MODULE 3

ORGANISATIONAL BEHAVIOUR
• “Organizational behavior is directly concerned with the
understanding, prediction, and control of human behavior
in organizations.” — Fred Luthans.
• Organosational behaviour is the study of both the group
and Individual performance and activity within the
organization.
Organizational behavior is the study of human behavior in an
organizational setting. This includes how individuals interact with each
other in addition to how individuals interact with the organization itself.
Organizational behavior is a critical part of human resources, though it
is embedded across a company.
• Organizational behavior is the study of both group and
individual performance and activity within an
organization.

• This area of study examines human behavior in a work

environment and determines its impact on job structure,
performance, communication, motivation, leadership, etc.

• It is the systematic study and application of knowledge

about how individuals and groups act within the
organizations where they work. OB draws from other
disciplines to create a unique field.
LEVELS OF ANALYSIS
 History of Organisational
behaviour
• In 1776, Adam Smith advocated a new form of
organisational structure based on the division of
labour. One hundred years later, German Sociologist
Max Weber introduced the concept about rational
organisations and initiated the concept of
charismatic leadership. Though the origin to the
study of Organisational Behaviour can trace its
roots back to Max Weber and earlier organisational
studies, it is generally considered to have begun as
an academic discipline.
 Historical development of OB
1. Industrial Revolution: It has only been since the Industrial Revolution of the
nineteenth century that relatively large number of individuals have been required to
work together in manager- subordinate relationships. Prior to this many of the large
organisations that did exist, were military ones in which the authority of the leader
was supreme and practically unquestioned, since membership was not voluntary.
Behavioural problems were relatively easy to deal with under these conditions. It
is certainly no accident that much of our current knowledge about human behavior has
been derived from organisations in which influencing behaviour consists of more than
just giving orders.
Famous industrialist like William C Durant, Henry Ford, Andrew Carnegie, and
John D Rock feller were men of brilliant managerial qualities. They possessed the
managerial qualities necessary for the initial stages if industrialization. However,
when the industrial revolution began to mature and become stabilized, this approach
was no longer appropriate.
2.Scientific Management: The great industrialist was primarily concerned with overall
managerial organisation in order for their companies to survive and prosper. The scientific
management movement around the turn of the century took an arrower, operations
perspective. Yet, the two approaches were certainly not contradictory. The managers in
both cases applied the scientific method to their problems and they thought that effective
management at all levels was the key to organisational success.
Fredrick W Taylor(1856 - 1915) is the recognized father of scientific management .
3. The Human Relations Movement: The second major step on the way to
current organisational behaviour theory was the Human Relations Movementthat
began in the 1930's and continued in various forms until the 1950's. The practice
of management, which places heavy emphasis on employee cooperation and
morale, might be classified as human relations. Raymond Mills states that the
human relation approach was simply to "treat people as human beings (instead
of machines in the productive process), acknowledge their needs to belong and
to feel important by listening to and heeding their complaints where possible and
by involving them in certain decisions concerning working conditions and other
matters, then morale would surely improve and workers would cooperate with
management in achieving good production.
 Fundamental principles of OB

• The concepts of OB is based on 2 elements :

1. Nature of people:
a)Individual Difference
b)Perception
c)A whole person
d)Motivated behaviour
e)Value of person
2. Nature of organisation:
a)Social system
b)Mutual interest
c)Ethics
 Importance of Organisational
Behaviour
• Understanding human Behaviour
• Predicting human Behaviour
• Controlling and directing human Behaviour
• Organisational effectiveness
• Human tool for human benefit
• Personal growth
• Motivation
• Effective communication
• Improving leadership styles
• Change and adaptation
• Good human relations
 Organisational effectiveness

Organizational effectiveness refers to how an

organization has achieved full self-awareness due in
part to: Leaders setting well-defined goals for
employees and outlining ways to efficiently execute
those goals. Management implementing clear
decision-making processes and communication
pipelines.
 Steps of Organisational
effectiveness
1. Leadership

One of the critical steps in organization effectiveness is developing leadership within

the company. It is leaders who create a vision for their company, define, refine and
execute critical processes, translate values into strategies, take action and be
accountable. A leader has to answer three things
Value – What is the value he is offering to the customers to gain a competitive
advantage in the market
Approach – How is he fulfilling the unique needs of his stakeholders and
which strategy is going to support the vision for achieving competitive advantage
Alignment – What is the designed alignment of processes, practices, strategy,
structure culture, etc and will they be able to create maximum conditions for
achieving company vision
 2.Communication
Every organization needs an effective communication system so that the
flow of information is smooth. Leaders can be successful when they can
communicate their message to other people in a precise manner.
Everything happens in a company because of the exchange of
information, and this is why strategic communication is considered a
critical element in the success chain.
It makes sure that the impact of the message is in alignment with the
intention so that it will lead to a better and complete understanding.
What, where, when, how everything matters hence keep track of your
words and communicate effectually. An essential way for organizational
effectiveness is by making sure that the leader is aligning with the
people around him and teaching regularly.
 3. Accountability 

Organizational effectiveness is to a great extent dependent on

the concept of accountability. A company should build an
environment where every individual, as well as a group, is
accountable for the tasks he participates in.
It is the accountability that determines how effectively the
people perform the given functions. The organizations must
make sure that there are performance accountability systems
in place to clarify the expectations of the company and align
the rewards as well as consequences with actual
accomplishments.
4. Delivery Efficiency Strategy

The next step in the six systems of organizational effectiveness is the

delivery of products and services. It is a fact that consumers and
markets are ever-changing, and this means that a company should be
prepared to shift and make adjustments to accommodate these changes
as well as changes caused by advancements in technology. A
straightforward delivery process will ensure the delivery to the right
customers and their engagement in full.
This is why business entities try to create simple procedures that are
adaptable, responsive. There is no scope for complexity because the
onus is on satisfying customer experience. When organizations align
initiative and operations with strategy using the best technique, they
can pursue breakthroughs in critical areas and build future capability.
 5.  Performance 

Human resources are the most valuable asset of a company,

and this is why the proper emphasis is given on hiring and
retaining the best of the best. It is essential to find the right
fit for the job and develop their skills and know-how through
training and other learning methods to increase
organizational effectiveness.
Business entities are particular about rewarding knowledge,
talent, and expertise to boost employee performances so that
they can ultimately have a positive impact on organizational
effectiveness.
 6. Measurement 

It is imperative to measure organizational

effectiveness. A business entity must set a standard
set of metrics and develop a system of reviews and
parameters to analyze and measure tasks, projects,
productivity, behavior, processes, and results.
It is leaders who establish and maintain the
measurement system to track progress and review
status regularly.
Approaches to Organisational
effectiveness
 1. Goal Approach

The Goal Approach is also called rational-goal or goal-

attainment approach, it has its origins in the mechanistic
view of the organization. This approach assumes that
organisations are planned, logical, goal-seeking entities and
they are meant to accomplish one or more predetermined
goals. Goal approach is worried with the output side and
whether or not the organization attains its goals with
respect to preferred levels of output. It sees effectiveness
with respect to its internal organisational objectives and
performance. Typical goal-attainment factors include profit
and efficiency maximization.
2.System Resource Approach

This approach to Organizational Effectiveness was

developed in response to the goal approach. The System
Resource Approach sees an organisation as an open
system. The organisation obtains inputs, participates in
transformation processes, and generates outputs. This
approach emphasizes inputs over output. It sees most
organizations as entities which function in order to survive,
at the same time rivaling for scarce and valued resources. It
assumes that the organisation consists of interrelated
subsystems. If any sub-system functions inefficiently, it is
going to influence the performance of the whole system.
 3. Internal-Process
Approach
This approach has been developed in response to
a fixed output view of the goal approach. It looks at
the internal activities. Organizational effectiveness
is assessed as internal organizational health and
effectiveness. According to Internal-Process
Approach effectiveness is the capability to get
better at internal efficiency, co-ordination,
commitment and staff satisfaction. This approach
assesses effort as opposed to the attained effect.
4. Strategic Constituencies Approach

This approach suggests that an efficient

organisation is one which fulfills the demands
of those constituencies in its environment
from whom it needs support for its survival. It
assesses the effectiveness to satisfy multiple
strategic constituencies both internal and
external to the organization.
 Factors Influencing to
organisational Effectiveness
Casual Variables: These are independent variables that can be altered
by the organisation and its management for instance, its policies skills
and behaviour and leadership and business strategies. The casual
variables can determine the course of development within an
organisation.
Intervening variables: These are motivation, Performance goals,
attitude, loyalty and perception of the employees and their capacity for
efficient decision making. Communication, and interaction. The
intervening variable show the health of an organisation.
End result Variables: These are loss, costs, earning, and productivity.
The end result variables reflects the achievement of an oraganisation
 Organisational learning
process
Organizational learning is the process of creating,
retaining, and transferring knowledge within an
organization. An organization improves over time as
it gains experience. From this experience, it is able to
create knowledge. This knowledge is broad, covering
any topic that could better an organization.
 The processes that drives
Organisational Learning process
1. Knowledge creation: The managers are always on
the look out to find new knowledge about customers,
clients, Vendors, businesses, Products, services, and
the environment. Knowledge creation is possible by
direct exposures to the specific subject through
various task that involves the processes, needs, and
environment of the organisation.
 2.Knowledge retention

After knowledge creation, the second step in

organisational learning is retaining the knowledge
that you have created to date. You need an effective
system for storing, recording, or merely retaining in
within the confines of the organisation. This is done
so that employees down the lane can gain access to
the required information easily and quickly
 Knowledge Transfer

The Third and final steps that drives OL is knowledge

transfer. In this step the knowledge or information is
transferred from individuals to the organisational
community. Some of these methods are simple and
some a bit complex but transfer of knowledge should
happen at all costs
 Contemporary challenges of
organisations.
1. Improving Peoples' Skills: Technological changes, structural
changes, environmental changes are accelerated at a faster rate in
the business field. Unless employees and executives are equipped
to possess the required skills to adapt to those changes, the
targeted goals cannot be achieved in time. These two different
categories of skills managerial skills and technical skills.
2. Improving Quality and Productivity: Quality is the extent to which
the customers or users believe the product or service surpasses
their needs and expectations. For example, a customer who
purchases an automobile has a certain expectation, one of which is
that the automobile engine will start when it is turned on.
3.Total Quality Management (TQM): is a philosophy of management that is
driven by the constant attainment of customer satisfaction through the
continuous improvement of all organizational processes. The components of
TQM are;
• (a) An intense focus on the customer,
• (b) Concern for continual improvement,
• (c) Improvement in the quality of everything the organization does,
• (d) Accurate measurement and,
• (e) Empowerment of employees
4. Managing Workforce Diversity: his refers to employing different categories
of employees who are heterogeneous in terms of gender, race, ethnicity,
relation, community, physically disadvantaged, elderly people, etc. The
primary reason to employ the heterogeneous category of employees is to tap
the talents and potentialities, harnessing the innovativeness, obtaining
synergetic effect among the divorce workforce.
5. Responding to Globalization: Today's business is mostly market-driven;
wherever the demands exist irrespective of distance, locations, climatic
conditions, the business operations are expanded to gain their market share
and to remain in the top rank, etc. Business operations are no longer
restricted to a particular locality or region. The company's products or services
are spreading across nations using mass communication the internet, faster
transportation, etc.
6. Empowering People: The main issue is delegating more power and
responsibility to the lower level grade of employees and assigning more
freedom to make choices about their schedules, operations, procedures and the
method of solving their work-related problems Encouraging the employees to
participate in the work-related decision will sizable enhance their commitment
to work. Empowerment is defined as putting employees in charge of what they
do by eliciting some sort of ownership in them.
7. Stimulating Innovation and Change: Today's successful organizations must
foster innovation and be proficient in the art of change; otherwise, they will
become candidates for extinction in due course of time and vanished from their
field of business, Victory will go to those organizations that maintain flexibility,
continually improve their quality, and beat the competition to the market place
with a constant stream of innovative products and services.
8.Emergence of E-Commerce: It refers to the business operations involving
the electronic mode of transactions. It encompasses presenting products on
websites and filling the order. The vast majority of articles and media
attention given to using the Internet in business are directed at online
shopping. In this process, the marketing and selling of goods and services
are being carried out over the Internet.

9. Improving Ethical Behaviour: The complexity in business operations is

forcing the workforce to face ethical dilemmas, where they are required to
define right and wrong conduct to complete their assigned activities.