristics
At the most basic level, OB examines personal attributes such as personality,
values, attitudes, perception, learning styles, and motivation. It looks at how
these traits influence daily work behaviors like decision-making, effort, and
cooperation. Practical applications include better hiring, personalized
training, and fair performance evaluation.
2. Examination of Group Dynamics
This dimension covers how people interact in teams, committees, and informal
groups. Topics include role definition, communication patterns, leadership
within groups, power sharing, and conflict handling. OB helps design effective
teams, prevent groupthink, and encourage healthy collaboration across
departments.
3. Analysis of the Whole
Organization
At the macro level, OB investigates how organizational structure, corporate
culture, policies, and physical environment shape employee behavior. It also
addresses large-scale processes such as cultural change, restructuring, and
strategic transformation. Leaders use this knowledge to create workplaces that
are both productive and humane.
4. Borrowing from Multiple
Disciplines
OB is not an isolated field. It draws ideas from psychology (individual
behavior), sociology (group behavior), anthropology (culture), social
psychology (interpersonal influence), and political science (power and
authority). This interdisciplinary foundation makes OB rich and capable of
solving complex human problems.
5. Practical Problem-Solving
Focus
Unlike purely academic subjects, OB is designed for real-world application. Its
scope includes developing tools and techniques to improve leadership, reduce
absenteeism, manage stress, handle change, and raise job satisfaction. Every
theory is meant to guide action. Managers use OB to build workplaces where
people and organizations grow together.
Factors Influencing
Organizational Behavior
Organizational Behavior (OB) is
shaped by a wide range of internal and external elements that determine how
individuals and groups act within a workplace. These factors influence employee
attitudes, drive, efficiency, and interpersonal relationships. A clear
understanding of these influences allows managers to build a positive work
culture and enhance overall performance. Key contributors include personal
traits, leadership quality, workplace culture, incentive systems, and
communication methods. Additionally, broader forces such as economic shifts,
social norms, and technological changes also play a significant role. Together,
these elements decide how well employees adapt, collaborate, and help the
organization achieve its objectives.
Key Factors Influencing
Organizational Behavior
1. Personal Differences
Every employee brings a distinct
set of characteristics to the workplace, including personality type, belief
systems, emotional responses, past experiences, and intellectual abilities.
These personal differences affect how individuals perceive tasks, interact with
coworkers, and respond to authority. For instance, some workers thrive under
pressure, while others prefer structured and predictable routines. Effective managers
recognize and respect these variations to assign appropriate roles and maintain
a harmonious environment. Embracing such diversity leads to stronger teamwork,
higher motivation, and improved output.
2. Drive and Incentives
The level of effort an employee
invests in their work is largely determined by their motivational state.
Motivation can arise from within—such as personal pride in work—or from
external sources like bonuses, public recognition, or promotions. Highly
motivated employees tend to be more creative, productive, and committed to
their employer. Established theories, including Maslow's hierarchy of needs and
Herzberg's two-factor model, explain how unmet needs and workplace conditions
affect drive. A lack of motivation often results in poor performance and
frequent turnover. Therefore, managers should offer fair compensation,
appreciation, and clear paths for career advancement.
3. Quality of Leadership
Leadership has a direct and
powerful effect on employee behavior. An effective leader inspires confidence,
offers direction, and encourages team members to reach their potential.
Different leadership approaches—such as autocratic, democratic, or
hands-off—produce different behavioral outcomes. For example, a democratic
style that invites input generally leads to greater job satisfaction. In
contrast, weak or inconsistent leadership can generate stress, confusion, and
interpersonal conflict. Strong leaders communicate openly, show empathy, and
earn trust, thereby shaping a positive and productive workplace.
4. Organizational Culture
Organizational culture refers to
the shared values, unwritten rules, traditions, and behavioral norms that guide
daily activities. It essentially defines "how things are done around
here." A healthy culture promotes cooperation, fresh ideas, and
dedication, while a toxic culture encourages politics, fear, and disengagement.
Culture develops gradually through leadership behavior, company history, and
routine policies. Employees who align well with the prevailing culture tend to
perform better and remain with the organization longer, making culture a
critical influence on behavior.
5. Communication Systems
Clear and open communication is
essential for any well-functioning organization. It enables the steady exchange
of information between management and staff. Poor communication leads to
misunderstandings, mistakes, and unnecessary disputes. Transparent
communication builds trust, encourages collaboration, and supports better
decision-making. Communication channels may be formal—such as reports and
official meetings—or informal, like casual conversations. When employees feel
heard and respected, they become more engaged. Thus, communication directly
affects team coordination, motivation, and overall results.
6. Workplace Conditions
Both physical and psychological
aspects of the work environment influence employee behavior. Physical factors
include lighting, seating, cleanliness, safety measures, temperature, and
access to tools. Psychological factors include respect from colleagues, emotional
support, and growth opportunities. When employees feel safe, valued, and
comfortable, they work more efficiently. A stressful or hostile environment, on
the other hand, leads to absenteeism, burnout, and low morale. Therefore,
maintaining a healthy workplace improves both performance and satisfaction.
7. Technological Factors
Technology reshapes how
employees perform tasks and interact with one another. Modern tools such as
automation, artificial intelligence, and digital communication platforms increase
speed and accuracy but may also create stress if workers lack proper training.
New technologies demand continuous learning and adaptability. Organizations
that invest in regular upskilling programs can harness technology effectively
without harming employee well-being. Consequently, technology influences job
satisfaction, work methods, and even organizational structure and communication
patterns.
8. Group Dynamics
Most work is performed in teams
or groups, and the quality of interactions within these groups strongly affects
organizational success. Group dynamics include how members cooperate, resolve
disagreements, share information, and support one another. Positive group
dynamics encourage creativity, shared problem-solving, and mutual motivation. Negative
dynamics—such as favoritism or unhealthy competition—lead to poor outcomes.
Managers should promote fairness, open dialogue, and collaborative norms to
maintain healthy group behavior. A supportive team environment helps employees
feel connected and perform better.
9. Organizational Structure
The structure of an organization
defines its hierarchy, reporting relationships, role clarity, and authority
distribution. A well-defined structure helps employees understand their duties
and whom to approach for guidance. Centralized structures keep decision-making
at top levels, while decentralized structures allow greater employee
participation. Structure also affects how quickly information flows and how
easily coordination happens. An overly rigid structure may suppress creativity,
whereas an excessively loose structure creates confusion. Hence, an appropriate
structure supports efficiency and smooth operations.
10. Economic and Social
Environment
External conditions such as
national economic health, employment rates, income levels, and prevailing
social values influence workplace behavior. During periods of high inflation or
recession, employees may experience job insecurity, which lowers morale and
productivity. Social trends—including education levels, family structures, and
cultural expectations—also play a role. For example, societies that value
collective effort tend to encourage teamwork in professional settings.
Understanding these external forces helps organizations design fair policies
and maintain employee satisfaction even during difficult times.
Disciplines Contributing to
Organisational Behaviour (OB)
Organisational Behaviour (OB) is
a broad field that draws knowledge from multiple academic disciplines. Since
human behaviour in workplaces is complex, no single subject can fully explain
it. Therefore, OB integrates concepts, theories, and research methods from
various disciplines to understand, predict, and influence how employees act within
organisations. These contributing disciplines provide the foundation for both
studying and applying OB principles in real-world settings.
1. Psychology
Psychology focuses on the mental
processes and behaviour of individuals. It forms the core of OB by explaining
why different people react differently to the same workplace situation.
Key Contributions to OB:
· Personality
and Motivation: Psychological theories such as Maslow's hierarchy of
needs and Herzberg's two-factor model help explain what drives employees to
work harder.
· Learning
and Development: Concepts like reinforcement, punishment, and
observational learning guide training programs.
· Perception
and Decision-Making: Understanding how people interpret events and
make choices at work.
· Emotions
and Attitudes: Studying stress, job satisfaction, burnout, and
emotional intelligence.
· Leadership: Psychological
research on various leadership styles and their effects on team performance.
Practical Use: Designing roles,
conducting performance appraisals, improving employee mental health, and
creating motivating reward systems.
2. Sociology
Sociology examines how
individuals behave when they are part of groups, communities, or social
structures. It helps OB understand the social dynamics that occur within
organisations.
Key Contributions to OB:
· Group
Dynamics: How teams form, develop, function, and influence individual
members.
· Organisational
Structure: Understanding hierarchies, chains of command, role
definitions, and norms.
· Workplace
Diversity: Analysing the effects of age, gender, ethnicity, and
background on group behaviour.
· Social
Stratification: How status and class differences affect interactions
and opportunities.
· Formal
and Informal Organisations: Studying both official structures and
unofficial social networks.
Practical Use: Building cohesive teams,
designing effective organisational charts, promoting inclusion, and managing
intergroup relations.
3. Anthropology
Anthropology is the study of
human cultures, traditions, and societies over time. It helps OB understand the
deeper cultural forces that shape workplace behaviour.
Key Contributions to OB:
· Organisational
Culture: Examining shared values, rituals, symbols, stories, and
unwritten rules within a company.
· Cross-Cultural
Management: Understanding how employees from different national or
regional cultures behave and communicate.
· Organisational
Change: Insights into how customs and practices evolve within
organisations over long periods.
· Comparative
Studies: Analysing how organisations differ across societies and
industries.
Practical Use: Managing multinational
teams, merging company cultures after acquisitions, adapting to foreign
markets, and preserving positive traditions during change.
4. Political Science
Political science deals with
power, authority, governance, and conflict resolution. It contributes to OB by
explaining the political behaviour that naturally occurs in any organisation.
Key Contributions to OB:
· Power
and Influence: Understanding different bases of power (legitimate,
reward, coercive, expert, referent) and how they are used.
· Organisational
Politics: Analysing self-interest behaviours, coalition formation, and
informal influence.
· Conflict
Resolution: Studying negotiation methods, mediation, arbitration, and
dispute handling.
· Decision-Making
Processes: Examining how authority is distributed and how major
choices are made.
· Ethics
and Governance: Understanding fair treatment, compliance, and ethical
dilemmas.
Practical Use: Navigating office politics
ethically, resolving departmental disputes, designing authority structures, and
promoting fair governance.
5. Economics
Economics studies the
production, distribution, and consumption of resources. It contributes to OB by
explaining how scarcity, incentives, and costs affect human behaviour at work.
Key Contributions to OB:
· Incentive
Systems: Designing pay structures, bonuses, commissions, and benefits
to motivate employees.
· Cost-Benefit
Analysis: Evaluating human resource policies based on their financial
impact.
· Labour
Market Dynamics: Understanding how external economic conditions
(unemployment, inflation) affect employee loyalty and morale.
· Resource
Allocation: Studying how time, budget, and attention are distributed
across tasks.
· Productivity
Measurement: Linking individual behaviour to output and efficiency.
Practical Use: Creating fair compensation
packages, justifying training investments, analysing turnover costs, and
aligning individual goals with financial targets.
6. Social Psychology
Social psychology sits between
psychology and sociology. It focuses specifically on how individuals influence
and are influenced by others in social settings. It blends the study of
personal attitudes with group pressures.
Key Contributions to OB:
· Attitude
Formation and Change: How beliefs and feelings about work are shaped
by peers and leaders.
· Social
Influence and Persuasion: Understanding conformity, obedience, and
peer pressure in teams.
· Interpersonal
Communication: Studying verbal and non-verbal exchanges between
employees.
· Leadership
and Followership: Examining how leaders persuade and how followers
respond.
· Group
Decision-Making: Analysing phenomena like groupthink, risky shift, and
brainstorming effectiveness.
Practical Use: Improving team meetings,
reducing negative peer pressure, designing persuasive internal communications,
and enhancing leadership training.
7. Industrial Engineering
Industrial engineering focuses
on designing efficient work systems, processes, and physical environments. It
contributes to OB by studying how job design and workplace layout affect human
performance.
Key Contributions to OB:
· Job
Design: Structuring tasks, responsibilities, and workflows to reduce
fatigue and error.
· Workplace
Ergonomics: Designing chairs, desks, tools, and screens to improve
comfort and safety.
· Time
and Motion Studies: Analysing how physical movements affect speed and
quality.
· Process
Improvement: Identifying bottlenecks and unnecessary steps that cause
frustration.
· Safety
Systems: Creating procedures that reduce accidents and stress.
Practical Use: Reducing repetitive strain
injuries, designing user-friendly software interfaces, arranging factory floors
for efficiency, and improving overall job satisfaction through better physical
conditions.
OB Models and Approaches
Four Major Models of
Organisational Behaviour
1. Autocratic Model
· Foundation: Power
and formal authority.
· Managerial
Focus: Commanding and controlling subordinates.
· Employee
Orientation: Obedience, discipline, and dependence on the boss.
· Employee
Need Met: Basic subsistence (salary to survive).
· Performance
Outcome: Minimal effort beyond what is required to avoid punishment.
· Drawbacks: High
frustration, job insecurity, low morale, and limited creativity.
2. Custodial Model
· Foundation: Economic
resources and financial benefits.
· Managerial
Focus: Providing security, healthcare, pensions, and other benefits.
· Employee
Orientation: Dependence on the organisation rather than on a specific
manager.
· Employee
Need Met: Safety and security needs.
· Performance
Outcome: Passive cooperation – employees feel satisfied but not
strongly motivated.
· Drawbacks: May
not encourage initiative or high achievement.
3. Supportive Model
· Foundation: Leadership
and genuine support.
· Managerial
Focus: Assisting employees to perform and grow.
· Employee
Orientation: Participation, job involvement, and recognition seeking.
· Employee
Need Met: Status and respect.
· Performance
Outcome: Awakened inner drives – employees give more than minimum
effort.
· Strength: Creates
a climate where employees feel valued and capable.
4. Collegial Model
· Foundation: Partnership
and shared purpose.
· Managerial
Focus: Building teamwork and shared responsibility.
· Employee
Orientation: Responsible behaviour, self-discipline, and commitment to
quality.
· Employee
Need Met: Self-actualisation and personal growth.
· Performance
Outcome: Moderate to high zeal – employees take pride in their work.
· Strength: Encourages
mutual respect, acceptance, and a sense of ownership.
·
Five Key Approaches in OB
1. Human Resources Approach
This approach views employees as
the most valuable asset of any organisation. It emphasises developing workers' skills,
knowledge, and abilities to their fullest potential. Managers shift from
controlling to supporting roles, helping employees grow while also achieving
company goals.
2. Contingency Approach
There is no single "best
way" to manage behaviour in all situations. The right method depends on
the specific circumstances, including the task, the people involved, and the
external environment. Managers must analyse each situation separately and adapt
their style accordingly.
3. Productivity Approach
This approach focuses on
maximising output while using minimum resources. Productivity is measured by
comparing results (goods, services, satisfaction) against inputs (labour,
materials, time). OB contributes by showing how motivation, teamwork, and
leadership affect productivity. Social and human outcomes are also considered.
4. Systems Approach
An organisation is seen as a
unified system of interconnected parts – individuals, teams, technology,
structure, and environment. Any action in one area affects all other areas.
Managers must think holistically rather than in isolated parts. This approach promotes
coordination, communication, and a shared sense of purpose.
5. Interdisciplinary Approach
OB does not rely on a single
discipline. It actively integrates knowledge from psychology, sociology,
anthropology, political science, economics, social psychology, and industrial
engineering. This wide foundation allows OB to address complex human problems
that no single field could solve alone