ORGANIZATIONAL BEHAVIOR

Working With people

Organizational behavior is the study and application of knowledge about how

people- as individuals and groups-act in organizations. Its goals are to make mangers
more effective at describing, understanding, predicting, and controlling human behavior.
Key elements to consider are people, structure, technology, and the external
environment. Previously known as human relations, organizational behavior has
emerged as an interdisciplinary field of value to managers. It builds on an increasingly
solid research foundation that was begun in the 1920s, and it draws upon useful ideas
and conceptual models from many of the behavioral sciences.
Fundamental concepts of organizational behavior relate to the nature of people
(individual differences, a whole person, motivated behavior, desire for involvement,
perception, and value of the person) and to the nature of organizations (social system
and mutual interest). Managerial actions should be oriented holistically to attain
superordinate goals of interest to employees, the organization, and society. This can
best be done by the understanding and use of human resource. contingency,
productivity, and systems approaches.
Models of Organizational Behavior

Every firm has an organizational behavior system. It includes the stated or

unstated philosophy, values, visions and goals; the quality of leadership
communications, and group dynamics; the nature of both the formal and informal
organizations; and the influence of the social environment. These items combine to
create a culture in which the personal attitudes of employees and situational factors can
produce motivation and goal achievement.
Four models of organizational behavior are the autocratic, custodial, supportive,
and collegial. The supportive and collegial models are more consistent with
contemporary employee needs and, therefore, will predictably obtain more effect results
in many situations. Managers need to examine the model they are using, determine
whether it is the most appropriate one, and remain flexible in their use of alternative and
emerging models.
The idea of organizational behavior models will be extended in Chapter 3, as we
discuss social systems, roles, and status. Specifically, we will look at the creation and
impact of organizational cultures which help employees sense which organizational
behavior model is in use.

Social Systems and Organizational Culture

A social system is a complex set of human relationships interacting in many ways.
Possible interactions are as limitless as the stars in the universe. Each small group is a
subsystem within larger groups that are subsystems of even larger groups, and so on,
until all the worlds population is included. Within a single organization, the social
system includes all the people in it and their relationships to one another and to the
outside world.
Two points stand out in the complex interactions among people in a social system. First,
the behavior of any one member can have an impact, directly or indirectly, on the
behavior of any other. Although these impacts may be large or small, all parts of the
system are mutually interdependent. Simply stated, a change in one part of a system
affects all other parts, even though its impact may be slight.
A second important point revolves around a systems boundaries. Any social system
engages in exchanges with its environment, receiving input from it and providing output
to it (which then becomes inputs for its adjacent systems). Social systems are,
therefore, open systems that interact with their surroundings.
Social Equilibrium
A system is said to be in social equilibrium when its interdependent parts are in
dynamic working balance. Equilibrium is a dynamic concept, not a static one. Despite
constant change and movement in every organization, the systems working balance can
still be retained. The system is like a sea: in continuous motion and even suffering
substantial disruption from storms, over time the seas basic character changes very
little.
Functional and Dysfunctional Effects
If the effects of change are favorable for the system, it has a functional effect. When
an action or a change creates unfavorable effects, such as a decline in productivity, for
the system it has a dysfunctional effect.
Employees can also have functional or dysfunctional effects on the organization. They
can be creative, productive, and enthusiastic and actively seek to improve the quality of
the organizations product or service. On the other hand, they can be tardy, absent
frequently, unwilling to use their talents, and resistant to organizational changes. For
employees to exhibit functional behaviors, they need to receive clear expectations and
promises of reward. Furthermore, in exchange, the organization needs to receive a
commitment from the employees.
Psychological and Economic Contracts
When employees join an organization, they make an unwritten psychological contract
with it, although often they are not conscious of doing so. This contract is in addition to
the economic contract where time, talent and energy are exchanged for wages, hours,
and reasonable working conditions. The psychological contract defines the conditions of
each employees psychological involvement both contributions and expectations with
the social system. Employees agree to give a certain amount of loyalty, creativity, and
extra effort, but in return they expect more than economic rewards from the system.

They seek job security, fair treatment (human dignity), rewarding relationships with coworkers, and organizational support in fulfilling their development expectations.
If the organization honors only the economic contract and not the psychological contract,
employees tend to have lower satisfaction because not all their expectations are being
met. They may also withhold some of their work-related contributions. On the other
hand, if both their psychological and economic expectations are met, they tend to
experience satisfaction, stay with the organization, and perform well. A desirable sense
of mutuality has been reached.
The psychological contract builds upon the concept of exchange theory. This theory
simply suggests that whenever a continuing relationship exists between two parties,
each person regularly examines the rewards and costs of that interaction. In order to
remain positively attracted to the relationship, both parties must believe that a net
positive ratio (rewards to costs) exists from their perspective. Consequently, the
psychological contract is continually examined and often revised as new needs emerge
and new rewards become available.
SOCIAL CULTURE
An environment of human-created beliefs, customs, knowledge and practices is called
social culture. Culture is the conventional behavior of society, and influences all
actions of a person even though it seldom enters into conscious thoughts.
Social cultures are often portrayed as consistent within a nation, thereby producing a socalled national culture. At the simplest level, national cultures can be compared on the
bases of how their members relate to each other, accomplish work, and respond to
change. However, distinctive social cultures can exist within a nation, as well, as seen in
the tragic dispute between people of various ancestry within the former country of
Yugoslavia. Social cultures can have dramatic effects on behavior at work. Some of the
ways in which cultures differ include patterns of decision making, respect for authority,
treatment of females, and accepted leadership styles. Knowledge of social cultures is
especially important because managers need to understand and appreciate the
backgrounds and beliefs of all members of their work unit.
People learn to depend on their culture. It gives them stability and security, because
they can understand what is happening in their cultural community and know how to
respond while in it. However, this one-culture dependency may also place intellectual
blinders on employees, preventing them from gaining the benefits of exposure to people
from other cultural backgrounds. Cultural dependency is further compounded under
conditions involving the integration of two or more cultures into the workplace.
Employees need to learn to adapt to others in order to capitalize on the opportunities
they present, while avoiding possible negative consequences.
Cultural Diversity
Employees in almost any organizations are divided into subgroups of various kinds.
Formation of groups is determined by two broad sets of conditions. First, job-related
(organizationally created) differences and similarities, such as type of work, rank in the
organization, and physical proximity to one another, sometimes cause people to align
themselves into groups. However, a second set of non-job-related conditions (those
related to culture, ethnicity, socioeconomics, sex and race) arise primarily from an

individuals personal background; these conditions are highly important for legal, moral,
and economic reasons.
This cultural diversity or rich variety of differences among people at work, raises the
issue of fair treatment for workers who are not in positions of authority.
Problems may persist because of a key difference in this context between
discrimination and prejudice. Discrimination is generally exhibited as an action,
whereas prejudice is an attitude. Either may exist without the other. The law focuses on
an employers actions, not feelings. If actions lead to what is legally determined to be
discriminatory results, such actions are unlawful regardless of the employers alleged
good intentions.
A promising approach to overcoming discriminatory practices actually attempts to
change the underlying attitudes. Programs aimed at managing and valuing diversity
build from a key premise: Prejudicial stereotypes develop from unfounded assumptions
about others and from their overlooked qualities. Differences need to be recognized,
acknowledged, appreciated, and used to collective advantage.
Social Responsibility Every action that organization take involves costs as well as
benefits. In recent years there has been a strong social drive to improve the cost-benefit
relationship to make it possible for society to gain benefits from organizations and for the
benefits to be fairly distributed.
Social responsibility is the recognition that
organizations have significant influence on the social system and that this influence must
be properly considered and balanced in all organizational actions.
The presence of strong social values such as social responsibility has a powerful impact
on organizations and their actions. It leads them to use a socioeconomic model of
decision making, in which both social costs and benefits are considered along with the
traditional economic and technical values. Organizations take a broader view of their
role within a social system and accept their interdependence with it.
ROLE
A role is the pattern of actions expected of a person in activities involving others. Role
reflects a persons position in the social system, with its accompanying rights and
obligations, power and responsibility. In order to be able to interact with one another,
people need some way of anticipating others behavior. Role performs this function in
the social system.
A person has roles both on the job and away from it. One person performs the
occupational role of worker, the family role of parent, the social role of club president,
and many others. In those various roles, a person is both buyer and seller, supervisor
and subordinate, and giver and seeker of advice. Each role calls for different types of
behavior. Within the work environment alone, a worker may have more than one role,
such as a worker in group A, a subordinate to Supervisor B, a machinist, a member of a
union, and a representative on the safety committee.
Roles Perceptions

Activities of managers and workers alike are guided by their role perceptions, that is,
how they think they are supposed to act in their own roles and how others should act in
their roles. Since managers perform many different roles, they must be highly adaptive
(exhibiting role flexibility) in order to change from one role to another quickly.
Supervisors especially need to change roles rapidly as they work with both subordinates
and superiors, and with technical and nontechnical activities.
When two people, such as a manager and an employee, interact, each one needs to
understand at least three role perceptions. For a manager, the three roles are as
follows: First there is the managers role perception as required by the job being
performed (A). Then there is the managers perception of the role of the employee being
contacted (B). Finally there is the managers perception of his or her role as likely to be
seen by the employee (C). Obviously, one cannot meet the needs of others unless one
can perceive what they expect. Three related role perceptions (D,E, and F) exist from
the employees perspective, with dramatic differences (from the managers perceptions)
possible especially in the direct comparisons such as A-D, B-E, and C-D. The key is
for both parties to gain accurate role perceptions for their own roles and for the roles of
the other. Reaching such an understanding requires studying the available job
descriptions, as well as opening up lines of communication to discover the others
perceptions. Unless roles are clarified and agreed upon by both parties, conflicts will
inevitably arise.
Mentors
A mentor is a role model who guides another employee (a protg) by sharing valuable
advice on roles to play and behaviors to avoid. Mentors teach, advise, coach, support,
encourage, act as sounding boards, and sponsor their protgs so as to expedite their
career progress. The advantages of successful mentoring programs include stronger
employee loyalty, faster movement up the learning curve, better succession planning
through development of replacements, and increased level of goal accomplishments.
Some organizations actually assign protgs to various mentors, but this practice can
create problems of resentment, abuse of power, and unwillingness to serve. As a result,
other firms simply encourage employees to seek out their own mentors.
Role Conflict
When others have different perceptions or expectations of a persons role, that person
tends to experience role conflict. Such conflict makes it difficult to meet one set of
expectations without rejecting another.
Role Ambiguity
When roles are inadequately defined or are substantially unknown, role ambiguity
exists, because people are not sure how they should act in situations of this type. When
role conflict and role ambiguity exist, job satisfaction and organizational commitment will
likely decline. On the other hand, employees tend to be more satisfied with their jobs
when their roles are clearly defined by job descriptions and statements of performance
expectations. A better understanding of roles helps people know what others expect of
them and how they should act. If any role misunderstanding exists when people
interact, then problems are likely to occur.
STATUS

Status is the social rank of a person in a group. It is a mark of the amount of

recognition, honor, esteem, and acceptance given to a person. Within groups,
differences in status apparently have been recognized ever since civilization began.
Wherever people gather into groups, status distinctions are likely to arise, because they
enable people to affirm the different characteristics and abilities of group members.
Individuals are bound together in status systems, or status hierarchies, which define
their rank relative to others in the group. If they become seriously upset over their
status, they are said to feel status anxiety.
Loss of status sometimes called losing face or status deprivation is a serious
event for most people; it is considered a much more devastating condition, however, in
certain societies. People, therefore, become quite responsible in order to protect and
develop their status. Since status is important to people, they will work hard to earn it. If
it can be tied to actions that further the companys goals, then employees are strongly
motivated to support their company.
Status Relationships
High-status people within a group usually have more power and influence than those
with low status. They also receive more privileges from their group and tend to
participate more in group activities. They interact more with their peers than with those
of lower rank. Basically, high status give people an opportunity to play a more important
role in an organization. As a result, lower-status members tend to feel isolated from the
mainstream and to show more stress symptoms than higher-ranked members.
In a work organization, status provides a system by which people can relate to one
another as they work. Without it, they would tend to be confused and spend much of
their time trying to learn how to work together. Though status can be abused, normally it
is beneficial because it helps people interact and cooperate with one another.
Status Symbols
The status system reaches its ultimate end with status symbols. These are the visible,
external things that attach to a person or workplace and serve as evidence of social
rank. They exist in the office, shop, warehouse, refinery, or wherever work group
congregate. They are most in evidence among different levels of managers, because
each successive level usually has the authority to provide itself with surroundings just a
little different from those of people lower in the structure.
Many organizations have a policy that persons of equal rank in the same department
should receive approximately equal status symbols. There may be some variation
between departments, such as production and sales, because the work is different and
rank is not directly comparable. In any case, managers need to face the fact that status
differences exist and must be managed successfully. Managers have the power to
influence and control status relationships somewhat. The organization gives some
status, and it can take some away.
Sources of Status
The sources of status are numerous, but in atypical work situation several sources are
easily identified. Education and job level are two important sources of higher status. A
persons abilities, job skills, and type of work also are major sources of status.

Other sources of status are amount of pay, seniority, age, and stock options. Pay gives
economic recognition and an opportunity to have more of the amenities of life, such as
travel. Seniority and age often earn for their holder certain privileges, such as first
choice of vacation dates, or the respect of co-workers for their longevity at work. Method
of pay (hourly versus salary) and working conditions also provide important status
distinctions, such as distinguishing blue-collar and white-collar work. Stock options
provide employees with the opportunity to share the financial success of the firm.
Significance of Status
Status is significant to organizational behavior in several ways. When employees are
consumed by the desire for status, it often is the source of employee problems and
conflicts that management needs to solve. It influences the kinds of transfers that
employees will take, because they dont want a low-status location or job assignment. It
helps determine who will be an informal leader of a group, and it definitely serves to
motivate those seeking to advance in the organization. Some people are status
seekers, wanting a job of high status regardless of other working conditions. These
people can be encouraged to qualify themselves for high-status jobs so that they will feel
rewarded.
ORGANIZATIONAL CULTURE
Social (national) culture creates the wide-ranging context in which organizations operate.
It provides the complex social system of laws, values, and customs in which
organizational behavior occurs. Employee behavior (B), according to social psychologist
Kurt Lewin, is a function of the interaction between personal characteristics (P) and the
environment (E) around the person, or B = f(P,E). part of that environment is the social
culture in which the individual lives and works, which provides broad clues as to how a
person with a given background will behave.
Inside the organization lies another powerful force for determining individual and group
behavior. Organizational culture is the set of assumptions, beliefs, values and norms
that are shared by an organizations members. This culture may have been consciously
created by its key members, or it may have simply evolved across time. It represents a
key element of the work environment in which employees perform their jobs. This idea
of organizational culture is somewhat intangible, for we cannot see it or touch it, but it is
present and pervasive. Like the air in a room, it surrounds and affects everything that
happens in an organization. Because it is a dynamic systems concept, culture is also
affected by almost everything that occurs within an organization.
Organizational cultures are important to a firms success for several reasons. They give
an organizational identity to employees a defining vision of what the organization
represents. They are also an important source of stability and continuity to the
organization, which provides a sense of security to its members. At the same time,
knowledge of the organizational culture helps newer employees interpret what goes on
inside the organization, by providing an important context for events that would
otherwise seem confusing. More than anything else, perhaps, cultures help stimulate
employee enthusiasm for their tasks. Culture attracts attention, convey a vision, and
typically honor high-producing and creative individuals as heroes. By recognizing and
rewarding these people, organizational cultures are identifying them as role models to
emulate.

Characteristics of Cultures
Organizations, like fingerprints and snowflakes, are unique. Each has its own history,
patterns of communication, systems and procedures, mission statements and visions,
stories and myths which, in their totality, constitute its distinctive culture. Cultures are
relatively stable in nature, usually changing only slowly over time. Exceptions to this
condition may occur when a major crisis threatens a firm or when two organizations
mere with each other (requiring a careful blending of the two as to avoid culture clash).
Most organizational cultures have historically been implicit rather than explicit. More
recently, though, organizations have begun talking about their intended cultures, and
many top leaders see one of their major roles as speaking out about the kind of
environment they would like to create within their firms. A final defining characteristic of
most cultures is that they are seen as symbolic representations of underlying beliefs and
values. Seldom do we read a description of a firms culture. More frequently, employees
make inferences about it from hearing stories about the way things are done, from
reading slogans that portray corporate ideals, from observing key artifacts, or from
watching ceremonies in which certain types of employees are honored.
Several other dimensions of culture are important to note. For one, there is no best
culture for all firms; culture clearly depends on the organizations goals, industry, nature
of competition, and other factors in its environment. Cultures will be more easily
recognized when their elements are generally integrated and consistent with each other;
in other words, they fit together like pieces of a puzzle. Also, most members must at
least accept, if not embrace, the assumptions and values of the culture.
Historically, employees seldom talked explicitly about the culture in which they worked;
more recently, culture has become an increasingly acceptable conversation topic among
employees. Most cultures evolve directly from top management, who can have a
powerful influence on their employees by what they say. However, managements
actions are even more important to watchful employees, who can quickly detect when
managers give only lip service but not true support to certain ideals, such as customer
service and quality products. A culture may exist across an entire organization, or it may
be made up of various subcultures the environment within a single division, branch,
plant, or department.
Finally, cultures have varying strengths they can be
characterized as relatively strong or weak, depending largely on the degree of their
impact on employee behavior and how widely the underlying beliefs and values are held.
The effect of organizational culture on employee behavior is difficult to establish. Some
research indicates that there is a positive relationship between certain organizational
cultures and performance. Agreement within an organization on a culture should result
in a larger degree of cooperation, acceptance of decision making and control,
communication, and commitment to the employer. Such a result is especially likely
when a firm consciously seeks to create a performance-enhancing culture that removes
barriers to success.

International Dimensions of Organizational Behavior

The world of business has been transformed into a global economy. Many U.S.
businesses have become multinational, extending their operations into other countries.
Similarly, corporations in other countries have begun extensive operations in the United
States and elsewhere. Managers of these firms encounter a wide variety of social,
political, and economic environments as well as unique individual differences. Among
many other factors, the difficulty in understanding local views of productivity can be a
major barrier to improvement. However, when expatriate managers are effective, they
help create a training multiplier effect, providing skills which become multiplied many
times in the host country.
Employees entering another nation may have difficulty adapting to it because of
their parochialism, ethnocentrism, or differences in cultural distance among nations.
Cultural shock is a potential barrier to success, but it can be prevented or minimized
through careful selection, trainings and counseling. Returning employees also need
attention so that their reentry will be smooth and productive.
Expatriate managers must recognize that their organizational behavior practices
cannot be transferred directly from one country to another, especially if the host country
is less developed. Models for understanding and managing people need to be adapted
to the particular social culture. The best results occur when neither the home country's
nor the host nation's traditional practices are used. Theory Z an example of
organizational approaches that integrate the most workable ideas from both sets of
existing practices. Transcultural managers&-those who can adapt successfully to a
number of other cultures and still achieve their goals of improved productivity&-will be
increasingly needed.
Managing Communications

Organizations need effective communication in downward, upward, lateral

directions. It is the transfer of information and understanding from one person to another
person. The two&-way communication process consists of these eight steps: develop
an idea, encode, transmit, receive, decode, accept, use, and provide feedback.
To overcome personal, physical, and semantic barriers, managers must pay
close attention to communication symbols, such as words, pictures, and nonverbal
actions. This requires study and use of semantics&-the science of meaning&-to
encourage understanding.
Managers play a key role in downward and upward communication, sometimes
even delaying or filtering the flow of information. Many tools are available for their use,
such as providing performance feedback and social support or establishing open&-door
policies and holding employee meetings. Listening, however, remains one of the most
powerful tools. Networks have become popular ways for employees to find out what is
going on around them, while the rapid acceptance of computers has madepossible
electronic mail systems and telecommuting for some employees.

Appraising and Rewarding Performance

Economic rewards provide social as well as economic value. They play a key
role within several motivational models, blending with expectancy, equity, behavior
modification, and need&-based approaches. Employees perform a rough cost&-reward
comparison and work somewhat near but below the break&-even point.
Performance appraisal provides a systematic basis for assessment of employee
contributions and distribution of economic rewards. Modern appraisal philosophy
focuses on performance. objectives, and goal setting. Nevertheless, the appraisal
interview can be difficult for both manager and employee.
Incentive systems provide different amounts of pay in relation to some measure
of performance. They tend to increase employee expectations that rewards will follow
performance, although the delay may range from a week to a year. Incentives often
stimulate greater productivity, but also tend to produce some offsetting negative
consequences. Wage incentives reward greater output by individuals or groups, while
profit sharing emphasizes mutual interest with the employer to built a successful
organization. Gain sharing emphasizes improvement in various indices of organizational
performance, while skill&-based pay rewards employees for acquiring greater levels or
types of skills.
Since employees have different needs to be served, many types of pay are
required for a complete economic reward system. In some organizations, flexible benefit
programs allow employees to select individual combinations of economic rewards.
Employee Attitudes

Employee attitudes are important to monitor, understand, and manage. They

develop is the consequences of the feelings of equity or inequity in the reward system,
as well as from supervisory treatment. Managers are particularly concerned with three
types of attitudes job satisfaction, job involvement, and organizational commitment.
Job dissatisfaction may lead to increased absenteeism, turnover, and other
undesirable behaviors, and so employers want to develop satisfaction among their
employees. The vast majority of workers in the United States report that they are
satisfied with their jobs, although they may be dissatisfied with specific aspects of them.
Older employees and higher occupational levels especially tend to have higher
satisfaction.

Higher job involvement leads to dedicated, productive workers. High

performance and equitable rewards encourage high satisfaction through a
performance&-satisfaction&-effort loop. Higher job satisfaction usually is associated with
lower turnover, and fewer absences. Committed employees are also more likely to
embrace company values and beliefs (its culture).
We can obtain useful attitudinal information by using questionnaires and
interviews, as well as by examining existing human resource data. Information is
communicated to managers through survey feedback that uses summary data, makes
relevant companions, and supports the conclusions with actual employee comments.
Follow-up is accomplished by committees to assure employees that appropriate action
is taken after a survey. Ultimately information on employee attitudes is useful only if it
influences managers to improve their performance.

Empowerment and Participation

Many employees want to become more empowered. If allowed to play a

meaningful role in the organization, their feelings of self-esteem will increase and they
will contribute their abilities and efforts to help the or organization succeed.
Participation is an important vehicle for empowering employees. Participation is
the mental and emotional involvement of persons in group situations that encourages
them to contribute to group goals and share responsibility for them. For employees it is
the psychological result of supportive management.
Participation is a sharing process that may increase the power of both
employees and the manager, because power is an expandable resource. When the
prerequisites of participation are met, it can provide a variety of benefits for both
employees and employers. Some employees desire more participation than others, and
so it is most effective when it reasonably matches their needs. Where there is
underparticipation or overparticipation, both satisfaction and performance may decline.
A number of participative programs can be effective, and they vary in the degree
to which they meet the criteria for full involvement. All have their benefits as well as their
limitations. A program that is desirable for some employees is not necessarily good for
all of them. Labor unions typically support management's effort to allow more
participation, but they have been somewhat reserved about becoming officially involved
in these efforts until recently.
Managing Change

Change is everywhere and its pace is increasing. The work environment is filled
with change that, while positive in intent, upsets the social system and requires
employees to adjust. When they do, employees respond with their emotions as well as
rational reasoning. Resistance to change can focus on the change itself or on the way it
was introduced. Further, it can be logical, psychological, or sociological.
Change has costs as well as benefits, and both must be considered to
determine net effects. Employees tend to resist change because of its costs, including
its psychic costs. Management reduces resistance by influencing the supporting and
restraining forces for change. Managers are encouraged to apply a systematic change
procedure spanning unfreezing, change, and refreezing activities. Since there is an
organizational learning curve for change, time is required for the potential benefits of
change to occur.
Transformational leadership can be instrumental in bringing about effective
changes. Leaders need to create and share a vision to inspire followers through their
charisma, and to encourage them to become double&-loop learners so that future
changes will be even more successful. A wide range of activities to support change can
also be used, such as participation, shared rewards, and adequate communications.
employees respond to job challenges. Type A people tend to show more stress than
type B people.
Counseling is discussion of a problem that usually has emotional content with an
employee in order to help the employee cope with it better. Its goal is better mental
health, and it is performed by both managers and professional counselors. Major
counseling functions are advice, reassurance, communication release of emotional
tension, clarified thinking, and reorientation. The most appropriate type of counseling for
nonprofessionals is participative counseling. Counseling programs deal with both job
and personal problems, and there is extensive cooperation with community counseling
agencies.