1. GSB – MBA – 2010 -2012
TM I – Sep – Nov – 2010
BA 6115
Organisational Behaviour
Unit I – lesson I
1

2. “OB is concerned with the emerging realities in the
work-place revolution. Knowledge is replacing
infrastructure. Self-leadership is superceding
command-control management. Networks are
replacing hierarchies. Virtual teams are
replacing committees. Companies are looking
for employees with emotional intelligence, not
for just technical smarts. Globalisation has
become the mantra of corporate survival. Co-
workers are not down the hall; they are at the
end of an internet connection located
somewhere else on the planet.”
2

3. • “The organisation is above
all social. It is people.”
Peter Drucker
“People are the key” – Sam
Walton, the founder of Wal-Mart
and the richest person in the
world when he died .
3

4. • “Effective organisational behaviour is
the bedrock on which effective
organisational action rests. Long term
competitive advantage comes from the
rich portfolio of individual and team
based competencies of an organisation’s
employees, managers and leaders.”
Hellriegal and Slocum
4

5. Ch I-Understanding OB
• Introduction and back ground
• Definition
• Management skills
• Generalisations about behaviour
• Theoretical framework
• Models of OB
5

6. Definition
• Organizational behaviour, is “… a study and
application of knowledge about human behaviour
– as individuals and in groups – in orgns – strives
to identify ways in which people can act more
effectively.”
• “The understanding, prediction and management
of human behaviour in organisations.”
• Is an applied science- best practices in one orgn can
be communicated to others
6

7. Insert Figure 1.1 here
What is Organizational Behavior?
7

8. • Organizational Behaviour studies encompass the
study of organizations from multiple viewpoints,
methods, and levels of analysis. Provides a set of
useful tools;
-at the individual level- interpersonal relations,
- at the group level – group dynamics – formal
teams and informal groups – inter-group relations,
- at the orgn level – inter-organisational gps –
M&As.
8

9. • Traditional distinction, present especially in
American academia, is between the study of
"micro" organizational behavior—which refers to
individual and group dynamics in an
organizational setting-
• and "macro" organizational theory which studies
whole organizations, how they adapt, and the
strategies and structures that guide them.
9

10. • To this distinction, some scholars have added
an interest in "meso" -- primarily interested in
power, culture, and the networks of individuals
and units in organizations—and "field" level
analysis which study how whole populations
of organizations interact. In Europe these
distinctions do exist as well, but are more
rarely reflected in departmental divisions.
10

11. Why Study Organizational Behavior
Organizational
Behavior
Research
Understand
organizational
events
Predict
organizational
events
Influence
organizational
events
11

12. Goals
• Describe how people behave under a
variety of conditions
• Understand why people behave as they do
• Predict future employee behaviour
• Control and develop human activity at
work to improve productivity, skill
improvement, team effort, etc
12

13. Forces
• People- individuals and groups
• Structure- jobs and relationships
• Technology-machinery, computers
• Environment-govt, competition, social
pressures.
All the above forces interact on each other
resulting in OB.
13

14. The major problem is and will continue to
be managing people – the HRs of the
organisation – the major challenge and
critical competitive advantage.
Globalisation, diversity, strategic
partnerships, emphasis on TQM,
environmental issues, Corporate
Governance and ethics serve as important
contextual or environmental dimensions
for OB.
14

15. • Technology can be purchased or copied, it levels the
playing field.
• The people, cannot be copied. It is possible to clone
human bodies- their ideas, personalities, motivation,
and organisation cultural values cannot be copied.
• The HRs of an organisation and how they are
managed represent the competitive advantage of
today’s and tomorrow’s organisations.
• A study of over 300 cos for more than 20 yrs found that
management of human resources through extensive training
and techniques such as empowerment resulted in
performance benefits, but operational initiatives such as
TQM or advanced manufacturing technology did not.
15

16. Generalisations about human behaviour
> happy workers are productive workers.
> Individuals are most productive when the boss is
friendly, reliable and unassuming.
> behaviour of good leaders is consistent irrespective of
the situations they face.
> Interviews are effective selection devices.
> Everybody likes a challenging job
> People will have to be bullied/intimidated to make
them to do their jobs.
> Money motivates all.
> People are more concerned about their own salaries than others’.
> Members of effective groups do not quarrel among themselves.16

17. Levels of Analysis
Group Level
Individual
Level
Organizational Level
17

18. Characteristics of OB
• Inter-disciplinary
• Research based – theories and practice
• Increased acceptance of findings by
managers
18

19. Components of Organizational Behavior
Understanding
organizational behavior
requires studying
Part One Individuals in Organizations
Part Two Group and Team Processes
Part Three Organizational Processes
19

20. A Short History of Organizational Behavior
The Greek philosopher Plato wrote about the essence
of leadership. Aristotle addressed the topic of
persuasive communication. The writings of the
Chinese philosopher Confucius in 500 BC are
beginning to influence contemporary thinking about
ethics and leadership. The writings of 16th century
Italian philosopher Niccolò Machiavelli laid the
foundation for contemporary work on organizational
power and politics.
20

21. In 1776, Adam Smith advocated a new
form of organizational structure based on
the division of labour. One hundred years
later, German sociologist Max Weber
wrote about rational organizations and
initiated discussion of charismatic
leadership.
21

22. • Soon after, Frederick Winslow Taylor
introduced the systematic use of goal setting
and rewards to motivate employees. In the
1920s, Australian-born Harvard professor Elton
Mayo and his colleagues conducted productivity
studies at Western Electric's Hawthorne plant in
the United States. They discovered the
importance of formal and informal group
dynamics in the work place, resulting in a
dramatic shift towards the ‘human relations’
school of thought.
22

23. • Though it traces its roots back to Max Weber
and earlier, organizational studies is generally
considered to have begun as an academic
discipline with the advent of scientific
management in the 1890s, with Taylorism
representing the peak of this movement.
Proponents of scientific management held that
rationalizing the organization with precise sets
of instructions and time-motion studies would
lead to increased productivity. Studies of
different compensation systems were carried
out. 23

24. • After the First World War, the focus of
organizational studies shifted to analysis of how
human factors and psychology affected
organizations, a transformation propelled by the
identification of the Hawthorne Effect. This
Human Relations Movement focused on teams,
motivation, and the actualization of the goals of
individuals within organizations.
• Prominent early scholars included Chester
Barnard, Henri Fayol, Frederick Herzberg,
Abraham Maslow, David McClelland, and Victor
Vroom.
24

25. • The Second World War further shifted the
field, as the invention of large-scale logistics
and operations research led to a renewed
interest in rationalist approaches to the study
of organizations. Interest grew in theory and
methods native to the sciences, including
systems theory, the study of organizations
with a complexity theory perspective and
complexity strategy. Influential work was done
by Herbert Alexander Simon and James G.
March and the so-called "Carnegie School" of
organizational behavior.
25

26. • In the 1960s and 1970s, the field was strongly influenced
by social psychology and the emphasis in academic
study was on quantitative research. An explosion of
theorizing, much of it at Stanford University and
Carnegie Mellon, produced Bounded Rationality,
Informal Organization, Contingency Theory, Resource
Dependence, Institutional Theory, and Organizational
Ecology theories, among many others.
• Starting in the 1980s, cultural explanations of
organizations and change became an important part of
study. Qualitative methods of study became more
acceptable, informed by anthropology, psychology and
sociology. A leading scholar was Karl Weick
26

27. • Frederick Winslow Taylor Frederick Winslow
Taylor (1856–1915) was the first person who
attempted to study human behavior at work
using a systematic approach. Taylor studied
human characteristics, social environment,
task, physical environment, capacity, speed,
durability, cost and their interaction with each
other. His overall objective was to reduce
and/or remove human variability.
27

28. • Taylor worked to achieve his goal of making
work behaviors stable and predictable so that
maximum output could be achieved. He relied
strongly upon monetary incentive systems,
believing that humans are primarily motivated
by money. He faced some strong criticism,
including being accused of telling managers to
treat workers as machines without minds, but
his work was very productive and laid many
foundation principles for modern management
studies.
28

29. Four Principles of
Scientific Management
1. Study the way employees perform their
tasks, gather informal job knowledge that
employees possess, and experiment with
ways of improving the way tasks are
performed.
2. Codify the new methods of performing
tasks into written rules and standard
operating procedures.
29

30. Four Principles of
Scientific Management
3. Carefully select employees so that they
possess skills and abilities that match the
needs of the task, and train them to
perform the task according to the
established rules and procedures.
4. Establish an acceptable level of
performance for a task, and then develop
a pay system that provides a reward for
performance above the acceptable level.
30

31. The Hawthorne Studies
• Hawthorne Works of the Western Electric
Company near Chicago; 1924-1932 – these
studies mark the starting point of the field of
Organisational Behaviour
• Initiated as an attempt to investigate how
characteristics of the work setting affect
employee fatigue and performance (i.e.,
lighting).
• Found that productivity increased regardless of
whether illumination was raised or lowered.
31

32. Started in 1924– to examine the relationship between light
intensity and employee productivity – a test group and a
control group were used – the test group initially did not
show any increase or decrease in output in proportion to the
increase/decrease in illumination. The control group with
unchanged illumination increased output by the same
amount overall by the test group. Subsequent phases
brought the level of light down to moonlight intensity: the
workers could barely see what they were doing, but
productivity increased. The results baffled the researchers.
Obviously, something besides the level of illumination was
causing the change in productivity – the complex human
variable.
32

33. The serendipitous results of these experiments
provided the impetus for the further study of human
behaviour in the work place.
Subsequent phase – relay room, where operators
assembled relay switches – test specific variables,
such as length of workday, rest breaks, and method
of payment. – basically the same results – each test
period yielded higher productivity than the earlier
one. Even when the workers were subjected to the
original conditions of experiment, productivity
increased–that was causing the change in the output.
33

34. • Conclusion – the independent variables (rest pauses,
etc.,) were not by themselves causing the change in
the dependent variable (output). Something was still
not being controlled.
• The bank wiring room study: the bank wirers were
placed in a separate test room. No experimental
changes during the study – an observer and an
interviewer gathered objective data – department’s
regular supervisors were used to maintain order and
control.
34

35. Findings were opposite to relay room experiments – output
was restricted – informal group norm was lower than
management’s – social pressures used to gain compliance
with group norms. The incentive system dictated that the
more a worker produced, the more money he would earn –
Also, the best producers will be laid off last – In spite of
this output was restricted. Social ostracism, ridicule, and
name-calling were the major sanctions used by the group to
enforce this restriction. In some cases, actual physical
pressure in the form of a game called ‘binging’ was applied.
In this, a worker will be hit as hard as possible, with the
privilege of returning one ‘bing’ or hit. Forcing rate-busters
play the game was an effective sanction. Group pressures
more effective than management incentives
35

36. Implications
• Workers’ preference to work in the relay room,
because of:
i. Small group
ii. Type of supervision
iii Earnings
iv Novelty of the situation
v. Interest in the experiment
vi attention received in the test room
The last 3 associated with “Hawthorne Effect” –
special attention paid to them 36

37. summary
• Factors influencing behavior:
– Attention from researchers
– Manager’s leadership approach
– Work group norms
• The “Hawthorne Effect”
37

38. Mary Parker Follett
• Management must consider the human
side
• Employees should be involved in job
analysis
• Person with the knowledge should be in
control of the work process regardless of
position
• Cross-functioning teams used to
accomplish projects
38

39. Douglas McGregor:
Theory X and Theory Y
Theory X
• Average employee is lazy,
dislikes work, and will try to
do as little as possible
• Manager’s task is to
supervise closely and
control employees through
reward and punishment
Theory Y
• Employees will do what is
good for the organization
when committed
• Manager’s task is create a
work setting that
encourages commitment to
organizational goals and
provides opportunities for
employees to be exercise
initiative
39

40. • At first employees were considered a cost, then
Human Resources, and now are becoming widely
recognised as ‘human capital’ (what you know –
education, experience, skills). Investing in this
capital results in desired performance outcomes
such as increased productivity and customer
satisfaction.
• Even going beyond human capital are more recently
recognised as ‘social capital’ ( who you know – networks,
connections, friends), and ‘positive psychological capital’ (
who you are – confidence, hope, optimism, resiliency and
more importantly who you can become, i.e., one’s possible
authentic self).
40

41. • Growing research evidence that
employees’ psychological capital is
positively related to their performance and
desired attitudes.
• As the ultimate ‘techie’ Bill Gates
observed;
“the inventory, the value of my company,
walks out the door every evening.”
41

42. “Because management is always about
people, its essence is dealing with human
nature. Since human nature seems to
have been extremely stable over recorded
history, the essence of management has
been extremely stable over recorded
history, the essence of management has
been and will be equally stable over time.”
Geert Hofstede –
International Management scholar
42

43. Challenges to Management
• Today’s challenges to management:
- a turbulent economy
- dangerous geopolitics
• At the organisation’s level:
- understanding global competition
- diversity
- ethical problems
43

44. The nature of work and the work place itself, the
traditional employment contract, and the
composition of the workforce are all
dramatically changing – yet human behaviour
is still to be understood in full.
Although the problems with human
organisations and the solutions over the ages
have not changed much, the emphasis and
surrounding environmental context have
changed.
44

45. • E.g., In the 1980s and 90smanagers were
preoccupied with restructuring their organisations to
improve productivity and meet the competitive
challenges in the international market place and
quality expectations of customers. – the resulting
‘lean and mean’ organisations offered some short
run benefits in terms of lowered costs and improved
productivity, instead of making significant changes
to meet the changing environment, most
organisations continued with more of the same.
45

46. • E.g., one analysis of Fortune 500 firms between
1995 and 2005 found – the most prominent
initiatives were;
- restructuring (downsizing),
- cost reduction programmes,
- globalising supply chains,
- creating shared services, and,
- Six Sigma (almost perfect).
Top management compensation was primarily tied to
stock options and thus to the firm’s stock price – led
to high risk mergers, acquisitions, and a highly
regulated winner-take-all environment. 46

47. e.g., the head of the nearly century-old investment
house Merryl Lynch bet his firm – and ultimately
lost – on the sub-prime financial market and out-
sized leverage – a whopping $160 mln severance
package on exit.
This type of behaviour and many other social,
economic and geopolitical factors led to the stock
market crash in 2008 – most of the focus had been
on financial markets, massive unemployment,
impact on those not laid off, the remaining
employees has been slighted.
47

48. • An expert on corporate psychology noted:
“After years of downsizing, outsourcing, and
a cavalier attitude that treats employees as
costs rather than assets, most of today’s
workers have concluded that the company no
longer values them. So they, in turn, no longer
feel engaged in their work or committed to the
company.”
The turmoil has left employees hurt and fearful,
feeling very vulnerable – the single most
prominent thought of people all over the world
is “I want a good job.”
48

49. • The Head of Gallup, at the end of the survey, said:
“Work is crucial to every adult human because
work holds within it the soul of the relationship of
one citizen to one government and one country.”
Ideal time for meeting challenges in HRM. “A crisis is
a terrible thing to waste.” - Jim Collins
The time has come not only to recognise and appreciate the
importance of human resources, but also to use recent
history as a catalyst for paradigmatic change in the way we
understand and use HRs.
– What is a “paradigm” shift?
Not just keeping up with incremental change, but a new way
of thinking about and managing HRs in today’s
dramatically changed work place.
49

50. Paradigm Shift
The term comes from the Gk word ‘paradeigma,’
meaning, “ a model, pattern or example.”
Introduced by philosophy-of-science historian Thomas
Kuhn, paradigm now means a broad model, a
framework, a way of thinking or a scheme for
understanding reality – the rules , defines the
boundaries and tells one how to behave within those
boundaries to be successful – impact of
globalisation, - work force consisting of post war
increase in population, Gen Xers (born in the late 60s
and 70s ), and people with inadequate literacy skills from
disadvantaged areas, and techies raised on computers has
led to a paradigm shift.
50

51. • E.g., James Brian Quinn refers to the
‘Intelligent enterprise’ as the new
paradigm – “ the organisation of
enterprises and effective strategies will
depend more on development and
deployment of intellectual resources than
on the management of physical assets.”
51

52. • A new set of challenges and required ways of
thinking. For today’s and tomorrow’s organisations
and management to be successful, there are new
rules with different boundaries – require new and
different behaviour inside the boundaries for
organisations and management to be successful.
Paradigm shifts have invalidated the advantages of
certain firms, e.g., almost all auto, financial and
retail firms, in recent years and created new
opportunities for others. (e.g., Google).
52

53. Paradigm effect
A situation in which those in the existing
paradigm may not even see the changes that
are occurring, let alone reason and draw
logical inferences and perceptions about
changes. – explains why there is considerable
resistance to change and why it is difficult to
move from old management paradigm to the
new. There is discontinuous change in the shift
to the new paradigm.
53

54. • As one author put it:
“ The depth of change required demands that those
charged with charting a passage through
hurricane like seas do more than run up a new set
of sails. What is involved equates to a quantum
shift in, not just learning, but how we learn, not
just doing things differently, but questioning
whether we should be doing many of the things we
currently believe in, at all; not just in drawing
together more information, but in questioning how
we know what it is (we think) we know.”
54

55. Contributing Disciplines to the OB Field
E X H I B I T 1-3a
55

56. Contributing Disciplines to the OB Field
E X H I B I T 1-3c
56

57. Contributing Disciplines to the OB Field
E X H I B I T 1-3b
57

58. Contributing Disciplines to the OB Field
E X H I B I T 1-3c
58

59. Contributing Disciplines to the OB Field
E X H I B I T 1-3d
59

60. Contributing Disciplines to the OB Field
E X H I B I T 1-3f
60

61. 5 OB Models
given by Keith Davis and Newstrom are:
1) Autocratic
2) Custodial
3) Supportive
4) Collegial
5) Systems
61

62. AUTOCRATIC MODEL
• The basis of this model is power with a managerial
orientation of authority. The employees in turn are
oriented towards obedience and dependence on the
boss. The employee need that is met is subsistence.
The performance result is minimal - most prevalent
during he industrial revolution – persons in power
can demand work from workers – pushing, directing
and persuading – tight control – unfair practices, low
payment and exploitation – employees put in min work in
the job to serve the basic needs of the family - though
harsh, it has worked well in certain conditions, e.g.,
organisational crisis.
62

63. Custodial
• The basis of this model is economic resources
with a managerial orientation of money. The
employees in turn are oriented towards security
and benefits and dependence on the
organization. The employee need that is met is
security. The performance result is passive
cooperation. To perk up the sagging morale of
the workers under the autocratic model
employers began to offer various welfare
schemes in the 19th century – paternalism –
fringe benefits – job security.
63

64. • E.g., IBM makes considerable efforts to stabilise the
workforce and preserve their jobs – reduces
overtime, freezes hiring, allows job transfers and
offers retirement incentives and lessens sub-
contracting to adjust IT slow downs. The organisation
should have considerable resources to pay pension benefit
from physical needs to security needs.
• Workers depend more on the organisation and less on the
managers – ensures loyalty – economic rewards are
assuredeven if the employee does not perform – contented –
but performance may decline because of job security –
1940s and 50s – University of Michiganconducted studies
which revealed that happy employees are not necessarily the
ost producticve employees. 64

65. Supportive
The basis of this model is leadership with a managerial
orientation of support. The employees in turn are oriented
towards job performance and participation. The employee
need that is met is status and recognition. The performance
result is awakened drives.
“The leadership and other processes of the organisation must
be such as to ensure a maximum probability that in all
interactions and all relationships within the organisation
each member will, in the light of his or her back ground,
values, and expectations view the experience as supportive
and one which builds and maintains his or her sense of
personal worth and importance.” e.g., TATAs.
Ensures organisatinal harmony.
65

66. Collegial
• The basis of this model is partnership with a managerial
orientation of teamwork. The employees in turn are oriented
towards responsible behavior and self-discipline. The
employee need that is met is self-actualization. The
performance result is moderate enthusiasm. “Collegial”
means a group of people working for a common purpose.
Manager is not addressed as ‘boss’ but is a facilitator.
Employees are self disciplined, self content and self
actualised. E.g., a R&D team or a project team.
• Although there are four separate models, almost no
organization operates exclusively in one. There will usually
be a predominate one, with one or more areas over-lapping
in the other models.
66

67. • Autocratic Custodial Supportive Collegial
• Model depends on
• PowerEconomic resourcesLeadershipPartnershipManagerial
orientationAuthorityMoneySupportTeamworkEmployee
orientationObedienceSecurityJobResponsiblityEmployee
psychological resultDependence on bossDependence on
organizationParticipationSelf-disciplineEmployees needs
metSubsistemceMaintenanceHigher-orderSelf-
actualizationPerformance resultMinimumPassive
cooperationAwakened drivesModerate enthusiasm
67
autocratic Custodial Supportive Collegial
Model depends on Power
Economic
resources
Leadership Partnership
Managerial orientation Authority Money Support Teamwork
Employee orientation Obedience Security Job Responsibility
Employee
psychological result
Dependence
on boss
Dependence
on
organization
Participation Self-discipline
Employees needs met Subsistence Maintenance Higher-order
Self-
actualization
Performance result Minimum
Passive
cooperation
Awakened
drives
Moderate
enthusiasm