HUMAN BEHAVIOR IN ORGANIZATION

Objectives:
Understanding the meaning of Organizational behaviour
Understanding the fundamental concepts connected with Organizational behaviour
Understanding the basic approaches of Organizational behaviour
Understanding the goals of organizational behaviour.
Knowing the importance of Organizational behaviour for the managers.

Organization Behaviour

Organization behaviour is defined as the systematic study and application of knowledge about how individuals
and groups act within the organizations where they work. It looks at employee behaviour, decisions, perceptions and
emotional responses. It examines how individuals and teams in organizations relate to one another and to their
counterparts in other organizations.

Those who study organizational behaviour are interested in several

outcomes such as work attitudes (e.g., job satisfaction and organizational
commitment) as well as job performance (e.g., customer service and
counterproductive work behaviours).
There are three key levels of analysis in Human behaviour. They are
examining the individual, the group, and the organization.
For example, if I want to understand my bosss personality, I would be
examining the individual level of analysis. If we want to know about how my
managers personality affects my team, I am examining things at the team level.
But, if I want to understand how my organizations culture affects my bosss
behaviour, I would be interested in the organizational level of analysis.

The Above Definition of OB Highlights on its Several Aspects Like:

a. Way of thinkingrequires clearly identifying the level of analysis
(individual, group, organizational).
b. Multi-disciplinarydraws principles, theories, and models from psychology, sociology and cultural anthropology.
c. Humanistic orientationassumes that individual feelings, attitudes, perceptions, goals, etc., are important to
the organization.
d. Performance-orientedfocusing on whether and why individual/group/organization performance is high,
moderate, or low.
e. External environmentsubstantially impacts organizational behavior.
f. Applications orientedconcerned with providing useful/applicable answers to management problems.

What is Human Behaviour?

It is the study and understanding of individual and group behaviour and patterns of structure in order to help
improve organisational performance and effectiveness
Human behaviour does not encompass the whole of management; it is more accurately described in the narrower
interpretation of providing a behavioural approach to management.
Any act of an individual person which is considered human behaviour is a reflection of his thoughts, feelings,
emotions, sentiments whether conscious or not. It mirrors his needs, values, motivation, aspirations, conflicts and state of
life. Behaviour, therefore, consists of all human activities.

Who is a Manager?
Three elements stand out in a manager
Competence Integrity Performance

Who is a manager? The CEO or the middle manager or the supervisor?

A managers decision-making, action and behavior are all geared towards Economic Performance.
The objective of a business enterprise could be Survival, Profit and /or Growth?
Peter Drucker feels otherwise-creating a customer.

What Managers Do?

Managing Managers Managing a Business
Managing Worker and Work Managing Time
 A Manager has to manage Resources- 5 Ms- Money, Materials, Machines, Methods and Man. One of these
resources is different from the others. Which one and why?
A manager also performs the following functions:
Planning determines what results the organization will achieve
Organizing specifies how it will achieve the results
Staffing specifies the right manpower that matches the job description
Leading/Directing through planning, organizing and controlling managers exercise leadership
Controlling determines whether the results will be achieved

Managers Role
For performing these roles, skills required by the managers are:
Technical Skills The ability to apply specialized knowledge or expertise
Human Skills The ability to work with, understand, and motivate other people, both individually and in groups
Conceptual Skills The mental ability to analyze and diagnose complex situations

What Makes a Good Manager?

Interpersonal relationship skill. Provide satisfaction Manages time well
Communication skill. Become an exemplary role model Strives for effectiveness
A good planner A good Listener Manages and leads
Decision Maker A representative of subordinates Maintains relationships
Leadership skill. An appropriate counselor Source of influence
Appraiser Uses power properly Sanctions

Goals of Human Behavior in Organizations

Organizational behaviour is an applied science that deals with individual behaviour as well as group behaviour in an
organization. The four goals of organizational behaviour are to describe, understand, predict and control.

1. To describe: The first objective is to describe how people behave under various conditions. For example, as a
manager, I have information about a particular junior officer that he comes office in late and leaves the office early.
2. To understand: The second goal of organizational behaviour is to understand why people behave as they do.
Managers have to understand the reasons behind a particular action. For example, as a manager, I must find out the
reason why the junior officer is coming late and going earlier.
3. To predict: Predicting future behaviour of employee is
another goal of organizational behaviour. Usually, managers
would have the capacity to predict why the employees are
committed to the organization or not. For instance, I have to
realize why he wants to leave my organization, how I can hold
the officer in my organization, what should be done by me in
this situation or what my role is etc.
4. To control: The final goal of organizational behaviour is to
control and develop a friendly atmosphere for the
organization. Since managers are responsible for the overall
performance of an organization, they must develop workers
teamwork, skill and commitment. Managers should take
necessary action for themselves. In the above case, I can
increase the financial benefits of the officer if it is not
satisfactory for him or I can help him to solve his personal
problem, or I can negotiate him to solve any organizational
problem.

So, organizational behaviour is a human tool for human

benefit. It is mainly used to analyse the human behaviour in all
types of organizations, such as business, government, school
and services organizations. So, in order to manage the human
resources properly, we need describe, understand, predict, and
control human behaviour.
Importance Of Organizational Behaviour For The Managers

Organizational behaviour provides a useful set of tools at five levels of analysis:

It helps managers to look at the behaviour of individuals within an organization.
It aids their understanding of the complexities involved in interpersonal relations, when two people (two co-
workers or a superior-subordinate pair) interact.
Organizational Behaviour is valuable for examining the dynamics of relationships within small groups, both formal
teams and informal groups.
When two or more groups need to coordinate their efforts, managers become interested in the intergroup
relations that emerge.
Organizations can also be viewed and managed as whole systems that have inter organizational relationships.

The Realities of Organisational Behaviour

However one looks at the nature or disciplines of organisational behaviour it is important to remember, as Morgan
reminds us, that the reality of organisational life usually comprises numerous different realities!

One way to recognise why people behave as they do at work is to view an organisation as an iceberg. What
sinks ships isnt always what sailors can see, but what they cant see.

The overt, formal aspects focus only on the tip of the iceberg (organisation). It is just as important to focus on
what you cant see the covert, behavioural aspects

The study of organisational behaviour embraces, therefore, an understanding of:

The nature and purpose of the organisation

The human element and behaviour of people
Business strategy, organisational processes and the execution of work
The process of management as an integrating and co-ordinating activity
Social responsibilities and business ethics
The external environment of which the organisation is part; and
The need for organisation success and survival.

Wilson, however, suggests that the meaning of the

term organisational behaviour is far from clear. She
challenges what constitutes organisational behaviour
and questions whether we should be interested only in
behaviour that happens within organisations. There is a
reciprocal relationship in what happens within and
outside organisations. Wilson suggests that we also
look outside of what are normally thought of as
organisations and how we usually think of work. We can
also gain insight into organisational life and behaviour
by looking at what happens in rest and play; considering
emotion and feeling; considering the context in which
work is defined as mens or womens work; and looking
at less organised work, for example work on the fiddle
and the meaning of work for the unemployed. These
suggestions arguably add an extra dimension to the
meaning and understanding of organisational behaviour

Factors Affecting Human Behaviour

1. Genetics a discipline of biology, is the

science of genes, heredity, and variation in
living organisms.(see also evolutionary
psychology)
2. Attitude the degree to which the person has a
favourable or unfavourable evaluation of the behaviour in question.
 3. Social norms the influence of social pressure that is perceived by the individual (normative beliefs) to perform
or not to perform certain behaviour.
4. Perceived behavioural control the individual's belief concerning how easy or difficult performing the behaviour
will be.

Influences on Behaviour

The variables outlined above provide parameters within which a number of interrelated dimensions can be
identified the individual, the group, the organisation and the environment which collectively influence behaviour in
work organisations.

The Individual Organisations are made up of their individual members. The individual is a central feature of
organisational behaviour, whether acting in isolation or as part of a group, in response to expectations of the organisation,
or as a result of the influences of the external environment.
Where the needs of the individual and the demands of the organisation are incompatible, this can result in
frustration and conflict. It is the role of management to integrate the individual and the organisation and to provide a
working environment that permits the satisfaction of individual needs as well as the attainment of organisational goals.
The Group Groups exist in all organisations and are essential to their working and performance. The
organisation comprises groups of people and almost everyone in an organisation will be a member of one or more
groups. Informal groups arise from the social needs of people within the organisation. People in groups influence each
other in many ways and groups may develop their own hierarchies and leaders. Group pressures can have a major
influence over the behaviour and performance of individual members. An understanding of group structure and behaviour
complements knowledge of individual behaviour and adds a further dimension to the study of organisational behaviour.
The Organisation Individuals and groups interact within the structure of the formal organisation. Structure is
created to establish relationships between individuals and groups, to provide order and systems and to direct the efforts
of the organisation into goal-seeking activities. It is through the formal structure that people carry out their organisational
activities to achieve aims and objectives. Behaviour is influenced by patterns of structure, technology, styles of leadership
and systems of management through which organisational processes are planned, directed and monitored. The focus of
attention is on the impact of organisation structure and patterns of management on the behaviour and actions of people.
McPhee refers to the growth in the nature and importance of organisational structures and their essence, and for greater
emphasis on business-to-business (B2B) depth or group interviewing as part of an insight into business and
organisational behaviour.
The Environment The organisation functions as part of the broader external environment of which it is a part.
The environment affects the organisation through, for example, internationalisation, technological and scientific
development, economic activity, social and cultural influences and governmental actions. The effects of the operation of
the organisation within its environment are reflected in terms of the management of opportunities and risks and the regard
for corporate responsibility and ethical behaviour. The increasing rate of change in environmental factors has highlighted
the need to study the total organisation and the processes by which the organisation attempts to adapt to the external
demands placed upon it. Increasing globalisation means that organisations must respond to different market demands
and local requirements. In globalisation, strategy and organisation are inextricably twined. Globalisation impacts on
organisational behaviour and has placed greater emphasis on processes within organisations rather than functions of the
organisation. Globalisation and the international context are discussed later in this chapter.

A Multidisciplinary Approach / Behavioral Science

Whatever the approach, the study of organisational

behaviour cannot be undertaken entirely in terms of a
single discipline. The study of behaviour can be viewed in
terms of three main disciplines

Psychologists are concerned, broadly speaking,

with the study of human behaviour, with traits of the
individual and membership of small social groups. The
main focus of attention is on the individual as a whole
person, or what can be termed the personality system,
including, for example, perception, attitudes and motives.
Sociologists are more concerned with the study
of social behaviour, relationships among social groups
and societies, and the maintenance of order. The main
focus of attention is on the analysis of social structures
and positions in those structures for example, the relationship between the behaviour of leaders and followers.
Anthropologists are more concerned with the science of humankind and the study of human behaviour as a
whole. As far as organisational behaviour is concerned the main focus of attention is on the cultural system, the beliefs,
customs, ideas and values within a group or society, and the comparison of behaviour among different cultures for
example, the importance to Muslim women of wearing trousers to work. People learn to depend on their culture to give
them security and stability and they can suffer adverse reactions to unfamiliar environments.

Forces that Affects the Nature of Human

Behaviour in the Organization
A wide range array of issues and trends
in these forces can be classifies into four areas
people, structure, technology and the
environment in which the organizations operates.

People people make up the internal

social system of the organization. That system
consists of individuals and groups, and large groups as well as small ones. Groups are dynamic: they form, change and
disband. People are living, thinking, feeling beings who work in the organization to achieve their objectives. Organizations
exist to serve people rather than people existing to serve organizations. The workforce of today has become diverse,
meaning employees bring a wide array of educational backgrounds, talents and perspectives to their jobs. This diversity
presents challenges for management to resolve, as when some employees express themselves through their values and
beliefs, while others present unique lifestyles and interests. Some companies are discovering that demonstrating a sense
of relationships are among the keys to the motivation of the present workforce. Other companies are urging their
managers to respond to a diverse workforce by building pride without devaluing others, empowering some without
exploiting others, and demonstrating openness, confidence authentic compassion and vulnerability.
Structure defines the formal relationship and use of people in organizations. Different jobs are required to
accomplish all of an organizations activities. These people have to be related in some structural way so that their work
can be effectively coordinated. These relationships create complex problems of cooperation, negotiation and decision
making.
Many organizational structures have become flatter (containing fewer levels, a goal often attained by cutting
middle-management positions). This downsizing and restructuring has occurred as a result of the pressure to lower costs
while remaining competitive. Other structures have grown more complex as a result of mergers acquisitions, and new
ventures. Several organizations have experimented with hiring contingent workforces (temporary, part-time, or contract
employees). Finally, many firms has moved from a traditional to a team-based structure.
Technology technology provides the resources with which people work and affects the tasks that they perform.
People cannot accomplish much with just their bare hands, so they construct buildings, design machines, create work
processes, and assemble resources. The great benefit of technology is that it allows people to do more and better work,
but it also restricts people in various ways. It has costs as well as benefits. Each of these technological advancements, in
its own way, places increased pressure on OB to maintain the delicate balance between technical and social systems.
Environment All organizations operate within an internal and external environment. A single organization does
not exist alone. It is part of a larger system that contains many other elements, such as government, the family, and other
organizations. Numerous changes in the environment create demands on organizations. Citizens expect organizations to
be socially responsible; new products and competition for customers come from around the globe; the dramatic pace of
change in society quickens.
Individual organizations, such as a factory or a school, cannot escape being influenced by this external
environment. It influences the attitudes of people, affects working conditions, and provides competition for resources and
power. It must be considered in the study of human behaviour.

Interactions With The Environment

The structure, management and functioning of an organisation are not only determined by internal considerations
and choices but are also influenced strongly by a range of volatile external environmental factors. In order to be
effective and maintain survival and growth, the organisation must respond to the opportunities and challenges, and the
risks and limitations, presented by the external environment of which it is part. Changes in the environment will affect
inputs, and changes in inputs will affect the transformation or conversion process and hence the outputs. The open
systems approach views the organisation within its total environment and emphasises the importance of multiple
channels of interaction.
The increasing rate of change in major environmental factors (technical, economic, social and governmental) has
highlighted the need to study the total organisation and to adopt a systems approach. In addition to these major
environmental factors, there is a multiplicity of constantly changing environmental influences that affect the operation of
an organisation
In order to understand the operations of organisations, and to improve organisational performance, it is necessary
to consider how they achieve an internal and external balance and how they are able to adapt to changes in their
environment and the demands placed upon them.

PESTEL Analysis
Organisational performance and effectiveness will be
dependent upon the successful management of the opportunities,
challenges and risks presented by changes in the external
environment. One popular technique for analysing the general
environment is a PESTEL analysis that is, Political, Economic,
Socio-cultural, Technological, Environmental and Legal influences.
Fundamental Concepts

Organizational behaviour starts with a set of fundamental concepts revolving around the nature of people and
organizations. These concepts are the enduring principles that form a strong foundation for OB.

The Nature of People

Individual Differences people have
much in common (they become excited by an The Nature of People The Nature of Organizations
achievement; they are grieved by the loss of a Individual differences Social systems
loved one), but each person in the world are also Perception Mutual interest
individually different. A whole person Ethics
Perception people look at the world Motivated behaviour
and see things differently. Even when presented Desire for involvement
with the same object, two people may view it in Value of the person
two different ways. Their view of their objective
environment is filtered by perception, which is the unique way in which is person sees, organizes, and interpret things.
Employees see their word worlds differently for a variety of reasons. They may differ in their personalities, needs,
demographic factors and past experiences, or they may find themselves in different physical settings, time periods, or
social surrounding. People also tend to pay attention to those features of their work environment that are consistent with
or reinforce their own expectations and this is what we call selective perception. Selective perceptions cannot only
cause misinterpretations of single events at work, but also lead to future rigidity in the search for new experiences.
A Whole Person Although some organizations may wish they could employ only a persons skill or rain, they
actually employ a whole person rather than certain characteristics. Different traits may be studies separately, but in the
final analysis, they are all part of one system making up a whole person. Skill does not exist apart from background or
knowledge. Home life is not totally separable from work life, and emotional conditions are not separate from physical
conditions. People function as total human beings.
When management applies the principles of organizational behaviour, it is trying to develop a better employee,
but it also wants to develop a better person in terms of growth and fulfilment.
Motivated Behaviour - from psychology we learn that normal behaviour has certain causes. These may
relate to a persons needs or the consequences that result from acts. In case of needs, people are motivated not by what
we think they ought to have but by what they want for themselves. This fact leaves management with two basic ways to
motivate people. It can show them how certain actions will increase their need fulfilment, or it can threaten decreased
need fulfilment if they follow an undesirable course of action. Clearly, a path toward increased need fulfilment is the better
approach. No matter how much technology and equipment an organization has, these resources cannot be put to use
until they are released and guided by people who have been motivated.
Desire for Involvement Many employees today are actively seeking opportunities at work to become involved
in relevant decisions, thereby contributing their talents and ideas to the organizations success. They hunger for the
chance to share what they know and to learn from the experience. Consequently, an organization needs to provide
opportunities for meaningful involvement. This can be achieved through employee empowerment.
Value of the Person People deserves to be treated differently from other factors of production. Because of this
distinction, they want to be treated with caring, respect, and dignity; increasingly, they demand such treatment from their
employers. They refuse to accept the old idea that they are simply economic tools. They want to be valued for their skills
and abilities and to be provided with opportunities to develop themselves.

The Nature of Organizations

Social Systems from sociology, we The Nature of People The Nature of Organizations
learn that organizations are social system; Individual differences Social systems
consequently, activities therein governed by Perception Mutual interest
social laws as well as psychological laws. Just as A whole person Ethics
people have psychological needs, they also have Motivated behaviour
social roles and status. Their behaviour is
Desire for involvement
influenced by their group as well as by their
Value of the person
individual drives.
Mutual Interest Organizations need people, and people need organizations. Organizations have a human
purpose, as they are formed and maintained on the basis of some mutuality of interest among their participants.
Managers and organizational owners need employees to help the, reach organizational objective; employees need the
organizations to help them reach individual objectives. If mutuality is lacking, trying to assemble a group and develop
cooperation makes no sense, because there is no common base on which to build.
Ethics In order to attract and retain valuable employees in an era in which good workers are constantly
recruited away, organizations must treat employees in an ethical fashion. Companies have established codes of ethics,
publicized statements of ethical values, provided ethics training, rewarded employees for notable ethical behaviour,
publicized positive role models, and set up internal procedure to handle misconduct.
When the organizations goals and actions are ethical, individual, organizational, and social objective are more
likely to be met. People find more satisfaction in work when there is cooperation and teamwork, such as they are learning,
growing and contributing.

Behavior Within Organizations

The Individual
Individual performance is the foundation of organizational performance. Understanding individual behavior is therefore
critical for effective management, as illustrated in the following account:

Ted has been a field representative for a major drug manufacturer since he graduated from college seven years
ago. He makes daily calls on physicians, hospital, clinics, and pharmacies.
Teds sales of his firms major drugs have increased, and he has won three national sales awards given by the
organization. Yesterday, Ted was promoted to sales manager for a seven-state region. Hell no longer be selling
but instead will be managing 15 other representatives. His sales team includes men and women, Caucasians,
Hispanics, Blacks, and Asians. Ted accepted the promotion because he believes he knows how to motivate and
lead salespeople. He comments, I know the personality of the salesperson. They are special people. I know their
values and attitudes and what it takes to motivate them. I know I can motivate a sales force.

In his job, Ted will be trying to maximize the individual performances of 15 sales representatives.
In doing so, he will be dealing with several facets of individual behavior.

Individual Characteristics Because organizational performance depends on individual performance, managers such as
Ted must have more than a passing knowledge of the determinants of individual performance. Psychology and social
psychology contribute relevant knowledge about the relationships among attitudes, perceptions, personality, values, and
individual performance. Learning to manage cultural diversity, such as that found among Teds 15 sales representatives,
has become increasingly important in recent years.
Managers cant ignore the need to acquire and act on knowledge of the individual characteristics of both their
subordinates and themselves.

Individual Motivation Motivation and ability to work interact to determine performance. Motivation theory attempts to
explain and predict how individuals behavior is aroused, sustained, and stopped. Unlike Ted Johnson, not all managers
and behavioral scientists agree on what is the best theory of motivation. In fact, the complexity of motivation may make an
all-encompassing theory of how it occurs impossible. But managers must still try to understand it. They must be
concerned with motivation because they must be concerned with performance.

Rewards and Appraisal One of the most powerful influences on individual performance is an organizations reward
system. Management can use rewards to increase current employees performance. It can also use rewards to attract
skilled employees to the organization. Performance appraisals, paychecks, raises, and bonuses are important aspects of
the reward system, but they arent the only aspects. Ted makes this point clear in the preceding account when he states,
I know what it takes to motivate them. Performance of the work itself can provide employees with rewards, particularly if
job performance leads to a sense of personal responsibility, autonomy, and meaningfulness. These intrinsic rewards are
also supplemented with extrinsic rewards, or what an organization, a manager, or a group can provide a person in terms
of monetary and nonmonetary factors.

Groups and Interpersonal Influence

Group behavior and interpersonal influence are also powerful forces affecting organizational performance, as the
following account shows:

During her two and one-half years as a teller in a small-town bank in Fort Smith, Arkansas, Kelly developed close
friendships with her co-workers. These friendships existed outside the job as well. Two months ago Kelly was
promoted to branch manager. She was excited about the new challenge. She began the job with a great deal of
optimism and believed her friends would be genuinely happy for her and supportive of her efforts. But since she
became branch manager, things havent been quite the same. Kelly cant spend nearly as much time with her
friends because shes often away from the branch attending management meetings at the main office. Kelly
senses that some of her friends have been acting a little differently toward her lately.
Recently Kelly said, I didnt know that being a part of the management team could make that much difference.
Frankly, I never really thought about it. I guess I was nave. Im getting a totally different perspective on the
business and have to deal with problems I never knew about.
Kellys promotion has made her a member of more than one group. In addition to being part of her old group of friends at
the branch, shes also a member of the management team. Shes finding out that group behavior and expectations have
a strong impact on individual behavior and interpersonal influence.

Group Behavior Groups form because of managerial action and because of individual efforts. Managers create
work groups to carry out assigned jobs and tasks. Such groups, created by managerial decisions, are termed formal
groups. The group that Kelly manages at her branch is a group of this kind. Groups also form as a consequence of
employees actions. Such groups, termed informal groups, develop around common interests and friendships. Kellys
bowling group is an informal group. Although not a part of the organization, groups of this kind can affect organizational
and individual performance. The effect can be positive or negative, depending on the group members intentions. If the
group at Kellys branch decided informally to slow the work pace, this norm would exert pressure on individuals who
wanted to remain a part of the group. Effective managers recognize the consequences of individuals needs for affiliation.

Intergroup Behavior and Conflict As groups function and interact with other groups, each develops a unique
set of characteristics, including structure, cohesiveness, roles, norms, and processes. The group in essence creates its
own culture. As a result, groups may cooperate or compete with other groups, and intergroup competition can lead to
conflict. If the management of Kellys bank instituted an incentive program with cash bonuses to the branch bringing in the
most new customers, this might lead to competition and conflict among the branches. Although conflict among groups can
have beneficial results for an organization, too much or the wrong kinds of intergroup conflict can have negative results.
Thus, managing intergroup conflict is an important aspect of managing organizational behavior.

Power and Politics Power is the ability to get someone to do something you want done or to make things
happen in the way you want them to happen. Many people in our society are uncomfortable with the concept of power.
Some are deeply offended by it. This is because the essence of power is control over others. To the growing number of
people around the world, this is an offensive thought. But power does exist in organizations. Managers derive power from
both organizational and individual sources. Kelly has power by virtue of her position in the formal hierarchy of the bank.
She controls performance evaluations and salary increases. However, she may also have power because her co-workers
respect and admire her abilities and expertise. Managers must become comfortable with the concept of power as a reality
in organizations and managerial roles.

Leadership Leaders exist within all organizations. They may be found in formal groups, like Kellys management
team at the bank, or in informal groups. They may be managers or non-managers. The importance of effective leadership
for obtaining individual, group, and organizational performance is so critical that there has been much effort to determine
the causes of such leadership. Some people believe that effective leadership depends on traits and certain behaviors,
separately and in combination; other people believe that one leadership style is effective in all situations; still others
believe that each situation requires a special leadership style.
Quality and leadership concepts have been found to be inseparable. Without effective leadership practices, instilling
concern about customer-focused quality is difficult, if not impossible. The OB at Work feature above discusses how some
future business leaders are broadening their personal definitions of effectiveness and success.

Contemporary Challenges for Organizations

The external environment is continuously changing, but some changes over the past decade and in the decade to
come are more profound than others. These changes require corporate leaders and all other employees to make
personal and organizational adjustments. In this section, three major challenges facing organizations are highlighted:
globalization, increasing workforce, and emerging employment relationships.

Globalization refers to economic, social and cultural connectivity with

people in other parts of the world. Organizations globalize when they actively
participate in other countries and cultures. Although businesses have traded
goods across borders for centuries, the degree of globalization today is
unprecedented. Information technology and transportation systems allow a much
more intense level of connectivity and interdependence around the globe.
Globalization offers numerous benefits to organizations in terms of larger markets,
lower costs, and greater access to knowledge and innovation. At the same time,
there is considerable debate about whether globalization benefits developing
nations, and whether it is primarily responsible for increasing work intensification,
as well as reducing job security and work-life balance in developed countries.
Increasing Workforce Diversity Working organizations that consist of
different nationalities and origins is regarded as a company high in diversity
workforce. The first one is called, surface-level diversity where it is the observable demographic and other overt
differences in people, such as their race, ethnicity, gender, age and physical capabilities. Diversity also includes
differences in psychological characteristics of employees, including personalities, beliefs, values and attitudes. This is
called the deep-level diversity. We cant directly see it, but it is evident in a persons decisions, statements, and actions.
The consequence of diversity presents both opportunities and challenges in organizations. Diversity is an
advantage because it provides a broader spectrum of knowledge. Furthermore, teams with some forms of diversity
(particularly occupational diversity) make better decisions on complex problems than do teams whose members have
similar backgrounds. But unfortunately, most forms of diversity offer disadvantages as well. Teams with diverse
employees usually take longer to perform effectively. It brings numerous communication problems as well as fault lines
in information sharing and, in extreme cases, morale problems, and higher turnover.
Companies need to make diversity as one of its priorities because diversity is a moral and legal imperative.
Organizations should offer a workplace that is fair and have just decisions regarding employment promotions, rewards
and so on.
Emerging Employment Relationships Combine globalization with emerging workforce diversity, then add in
recent developments in information technology. The resulting concoction has created incredible changes in employment
relationships. A few decades ago, almost all employees would finish their workday after eight or nine hours and could
separate their personal time from the workday. There were no iPhones, Blackberrys or Internet connections to keep them
tethered to work on 24/7 schedule. Today, work hours are longer, employees experience more work-related stress, and
there is growing evidence that family and personal relations are suffering.
One of the most important employment issues over the past decade has been work-life balance. It occurs when
people are able to minimize conflict between their work and non-work demands. Most employees lack this balance
because they spend too many hours each week performing or thinking about their jobs, whether at the workplace, at
home or on vacation. This focus on work leaves too little time to fulfil non-work needs and obligations.
Another employment relationships trend is virtual work, whereby employees use information technology to
perform their jobs away from the traditional physical workplace. Some virtual works occurs when employees are
connected to the office while traveling or at clients offices.

Activity #1

PERSONAL AWARENESS AND SKILLS EXERCISE

Completing this exercise should help you to enhance the following skills:
Obtain a clearer picture of your own and other peoples work ethic.
Explore the importance of work to you and your fixed attitudes about work.
Recognise the significance of individuals orientations to work within an organisation.

1. You are required to start by asking yourself this question: is it a good thing to be a worker? Then think carefully about
your responses to the following questions.

How do you feel

When you hear the word work? About someone who chooses not to work?
As you get ready for work? About taking time off?
When you know the day is over? When you hear the word management?
About the work youve accomplished? About taking control of your career?

2. Compare your responses with those of your colleagues. What conclusions do you draw about the work ethic?

3. Discussion
What do you see as the character traits of a person with a healthy work ethic?
To what extent do you agree with the contention that we are employed for our skills but valued for our attitude?
What effect might different orientations to work have within an organisation and how might they all be
accommodated?

4. DEBATE: When choosing between two employees, which will you choose as a manager?
An employee that is very skilful but with attitude problem
An employee that lacks skill but very easy to get along with

5. As a worker, what are the things/factors that motivate you to work hard?
Trends and Changes

Challenges and Opportunities

There are many trends within the workplace and around the globe that have and will continue to affect the
workplace and your career. We are sure you have noticed many of these trends simply by reading newspaper headlines.
We will highlight some of these trends along with the challenges and opportunities they present for students of
organizational behaviour.

Ethical Challenges
Business ethics refers to applying ethical principles to situations that arise at work. The challenge is to continue to
think about business ethics on a day-to-day basis and institute cultures that support ethical decision making. The
opportunity for organizations to be on the forefront of ethical thinking and actions is wide open. OB research finds that the
most important determinant of whether a company acts ethically is not necessarily related to the policies and rules
regarding ethical conduct but instead whether it has a culture of consistently ethical behavior and if leaders are committed
to this ethical behaviour.

Lack of Employee Engagement

Studies suggest that fostering engagement, a concept related to passion, in employees has a significant impact
on the corporate bottom line. Employee engagement is a concept that is generally viewed as managing discretionary
effort, that is, when employees have choices, they will act in a way that furthers their organizations interests. An engaged
employee is a person who is fully involved in and enthusiastic about their work. Engaged employees are not just
committed. They are not just passionate or proud. They have a line-of-sight on their own future and on the organizations
mission and goals. They are enthused and in gear using their talents and discretionary effort to make a difference in
their employers quest for sustainable business success.

Technology
Technology has transformed the way work gets done and has created many great opportunities. The nexus of
increasing personal computing power, the Internet, as well as nanotechnology are allowing things to be created that
werent even imaginable 50 years ago. And the rate of technological change is not expected to slow down anytime soon.
We are also more connected by technology than ever before. It is now possible to send and receive e-mails or text
messages with your coworkers and customers regardless of where in the world you are. Technology has also brought a
great deal of challenges to individuals and organizations alike. To combat the overuse of e-mail, companies such as Intel
have instituted no e-mail Fridays, in which all communication is done via other communication channels. The technology
trend contains challenges for organizational behavior.

Flattening World
The Internet has flattened the world and created an environment in which there is a more level playing field in
terms of access to information. This access to information has led to an increase in innovation, as knowledge can be
shared instantly across time zones and cultures. It has also created intense competition, as the speed of business is
growing faster and faster all the time. The mass collaboration also changed the way work gets done, how products are
created, and the ability of people to work together without ever meeting.

Sustainability and Green Business Practices

The primary role of for-profit companies is to generate shareholder wealth. More recently, the concept of the
triple bottom line has been gaining popularity. Those subscribing to the triple bottom line believe that beyond economic
viability, businesses need to perform well socially and environmentally. While some organizations have embraced the
concepts underlying the triple bottom line, businesses are also undergoing a great deal of greenwashing, which refers to
the marketing of products or processes as green to gain customers without truly engaging in sustainable business
practices. Sustainable business practices are those that meet the present needs without compromising the needs of
future generations. The challenge is to reconcile the accountability that publicly owned firms have in generating wealth for
their shareholders while attending to the triple bottom line. On the other hand, organizations also have an opportunity to
leverage a proactive stance toward innovative processes that can result in even greater profits for their products.

Aging Workforce and the Millennial Generation

You have probably heard that the workforce is aging. Over the next 30 years, 76 million baby boomers will retire,
but there will only be 46 million new workers from Generations X and Y entering the labor force. This demographic trend
creates both challenges and opportunities for organizations. There will be record numbers of retirements. Aging
workforces can create great opportunities for industries, but it can also mean great challenges lie ahead as entire
industries related to basic infrastructure face massive retirement projections.
 The Millennial Generation (which includes those born between 1980 and 2000) differs from previous generations
in terms of technology and multitasking as a way of life. Having never known anything different, this population has
technology embedded in their lives. In addition, they value teamwork, feedback, and challenging work that allows them to
develop new skills. If you are in this generation or know those who are, you know there is an expectation of immediate
interaction. The challenge for organizational behavior is to keep individuals from different generations communicating
effectively and managing people across generational lines despite different values placed on teamwork, organizational
rewards, worklife balance, and desired levels of instruction.

The Global Marketplace for Staffing: Outsourcing

Outsourcing has become a way of life for many organizations, especially those based in the United States that
are outsourcing to other countries where labor is relatively inexpensive. Outsourcing refers to having someone outside the
formal on-going organization doing work previously handled in-house. This practice can involve temporary employees,
consultants, or even offshoring workers. Offshoring means sending jobs previously done in one country to another
country. Nowhere is there more outsourcing and offshoring than in the software technology industry.
The Age of Paradox, coined the term shamrock organization, which is an organization comprising one-third
regular employees, one-third temporary employees, and one third consultants and contractors. He predicts that this is
where organizations are headed in the future. The darker side of the changing trend in organization composition revolves
around potential unemployment issues as companies move toward a shamrock layout. Fortunately, this shift also
presents an opportunity for organizations to staff more flexibly and for employees to consider the trade-offs between
consistent, full-time work within a single organization versus the changing nature of work as a temporary employee,
contract worker, or consultantespecially while developing a career in a new industry, in which increased exposure to
various organizations can help an individual get up to speed in a short amount of time. The challenge for organizational
behavior is managing teams consisting of different nationalities separated not only by culture and language but also in
time and space.

Activity #2

1. Share an ethical dilemma you have observed at work or school to someone in your class. What do you think should
have been done differently and why?
2. How has technology and the flattening world affected you in the last 10 years? Please share examples of this.
3. Do you see the aging (and retiring) workforce as an opportunity or a threat for businesses? How do you think this will
affect your career?

THE NATURE AND CONTEXT OF ORGANISATIONS

All organisations have some function

to perform. They exist in order to achieve
objectives and to provide satisfaction for their
members. Organisations enable objectives to
be achieved that could not be achieved by the
efforts of individuals on their own. It must be
remembered that organisations are structures
of people.

Common Factors in Organisations

All organisations have their own
individual character, culture and sense of
identity and differ in their attributes, processes
and methods of working. However, despite the
differences, there are at least three common
factors in any organisation:
People
Objectives
Structure.
It is the interaction of people in order
to achieve objectives that forms the basis of
an organisation. Some form of structure is
needed by which peoples interactions and efforts are channelled and co-ordinated. We can add to these a fourth factor:
Management.
Some process of management is required by which the activities of the organisation, and the efforts of its
members, are directed and controlled towards the pursuit of objectives.

Differences in Applications
Despite these common factors, the structure, management and functioning of these organisations will all vary
because of differences in the nature and type of the organisation, their respective goals and objectives, and the
behaviour of the people who work in them.

THE FORMAL ORGANISATION

The formal organisation can be distinguished from the informal organisation (which is discussed later in this
chapter) the difference between them is a feature of the degree to which they are structured.
A formal organisation has been defined by as: the planned co-ordination of the activities of a number of people
for the achievement of some common, explicit purpose or goal, through division of labor and function, and through a
hierarchy of authority and responsibility.
An organisation is a pattern of roles and a blueprint for their co-ordination. The object of co-ordination is activities,
not people. The formal organisation can exist independently of the membership of particular individuals.
The formal organisation is:
Deliberately planned and created;
Concerned with the co-ordination of activities;
Hierarchically structured with stated objectives; and
Based on certain principles such as the specification of tasks, and defined relationships of authority and
responsibility.
An organisation chart may give a representation of the formal structure. Other examples of the formal
organisation are rules and regulations, policy manuals, standing orders and job descriptions.

BASIC COMPONENTS OF AN ORGANISATION

Any organisation can be described, broadly, in terms of an operating

component and an administrative component.
The operating component comprises the people who actually
undertake the work of producing the products or providing the
services.
The administrative component comprises managers and analysts
and is concerned with supervision and co-ordination.
Developing this description, we can analyse the work organisation in
terms of five basic components: the operational core, operational support,
organisational support, top management and middle management.

The operational core is concerned with direct performance of the

technical or productive operations and the carrying out of actual task
activities of the organisation for example, people putting together parts
on an assembly line, teaching in a classroom, treating a patient, cooking
meals in a hotel, serving in a bank or repairing a hole in the road.
Operational support is concerned indirectly with the technical or productive process but closely related to the actual
flow of operational work for example, people working in quality control, work study, progress planning, storekeeping,
works maintenance or technical services.
Organisational support is concerned with provision of services for the whole organisation, including the operational
core, but which are usually outside the actual flow of operational work for example, people working in human
resources, medical services, canteens, management accounting or office services.
Top management is concerned with broad objectives and policy, strategic decisions, the work of the organisation as
a whole and interactions with the external environment for example, managing directors, governors, management
teams, chief executives, boards of directors or council members.
Middle management is concerned with co-ordination and integration of activities and providing links with operational
support staff and organisational support staff, and between the operational core and top management.

PRODUCTION AND SERVICE ORGANISATIONS

 Another major distinction is arguably between production and service organisations. Compared with production
industries, services tend to display a number of characteristic features, including the following:
The consumer is a participant in the service process. This requires particular attention to the surroundings and
characteristics of the service operations.
Services cannot be stored, they are time-perishable and if they are not used they are likely to be wasted. For
example, the income lost from a hotel room unsold on one day is lost for ever.
Unlike physical products, services are less tangible and more difficult to explain or communicate. Benefits derived
from services tend to be associated with feelings and emotions.
In service operations, work activities are people-oriented and the characteristics of the workforce are particularly
important in determining organisational effectiveness.
Measurement of output is difficult and there is unlikely to be a single, important criterion by which to measure
effective performance.

However, other writers, such as Macdonald, maintain that service organisations are different, Product quality and
service quality are the same inasmuch as they apply to the results of different activities. There are, however, some
fundamental differences in the organisation of an operation to provide products and services. There are also intrinsic
differences between products and services.

Organizational Stress
In addition to
organisational conflict, a major
and related influence on the
work/life balance, discussed later
in this chapter, is the extent to
which employees suffer from
organisational stress. Stress is a
complex and dynamic concept. It
is a possible source of tension
and frustration, and can arise
through a number of interrelated
influences on behaviour,
including the individual, group,
organisational and environmental
factors.

The effects of stress

An increasing number of surveys
report perceived or actual
increases in levels of stress and
contend that stress at work is one
of the biggest problems in
European companies and one of
the major adverse influences on
the quality of working life and
work performance. There have
also been a number of highly
publicised reports of successful
legal claims based on the effects of stress.

IS STRESS NECESSARILY TO BE AVOIDED?

A certain amount of stress may not necessarily be seen as a bad thing and may arguably even help promote a
higher level of intensity and motivation to get work done. It is important to bear in mind, however, that stress can
potentially be very harmful. But what is the distinction between pressure and stress? Pressure can be seen as a positive
factor that may be harnessed to help people respond to a challenge and function more effectively. Stress may be
regarded as a continuous negative response arising from extreme pressure or other demands and the individuals inability
to cope.
 Personal performance may improve with pressure, up to a certain point. Beyond that point, continuous pressure
leads to a fall in performance as the person is no longer able to cope. Signs of this are fatigue, poor judgement
and bad decision making. In turn, this can lead to serious business problems

So, to what extent is stress a negative or positive influence on employee behaviour? Stress is a very personal
experience, as is the response of each individual to it and their beliefs about how best to cope with the causes and
effects. Orpen questions the prevalent view among managers in Britain that seems to be that stress at work is something
to be avoided at all costs. Just as there are circumstances when individuals may have too much stress, there are also
circumstances when individuals may have too little stress for effective performance. This view also appears to be
supported by Gwyther, who points out that although stress appears to have become public health enemy number one and
is viewed as the culprit of myriad complaints, the term is bandied about far too readily and there is a need to stand back
and attempt to get things into some sort of perspective. A measure of stress is natural. A degree of stress at work is no
unhealthy thing and without it nothing would ever get done.
However, it is important to bear in mind that although management may believe that a moderate level of stress
can be a spur to increased work performance; employees are unlikely to perceive this in the same way and dispute what
is regarded as an acceptable level of stress or excessive pressure. As ACAS point out, whilst some amount of stress can
be useful as a spur to motivation the key phrase definition is adverse reaction. This can include physical symptoms such
as headaches, stomach problems and muscle tension, and mental symptoms such as anxiety and depression. These
reactions can be extremely debilitating and result in reduced productivity, absenteeism and poor morale in the workplace

CAUSES OF STRESS
Whatever the effects, it is generally acknowledged that stress is potentially part of everyday working life. It occurs
for a variety of reasons, including individual differences and types of personality; occupation and actual nature of the job,
whether working in the private or public sector; and organisational conflict (discussed earlier in this chapter).
Other sources of stress at work include the following:
Restructuring of organisations and reductions in staffing levels resulting from demands for improved business
competitiveness and lower operating costs. This has placed greater pressures on remaining staff and resulted in
a growing number of work-related health problems, work stress and a less efficient workforce.
The long-hours culture, increased workloads and work intensification, together with unreasonable deadlines.
Excessive rules and regulations, and greater bureaucratic burdens especially among professional groups.
Developments in information and communications technology (ICT) that mean staff are far more constantly and
easily contactable and expected to deliver everything faster. This can lead to greater pressure on individuals, a
reluctance to switch off and a blurring between work and home life.
Organisational changes such as redundancies and the loss of key members of staff that place extra demands on
managers.
Interpersonal relationships at work, especially with immediate superiors; poor communications; office politics.
Lack of delegation and autonomy over control of work. Research into managers in various types of organisation
in Western Australia showed that delegation of responsibility to middle managers required great skill, which was
too seldom present. Replies from 532 managers in 36 organisations indicated a clear correlation between lack of
autonomy and stress at work. Stress was often caused by the hierarchical structure of the organisation not
permitting sufficient autonomy. As a result, projects were frequently delayed and also managers authority within
their departments was undermined.51
Organisation structure and role relationships. Lack of clarity about expected patterns of behaviour, or role conflict,
is a potential source of stress (discussed in Chapter 8). In the case of customer service, Jamison suggests that if
there is a conflict between the requirements of a customer and the requirements of the organisation, this will
induce unhelpful behaviour as a result of stress

COPING WITH STRESS

There are a number of measures by which individuals and organisations can attempt to reduce the causes and
harmful effects of stress. There are also many suggested techniques to help individuals bring stress under control for
example, changing ones viewpoint, identifying causes of distress, effective time management, expanding ones social
network, laughing and telling jokes, relaxation training, working on stress reduction and appreciating that some stress can
be useful. However, there are not always easy remedies for stress and much depends upon the personality of the
individual. Techniques such as relaxation therapy may help some people, although not others, but still tend to address the
symptoms rather than the cause

Effective communications and conversation

Effective two-way communications at all levels of the organisation are clearly important in helping to reduce or
overcome the level of stress. Staff should feel able to express their true feelings openly and know they will be listened to.
However, in addition to good communications, Reeves refers to the importance of conversation for maintaining
relationships and suggests a case for a conversation culture. The ability to hold good-quality conversations is becoming a
core organisational and individual skill. Unlike communication, conversations are intrinsically creative and roam freely
across personal issues, corporate gossip and work projects. Conversations are a defence against stress and other
mental health problems. People with good social relationships at work are much less likely to be stressed or anxious.
A growing number of organisations are introducing an email-free day to encourage staff to use the telephone or walk
across the corridor to talk more with one another.

Reducing Uncertainty
Informing members of staff in the first place about what is happening especially at times of major change,
involving them proactively in the change process, and allowing people to feel in control and exercise their own discretion
reduces uncertainty and can help minimise the potential for stress

Supportive Work Environment

Managers can do much to create a psychologically supportive and healthy work environment Treating people with
consideration, respect and trust, giving full recognition and credit, getting to know members of staff as individuals, and
placing emphasis on end results can all help to reduce stress. Managers should attempt to be role models and through
their language and body language indicate to others that they are dealing effectively with their own work pressures.

Activity #2
 Form a group of 6 and your instructor will assign a topic (box) for you to analyse. You will be given 5 minutes to
prepare and explain to the class about your assigned topic.

THE WORK/LIFE BALANCE

Popular press articles often suggest that work is still a large component of what gives meaning to peoples lives
and give examples of big lottery or pools winners staying in work and often in their same, even apparently routine, jobs.
Other surveys and reports continue to suggest that the workplace is no longer a central feature of social activity. For a
majority of people the main reason for work remains the need for money to fulfil the necessities of life. However, much still
appears to depend on the extent of an individuals social contacts and activities outside of the work situation.

Is Work/Life Balance Still An Issue?

Many staff still have specific places of work and agreed times in which to undertake their duties. However,
technology and the internet allow for greater flexibility in work schedules. So-called knowledge workers, who work from
home on computers, with greater control over their roles and work times, arguably have improved motivation and
productivity. Continuing concern with the issue cannot be explained simply with reference to working hours. Work/life
balance is moving towards a concern with flexibility and parenting. It taps into a desire for greater autonomy at work, a
shift in gender roles within the family, the possibilities of technology and an intensification of working life. According to the
Work Foundation, two-thirds of companies are now offering flexible work options although the pace of change in
organisations granting more freedom over working time is extremely slow. Concerns about work/life balance also reflect a
growing sense of stress, tiredness and a lack of time.

Activity #3

Objectives
Completing this exercise should help you to enhance the following skills:
Demonstrate your ability to undertake a strategic analysis of an organisation.

Exercise
You are required to set out a detailed PESTEL (political, economic, socio-cultural, technological, environmental,
legal) analysis of your college department or faculty, or any other organisation with which you are familiar.