Unit I

Meaning and Concepts of Organization Behaviour

1.1 Meaning and Concepts of Organization Behaviour

Organizational Behavior (OB) is the study of human behavior in organizational settings, the interface between human behavior and the organization, and the organization itself.

It is dynamic and changes as per the needs of society, its members, business objectives and environmental changes.

It is defined in different ways by different theorists.

The definitions given by some well know theorists are as given below:

According to L. M. Prasad, “Organizational Behavior can be defined as the study and application of knowledge about human behavior related to other elements of an organization such as structure, technology and social systems”.

According to Davis and Newstram, “Organizational Behavior is the study and application of knowledge about how people act within organizations”.

Scope of Organizational Behavior

The scope of Organizational Behavior includes People, Technology, Structure and Social Systems which may be briefly discussed as under:

People: People refer to the individuals and groups which are evident in an organization. The study of individual behavior, the behavior exhibited by the different groups present in an organization comprises an important element in organizational behavior studies.

Technology: Technology means the equipment’s, machines, technology used by the people who are working in the organization.

Structure: Structure represents the relationships between the people working in the organization. The relationship may be hierarchical like boss subordinate or between same positions or between different departments.

Social Systems: Organization doesn’t operate alone; it does exist in a society which the organization needs to take care of the values and beliefs of the society. The organization also needs to interact with the society where it does business. Organization is just a part of the large supra system consisting of many elements.

Features of Organizational Behavior-

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1.2 Role of Manager in organization

A manager needs to perform various roles in an organization. A manager is flooded with many responsibilities which he needs to pursue altogether. In an organization, the role of manager can be segregated into 10 different roles which are diagrammed below in a chart:

Interpersonal Roles

There are different roles that are required by the manager to perform. The roles of managers can be categorised under three big categories:

Let us have a discussion on them one by one:

1) Interpersonal role: As a figure head, a manager has to sign some legal documents, receive guest from outside, take decisions and sort out activities of subordinates. He is also responsible to motivate employees for an enhanced performance. In case the employees don’t perform well, he needs to understand the employee and act accordingly to bring out the best from the employee.

2) Informational Roles

A manager needs to stay updated as regards the information from outside and also from inside. The information collected from outside sources by the manager needs to be communicated or disseminated to the subordinates in the organization. The manager might also require becoming the spokesperson in many events or meetings representing the organization.

3) Decision Roles

A manager performs four different decisional roles. As an entrepreneur, the manger needs to initiate and oversee projects for the development of the organization. As a disturbance handler, the manager needs to provide solutions as regards any differences or grievances cropping up within the organizational atmosphere. The manager also acts as an allocator when he assigns and monitors the allocation of human, physical and monetary resources. A manager also acts as a negotiator when he needs to bargain with outsiders for acquiring benefit for the organization.

1.3 Direct and Indirect Environmental forces impact of various field of OB

The organization should consider the forces which have a profound impact on the working of the business. Basically, an organization doesn’t work in isolation. There are various forces which affect the working of the organization.  The direct environmental factors are those factors which have a direct impact on the operating activities of the business. The indirect environment factors may be those which may not have a direct impact immediately but may influence the activities of the organization.

Direct forces: The direct forces have a direct impact on the organizational working which may include suppliers, labour unions, laws and governmental regulatory agencies, customers and competitors. Let us have a brief discussion on each of these forces one by one:

a)     Suppliers: Suppliers refers to those who supply raw materials or necessary inputs to the firms. If proper quantity, quality of inputs is not supplied within the right time, there might be a halt in the production which might disrupt the smooth flow of production activities. This may in turn will not make the goods available in the market which will encourage the competitors to capture.

b)    Labour Unions: Labour Unions comprises the workforce who are basically engaged in the production process. They are considered vital assets for an organization because its because of these labors the production does happen in any organization. If the labour unions create hindrance in the production, the entire organization is supposed to suffer by not able to make the production happen.

c)     Law and Government (Legal): Every organization be it any form like sole proprietorship, partnership, joint stock company, etc. are suppose to conduct their business activities amidst many hurdles in the form of legal restrictions. If law and order change and poses new challenge, it will have a direct influence on the operation of the business. For example, in 1992, there was a ban of outside companies to work in India which eventually moved Coca-Cola brand out of Indian market.

d)    Customers: Customers are considered king of the market. It’s the customers who can make a business successful. If the customers don’t purchase, to whom will the business sell products? Sometimes the change in customers taste, fashion, makes a profound impact in the sales of an organization. The customers preferences, buying behaviour determines the success of any organization.

e)     Competitors: Competitors are the one because of which the firms need to formulate strategies to fight competition and make a place or position amidst the competitors in the market. Sometimes the competitors are so strong in their products or strategies, that they pose threat to the survival of other firms in the same industry. For example, when Reliance Jio was first launched in the market at a no price, it posed a huge challenge and threat to the existing networks resulting in quick drop of market share.

Indirect Forces: Indirect forces doesn’t have a direct influence on the activities, but more often they go for influencing the activities some way or the other. Hence even those forces need to be monitored and plan accordingly. The indirect forces can be in the form of Technology, Economic Conditions, Socio-Cultural factors, Political and Demographic Factor. Let us have a look at them one by one:

a)     Technology: Technology always goes for upgradation. It is necessary for the firms to keep up to date with the latest technological advancements instead of using obsolete production methods. If not going pace with the latest technology, competitors will come up with products with advanced features and quality at low cost which will ne difficult for us to provide in the existing cost.

b)    Economic Conditions: The phase of business cycle, consumers demand of our product, the economy of our nation, etc, also directly or indirectly influence the profitability or operations of a business. The cost of raw materials or inputs also gets effected if inflation or rise in prices happens because of which the cost of production goes high.

c)     Socio-cultural factors: All organizations operate in certain cultural behaviour of a society because organization does operate in a society. Organization is a sub-system of the large supra-system. The culture of the society, attitude, beliefs, values does affect the business practices of an organization. The organizations need to understand the cultural values and the expectations of the customers and do plan their strategies of marketing and other activities accordingly.

d)    Political Environment: Th political environment also has an impact in the smooth operations of a business. A stable government will help the businesses to conduct their operations without any hindrances or else lots of difficulties might arise in the event of operations.

e)     Demographic factor: Demographic factors like age, income, education, etc also determines the buying behaviour of people. Income will determine the intensity of purchase for luxury products. If the products are for youngsters, then there will be no meaning to market the products in a society with maximum adult population.

These are some of the factors which affects the functioning of an organization. But these are not exhaustive list of forces, any uncertain contingencies might crop up in the future creating a huge impact on the particular organizational functioning.

Various fields of Organizational Behaviour

Organizational Behaviour draws concepts and theories from six fields or disciplines which may be:

1) Psychology.

2) Sociology.

3) Social Psychology.

4) Economics.

5) Anthropology.

6) Political Sciences.

Let us have a brief overview of each one of them one by one:

1.     Psychology:

Psychology has perhaps the first influence on the field of organizational behavior because it is a science of behavior. A psychologist studies almost all aspects of behavior. Psychology deals with studying human behavior that seeks to explain and sometimes change the behavior of humans and other animals.

Psychologists are primarily interested in predicting the behavior of individuals to a great extent by observing the dynamics of personal factors. Those who have contributed and continued to add to the knowledge of OB are teaching theorists, personality theorists, counseling psychologists and primary, industrial and organizational psychologists.

Some of the numerous areas of interest within the disciplines of psychology are:

Understanding Psychological principles and its models help significantly in gaining the knowledge of determinants of individual behavior such as

2.     Sociology:

The major focus of sociologists is on studying the social systems in which individuals fill their roles. The focus is on group dynamics.

They have made their greatest contribution to OB through their study of group behavior in organizations, particularly formal and sophisticated organizations.

Sociological concepts, theories, models, and techniques help significantly to understand better the group dynamics, organizational culture, formal organization theory and structure, corporate technology, bureaucracy, communications, power, conflict, and intergroup behavior.

Psychologists are primarily interested in focusing their attention on individual behavior. A social system is an operational social unit that is structured to serve a purpose. It consists of two or more persons of different status with various roles playing a part in a pattern that is sustained by a physical and cultural base.

When analyzing organizing as a social system, the following elements exist:

Therefore, organizations are viewed by sociologies as consists of a variety of people with different roles, status, and degrees of authority. The organization attempts to achieve certain generalized and specific objectives. To attain some of the abstract ends such as the development of company loyalty, the organization’s leaders appeal to the shared cultural base.

3.     Social Psychology:

It has been defined as the scientific investigation of how the thoughts, feelings, and behavior of individuals are influenced by the actual, imagined or implied the presence of others.

It deals with how people are affected by other individuals who are physically present or who are imagined to be present or even whose presence is implied.

In general, sociology focuses on how groups, organizations, social categories, and societies are organized, how they function, how they change.

The unit of analysis is the group as a whole rather than the individuals who compose the group. Social Psychology deals with many of the same phenomena but seeks to explain whole individual human interaction and human cognition influences culture and is influenced by culture. The unit of analysis is the individual within the group.

In reality, some forms of sociology are closely related to social psychology. Social Psychologists study an enormous range of topics including conformity, persuasion, power, influence, obedience, prejudice, discrimination, stereotyping, sexism and racism, small groups, social categories, inter-group behavior, crowd behavior, social conflict, social change, decision making, etc.

Among them, the most important topics relevant to the organizational behavior field are behavioral change, attitude change, communication, group process, and group decision making.

4.     Anthropology:

The main aim of anthropology is to acquire a better understanding of the relationship between the human being and the environment. Adaptations to surroundings constitute culture. The manner in which people view their surroundings is a part of the culture.

Culture includes those ideas shared by groups of individuals and languages by which these ideas are communicated. In essence, culture is a system of learned behavior. Their work on culture and environment has helped us to understand differences in fundamental values, attitudes, and behavior among people in different countries and within different organizations.

The world is the laboratory of anthropologists, and human beings must be studied in the natural habitat. Understanding the importance of studying man in natural settings over time enables one to grasp the range of anthropology.

Familiarity within some of the cultural differences of employees can lead to greater managerial objectivity and depth in the interpretation of behavior and performance.

Anthropologists contribute to study some aspects of organizational settings – similar values, comparative attitudes, cross-cultural analysis between or among the employees.

5.     Political Sciences:

Contributions of political scientists are significant to the understanding of behavior in organizations. Political scientists study the behavior of individuals and groups within a political environment.

They contribute to understanding the dynamics of power centers, structuring of conflict and conflict resolution tactics, allocation of power and how people manipulate power for individual self-interest. The knowledge of political science can be utilized in the study the behavior of employees, executives at micro as well as macro level.

6.     Economics:

Economics contributes to organizational behavior to a great extent in designing the organizational structure. Transaction cost economics influence the organization and its structure. Transaction costs economics implies cost components to make an exchange on the market.

This transaction cost economics examines the extent to which the organization structure and size of an organization varies in response to attempts to avoid market failures through minimizing production and transaction costs within the constraints of human and environmental factors. Costs of transactions include both costs of market transactions and internal coordination.

A transaction occurs when a good or service is transferred across a ‘technologically separable barrier’ Transaction costs arise for many reasons.

These are the various disciplines from where OB draws concepts and does implement in the understanding of the entire process of consumer buying behaviour.

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