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PEMP- GP-POM

Session 4.1
Organising and Fundamentals of
Organisational Behaviour
Session Speaker
Lokesh A C

M.S Ramaiah School of Advanced Studies - Bangalore

PEMP- GP-POM

Session Objectives
At the end of session students will be able to
understand
The fundamental characteristics of organizing,
Work specialization, chain of command, span of
management, and centralization versus decentralization
Role of human resource management and importance of
Strategic HRM

M.S Ramaiah School of Advanced Studies - Bangalore

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Session Objectives
Identify how structure can be used to achieve an
organizations strategic goals
Illustrate how organization structure can be designed
to fit environmental uncertainty
Identify elements of organisational behaviour which
affects individual/group performance
Need for organisations to plan for change
management
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Session Contents
Organization Structure an Over view
Responsibility, Authority and Delegation
Centralization versus Decentralization
Managers and Managerial Roles
Strategic Human Resource Management and planning
Introduction to Organisational Behaviour
Importance, Challenges and Opportunities in OB

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Organization
A consciously coordinated social entity, with a
relatively identifiable boundary, that functions on a
relatively continuous basis to achieve a common
goal or set goals

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Organization
Organization is a purposeful system with several
subsystems where individual and activities are
organized to achieve certain predetermined goals
through division of labor and co-ordination of
activities

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Planet
resources
Health & Safety,
equity
Planet
People

Profit

Economic growth

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Elements of Organization
1. Co-ordination
2. Common goals
3. Division of labor
4. Integration

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Functions of Organizations
Allocate tasks to employees
Instruct employees
Use technology and other resources
Collect and transmit information
Exert power and control

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Basic Parts of an Organization


Top
Management

Technical
Support

Middle
Management

Administrative
Support

Technical
Core
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Goals and
Strategy
Size
Environment
Structure

Culture
1.
2.
3.
4.
5.
6.

Technology

Formalization
Specialization
Hierarchy of Authority
Centralization
Professionalism
Personnel Ratios

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Organization Theory
Study of function, structure, and performance of
organization
Groups and individuals working
Guide for decision making
Working relationships & their consequences

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An Open System and Its


Subsystems
Environment

Raw
Materials
People
Information
resources
Financial
resources

Subsystems

Transformation
Process
Output

Input

Boundary
Spanning

Production,
Maintenance
Adaptation,
Management

Products
and
Services

Boundary
Spanning

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Institutions

Preserve peace & stability


Seek global long-term solutions
Power to rule, incite, tax

Investors

NGOs
Individuals

Businesses

Demand more transparency, information and


ethics;
Include social & environmental performance in
business notation power to provide funds
Demand to be consulted and associated
Power to inform and denounce
(media, internet, justice, )

Seek quality of life and security


Demand free choice
Power to vote, denounce, boycott

Contribute services, products and technology to


society.
Balance economic profits with the long term
sustainability of the business

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Organization Structure
Formal system of task and authority relationships
Facilitates effective response to problem of coordination
and motivation
People co-ordinate actions and resources for goals
It can be changed and managed through organization design

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Organization Design
Process a structure and manage elements of structure
It controls the activities necessary to achieve its goals

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Evolution of Organizational
Structures

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Importance of Structure
It facilitates management
Encourages growth and diversification
Optimum use of technological improvement
Encourages proper use of human resources
Stimulates creativity

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Importance of Organization Design


Deal with contingencies
Effectively manage diversity and increase efficiency
Gaining competitive advantage
Value creation activity
Efficiency and innovation

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Factors Affecting Organization


Design

Organizational Structure and Design

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Consequences of Incorrect
Organization Design
Decline of the organization
Talented employees quit the organization
Resource become harder and harder to acquire
Whole process of value creation slows down
It influence structural change
Derails company's s strategy

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Role of Top Management


External Environment
Opportunities
Threats
Uncertainty
Resource Availability

Strategic Direction
Define
mission,
official
goals

CEO, Top
Management
Team
Internal Situation
Strengths
Weaknesses
Distinctive Competence
Leadership Style
Past Performance

Organization
Design

Select
operational
goals,
competitive
strategies

Structural Form
learning vs.
efficiency
Information and
control systems
Production
technology
Human resource
policies,
incentives
Organizational
culture
Inter-organizational
linkages

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Effectiveness
Outcomes
Resources
Efficiency
Goal attainment
Competing values

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Responsibility
Being dependable and making good choices
Responsibility comes with privileges
Responsible people are accountable, pursue
excellence, and exercise self-control
An accountable person thinks before acting, and
accepts responsibility for the consequences of his/her
choices

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Accountability
Accepting the blame or credit for ones choices or
behaviors
An accountable person doesnt make excuses, or blame
others for mistakes personally made
An accountable person sets a good example for others to
look up to

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Span of Management
It is also called span of control and span of supervision
It is the number of subordinates that a manager directs
and supervises
The number of subordinates varies
The smaller or narrower the span, the more levels of
management will be required
Some managers are able to supervise more subordinates
than are others
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Factors Determining the Span


Competence of the supervisor/ Manager
Competence and makeup of the subordinates
Amount and availability of help from staff specialists
Nature and importance of the activities performed
The dynamics and complexity of the activity to be
performed

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Factors Determining the Span


The degree to which a comprehensive set of
standards and procedures are available to guide
subordinates
Availability of self-directed teams

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Authority
It is the key to the managerial job
It is the lifeblood of the managerial position
It gives legitimate power to the manager or
supervisor to give directives to subordinates
It is limited in scope by both internal and external
factors

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Authority
Authority :
Is the right to make decisions, to direct the work of
others, and to give orders.
Line Managers:
A manager who is authorised to direct the work of
subordinates and is responsible for accomplishing
the organisations jobs

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Authority
Staff Manager:
Are authorised to assist and advise line managers in
accomplishing the organisations jobs.
They may advise on recruiting, hiring, and
compensation

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Line Authority
Authority is based on superior-subordinate
relationships and is managerial in nature
Authority to give orders to subordinates
The authority to direct subordinates and require them
to comply to decisions, policies, plans, and objectives
Generally follows the principle of unity of command

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Staff Authority
Authority is based on expertise in specialty areas
Provides information, counsel, advice, and guidance in
specialty areas and is not managerial in nature
The authority to make recommendations to line
organization
The recommendations can be accepted, rejected, or
altered by the line organization

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Functional Authority
The CEO or administrator gives a staff member
special limited right to command
The right is based on expertise in a specialized area
It allows maximum effective use of staff specialists
It violates the principle of unity of command

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Delegation of Authority
Authority to make business decision
Support accountability and governance
Responsibility / accountability / authority
Forms the basis of decision escalation process
Single source of truth or guiding principles

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Delegation of Authority
Successful organisations exhibit characteristics of
structural clarity through formal and informal accountabilities
Informational accountabilities - (Underpinned by leadership style,
culture, trust, operating principle/values etc)
Formal accountabilities
Clearly defined and documented
Assigned to expertise with ability to act
Congruent across multiple dimensions
Open and robust communication
Constant learning and educating from failure

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Benefits of Delegation
Empowers employees
Provides or builds on internal structure
Protects assets from undue risks or liabilities
Provides alignment of resources to decision making
Embeds risk appetite and tolerance throughout the
organisation
Provides greater clarity on what is truly important to
an organisation
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Challenges of Delegation
Complexity of DoA
Misalignment of DoA and business processes
DoA not aligned with organisational structure /
decision making
Ineffective decision making structures
Lack of staff awareness and inappropriate training
Failure to enforce (e.g. code of conduct breach)
Poorly managed when staff in temporary roles
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The Process of Delegation


1. Assignment of duties and defining the results expected
2. Granting of permission (authority)
3. Creation of an obligation (responsibility)

In order to make delegation of authority a success,


these three steps must blend together

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Centralization v/s. Decentralization


Centralization decision authority is located near the
top of the organization

Decentralization authority is pushed downward to


lower organizational levels

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Managers
Managers get things done through other people
They Plan, Organise, Lead and Control
Firms, Industries, Schools, Hospitals, Churches,
Temples, Police dept, etc, are ALL Organisations and
Managers have to work in an organisation

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Role of Managers
1. Plan: defining goals & strategies
2. Organising: who does what task, how they are
grouped, who reports to whom etc
3. Leading: motivating, resolving conflicts, directing
activities of others etc
4. Controlling: monitoring, comparing, correcting,.

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Role of Manager
1. Traditional management
Decision making, planning, and controlling
2. Communications
Exchanging routine information and processing
paperwork
3. Human resource management
Motivating, disciplining, managing conflict, staffing,
and training
4. Networking
Socializing, politicking, and interacting with others
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Allocation of Activities by Time

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Inference
One common thread runs through functions, roles,
skills activities and approaches to management
Managing people is crucial
Managers need to develop their people skills if they
are going to be effective and successful

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HRM Functions
Conducting job analysis
Planning labour needs and recruiting job candidates
Selecting job candidates
Orienting and training new employees
Managing wages & salaries (Compensating)

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HRM Functions
Providing incentives and benefits
Appraising employees
Communicating (Interviewing, counselling, &
Disciplining)
Training and developing
Building employee commitment

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Importance of HR Management
Firm can avoid:
Hire the wrong person for the job
High turnover
People not doing the best
Wastage of time with useless interviews

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Importance of HR Management
Firm can avoid:
Have company cited under occupational safety laws for
unsafe practices
Have some employees think their salaries are unfair and
inequitable
Allow a lack of training to undermine effectiveness
Commit any unfair labour practices

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Benefits of Good HR Practices


Attract and retain talent
Train people for challenging jobs
Develop skills and competencies
Promote team spirit
Develop loyalty and commitment
Increase productivity and profits

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Benefits of Good HR Practices


Improve job satisfaction
Enhance standard of living
Generate employment opportunities

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Strategic Planning
Plan of an organisation to match its interior
strengths and weaknesses with external threats and
opportunities in order to maintain a competitive
strategy
To address Where are we now as a business and
where we do want to be?

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HR Strategy
Strategy: It a course of action
The various strategies of company such as HR, sales,
marketing, finance, and manufacturing need to support
the companys strategic plan.
Example of HR Strategy: To boost employees quality
consciousness through improved screening and Training

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SHRM: Challenges
1. The need to support corporate productivity and
performance improvement efforts
2. Employees play an expanded role in employers
performance improvement efforts
3. HR must be involved in designing - not just executing
- the companys strategic plans

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SHRM: Activities
Formulating and Executing HR systems
Formulating HR Policies and Activities
Assess Employee competencies and behaviors based
on the Company needs to achieve its strategic aims

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Linking Corporate and HR


Strategies
Companys competitive environment
1. Economic, political, demographic
2. Competitive and technologies trends

Companys strategic situation

1.
2.
3.

Companys Strategic plan


Expansion - Geographical area
Cost cutting
Diversification

1.
2.

Companys HR strategies
Recruiting, training
Appraising and Compensation

Companys internal strengths


And weaknesses

Organisational Performance

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HR Score Card Approach


Define the business strategy
Outline the companys value chain
Identify the strategically required Organisational outcomes
Identify the required work force
Identify the strategically relevant HR System policies and activities
Design the HR scorecard measurement system
Periodically reevaluate the measurement system
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Importance of Strategic HRM


Can establish an Organisations sustainable competitive
advantage
Requires fundamental change in how managers think
about employees
Need to consider outsourcing certain HR transactions

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Importance of SHRM
Traditional HR Practice

Emerging HR Practice

Administrative role

Strategic role

Reactive

Proactive

Separate, Isolated from company


mission

Key part of organisational mission

Production focus

Service focus

Individuals encouraged, singled out for


praise, rewards

Cross-functional teams, teamwork most


important

People as expenses

People as key investment / assets


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Importance of SHRM
Distinction Point

Traditional HRM

Strategic HRM

Focus

Employee relations

Partnership with internal and


external customers

Role of HR

Transactional change follower and


respondent

Transformational change
leader and initiator

Initiative

Slow, reactive, fragmented

Fast, proactive and integrated

Time Horizon

Short-term

Short, medium and long (as


required)

Control

Bureaucratic-roles, policies, procedures

Organic- flexible, as applicable

Job design

Tight division of labour, independence,


specialisation

Broad, flexible, cross-training


teams

Key investments

Capital, products

People, knowledge

Accountability

Cost centre

Investment, centre

Responsibilities for HR

Staff selection

Line managers

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Organizational Change
Organizational change is the process by which
organization move from their present state to some
desired future state to increase effectiveness
When an organization system is disturbed by some
internal or external forces change frequently occur or
any alteration which occur in the overall work
environment of an organization

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Organizational Change
Change can be due to internal and/or external forces in
the organization
Change in any part of the organization affect the whole
organization
Change may affect people, structure, technology, and
other element of the organization
Change also affect the rate of speed and degree of
significance of the organization
Change may be reactive or proactive
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Change Forces
External Forces

INTETRNAL FORCES

Work force

Managerial personnel

Management structure

Avoid developing

Change
forces

Technology

Marketing conditions

Social changes

Political forces

inertia

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Change Forces
Companies Responses to Pressures
for Green Policies and Practices
Managerial
Advice

Taking as it positive way:


It create a healthy image in customers
It help in cost cutting
Energy saving in the office
Help in reducing carbon in environment
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Change Agents
Persons in organization responsible for managing
change activities
Can be managers or non managers, current
employees, newly hired employees or outside
consultants

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Process of Planned Change


Moving/
Transition

Unfreezing

Refreezing

Provide rationale for

Provide information

Implement new

change
Create minor levels
of guilt/anxiety about
not changing
Create sense of
psychological safety
concerning change

that suspects proposed


changes
Bring about actual
shifts in behavior

evaluation systems
Implement new hiring
and promotion systems

Kurt Lewin
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Speed of Change
Urgency
Degree of support
Criteria to
Consider

Amount and complexity of change


Competitive environment
Knowledge and skills available
Financial and other resources

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Resistance to Change
Effort to block new
ways of doing things

Individual
Resistance
Group
Resistance

Organizational
Resistance

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Individual Resistance

Economic factors

Habits

Insecurity

Lack of communication

Extent of change

Psychological factors

Social factors
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Group Resistance

Most organizational changes have impact on


formal groups

The groups fear that their cohesiveness or


existence is threatened by change

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Organizational Resistance
Conservative organizations may resist new ideas. The major
reason for organizational resistance are: Threat to power
Group inertia
Organizational structure
Threat to specialization
Resource constants
Sunk costs
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Minimizing Resistance to
Change
Communication

Highest priority and first strategy


for change
Improves urgency to change
Reduces uncertainty (fear of
unknown)
Problems - time consuming and
costly

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Minimizing Resistance to
Change
Communication

Provides new knowledge and skills


Includes coaching and action

Training

learning
Helps break old routines and adopt
new roles
Problems -- potentially time
consuming and costly
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Minimizing Resistance to
Change
Communication

Increases ownership of change


Helps saving face and reducing

Training

fear of unknown

Employee
Involvement

Includes task forces, search


conferences
Problems -- time-consuming,
potential conflict

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Minimizing Resistance to
Change
When communication, training, and
Communication
Training

involvement do not resolve stress


Potential benefits

Employee
Involvement
Stress
Management

More motivation to change


Less fear of unknown
Fewer direct costs
Problems -- time-consuming,
expensive, doesnt help everyone

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Minimizing Resistance to
Change
Communication

When people clearly lose something


and wont otherwise support change

Training
Employee
Involvement
Stress
Management
Negotiation

Influence by exchange-- reduces


direct costs
Problems
Expensive
Increases compliance, not commitment

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Minimizing Resistance to
Change
Communication

When all else fails

Training

Assertive influence

Employee
Involvement
Stress
Management
Negotiation

Firing people - radical form of


unlearning
Problems
Reduces trust
May create more subtle resistance

Coercion
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Organisational Behaviour
Organization: A structured social system consisting of
groups and individuals working together to meet some
agreed upon objectives
Organisational Behaviour investigates the impact that
individuals, groups, and structure have on behaviour
within organisations, for the purpose of applying such
knowledge towards improving an organisations
effectiveness
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Organisational Behaviour
The field of OB has Four Main characteristics:
i.

OB is firmly grounded in scientific method

ii.

OB studies individuals, groups and organizations

iii. OB is interdisciplinary in nature


iv. OB is used for enhancing organizational effectiveness
and individual well being

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Organisational Behaviour
Is based on Behavioural Science
Seeks to develop knowledge by using an empirical
research based methodology
It is based on systematic observation and measurement of
the Behaviour or phenomenon of interest

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Organisational Behaviour
OB researchers have shed light on:
How can goals be set to enhance peoples job
performance?
How can leaders enhance their team effectiveness?
What can be done to improve organisational
communication?

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Organisational Behaviour
Three levels of analysis need to be considered:
1. Individual perceptions, attitudes, motives
2. How people communicate and co ordinate activities in
work groups
3. The way the organization is structured and operated in an
environment which effects individual and groups

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Organisational Behaviour
OB draws upon a wide variety of social sciences i.

Psychology: Study of Individual behaviour of humans,


such as Job satisfaction, Work design, Emotions

ii. Sociology: Study of people in relation to their


environment or culture - Group behaviour, Teams
iii. Social Psychology: Change management, Measuring,
understanding and changing attitudes

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Organisational Behaviour
iv. Anthropology: Study of societies - Why values, habits,
attitudes, behaviour are different in different countries
v. Economics: Decision making, Negotiation

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Organisational Behaviour
Theory Y
Modern approach, employees are not lazy, will work hard if
right conditions prevail
Assumes people have a psychological need to work and
seek achievement and responsibility
Ability to innovate is widely spread and not solely those of
managerial class

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Organisational Behaviour
Theory X
Employees dislike work, so will attempt to avoid it
So they need to be coerced, controlled, punished to achieve
Employees avoid responsibility & seek direction always
Most employees place security above all needs and display
no ambition

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Organisational Behaviour
Theory X assumes that the average person:

Has no ambition, wants no responsibility, and would rather


follow than lead

Is self-centered and does not care about organizational


goals

Resists change

Is gullible and not particularly intelligent

People work only for money and security


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Organisational Behaviour
Theory Y makes the following general assumptions:

Work can be as natural as play and rest

People will be self-directed to meet their work


objectives if they are committed to them

People will be committed to their objectives if rewards


are in place that address higher needs such as selffulfillment

People will seek responsibility

Most people can handle responsibility because creativity


and ingenuity are common in the population
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Importance of OB
OB will help Managers to:
a) Motivate employees
b) Keep them satisfied and productive
c) Communicate effectively
d) Make teams work effectively
e) Design jobs

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History of OB
Frederick Taylor:
Addressed OB in a Steel Mill
Time and Motion Study and scientific management was
born to design a job and select and train the right
person.

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History of OB
Mayo:
Environment and human treatment dramatically increased
performance -illumination, rest, duration of work day etc.
Social Forces at Work were found as important as physical
factors

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History of OB
Division of Labour work divided into specialized tasks
and whom each worker should be responsible
Bureaucracy (Fayol and Weber) application of set of
rules where the higher authority is in changer of lower
ranking workers

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Rising Expectations
Social Factors have changed employees expectations
Flexi hours due to nuclear families
Temporary workers
Compressed work weeks
Corporate Social Responsibility unethical work practices

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Rising Expectations
Customers demands have made TQM mandatory
Total Employee Involvement
Continuous Improvement
Customer Focus
Environmental concerns Global Warming

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Study of OB will help to understand:


Basic human processes
Personality and abilities
Emotions and Stress on Job
Individual in the organization
Motivations
Career Dynamics
Group Dynamics

Decision making
Communications
Interpersonal behaviour
Influencing others
Organization culture,
creativity and Innovation
Leadership
Organizational processes

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Challenges and
Opportunities in OB
Change Management

Improving people skills

Globalisation

Empowering people

Workforce Diversity

Innovation fostering

Improving Quality &

Temporariness

Productivity

Work-Life balance

Labour shortage

Ethics

Improving Customer service

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Organisational Culture
Organisational culture describes the psychology,
attitudes, experiences, beliefs and values (personal and
cultural values) of an Organisation.
The specific collection of values and norms that are
shared by people and groups in an Organisation and
that control the way they interact with each other and
with stakeholders outside the Organisation

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Organisational Culture
Beliefs and ideas about what kinds of goals
members of an Organisation should pursue and ideas
about the appropriate kinds or standards of behavior
Organisational members should use to achieve these
goals.

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Organisational Culture
Organisational values develop into Organisational
norms, guidelines or expectations that prescribe
appropriate kinds of behavior by employees in
particular situations and control the behavior of
Organisational members towards one another.

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Goals of OB
A. Describe: To describe, systematically how people behave
under a variety of conditions. Achieving this goal allows
managers to communicate about human behavior at work
using a common language.
B. Understand: To understand why people behave as they
do. The managers would be frustrated if they could talk
about behavior of their employees, but not understand the
reasons behind those actions.
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Goals of OB
C. Predict:
The managers would have capacity to predict which
employees might be dedicated and productive or which
ones might have absent, cause problem.
Thus the managers could take preventive actions.

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Goals of OB
D. Control:

Since managers are responsible for performance


outcome, they are interested to make an impact on
employee behavior, skill development, team effort, and
productivity.

Managers need to be able to improve results through the


actions they and their employees take

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Forces affecting OB
1. People
2. Structure
3. Technology
4. Social system

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People

People make up internal social system- Individuals,


Groups small, large

People are the living, thinking, feelings being who


created the Organisation

Human organisation changes every day

People try to achieve objectives and goals

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Structure

Structure defines the formal relationship and use of


people in the organisation.

Different people in an organisation are given different


roles and they have certain relationship with others.

People have to be related in some structural way so that


their work can be effectively coordinated.

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Technology

The technology imparts the physical and economic


conditions within which people work.

People make use of - building, machines, tools,


processes and resources.

The nature of technology depends on the nature of the


organisation

Technology influences the work/working conditions

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Social System

Social system provide external environment within


which organisation operates

A single organisation is a part of the social system

Social system is made of many organisations

Organisations influence each other.

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Summary
Organization is a

A consciously coordinated social entity

purposeful system with several subsystems

Elements of organisation are:


1. Co-ordination
2. Common goals
3. Division of labor
4. Integration

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Summary
Basic parts of an organisations are- top management,
middle management, technical core, administrative and
technical supports
Organisation structure is a formal system of task and
authority relationships
Organisation design controls the activities necessary to
achieve its goals

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Summary
Factors affecting organization design are- technology,
strategy, environment, size, life cycle, culture
Role of top management is to provide strategic directiondefine mission, official goals, ..
Responsibility is being dependable and making good
choices and accountable
Accountability is accepting the blame or credit for ones
choices or behaviors
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Summary
Span of management is the number of subordinates that a
manager directs and supervises
Authority is the right to make decisions, to direct the
work of others, and to give orders
Line authority
Staff authority
Delegation: empowering employees to make business
decisions
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Summary
Managers get things done through other people
They plan, organise, lead and control
HR functions are;
Conducting job analysis
Planning labour needs and recruiting job candidates
Selecting job candidates
Orienting and training new employees
Managing wages & salaries (Compensating)

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Summary
SHR Planning: Plan of an organisation to match its
interior strengths and weaknesses with external threats
and opportunities in order to maintain a competitive
strategy
SHRM Activities are
Formulating and Executing HR systems
Formulating HR Policies and Activities
Assess Employee competencies and behaviors

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Summary
Organizational change is the process by which
organization move from their present state to some
desired future state to increase effectiveness

Either due to internal or external forces

Change agents are the persons in organization


responsible for managing change activities

Process of planned change unfreezing,


transition/moving and refreezing
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Summary
Resistance to change is Effort to block new ways of
doing things
1.

Individual resistance

2.

Group resistance

3.

Organisational resistance

Methods of minimising resistance to change


communication, training, employee involvement, stress
management, negotiation and coercion

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Summary
Organisational Behaviour investigates the impact that
individuals, groups, and structure have on behaviour
within organisations
Three levels of analysis are carried out- individual,
group and organisational
OB draws upon a wide variety of social sciences
psychology, sociology, social psychology, anthropology
and economics
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Summary
Theory Y
Employees are not lazy, will work hard if right conditions
prevail, have psychological need to work, seek
achievement and responsibility and have ability to
innovate

Theory X
Employees dislike work, so will attempt to avoid it, need to
be coerced, controlled, punished to achieve, avoid
responsibility & seek direction always
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Summary
OB will help Managers to:
a)

Motivate employees

b) Keep them satisfied and productive


c)

Communicate effectively

d) Make teams work effectively


e)

Design jobs

Organisational culture describes the psychology,


attitudes, experiences, beliefs and values (personal and
cultural values) of an Organisation
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Summary
Goals of OB
To describe, systematically how people behave under a
variety of conditions
To understand why people behave as they do
To predict which employees might be dedicated and
productive or which ones might have absent, cause
problem
To improve results through the actions they and their
employees take
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