EHS302:

ORGANIZATIONAL
BEHAVIOR
Dr. KVS Seshendra Kumar
Assistant Professor
Department of Mechanical Engineering
skarri@gitam.edu

9581014254
 MODULE I: Introduction
◦ Introduction;
◦ Definition of Organization Behaviour and Historical development,
◦ Environmental Context (Information Technology and Globalization),
◦ Diversity and Ethics,
◦ Design and Cultural,
◦ Reward Systems.
◦ The Individual:
◦ Foundation of individual behaviour,
◦ Ability
What are Organizations ?
◦ Organizations are groups of people who work interdependently toward
some purpose.
◦ Organizations have existed for as long as people have worked together.
◦ An organization, or organisation, is an
entity—such as a company, an
institution, or an association—
comprising one or more people and
having a particular purpose.
◦ The word is derived from the Greek
word organon, which means tool or
instrument, musical instrument, and
organ.
What is organizational
behavior (OB)?
◦ The study of human behavior, attitudes, and
performance in organizations.
◦ OB is the study of what people think, feel, and do
in and around organizations.
◦ OB is the study of what people do in an
organization and how their behavior affects the
organizations performance.
◦ Its focus is on employee behavior, decisions,
perceptions and emotional responses.
 What is organizational behavior (OB)?
◦ Organizational behavior is the academic study of how
people interact within groups.
◦ The principles of the study of organizational behavior are
applied primarily in attempts to make businesses operate
more effectively.
why study OB?
Importance of OB
◦ OB provides a road map to our lives in organizations.
◦ OB uses scientific research to understand and make organization life,
as it helps to predict what people will do under various conditions.
◦ It helps to influence organizational events – to understand and predict
events
◦ It helps individual understand herself/ himself in better fashion.
◦ It helps manager to manage human resources effectively.
◦ It is also useful in the field marketing.
Levels of OB

Organizational
level
Group Level

Individual level
Components of ob
◦Persons who direct and supervise
the activities of one or more
employees.
Management
 Management functions- PODSCoRB
◦ Planning
◦ Organising
◦ Directing
◦ Staffing
◦ Coordinating
◦ Reporting and
◦ Budgeting.
 Management functions: Planning
◦ Deciding in advance
◦ What to do?
◦ When to do?
◦ How to do?
◦ Who is going to do it?
◦ Sets the goal of an organization
◦ It encompasses defining an organization’s goals, establishing an overall
strategy for achieving those goals, and developing a comprehensive set of
plans to integrate and coordinate activities.
Management functions: organizing
◦ Organizing as a process involves:
◦ Identification of activities
◦ Classification of grouping of activities
◦ Assigning duties
◦ Delegation of authority and creation of responsibility
◦ Coordinating authority and responsibility relationships
◦ Organizing includes determining what tasks are to be done, who is to do them,
how the task are to be grouped, Who reports to whom and where decisions are to be
made
Management functions: Directing (leading)
◦ A function that includes motivating employees,
coordinating employees, direct their activities, select the
most effective communication channels, and resolve
conflicts among members.
Staffing
◦ staffing is an operation of recruiting the
employees by evaluating their skills
and knowledge before offering them
specific job roles accordingly.
◦ A staffing model is a data set that
measures work activities, how many labor
hours are needed, and how employee
time is spent.
 Management functions: controlling
◦ A function that includes monitoring activities to ensure they are
being accomplished as planned and correcting any significant
deviations.

Goals are being met Goals are not being met

Managers can take action to Managers must take corrective
maintain and improve performance action
Reporting
◦ Managerial reporting is the collection
of data that informs managers on
how to efficiently run their
department.
◦ A successful business implements
managerial reports not only to track a
department's key performance
indicators (KPIs) but also to help guide
its managers toward making accurate,
data-driven decisions.
 Budgeting
◦ Budgetary management is the
process of managing and
tracking income and expenses.
◦ Companies often have budgets
for individual departments as well
as an overall company budget.
◦ Departmental managers are
frequently responsible for
managing their department's
budget.
Historical developments of OB
History of Organizational Behavior
◦ Historical Perspective of Organisational Behaviour
◦ In 1776, Adam Smith advocated a
new form of organisational
structure based on the division of
labour.
◦ One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at
the top for receiving the head; to make the head requires two or three distinct operations; to put it on,
is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the
paper; and the important business of making a pin is, in this manner, divided into about eighteen
distinct operations, which, in some manufactories, are all performed by distinct hands’.
◦ One hundred years later, German
Sociologist Max Weber introduced the
concept about rational organisations and
initiated the concept of charismatic
leadership.
◦ The Max Weber Theory of
Bureaucracy proposes that all
business tasks must be divided
among the employees.
◦ The basis for the division of tasks
should be competencies and
functional specializations.
◦ In this way, the workers will be well
aware of their role and worth in the
organization and what is expected of
them.
◦The beginnings of OB can be found
within the human relations/behavioral
management movement, which
emerged during the 1920s as a
response to the traditional or classic
management approach.
◦ In 1920's Elton Mayo an Australian born
At the Hawthorne plant of Western Electric, he discovered
Harvard Professor and his colleagues that job satisfaction increased through employee
conducted productivity studies at participation in decisions rather than through short-
Western Electric's Hawthorne Plant. term incentives.

◦ With this epoch (era) making study the

focus of organisational studies shifted to
analysis of how human factors and
psychology affected organisations.
◦ This shift of focus in the study of
organisations was called the Hawthorne
Effect.
◦ The Human Relations Movement
focused on teams, motivation, and the
actualisation of goals of individuals
within organisations.
◦ Studies conducted by prominent scholars like
Chester Barnard, Henri Fayol, Mary Parker Follett,
Frederick Herzberg, Abraham Maslow, David
McCellan and Victor Vroom contributed to the
growth of Organisational Behaviour as a discipline.
◦ In the 1960's and 1970's, the field was strongly influenced
by social psychology and the emphasis in academic study
was quantitative research.
◦ An explosion of the bounded rationality, informal
organisation, contingency theory, resource dependence,
institution theory and population ecology theories have
contributed to the study of organisational behaviour.
Historical development of Organisational behaviour

The Human Relations

Movement

Elton Mayo and his

famous Hawthorne
studies(1930’s)
Historical development of Organisational
behaviour
2. Scientific Management:
◦The great industrialist was primarily concerned with overall managerial organisation in order for their companies to survive and
prosper.
◦The scientific management movement around the turn of the century took an arrower, operations perspective.
◦Yet, the two approaches were certainly not contradictory.
◦The managers in both cases applied the scientific method to their problems and they thought that effective management at all
levels was the key to organisational success.
◦ His argument proved to be correct and in some instances "taylorism" resulted in
productivity increases of 400 percent.
◦ In almost all cases, his methods improved productivity over existing levels.
◦ Taylor had actually shop and engineering experience and therefore was intimately
involved with tools, products and various machining and manufacturing
operations.
◦ His well- known metal -cutting experiments demonstrated the scientific
management approach.
◦ Over a period of twenty-six years, Taylor tested every conceivable variation in
speed, feed, depth of cut, and kind of cutting tool.
◦ The outcome of this experimentation was high speed steel, considered one of the
most significant contributions to the development of large-scale production.
◦ Coupled with Taylor's logical, rational, engineering -like approach to
management was a simple theory of human behaviour:
◦ People are primarily motivated by economic rewards and well take
direction if offered the opportunity to better their economic positions.
◦ Put simply, Taylor's theory stated that:
• Physical work could be scientifically studied to determine the optimal method of
performing a job.
• Workers could there after be made more efficient by being given prescriptions for
how they were to do their jobs.
• Workers would be willing to adhere to these prescriptions if paid on "differential
piece work" basis.
◦ In addition to advocating the use of scientific means to develop the best way
to do a task, Taylor argued that several other principles were important.
i. Workers with appropriate abilities had to be selected and trained in the appropriate
task method.
ii. Supervisors needed to build cooperation among the workers to ensure that they
followed the designated method of work. Building such cooperation included
soliciting workers' suggestions and being willing to discuss ideas for improved work
methods.
iii.There needed to be a clear division of work responsibilities. Previously, the workers
planned how to approach a task, and then they executed it. Under the Taylor scheme,
it was management's job to do the task planning, using scientific methods.
◦ Taylor's four principles of scientific
management are summarized here: -
• Scientifically study each part of a task and develop
the best method for performing the task.
• Carefully select workers and train them to perform
the task by using the scientifically developed
method.
• Cooperate fully with workers to ensure that they
use the proper method.
• Divide work and responsibility so that management
is responsible for planning work methods using
scientific principles and workers are responsible for
executing the work accordingly.
◦ Many have criticized Taylor's work for dehumanizing the work place and treating
workers like machines, but his overall contribution to management was significant.
◦ Although others were studying similar methods at the same general time, Taylor was
one of the first to take the theory and practice of management out of the realm of
intuitive judgment and into the realm of scientific inquiry and reasoning.
◦ Taylor's ideas on time study, standardization of work practices, goal setting, money as
a motivator, scientific selection of workers and rest pauses have all proved to be
successful techniques of management today.
◦ Taylor was by no means the only note worthy scientific manager.
◦ Others in the movement, such as Frank and Lillian Gilberth and Henry L Gantt made
especially significant contributions.
◦ The Gilbreths: Other major advocates of scientific management were the husband and wife team of Frank
Gilbreth (1868 - 1924) and Lillian Moller Gilberth (1878 - 1972).
◦ As Frank become involved in training young brick layers, he noticed the in efficiencies that were handed down
from experienced workers.
◦ To remedy the situation he proposedusing motion studies to streamline the bricklaying process.
◦ Frank also designed special scaffolding for different types of jobs and devised precise directions for mortar
consistency.
◦ On the basis of these and other ideas, Frank was able to reduce the motions involved in brick laying from 18 ½
to 4.
◦ Using his approach, workers increased the number of bricks laid per day from 1000 to 2700 with no increase in
physical exertion.
◦ Frank married Lillian Moller, who began working with him on projects while she completed her doctorate in
psychology.
◦ The two continued their studies aimed at eliminating unnecessary motions and expanded their interests to exploring
ways of reducing task fatigue.
◦ Part of their work involved the is olation of 17 basic motions, each called a “therblig” ("Gilbreth" spelled backward,
with the "t" and "h" reversed).
◦ Therbligs included such motions as select, position, and hold - motions that were used to study tasks in a number of
industries.
◦ The Gilbreths used the therblig concept to study tasks in a number of industries.
◦ The Gilbreths used the therblig concept to study jobs and also pioneered the use of motion picture technology in
studying jobs.
◦ Lillian helped define scientific management by arguing that scientific studies of management must focus on both
analysis and synthesis.
◦ With analysis, a task is broken down into its essential parts or elements.
◦ With synthesis, the task is reconstituted to include only those elements necessary for efficient work.
◦ She also had a particular interest in the human implications of scientific management, arguing that the purpose of
scientific management is to help people reach their maximum potential by developing their skills and abilities.
◦ Lillian Gilbreth ranks as the first woman to gain prominence as a major contributor to the development of
management as a science.
◦ Henry L Gantt (1861-1919): One of Taylor's closest associates, Henry Gantt latter become an independent
consultant and made several contributions of his own. The most well -known is the Gantt Chart, a graphic aid to
planning, scheduling and control that is still in use today. He also devised a unique pay incentive system that not only
paid workers extra for reaching standard in the allotted time but also awarded bonuses to supervisors when workers
reached standard. He wanted to encourage supervisors to coach workers who were having difficulties.
◦ The scientific managers like Taylor, Frank and Lillian Gilberth and Henry Gantt were not the first or only group that
recognized the importance of the operating functions. Ahundred years earlier, Adam Smith had carefully pointed out
the advantages of division of labour and in 1832, Charles Babbage, a British mathematician with some asto unding
managerial insights, discussed transference of skill in his book Economy of Machinery and Manufacture.
3. The Human Relations Movement:
◦ The Human Relations Movement, popularized by Elton Mayo and his famous Hawthorne studies conducted at the
Hawthorne Plant of the Western Electric Company, in many ways it remained the foundation of much of our
management thinking today.
◦ Before the Hawthorne studies officially started, Elton Mayo headed a research team, which was investigating the
causes of very high turnover in the mule-spinning department of a Philadelphia textile mill in 1923 and 1924.
◦ After interviewing and consulting the workers, the team set up a series of rest pauses, which resulted in greatly
reduced turnover and more positive worker attitudes and morale.
In the late 20th
century

⚫ OB becoming interdisciplinary
⚫ Psychology
⚫ Sociology
⚫ Communication
Environmental Context
(Information Technology )
◦ Organization and Efficiency
◦ Technology allows companies to be more organized than ever before.
◦ Filing a document can be done instantaneously and retrieved just as easily.
◦ The speed of the internet and the availability of technology allows for a much more efficient workday.
◦ Documents can now be signed electronically and sent wherever they need to go quickly.
◦ Training and development can now be offered online and allows individuals to complete training on their own
time, eliminating the need to work around many schedules to conduct a training event.
◦ Accessibility
◦ Technology enables people to be constantly in touch with their work.
◦ Email and smartphones oftentimes prevent people from unplugging from their job.
◦ While this can be avoided by setting aside technology when you are off work, some companies now expect an
immediate response to questions or concerns.
◦ While for some this may be a welcomed advantage, for other it can potentially lead to burnout and frustration.
◦ Accessibility of technology is a necessity for almost every organization.
◦ A power outage or lack of internet access can completely shut down a company.
Globalization
Diversity refers to identity-based differences among and
between two or more people that affect their lives as applicants,
employees, and customers.
These identity-based differences include such things as race and
ethnicity, gender, sexual orientation, and age.
◦ How does diversity impact organizational behavior?
◦ Diversity affects how organizations understand that
employing people who hold multiple perspectives
increases the need to mitigate conflict between
workers from different identity groups,
◦ enhances creativity and problem solving in teams,
and
◦ serves as a resource to create a competitive
advantage for the organization.
 Ethics
Ethics refers to the principles, rules and standards of moral behaviour that are accepted by society as
right or wrong.

It tells the difference between the right and wrong.

It guides the employees of the organization to decide on the best course of action in situations where it
is difficult to make the right choice, or at least the best choice from among competing alternatives

Ref: Organizational Ethics and Management – IspatGuru

 The word ethics is derived from the Greek word ‘Ethikos’ and Latin word
‘Ethicus’.

 The word means custom, norm, ideal, or character.

 In the words of Peter.F.Drucker, ‘Ethics deals with right actions of individuals’.

 The term ‘business ethics’ came into common use in the USA in the early 1970s.

 Organizations started highlighting their ethical stature in the late 1980s and early
1990s, possibly trying to distance themselves from the business scandals of the day.
 Ethical behaviour

Organizational ethics means the behaviour of the organization while conducting its operations, by
observing morality in its activities

Ethical behaviour is the behaviour that conforms to the ethics which is individual beliefs and social
standards about what is right and good. Ethics are important for getting along with others, living with
oneself, and having a good character

Organizational ethics is concerned with the ethical behaviour of the organization while carrying out its
operations. Unethical practices create problems within the organization. The life and growth of the
organization depends upon the ethics practiced by its management and employees
Necessity for organizational ethics

 To satisfy shareholder expectations

 To protect the reputation of the organization
 To build trust with those groups with which the organization
works
 To guard against unethical employees and competitors
 To establish a working environment that matches the core
values
 To ensure that the organization is an equal opportunity
employer
 To maintain a safe working environment for employees
 To engage actively with local communities as a partner
 To maintain high standards of integrity
 To adhere to the practice of full disclosure on the quality of
goods and services
Culture
 How does organisational culture affect
organisational behaviour?
◦ It has been suggested that organizational culture affects such
employees' outcomes as productivity, performance, commitment,
self confidence, and ethical behaviour.
◦ Organizational culture is one of the core determinants of the
organizational success as it influences employee work behaviour.
 Learning objectives

Reward
Systems
What is
reward?
 Why are rewards important?
◦ Motivation and performance levels
◦ Commitment to the organisation
◦ Job satisfaction and engagement
Terminology related to Reward
Management

Adapted from Foot and Hook (2005:301)

◦ Extrinsic reward – Tangible or transactional
reward for undertaking work e.g. salary,
incentive and benefits.

◦ Intrinsic reward - derived from work and Types of rewards

employment e.g. environmental rewards
(physical surroundings, values of the
organisation) Development –oriented rewards
(L&D opportunities, career advancement)
 The Reward Strategy
This is a business focused statement of the intentions of the organisation concerning the development of future
reward processes & practices which are aligned to the business & human resource strategies of the
organisation, its culture & the environment in which it operates (Armstrong, 2007)

When formulating reward strategy, there are 3 basic

questions to answer:
1. Where are we now?
2. Where do we want to be?
3. What’s the business case?
Management
Approach to
Reward
BUSINESS STRATEGY REWARD STRATEGY
Achieve added value by improving motivation Introduce or improve performance pay plans – IPRP or team
rewards
Achieve added value by improving performance or productivity Introduce or improve performance pay plans and performance
management processes
Achieve competitive advantage by technological development Introduce competence or skills based pay

Achieve competitive advantage by delivering better value and Recognise and reward individuals and teams for meeting and
quality to customers exceeding customer service & quality standards

Achieving competitive advantage by attracting, developing and Ensure that rates of pay are competitive. Reward people for
retaining high quality employees developing their competencies and careers.

Examples of Business Strategy linked to the Reward

Strategy thereby achieving integration
Consider…

1. Which reward goals (when designing the company reward

strategy) would be most critical for a technology based
company e.g. Microsoft/Apple?

2. Which reward goals (when designing the company reward

strategy) would be most critical for a non-profit company e.g.
red cross?

3. Which reward goals would you value most and why?

Research evidence from the Chartered Institute of Personnel
and Development (CIPD) (2008)
◦ Drivers of reward strategy
◦ Recruit & retain key talent
◦ Reward high performers
◦ Support business goals

◦ Widespread acknowledgement that there is no “right way” to manage

pay.
◦ Individual contribution/merit is now the dominant factor in determining
pay progression.
◦ Skills based pay continues to decline and regional rates are growing in
popularity
◦ 30% of organisations claim a “Total Reward” approach
Features of an
Effective
Reward
Strategy
Consider…

1. What the main objectives of employee reward can be from an employer’s

point of view and an employee’s point of view?

2. What are organisations paying for (whether through pay or their reward
strategy)?
Objectives of reward systems
Employer Perspective Employee Perspective
◦ Purchasing power
◦ Prestige

◦ Competition ◦ ‘Felt-fair’

◦ Control ◦ Right to fair pay

◦ Motivation ◦ Internal & external relativities

◦ Performance ◦ Recognition

◦ Cost
◦ Composition

Source: Torrington et al. (2005:596 – 601)

What are
organisations paying
for?
Factors affecting the strategic reward system

Internal factors External factors

Compensation policy Conditions of the
of organization labor market

Area wage rates

Worth of job
Cost of living
PAY
Employee’s Collective
relative worth bargaining

Employer’s ability to pay Legal requirements

Different types of reward system

Two main categories:

1.Fixed payment systems = Those that don’t vary in

relation to achievements

2.Variable payment systems = Those that vary in

relation to results, profits, or performance (based on
payment by results or performance related pay)
Type 1: Fixed payment systems

Based on job/time which can involve;

◦ Hourly rates
◦ Day rates
◦ Weekly wage
◦ Annual salary

Or alternatively based on:

◦ Competence – qualifications and/experience
◦ Seniority – age/tenure
Type 2a): Variable Payment Systems –
Payment by results
Piece work/commission

Individual time saving Rewards according to

a set formula or
Measured day work output

Small group incentives

Large group incentives – gainsharing

Profit sharing – cash-based/share-based

Type 2b): Variable Payment Systems –
Performance-related pay
Skill-based schemes – developing competencies

Merit-based schemes

Goal-based schemes
Varies depending
upon actual
Non monetary rewards performance
Flexible benefits systems/cafeteria style pay
Group Discussion…

What are the advantages and disadvantages of

performance related payment (PRP) systems?
 Advantages of PRP Disadvantages of PRP
◦ Employees are able to influence ◦ Encourages compliance rather than
performance by changing their behaviour commitment
◦ The reward is clearly & closely linked to
the effort of the individual or group ◦ Short-term motivation – Hertzberg
(1966)
◦ Employees are clear about the targets &
standards of performance needed & can ◦ Unlikely to improve poor performance
measure their own performance against
these targets ◦ Stifle creativity and innovation
◦ Performance can be measured with ◦ Reliance on line manager’s skills as
fairness & consistency assessors
◦ The pay system uses a clearly defined & ◦ Can lead to Equal Pay claims
understood formula
◦ Can encourage an entrepreneurial &
performance oriented culture

Source: Torrington et al. (2014)

Total Reward
◦ Takes a holistic approach to reward management - ‘extrinsic’
and ‘intrinsic’ rewards
◦ Combines a number of elements

“Combines the traditional pay and benefits elements with the other
things that employees gain from employment: skills, experience,
opportunity and recognition” (Redman and Wilkinson, 2006:128)

Video containing explanations of total reward management -

https://www.youtube.com/watch?v=OuH2oWCrxmU
 Benefits of the Total Reward
◦
Approach
Increased flexibility – tailored to particular challenges and circumstances

◦ Recruitment and retention

◦ Reduced cost

◦ Heightened visibility in a tight labour market to attract critical talent

◦ Enhanced profitability – direct links can be forged between employee

motivation and product/service quality
 Conclusion
◦ Contemporary organisations are looking for ways to use rewards as a means
of attracting and retaining their employees

◦ Reward strategies are influenced by a wide range of internal and external

factors with increasing focus being placed on rewarding employees for their
performance and a flexible total reward approach

◦ Reward strategies need to be linked to organisational strategies but this can

often be complex as rewards are contractual and difficult to change when
organisational strategies change
The Individual