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Chapter 1. The Dynamics Of People and Organizations. UNDERSTANDING ORGANIZATIONAL BEHAVIOR. ORGANIZATIONAL BEHAVIOR. Organizational Behavior is the study and application of knowledge about how people – as individuals and as groups – act within organizations.

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Chapter 1

Chapter 1

The Dynamics

Of People and


Understanding organizational behavior


Organizational Behavior is the study and application of knowledge about how people – as individuals and as groups – act within organizations.

Organizational Behavior is a scientific discipline in which a large number of research studies and conceptual developments are constantly adding to its knowledge base.

Goals of Organizational Behavior (Most Sciences share four goals)

- Describe (How people behave under a variety of conditions)

- Understand (Why people behave as they do.)

- Predict (Managers should have the capacity to predict employees actions on a certain day and take preventive actions) - Control ( To develop some human activity at work)

Understanding organizational behavior1

Managers are responsible for performance outcome, they are vitally interested in being able to make an impact on employee behavior, skill development, team effort , and productivity. Managers need to be able to improve results through actions they and their employees take, and Organizational Behaviors can aid them in their pursuit of this goal. Organizational Behavior is a human tool for human benefit. Organization Behavior applies broadly to the behavior of people in all types of organizational, business, government, schools and Service organizations. Wherever organizations are , there is a need to ‘’Describe, Understand, Predict and (Control) better manage human behavior.

Understanding organizational behavior2

FORCESA collect set of Forces affects the nature of organization today can be classified as: - People - Structure - Technology - Environment

Understanding organizational behavior3

PeoplePeople make up the internal Social System of the Organization. That System consists of individuals and groups. There are formal and informal groups.Groups are dynamic. They form, change, and disband. People are the living, thinking, feeling beings who work in the organization to achieve their objectives. Remember that Organizations exist to serve people, rather than people existing to serve organizations. The Workforce of today organizations are richly diverse (Employees have a wide array of educational background, talents and perspectives ) Managers need to be tuned in to these diverse pattern and trends and be prepared to adapt to them. Management Leadership practices must change to match the new conditions.


Understanding organizational behavior4

StructureDefines the formal relationship and use of people in organizations. Different Jobs are required to accomplish all of an organization’sactivities.Thus, there are managers, employees , accountants and assemblers etc., in an organization. People in the Organization have to be related in some structural way so that their work can be effectively coordinated .TechnologyTechnology provides the resources with which people work and affects the tasks that they perform. The Technology used has a significant influence on working relationships.The great benefit of technology is that it allows people to do more and better work , but it also restricts people in various ways . It has cost as well as benefits.


Understanding organizational behavior5

EnvironmentAll organizations operate within an internal and an external environment.A single organization does not exist alone. It is part of a larger System that contains many other elements, such as government, the family, and other organizations.Numerous changes in the environment create demands on organizations.Individual organizations, such as a Factory, or a school, cannot escape being influenced by the external environment. It influences the attitudes of people , affects working conditions, and provides competition for resources and power.


Understanding organizational behavior6

• Positive Characteristics the OB Field One major strength of Organizational Behavior is its Interdisciplinary nature. It integrates the Behavioral Sciences with other Social Sciences that can contribute to the subject.

Another strength is its emerging base of Research Knowledge andConceptual Frameworks.

A third major strength of Organizational Behavioural is theincreasing Acceptance of Theory and Research by practising managers.

Fundamental concepts

  • The interaction of Theory, Research, and Practice in Organizational Behavior

Fundamental concepts1

The Nature of People - Individual differences - Perception - A whole Person - Motivated Behavior - Desire for involvement - Value of the People

Individual DifferencesPeople have much in common but each person in the world is also individually different. This belief that each person is different from all other is typically called the ‘Law Of Individual Differences’

Fundamental concepts2

PerceptionPeople look at the world and see things differently. Even when they are presented with the same object, two people may view it in two different ways. Their view of their objective environment is filtered by perception, which is the unique way in which each person sees, organizes, and interprets things. Employees see their work worlds differently for a variety of reasons since they may differ in personalities, needs, demographic factors , and past experiences, or they may find themselves in different physical settings , time periods, or social surroundings. whatever the reason, they tend to act on the basis of their perceptions. Managers must learn to expect perceptual differences among their employees , accept people as emotional beings, and manage them in individual ways.

Fundamental concepts3

A Whole PersonOrganizations employ a Whole person not only a person’s skills or brain. A persons home life cannot be separated from his/her work life.

When Managers practices Organizational Behaviour, it is actually trying to develop a better employee, but it also wants to develop a better person in terms of growth and fulfilment.

Jobs shape people somewhat as they perform job, management needs to care about the job’s effect on the whole person.

If the whole person can be improved, then benefits will extend beyond the firm into larger society in which each employees lives.

Fundamental concepts4

Motivated BehaviorNormal behavior has certain causes. These may relate to a person’s needs or the consequences that result from acts.

In the case of needs , people are motivated not by what we think they ought to have but by what they themselves want. To an outside observer , a person’s need may be unrealistic, but they are still controlling.

Motivation is essential to the operation of organizations. No matter how much technology and equipment an organization has , these resources can not be put to the us until they are released and guided by people who have been motivated.

Desire for ImprovementMany employees today are actively seeking opportunities at work to become involved in relevant decisions, thereby contributing their talents and ideas to the organization’s success. Desire for improvement can be achieved through employee empowerment.

Fundamental concepts5

Value of the Person

People deserve to be treated differently from other factors of production(Lnad, Capital, technology) because they are of a higher order in the universe.

Because of this distinction , people want to be treated with caring, respect, and dignity; increasingly they demand such treatment from their employers. They refuse to accept the old idea that they are simply economic tools.

People want to be valued for their skills and abilities and to be provided with opportunities to develop themselves.

Fundamental concepts6

  • The Nature of OrganizationsThe three key concepts are:

    • Social Systems

    • Mutual Interest

    • Ethical Treatment Social SystemsOrganizations are Social systems. Two types of social systems exist side by side in organizations. One is the Formal Social System and the other is the Informal Social Systems.The existence of a Social System implies that the organizational environment is one of dynamic change rather than a static set of relations as pictured on an organization chart. All Parts of the system are interdependent, each part is subject to influence by other parts.

Fundamental concepts7

  • Mutual Interest

  • Organizations need people and people need organizations. Organizations have a human purpose. They are formed and maintained on the basis of some Mutuality of Interest among their participants.

  • Managers need employees to help them reach organizational objectives. And People need organizations to help them reach individual objectives.

  • Mutual interest provides a super ordinate goal for employees, the organization, and society

Fundamental concepts8

EthicsIn order to attract and retain valuable employees in an era in which good workers are constantly recruited away Ethical Treatment is necessary. To succeed organizations must treat employees in an ethical fashion.

Companies have established Codes of Ethics , publicized statements of ethical values, provided ethics training, reward employees for notable ethical behavior, publicized positive role models and a set of internal procedures to handle misconducts.

When the organization’s goal and actions are ethical, mutuality creates a

Triple Reward Systemin which Individual, Organizational and social objectives are all met. People find more satisfaction in work when there is cooperation and teamwork. They are learning growing and contributing. The organization is also more successful because it operates more effectively.

Society itself is the most beneficiary of the Triple Reward System. Because it has better products and services, more capable citizens and overall climate of cooperation and progress.

Fundamental concepts9



  • The Human Resource Approach is Developmental. - It is concerned with the growth and development of people toward higher levels of competency, creativity, and fulfillment, because people are the central resource in any organization and any society.

  • The Human Resource Approach , on the other hand, is Supportive.

  • - It helps employees become better, more responsible people, and then tries to create a climate in which they may contribute to the limits of their improved Abilities.

  • Essentially, the Human Resources approach means that better people achieve better results.

Fundamental concepts10

  • 2.A CONTINGENCY APPROACH Different Managerial Behaviors are required by different environments for effectiveness.

    • Managers need to know under what conditions they should choose one behavioral Approach over another and the contingency framework can help them to do this.

    • The Strength of Contingency Approach is that it encourages analysis of each situation prior to action while at the same time discouraging habitual practice based on universal assumptions about people.

    • The Contingency approach is also more interdisciplinary, more system oriented, and more research oriented than the traditional approach.

Fundamental concepts11

  • 3. RESULTS-ORIENTED APPROACH Outcomes of Organizational Behavior programs are assessed in terms of their efficiency.

    • All Organizations need to achieve some relevant outcomes, or results. So this Result orientation is a common thread woven through Organizational Behavior.

    • Productivity is the key issue in this approach.

    • Productivity measures are intertwined in the popular practice of Total Quality Management (TQM) .

    • .

Fundamental concepts12


  • Total Quality Management is an integrated attempt to improve the quality of a firm’s products and services through a variety of techniques and training.

  • TQM focuses on: - High Customer satisfaction through listening carefully to customers - Building partnership with suppliers

  • - Searching for continuous improvements in operational methods.

  • - Training employees in the understanding and use of statistical tools

  • - Meaningfully involving employs in team-based systems.


  • The interaction of Motivation and Ability determines a person’s Potential Performance in any activity:

  • Knowledge * Skill = Ability

  • Attitude * Situation = Motivation

  • Ability * Motivation = Potential Human Performance

  • Potential Performance * opportunity = Organizational Results

Fundamental concepts13


  • Treating an organization as a System is critically important to its success

  • The Systems Approach compels Managers to take Holistic view of the subject.

  • Holistic Organizational Behavior interprets people – organization relationships in terms of the whole person, whole group, whole organization, and whole social System.

  • It takes an across-the-board view of people in organizations in an effort to understand as many of the factors as possible that influence people’s behavior.

  • Issues are analyzed in terms of the total situation affecting them rather than in terms of an isolated events or problems.

Fundamental concepts14


  • People who lack System understanding may develop a Behavioral Bias,

  • which gives the a narrow viewpoint that emphasizes employee experiences

  • while overlooking the broader system of the organization in relation to all its

  • publics.

  • This condition is a reflection of Tunnel Vision, in which people have narrow

  • viewpoints, as if they were looking through a tunnel. Tunnel vision restricts

  • objectivity.

  • Behavioral Bias can be so misapplied that it harms employees as well as

  • organization. So people in spite of their good intentions, so overwhelm

  • others with care that the recipients of such care are reduced to Dependent -

  • unproductive- indignity.

  • People become content, not fulfilled. They find excuse for failure rather than

  • take responsibility for progress. They lack self discipline and self respect.

Fundamental concepts15


Overemphasis on an Organizational Behavior practice may produce negative results

as indicated by the Law Of Diminishing Returns.

Law Of Diminishing Returns states that at some point, increases of desirable

Practice produce declining returns, eventually zero returns, and then negative

returns as more increases are added.

The concept implies that for any situation there is an optimum amount of a

desirable practice, such as recognition or participation

Fundamental concepts16


The philosophy of Organizational Behavior is supportive and oriented toward human

Resources. It seeks to improve the human environment and help people grow toward

their potential.

However, a significant concern about Organizational Behavior is that its knowledge

and techniques can be used to manipulate people unethically as well as help them

Develop their potential.

People who lack ethical values could use people in unethical ways.

The possibility of manipulation means that people in power in organizations must

maintain high ethical and moral integrity and not misuse their power.

As the general population learns more about Organizational Behavior, it will be more

difficult to manipulate people, but the possibility is always there. That is why the

society needs Ethical Leaders (Managers). Ethical Managers will not manipulate people.