Note for Organizational Behaviour - OB by Deepankar Rout

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UNIT: 01 Definition, scope and importance of OB: Organizational Behavior (OB) can be defined as the understanding, prediction and management of human behavior both individually or in a group that occur within an organization. Internal and external perspectives are the two theories of how organizational behavior can be viewed from an organization’s point of view. In this tutorial, we will be learning in detail about both the theories. Importance of OB While working in an organization, it is very important to understand others behavior as well as make others understand ours. In order to maintain a healthy working environment, we need to adapt to the environment and understand the goals we need to achieve. This can be done easily if we understand the importance of OB. Following points bring out the importance of OB − • • • • • • • • It helps in explaining the interpersonal relationships employees share with each other as well as with their higher and lower subordinates. The prediction of individual behavior can be explained. It balances the cordial relationship in an enterprise by maintaining effective communication. It assists in marketing. It helps managers to encourage their sub-ordinates. Any change within the organization can be made easier. It helps in predicting human behavior & their application to achieve organizational goals. It helps in making the organization more effective. Thus, studying organizational behavior helps in recognizing the patterns of human behavior and in turn throw light on how these patterns profoundly influence the performance of an organization. In a very broad sense, the scope of OB is the extent to which it can govern or influence the operations of an organization. The scope of OB integrates 3 concepts respectively − Individual Behavior It is the study of individual’s personality, learning, attitudes, motivation, and job satisfaction. In this study, we interact with others in order to study about them and make our perception about them. Example − The personal interview round is conducted to interact with candidates to check their skills, apart from those mentioned in the resume. 1

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Inter-individual Behavior It is the study conducted through communication between the employees among themselves as well as their subordinates, understanding people’s leadership qualities, group dynamics, group conflicts, power and politics. Example − A meeting to decide list of new board members. Group Behavior Group behavior studies the formation of organization, structure of organization and effectiveness of organization. The group efforts made towards the achievement of organization’s goal is group behavior. In short, it is the way how a group behaves. Example − Strike, rally etc. Evolution of OB: A large number of people have contributed to the growth of OB as a discipline. The most important ones have been described below: A. Early Theorists Adam Smith’s discussions in the Wealth of nations published in 1776 stated that organizations and society would reap from the division of labor. He concluded that division of labor increased productivity by raising each worker’s skill and dexterity, by saving time otherwise lost in changing tasks. The development of assembly line production process in the early 20th century was obviously stimulated by the economic advantages of work specialization (arising out of division of labor) as stated in the work of Smith. The other significant work which influenced this philosophy was that of the work of Charles Babbage in 1832 titled On the Economy of Machinery and Manufactures. He added the following to Smith’s list of advantages that can be accrued from division of labor: 1. It reduces the time needed to learn a job 2. Reduced wastage of material during the learning process 3. Allowed attainment of increased skill levels 4. Careful match of people’s skills and physical abilities with specific tasks Thus in the writings of these writers the benefits of division of labor were being highlighted where the maximum emphasis was on raising productivity and minimizing wastage of resources and time. Very little consideration was given towards the human elements in the workplace. B. The Classical Era We see this trend to continue in what is called as the classical era which covers the period between 1900 to mid 1930s. the first general theories of management began to evolve and the main contributors during this era were Frederick Taylor, Henri Fayol, Max Weber, Mary parker Follet and Chester Barnard. 2

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Frederick Taylor’s main emphasis was on finding one best way of doing each job. He stressed on selecting the right people for the job, train them to do it precisely in one best way. He favored wage plans to motivate the workers. His scientific principles of management stressed the following principles: 1. Shift all responsibility for the organization of work from the worker to the manager; managers should do all the thinking relating to the planning and design of work, leaving the workers with the task of implementation. 2. Use scientific methods to determine the most efficient way of doing work; assign the worker’s task accordingly, specifying the precise way in which the work is to be done. 3. Select the best person to perform the job thus designed. 4. Train the worker to do the work efficiently. 5. Monitor worker performances to ensure that appropriate work procedures are followed and that appropriate results are achieved. Taylor was one of the first to attempt to systematically analyze human behavior at work. He insisted the use of time-and-motion study as a means of standardizing work activities. His scientific approach called for detailed observation and measurement of even the most routine work, to find the optimum mode of performance. The results were dramatic, with productivity increasing significantly. With passing time, new organizational functions like personnel and quality control were created. Of course, in breaking down each task to its smallest unit to find what Taylor called „„the one best way‟‟ to do each job, the effect was to remove human variability. Hence he lay the ground for the mass production techniques that dominated management thinking in the first half of the twentieth century. Henri Fayol, a mining engineer and manager by profession, defined the nature and working patterns of the twentieth-century organization in his book, General and Industrial Management, published in 1916. In it, he laid down what he called 14 principles of management. This theory is also called the Administrative Theory. The principles of the theory are: 1. Division of work: tasks should be divided up with employees specializing in a limited set of tasks so that expertise is developed and productivity increased. 2. Authority and responsibility: authority is the right to give orders and entails enforcing them with rewards and penalties; authority should be matched with corresponding responsibility. 3. Discipline: this is essential for the smooth running of business and is dependent on good leadership, clear and fair arguments, and the judicious application of penalties. 4. Unity of command: for any action whatsoever, an employee should receive orders from one superior only; otherwise authority, discipline, order, and stability are threatened. 5. Unity of direction: a group of activities concerned with a single objective should be cocoordinated by a single plan under one head. 6. Subordination of individual interest to general interest: individual or group goals must not be allowed to override those of the business. 7. Remuneration of personnel: this may be achieved by various methods but it should be fair, encourage effort, and not lead to overpayment. 8. Centralization: the extent to which orders should be issued only from the top of the organization is a problem which should take into account its characteristics, such as size and the capabilities of the personnel. 3

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9. Scalar chain (line of authority): communications should normally flow up and down the line of authority running from the top to the bottom of the organization, but sideways communication between those of equivalent rank in different departments can be desirable so long as superiors are kept informed. 10. Order: both materials and personnel must always be in their proper place; people must be suited to their posts so there must be careful organization of work and selection of personnel. 11. Equity: personnel must be treated with kindness and justice. 12. Stability of tenure of personnel: rapid turnover of personnel should be avoided because of the time required for the development of expertise. 13. Initiative: all employees should be encouraged to exercise initiative within limits imposed by the requirements of authority and discipline. 14. Esprit de corps: efforts must be made to promote harmony within the organization and prevent dissension and divisiveness. The management functions, that Fayol stated, consisted of planning, organizing, commanding, co-coordinating and controlling. Many practicing managers, even today, list these functions as the core of their activities. Fayol was also one of the first people to characterize a commercial organization’s activities into its basic components. He suggested that organizations could be sub-divided into six main areas of activity: 1. Technical 2. Commercial 3. Financial 4. Security 5. Accounting 6. Management. In defining the core principles governing how organizations worked and the contribution of management to that process, Fayol laid down a blueprint that has shaped organization thinking for almost a century. Max Weber developed a theory based on authority relations and was the pioneer in looking at management and OB from a structural viewpoint. His theory is also known as bureaucratic theory in management. He described ideal types of organization and called it a bureaucracy. This was a system marked by division of labor, a clearly defined hierarchy, detailed rules and regulations and impersonal relationships. He wanted this ideal types construct to be taken as a basis for creating organizations in real world. The detailed features of Weber’s ideal bureaucratic structure are a follows: 1. Jurisdictional areas are clearly specified, activities are distributed as official duties (unlike traditional form where duties delegated by leader and changed at any time). 2. Organization follows hierarchical principle -- subordinates follow orders or superiors, but have right of appeal (in contrast to more diffuse structure in traditional authority). 3. Intention, abstract rules govern decisions and actions. Rules are stable, exhaustive, and can be learned. Decisions are recorded in permanent files (in traditional forms few explicit rules or written records). 4. Means of production or administration belong to office. Personal property separated from office property. 4