Organizational Behavior Chapter 1

UNIT ONE
1. OVERVIEW OF ORGANIZATIONAL BEHAVIOR
Introduction
People at work in organizations today are part of a new era. The institutions of society and the
people who make them work are challenged in many and very special ways. Society at large
increasingly expects high performance and high quality of life to go hand-in-hand, considers
ethics and social responsibilities core values, respects the vast potential of demographic and
cultural diversity among people, and accepts the imprint of a globalization on everyday living
and organizational competitiveness. In this new era of work and organization, the body of
knowledge we call “organizational Behavior” offers many insights of grate values. We live and
work in a knowledge-based economy that is continually laced with the winds of change. This
places a great premium on “learning” by organizations as well as individuals. Only the learners,
so to speak, will be able to maintain the pace and succeed in a constantly changing environment.
1.1. What is Organizational Behavior?
What is behavior? What is organizational behavior mean?
Nowadays, organizations are much more than means for providing goods and services. They
create the settings in which most of us spend our lives. In this respect, they have profound
influence on our behavior. Organizational behavior, in short, is the explanation of how people
behave in organizations. Organizational behavior is the study of what people think, feel, and do
in and around organizations. There are a few definitions given by different authorities.
Organizational behavior (OB) is the field of study that seeks knowledge of behavior in
organizational settings by systematically studying individual, group and organizational process,
and then it applies that knowledge to make organizations work more effectively.
Stephen P. Robbins (1996) investigates OB as a field of study emphasize about individuals,
groups and structure have on behavior within organizations for the purpose of applying such
knowledge toward improving an organization’s effectiveness. As a whole, it involves the
understanding, prediction and control of human behavior and the factors, which influence the
performance of people as members of an organization.
Schermerhorn R.John et.al. (2002), formally defined, organizational behavior is the study of
individuals and groups in organizations. Learning about organizational behavior will help you
develop a better work-related understanding about yourself and other people. It can also expand

Organizational Behavior (OB) handoutPage 1

Organizational Behavior Chapter 1

your potential for career success in the dynamic, shifting, complex and challenging new
workplaces of today…and tomorrow.
Organizational Behavior knowledge is based on behavioral sciences. It applies the scientific
method to practical managerial problems. Organizational Behavior is not as some fields of
science like physics and chemistry because of its relatively recent appearance (Organizational
Behavior was formally established as a field by the late 1950s). However, Organizational
Behavior specialists not only apply their knowledge, they conduct studies to help solve specific
problems. These studies rely on the use of the scientific method, as it is the central defining
characteristic of modern organizational behavior. Therefore, it is important to learn about
behavior in organizational settings of various reasons:
Firstly, it is a way of thinking and humanistic orientation. Peoples and their attitudes,
perceptions, learning capacities, feelings and goals are of major importance to the organization.
Behavior is viewed as operating at individual, groups and organizational level.
Secondly, it is the application of scientific studies. As the scientific method has been used in
conducting research on Organizational Behavior, a set of principles and guidelines on what
constitute good research has emerged.
Third, it is performance oriented. It helps to answer important questions concerning goal setting,
performance enhancement, job satisfaction, and individuals and groups decision – making.
Finally, it is multidisciplinary. It utilizes principles, models, theories and methods from other
disciplines. Organization behavior is a field of study beginning to grow and develop in stature
and impact.
1.2. The Three Basic Units of Analysis In Organizational Behavior (Model of
Organizational Behavior)
A model is an abstraction of reality; a simplified representation of some real world phenomenon.
The model of organizational behavior is based on the three basic levels of analysis of
organizational behavior: Individuals, Groups and Organizational. Organizational Behavior
specialists look at behavior on three levels because individuals work in – groups within an
organization setting.
As we move from the individual level to the organization level, we add systematically to our
understanding of behavior in organizations. The three basic levels are analogues to building
blocks; each level is constructed on the previous level. Groups are based on individuals and

Organizational Behavior (OB) handoutPage 2

Organizational Behavior Chapter 1

organizational behaviors are ultimately based on individual and group behaviors. Now let us see
each level of analysis separately.
Individual level: People enter organizations with certain characteristics that will influence their
behavior at work. The more obvious of these are personal or biographical characteristics such as
age; gender; marital status; personality characteristics, attitudes and values, and basic ability
levels. Individual perceptions and motives are also the concern of this level.
Group level: The behavior of people in – groups is more than the sum total of all individuals
acting in their own way. Peoples’ behaviors when they are in groups are different from their
behavior when they are alone. At the group level, it describes how people communicate with
each other and coordinate their activities between themselves in workgroups.
Organizational level: Reaches its higher level of sophistication when people add formal
structure to their previous knowledge of individual and group behavior. Just as groups are more
than the sum of their individual’s members, so are organizations more than the sum of their
member groups. At this level, it is to examine the organizations as a whole – the way they are
structured and operated in their environment, and the effects of their operations on the
individuals and groups within them. The design of the formal organization, work processes, and
jobs; the organization’s human resource policies and practices, and the internal culture all have
its impact at this level. The model of organizational behavior can be illustrated as follows:
The Organization’s Environment

Organizational Level
Group Level
Individual Level

1.1. Replacing Intuitions with systematic study

The field of OB seeks to replace intuitive explanations with systematic study that is the use of
scientific evidence gathered under controlled conditions and measured and interpreted in a
reasonably rigorous manner to attribute cause and effect. The objective of course, to draw
accurate conclusion, so the field of organizational behavior it raises and conclusions is based on
a large number of systematically designed research studies.
Organizational behavior systematically study actions (behavior) and attitudes, but not all action
and attitude. Three types of behavior have proved to be important determinant of employee

Organizational Behavior (OB) handoutPage 3

Organizational Behavior Chapter 1

performance. Productivity, Absenteeism: - in terms of absence it is hard for an employee to be

productive, if he/she is not at work. And Turnover:- high later of employee turnover increase
costs and tend to place less experienced people in to job.
Organizational behavior is also concerned with employees’ job satisfaction, which is an attitude.
Managers should be concerned with their employees’ job satisfaction for three reasons.
a) There may be a link between satisfaction and productivity
b) Satisfaction appears to be negatively related to absenteeism and turnover
c) Finally, it can be argued that managers have a humanistic responsibility to provide their
employee with jobs that are challenging, intrinsically rewarding and satisfying.
Organizational behavior is specifically concerned with work related behavior and that taken
play in organizations.
As far back as a century ago, consultants and scholars were giving increased attention to the
systematic study of management. Although most attention was initially on physical working
conditions, principles of administration and industrial engineering principles, by the 1940s the
focus had broadened to include the essential human factor. This gave imputes to research dealing
with individual attitudes, group dynamics and the relationship between managers and workers.
Eventually the discipline of organizational behavior emerged as a broader and encompassing
approach. Today, it continues to evolve as a discipline devoted to scientific understanding of
individuals and groups in organizations and of the performance implications of organizational
structures, systems and processes. To see how organizational behavior is a systematic study the
following points will provide a good idea for learners.
Interdisciplinary body of knowledge: organizational behavior is an interdisciplinary body of
knowledge with strong ties to the behavioral sciences-psychology, sociology, and anthropology,
as well as to allied social sciences such as economics political science. Organizational behavior
is unique, however in its devotion to applying and integrating these diverse insights to a chive a
better understanding of human behavior in the organizations.
Use of scientific methods organizational behavior uses scientific methods to develop and
empirically test generalizations about behavior in organizations. Scientific thinking is important
to organizational behavior researchers and scholars for this reasons the process of data collection
is controlled and systematic, proposed explanations are carefully tested and only explanations
that can be scientifically verified are accepted.

Organizational Behavior (OB) handoutPage 4

Organizational Behavior Chapter 1

Focus on Application the field of organizational behavior focuses on applications that can make
in a real difference in how organizations and people in them perform. Outcome or dependent
variables studied by researchers, for example including task performance, job satisfaction, job
involvement, absenteeism and turn over. It is in this sense organizational behavior is an applied
social science that can ultimately help to improve the functioning of organizations and the work
experiences of their members. Among the practical questions addressed by the discipline
- How should rewards such as merit pay raises be allocated?
- When should jobs should jobs be designed for individuals and for groups?
- What are the ingredients of successful teamwork?
- How organizational cultures be changed?
- Should decisions be made by individuals, consultative or group methods?
- What is the best way to achieve “win – win” outcomes?
Contingency Thinking rather than assume that there is one “best” or universal way to manage
people and organizations. Organizational behavior recognizes that management practices must
be tailored to fit the exact nature of each situation. Using a contingency approach researchers try
to identify how different situations can best be understood and handled.
1.2. Features of Organizational Behavior
OB recognizes the dynamic nature of organizations. As a field of study OB pays attention to
both behavior and the organizations within the behavior takes place. An organization is a
structured social system consisting of groups and individuals working together to meet some
agreed upon objectives. In studying organizations, OB scientists recognize that organizations are
not static; they are dynamic and ever –changing entities. They recognize that organizations are
open systems; that are self – sustaining systems that use energy to transform resources from the
environment into some form of output. The continuous nature of the system characterizes the
existence of organization.
Because of organizations dynamism and complexity OB assumes there is No one best
approaches to manage organization – everyone wants to know what the best way to motivate
and to lead is. However, there is no one best approach to motivate or to lead. OB scientists
recognize a contingency approach that behavior is the result of a complex of interacting forces
and must be dealt with accordingly. This approach takes the view that there is no one best,
universal structure. There are a large numbers of variables, or situational factors, which influence

Organizational Behavior (OB) handoutPage 5

Organizational Behavior Chapter 1

organizational design and performance. The contingency approach emphasizes the need for
flexibility. By adopting a contingency approach, the field of OB recognizes that behavior in
organization is influenced by a wide variety of factors in combination with each other. The
factors may include background of individuals, colleagues, nature of work, the workplace,
remuneration package, type of management, the surrounding environment, etc. therefore, OB
specialists agree that the best motivation and the best leadership style are contingent upon the
circumstances of the behavior.
OB confronts the challenges created by the changing nature of work. The world is constantly
changing, and this phenomenon greatly influences the work setting. The changing demographics
of the workforce make the work of OB more important. For example, there are more women
working than ever before, who are better trained and educated. Secondly, globalization is another
trend. The economy sooner or later need to be opened and makes the completion globally.
Thirdly, the increased use of automation and sophisticated computer technology has raised new
issues and challenges for OB.
1.3. The Development of Organizational Behavior
Early managerial concern seemed to concentrate on increasing productivity, not on taking care of
people. In the early part of this century, management pioneers such as Frederick Taylor, Frank
Gilbreth, and their contemporaries applied scientific methods to design jobs and work conditions
for optimal productivity. Work patterns were designed for efficiency.
Incentives offered to workers were primarily monetary. It was believed that every worker could
be good at something; it was management’s job to help each individual find the best place to
work. Time and motion studies were used to arrange each job more efficiently.
Since it was felt that managers had a responsibility to provide the very best working conditions,
one of the most famous research efforts ever attempted in an organizational setting was begun in
the 1920s at the Western Electric plant in Hawthorne, Illinois. The study was actually begun as
an attempt to find the best level of illumination for workers at workstations to achieve
effectiveness (getting goals accomplished) and efficiency (using resources wisely).
In the process of researching lighting levels and other working conditions, the human side of
organizations became the focus of attention. New questions were asked, and new assumptions
were developed. It was felt that happy workers would be productive workers. Allowing and
encouraging employees to work together in groups was considered important. Affiliation needs

Organizational Behavior (OB) handoutPage 6

Organizational Behavior Chapter 1

were felt to be a high priority. Unions gained strength as many believed employers were abusing
and manipulating their employees. The Great Depression increased the desire of individuals for
support from one another.
Many say that it was the Hawthorne studies that opened the door to consideration of the things
people feel, need, and want from their work experiences. It was also seen as the introduction to
group dynamics.
The Hawthorne studies were by no means the end of the development of management thought.
When Koontz wrote his classic article published in 1961, he identified six different schools of
thought; when he wrote a revisiting article in 1980, he found eleven different management
approaches.
Generally speaking the foundation of organizational behavior will be studied along the lines of
the development of management schools of thought, which are supposed to be the roots and
sources of organizational behavior.
 These schools of thought are:
 scientific management,
 classical organization theory,
 the human relations movement, and
 other thoughts in the modern era
1.4. Contributing Disciplines to Organizational Behavior
The three level of analysis of organizational behavior fits into the five anchors of organizational
behavior. The five anchors of organizational behavior are:
 The multidisciplinary anchor,  The multiple level of analysis
 The scientific method anchor, anchor, and
 The contingency anchor,  The open systems anchor,
The multidisciplinary anchor, organizational behavior is anchored around the idea that it should
draw on knowledge from other disciplines. In other words, organizational behavior should be
multidisciplinary. Fields like psychology, sociology, economics, political science, anthropology,
etc. have contributed a lot for the field of organizational behavior.
Organizational behavior is applied behavioral science and as a result is built up on contributions
from several behavioral disciplines. The followings are the predominant areas.

Organizational Behavior (OB) handoutPage 7

Organizational Behavior Chapter 1

Psychology:- is the science that seeks, to measure, explain, and sometimes change the behavior
of human and other animals.
Sociology: Studies people in relation to their follow human beings. Sociologists have made their
greater contribution to OB through their study of group behavior in organizations, particularly
formal and complex organizations. Areas within OB that have received valuable input from
sociologists include group dynamics, Design of work teams, organizational culture formal
organization theory and structure bureaucracy, communications, status, power and conflict.
Social Psychology: is an area with in psychology blending concepts from psychology and
sociology. It focuses on the influence of people on one another. One of the major areas receiving
considerable investigation by social psychologists has been, change how to implement it and
how to reduce barriers to its acceptance.
Anthropology; is the study of societies to learn about human beings and their activities. The
work of anthropologists on culture and environments, for instance has helped us understand
differences in fundamental values, attitudes, and behavior between people in different countries
and within an organizations.
Political Science: is the study of the behavior of individuals and groups within a political
environment. Specific topics of concern to political scientists include structuring conflict,
allocation of power, and how people manipulate power for individual self-interest.

Organizational Behavior (OB) handoutPage 8

Organizational Behavior Chapter 1

Toward an OB Discipline

© 2005 Prentice Hall Inc. All rights reserved.

The scientific method anchor: A second anchor of organizational behavior relates to the way
we study organizations. For the most part, OB researchers test their hypothesis about
organizations by collecting information according to the scientific method. The scientific method
is a set of principles and producers that help researchers to systematically understand previously
unexplained events and conditions.
The contingency anchor: “It depends” is a phrase that OB scholars often use to answer a
question about the best solution to an organizational problem. This anchor states that a particular
action may have different consequences in different situations. In other words, no single solution
is best in all circumstances.
The multiple levels of analysis anchor. Organizational events are usually studied from three
common levels of analysis: individual, group, and organizational. The individual level includes
the characteristics and behavior of employees as well as the thought processes attributed to them,
such as motivation, perceptions, personalities, attitudes and values. The group level of analysis

Organizational Behavior (OB) handoutPage 9

Organizational Behavior Chapter 1

looks at the way people interact. This includes group dynamics, decisions, power, conflict and
leadership. At the organization level, we focus on how people structure their working
relationships and on how organizations interact with their environment.
The open system anchor: Organizations are open systems; not closed systems. This means that
organizations consist of interdependent parts that work together to continually monitor and deal
with the environment.
1.5. Importance of Organizational Behavior
Organizational behavior is all about the study of human behavior, attitude and performance with
in the setting of organizations. People naturally show interest to know how individuals and
groups behave in organizations. Every one of us has an inherent need to know about the world in
which we live. This is particularly true in organizations, because they have a profound and
widespread effort on our lives. In modern times, in particular, our lives are closely and heavily
tied to organizations. We are thus strongly interested to know what is going on in and around
organizations.
The field of organizational behavior uses scientific research to help us to understand and predict
behavioral situations and related processes in the organization. The decisions and actions that
people make in organizations are determined by a complex combination of factors. Generally
speaking, organizational behavior has a lot of importance. More specifically, organizational
behavior helps us to address three very important and interrelated issues.
1. Understand organizational events, i.e. exploring and knowing what is really going on in
the organization;
2. Influence organizational events, i.e., influencing the way things are handled and done in
the organization; and
3. Predict organizational evens, i.e., knowing about the future in the organization.
In this context, we can outline certain benefits of OB as follows. Organizational behavior helps
us to:
 Explore what is really going on in organizations with respect to how individuals and
groups are behaving, making decisions, performing, and resolving conflicts and son on;
 Make sense of the workplace and to some extent
 Understand and predict (know the future about) what people will be don under various
conditions in organizations.

Organizational Behavior (OB) handoutPage 10

Organizational Behavior Chapter 1

 Influence the environment in which we live and work. Whether we are a marketing
specialists, accountant or personnel officers, we need to know how to communicate
effectively with others, manage conflict, make better decisions, build commitment to our
ideas, to help work teams to operate more effectively, and so on.
1.6. Management and Organizational Behavior in 21st Century
The obvious question is what will the world be like in the 21 st Century? In predicting what
organizations of the future will be like, Fremound, E.Kast and James E.rosen Weig have offered
the following descriptions.
1. Organizations will be operating in a turbulent environment where they will have to with
stand continual change and adjustment
2. Organizations will increase in size and complexity
3. Greater emphasis will be placed up on persuasion rather coercion in getting employees to
participate in organizational functions
4. The influence of employees at all levels of the organization will increase, there by
resulting in power equalization
5. There will be increase in the number and influence of scientists and professionals within
the organization
6. The goals of the complex organizations will increase and emphasis will be given to
satisfying a number of them rather than maximizing anyone.
Undoubtedly the future of management will be full of over whelming challenges and
opportunities diversity of problem situations and baffling diversity of problem situation and
puzzles and solve them in a more intelligent way than what they have been doing now.
Finally, it must be pointed out that the old cliché “workers do, and managers tell” will be going
to be a silly misconception. Tomorrow’s managers must be in a position to effectively translate
the technological, social, economic and political changes in to fruitful programmers so that the
goals of organization are achieved to the satisfaction of the society.

Organizational Behavior (OB) handoutPage 11