ORGANIZATION AND ORGANIZATIONAL BEHAVIOUR

1 Objectives

 Define organization
 Analyse the need for organisation
 Define Organizational Behaviour (OB)
 Explain the value of Systematic study of OB
 Identify the contributions made to OB by major disciplines of
the behavioural science.
 Explain the organizational behaviour models

2 Organization

Organizations are found in all walks of life. It is the form of every human
association for the attainment of a common purpose.

The basic feature of any organization is the hierarchy of persons in it. It,
therefore, distinguishes among different persons and decides who will be
superior and the subordinate.

2.1 Need for the study of organization

The study of organization has to be made for following reasons:

a) It provides an ideal setting for the study of human behaviour. The

study of organization leads to man’s important discoveries that are
vital for the continued well-being.

b) Knowledge of organization helps managers to effectively know various

issues, such as how to run the organization and protect the
environment needs, how to motivate the workers, how to manage
conflicts, how to introduce changes and so on.

c) Organizations pervade in all the important phases of man’s life. A man

is born in organizations (hospitals, clinics etc.); he is educated in

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 organizations (schools, colleges etc.), and works in organization
(factories, office etc.).

3 What is organizational behaviour?

Organizational Behaviour (OB) is a study involving the impact of individuals,

group and structure or behaviour within the organization. This study is
useful for the effective working of an organization. It is a study of what
people do within an organization and how their behaviour affects the
performance of an organization.

Organizational Behaviour is concerned mainly with employment related

matters such as job, work, leaves, turnover, productivity, human
performance and management.

Organizational Behaviour also includes such core topics as motivation,

leadership and power, interpersonal communication, group structure and
process, learning attitude, perception, conflicts, work design and work
stress.

Organizational Behaviour deals with commonly accepted ‘facts’ about human

behaviour and organizations that have been acquired over the years.

OB is a field of study that investigates the impact that individuals, groups

and structure have on behaviour within organizations for the purpose of
applying such knowledge towards improving an organization’s effectiveness.
It is a distinct area of expertise with a common body of knowledge. It
studies three determinants of behaviour in organizations: individual, groups
and structure.

OB is concerned with the study of what people do in an organization and

how that behaviour affects the performance of the organization.

3.1 Need for the study of Organizational Behaviour

Organizational Behaviour is an applied behavioural science that is built on

contribution from a number of other behavioural discipline like psychology,
sociology, social psychology, anthropology and political science.

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Understanding Organizational Behaviour is becoming very important for
managers.
Due to global competition, it is becoming necessary for the employees to
become more flexible and to cope with rapid changes.

4 Historical evolution of organizational behaviour

Three individuals are important who promoted ideas which had major
influence in shaping the direction and boundaries of Organizational
Behaviour (OB). They are: Adam Smith, Charles Babbage and Robert Owen.

Adam Smith, in his discussion made in “The Wealth of Nations” in 1776,

brilliantly argued on the economic advantage that organization and society
would benefit from the division of labor.

Adam Smith concluded that division of labour raised the productivity by

increasing each worker’s skill and dexterity by saving time that is commonly
lost in changing tasks and by encouraging the creation of labour saving
inventions and machinery.

Charles Babbage, a British mathematics professor, in his book, “On the

Economy of machinery and manufacturer” published in 1832 added to
Smith’s list of the advantages that accrued from division of labour, namely,
i. It reduces the time needed for learning a job.
ii. It reduces the waste of material during the learning stage.
iii. It allows for the attainment of high skill levels.
iv. It allows a more careful matching of people’s skills and physical abilities
with specific tasks.
Babbage also proposed that the economics from specialization should be as
relevant to doing mental work as physical labour. This is reflected in industry
in the form of specialization in accounting, taxation, marketing and
organizational behaviour.

Robert Owen, a Welsh entrepreneur, was one of the first industrialists to

recognize how the growing factory system was demeaning workers. He
argued that money spent on improving labour was one of the best
investments that business executives can make. He argued for regulating

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hours of work for all, child labour too, public education, company furnished
meals at work and business involvement in community projects.

Classical Era

The classical era covered the period from 1900 to 1930 approximately when
the first general theory of management began to evolve. The major
contributors were Frederick Winslow Taylor, Henry Fayol, Max Weber, Mary
Parker Follett and Chester Barnard.

Scientific Management

It was Frederick Winslow Taylor who noticed that employees use vastly
different techniques to do the same job — which he improved. At his time,
there were no clear responsibilities laid for workers and management. The
work done by workers was very slow. Worker’s output never matched their
abilities and attitudes. No effective work standards existed.

Taylor made a mental revolution among both the workers and management
by defining clear guidelines for improving production efficiency. The four
principles of management that he defined are as follows:
a) Develop a science for each element of an individual.
b) Scientifically select, train, teach and develop the worker.
c) Co-operate with the workers heartily so as to ensure that all work to
be done is in accordance with the principles of the science that has
been developed.
d) Divide work and responsibility almost equally between management
and workers.

Administrative Theory

The administrative theory describes efforts to define the universal functions

that managers perform and principles that constitutes good management
practices. The major contribution to this theory was that of a French
industrialist, namely, Henry Fayol.

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Henry Fayol

Fayol proposed that all managers perform five management functions:

Planning, Organizing, Commanding, Co-ordinating and Controlling. In
addition, he described the practice of management as something distinct
from accounting, finance, production, distribution and so on. He proposed 14
principles of management as below:
i. Division of labour : Specialization increases output by making
employees more efficient.
ii. Authority: Authority gives management the right to order. Authority
goes with responsibility.
iii. Discipline: Employee must obey and respect the rules. Good
discipline is the result of effective leadership.
iv. Unity of command: Every employee should receive communication
from only one person.
v. Unity of direction: Each group of organizational activities that have
the same objective should be divided by one manager using one plan.
vi. Remuneration: Wages paid to workers should be fair.
vii. Subordination of individual interest: The interest of any one
employee or group should not take precedence over the interests of
the organization as a whole.
viii. Centralisation: The optimum degree of centralization should be
maintained for each situation.
ix. Scalar chain: The Scalar chain measures the line of authority from
top management to the lowest ranks. Communication should follow
this chain.
x. Order. Material and people should be in the right place at the right
time.
xi. Equity: Managers should be kind and fair to their subordinates.
xii. Stability: High employee turnover is inefficient. Management should
provide personnel planning and ensure replacements.
xiii. Initiative: Employee allowed to originate and carry out plans will
exert high levels of effort.
xiv. Esprit-de-corps: Promoting team spirit will build harmony and unity
within the organization.

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Structural theory

Simultaneously, the German sociologist, Max Weber, developed a theory of

authority structures and described organizational activity as based on
authority relation. He was one who looked at management and
organizational behaviour from a structural perspective.

Weber described an ideal type of organization that he called a bureaucracy.

The detail features of his ideal bureaucratic structure are as follows:
a) Job — specialization: Jobs are broken into simple, routine and well
defined tasks.
b) Authority hierarchy: Positions are organized in a hierarchy, each
lower one controlled by and supervised by a higher one.
c) Formal selection: All organization members be selected on the basis
of technical qualifications demonstrated by training, education or
exams.
d) Rules and regulations.- To ensure uniformity and to regulate the
actions of employees, managers must depend upon company’s
rules.
e) Impersonality.- Rules and controls are applied uniformly. Avoiding
involvement of personalities and personnel preferences.
f) Career orientation: Managers are professionals and not owners of
units they manage.
They work for fixed salaries and pursue their careers within their
organizations.

‘Social Man’ Theory

Mary Parker Follett and Chester Barnard saw the importance of the social
aspect of organizations. Their ideas, though born in scientific management,
did not achieve any large degree of recognition until 1930’s. Mary Parker
Follett first recognized that, organization could be viewed from the
perspective of individual and group behaviour. Barnard saw organizations as
social systems that require human co-operation. Barnard maintained that
success depends on maintaining good relations with people and introduced

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the idea that managers had to examine the environment and then adjust the
organization to maintain the state of equilibrium.

Behavioural Era

“The people side” of organization came into its own during the period known
as “behavioural era”. This era was marked by human relations movement
and widespread application of behavioural research. Three thinkers conveyed
the message that human relations are most important during the
behavioural era. They are Dale Carnegie, Abraham Maslow and Douglas
McGregor.

Dale Carnegie through his book ‘How to Win Friends And Influence People’
conveyed the theme that the way to success is through winning co-operation
of others. His main advice is:
i. To make others feel important through sincere appreciation of their
efforts.
ii. To strive to make good first impression.
iii. Win people to their way of thinking by letting others do the talking and
never telling a man he is wrong.
iv. Change people by praising their good traits and giving the leader the
opportunity to seek face.

Maslow proposed a theoretical hierarchy of five needs: Physiological, Safety,

Social, Esteem and Self-actualisation. He advocated the need of satisfaction
of each before turning to the next one. He believed that self- actualization —
that is, achieving one’s full potential — was the summit of a human beings
existence. Managers who accepted his theory, altered their organizations
and management practices.

McGregor is best known for his formulation of two sets of assumptions —

known as Theory X and Theory Y. The former assumes that people have little
ambition, dislike work, avoid responsibility and need to be closely directed to
work effectively. The latter assumes that people can exercise self-direction,
accept responsibility and consider work to be as natural as rest or play.

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McGregor believed that theory Y assumptions better captured the true
nature of workers and guided management better.

5 Organizational Behaviour models

The current research essentially reflects maturing of OB as a scientific

discipline. Kingsley Davis has described four OB models, namely,
a) autocratic
b) custodial
c) supportive
d) collegial.

Autocratic Model

In the autocratic model, managerial orientation is towards power. Managers

see authority as the only means to get the things done, and employees are
expected to follow orders. The result is high dependence on boss. This
dependence is possible because employees live on the subsistence level. The
organizational process is mostly formalized; the authority is delegated by
right of command over people to whom it applies.

Custodial Model

In the custodial model, the managerial orientation is towards the use of

money to play for employee benefits. The model depends on the economic
resources of the organization and its ability to pay for the benefits. While the
employees hope to obtain security, at the same time they become highly
dependent on the organization. An organizational dependence reduces
personal dependence on boss.

Supportive Model

The supportive model organizational behaviour depends on managerial

leadership rather than on the use of power of money. The aim of managers
is to support employees in their achievement of results. The focus is
primarily on participation and involvement of employees in managerial
decision-making process.

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Collegial Model

Collegial model is an extension of supportive model. The term collegial refers

to a body of people having common purpose. Collegial model is based on the
team concept in which each employee develops high degree of
understanding towards others and shares common goals. The employee
response to this situation is responsibility. Employees need little direction
and control from management. Control is basically through self-discipline by
the team members.

6 Conclusion

Organizations have a major influence on our daily life. They are created by
individuals alone or in groups. On being formed, organizations facilitate
division of labor, manage large scale technology, manage the external
environment, minimize transaction costs and exert power and control.

In short, organizational behaviour is highly useful in ensuring organizational

effectiveness. In simple terms, Organisational Behaviour as a discipline is
the study of human behaviour in organizational settings.