Organizational Behaviour PDF

Content Organizational Behaviour
CONTENTS
Chapter No Chapter Name Page No
1 Management Process ........................................................................3
2 Introduction to Organization Behaviour ...........................................14
3 Changing Context ..............................................................................32
4 Social, Culture and Organisation ......................................................46
5 Perception.........................................................................................55
6 Personality Traits and Measuring Personality ..................................73
7 Work Motivation...............................................................................87
8 Work Group and Teams ..................................................................104
9 Power, Politics and Conflict ............................................................119
10 Leadership.......................................................................................129
11 Learning Organisation .....................................................................147
12 Change Management......................................................................154
13 Future Organisational Design .........................................................166
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Organizational Behaviour Management Process
CHAPTER 1
MANAGEMENT PROCESS
Learning Objectives:
1.1 Definition of management
1.2 Objectives of Management
1.3 Scope of Management
1.4 Human Relations and Management
1.1 Management: Definition, objective and scope

Managers influence all the phases of modern organizations. Sales Managers maintain
a sales force that markets goods. Personnel managers provide organizations with a
competent and productive workforce. Plant managers run manufacturing operations
that produce the clothes we wear, the food we eat, and the automobiles we drive.
Our society could never exist as we know it today nor improve without a steady
stream of managers to guide its organizations. The well-known management author
Peter Drucker highlighted this point when he said that Effective Management is
probably the main resource of developed countries and the most needed resource of
developing ones.
The term ‘management’ has been used in different senses. Sometimes it refers to the
process of planning, organizing, staffing, directing, coordinating and controlling, at
other times it is used to describe it as a function of managing people. It is also referred
to as a body of knowledge, a practice and discipline.
Meaning and Definitions of management

Management is very important for any organization without proper management you
cannot achieve the required objectives. It is an important force which coordinate the
individual efforts. Anyhow, it is a controlling force in case of business, country or even
for a family. Management is an inevitable element for directing and unifying the group
efforts towards a common objective. Since the most of the human aims can be well
realized only through collective action, management is universally called for in all such
organizations of the society.
In short, management is not merely the task of managing the business. But it is an
essential accompaniment of all social organizations and is to be found everywhere as
a distinct and dominant activity.
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Management Process Organizational Behaviour
It can be defined in the following words:

Definition of Management: - "Management is a process of coordinating the resources
to meet the objectives."
Business Management: - "Business activity which directs and controls the organization
and operations of a business enterprise is called Business Management."
Manager: - "The person who controls the overall activities of the business, a firm or a
department is known as manager."
In other words, management functions have universal application. While describing
the pivotal role of management in the social history, Drucker rightly remarked that
Management which is the organ of society specially charged with making resources
productive that is with the responsibility for organized economic advance, therefore
reflects the basic spirit of the modern age.
With the growth of industry and commerce and the separation of ownership from
control, management has become more or less a profession.
Management, today, consists of a cadre of professionalisms and is concerned not only
with the initial formation of the enterprise but also with the problems of adapting,
expanding or contracting the firm whenever changing economic conditions and
environmental influences require such action.
It provides new ideas, imaginations and visions to the group working so as to account
for better results or performances. It ensures a smooth flow of work in the
organization by focusing on strong points, neutralizing weak links, overcoming
difficulties and establishing team spirit.
Thus management, as Drucker says is the life giving dynamic element in every
business.
There is not a single generally accepted definition for the term management.
However, eminent authors have made an attempt to formulate a suitable definition
for the term management. But none of them can be regarded as a generally accepted
definition.
There are more differences of opinion as some writers stress the directing of human
activities while others emphasis the earning of maximum profits. Since the evolution
of management thinking has passed three distinct phases, differences of opinions are
bound to exist.
Now we shall proceed to discuss some of the definitions formulated by eminent
thinkers in the subject of management science.
Definition of Louis A. Allen
Management is what a manager does.
Definition of Henry Fayol:
To manage is to forecast and plan, to organize, to command, to coordinate and to
control.
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Definition of Harold Koontz

“Management is the art of getting things done through and with people in formally
organized groups.”
Definition of F.N. Taylor:
Management is the art of knowing what you want to do…. in the best and cheapest
way.
The definition for management is more comprehensive and much wider in its scope.
From the definitions referred above, it is clear that management is getting things done
through the efforts of other people.
In other words, it refers to the technique of extracting work from others in an
integrated manner for reaching the specific objectives of the business.
Role of Management
In any organizational unit, whether it is a company or a section in a company, the
manager stands between his organization and its environments.
Today, the society has become very complex and a change in one part generates
changes in other parts. Changing technology has created complexities which call for
improved managerial practices. The age of specialization poses problems of
coordination and the job of the manager becomes more complicated and magnified.
Business has also become more complicated on account of increased Government
control.
Further, there is a continuous change in the social structure and we always live in a
period of accelerating change which is reflected in both tangible and intangible forms.
Tangible changes are concerned with changes in technology, size of organization,
specialization of work and theories which affect the society. Intangible changes such
as changes in attitude, human values, culture, etc., provide shock to the society. More
the complexity and changes in the society, more urgent is the need of management.
Contribution of Management to Society

The management contributes in the following ways to a complex society:
1. It tries to make effective utilization of resources,
2. It develops various resources,
3. It balances the pressures from various interest groups,
4 It provides stability in the society by changing and modifying the resources as per
the changing environment of the society, and
5. It provides integration between traditions and new inventions and protects the
society from the mal-effects of inventions so that continuity in the social process
may be maintained.
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1.2 Objectives of Management

Organisational Objectives: Management is responsible for setting and achieving
objectives for the organisation. The main objective of any organization should be to
utilize
human and material resources to the maximum possible advantage, i.e., to fulfill the
economic objectives of a business.
 Survival: The basic objective of any business is survival. In order to survive, an
organization must earn enough revenues to cover costs by ensuring maximum
output with minimum costs.
 Profit: Management has to ensure that the organization makes a profit through
optimum utilization of resources and making the return on investment certain.
 Growth: To remain in the industry, management must exploit fully the growth
potential of the organization. There are many indicators of growth such as sales
volume, increase in the of employee count, the number of products or the
increase in capital investment, goodwill and prosperity.
Social Objectives: As a part of society, every organisation whether it is business or

non-business, has a social obligation to fulfill which is to consistently create economic
value for various constituents of society. This includes:
 To arrange for preservation of natural resources and environment through
environmental friendly methods of production.
 Giving employment opportunities to the disadvantaged sections of society.
 To supply goods and render services of proper quality at a fair price to the
customers.
 To pay the Government tax in right time.
 To maintain the ethical values of the managers themselves in their day to day
work
Individual Objectives: Organization consists of different types of individual who joins

it to satisfy their diverse needs. Management has to reconcile personal goals with
organisational objectives for harmony in the organisation. Main individual objectives
of management are as follows:
 Ensure sufficient amount of dividend for the owners of the enterprise.
 Arrange for adequate remuneration of the employees and security of their jobs.
 Create good work environment
 Arrange for proper training and development of the employees.
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Importance of Management
The significance of ‘Management’ may be enumerated in the following paragraphs:
1. Meeting the Challenge of Change
Challenge of change has become intense and critical in recent years. The
complexities of modern business can be overcome only through scientific
management.
2. Effective Utilization of the Seven M’s

There are seven M’s in business, such as Men, Materials, Money, Machines,
Methods, Markets and Management. Management stands at the top of all these
M’s and determines and controls all other factors of business.
3. Directs the Organization

Just as the mind which directs and controls the body to fulfill its desires,
management also directs and controls the organization to achieve the desired
goal
4. Integrates Various Interests

In the group efforts, there are various interest groups which put pressure over
other groups for maximum share in the final output. Management by balancing
these pressures integrates the various interests.
5. Provides Stability
It provides stability in the society by changing and modifying the resources to cope
up with the demanding needs of every changing environment of the society.
6. Provides Innovation
Management provides new ideas, imaginations and visions to the organization
and necessary life for better and greater performance.
7. Establishes Team-spirit
Management coordinates the activities of the various departments in an
organization and establishes team-spirit among the personnel.
8. Tackles Business Problems

Good management serves as a friend, philosopher and guide in tackling business
problems. It provides a tool for the best way of doing a task.
9. Acts as a Tool of Personality Development

Management is not the direction of things, but the development of men. It makes
the personality of the people. Management strives to improve quality, efficiency
and productivity.
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1.3 Scope of management

A manager gets things done by working with people and other resources in order to
achieve an objective. The sum total of managerial functions is known as management
process.
1. Planning: Planning is deciding in advance what is to be done and the method of
doing it in an orderly way. It clarifies the objectives and evolves a complete set of
policies, programmes and procedures. Planning includes some amount of
forecasting and decision making. Forecasting is the process of assessing future
and providing for expansion and development in future.
2. Organising: Organising means the creation of a structure of functions and duties
to be performed by a group of people to attain the goals of an enterprise. The
organization structure consists of a series of relationships at all levels of authority
through the division of total work. Different departments are established and
responsibilities are allocated to the separate managers for supervising them.
3. Staffing: Staffing means the activities of regular employment of working
personnel and dealing with all matters relating to the personnel. It includes filling
up of posts by recruitment, selection and appointment of the proper personnel
regularly, fixing up their wages and salaries. It primarily deals with manpower
management and is always concerned with the effective utilization of human
resources.
4. Command: Command is the starting signal or order which moves the staff into
operational activities. By executing command function, the manager serves as a
leader of the enterprise.
5. Direction: Working personnel start their work on command, but wait for direction
of the manager as to how they will accomplish their work. Direction is the work
of guiding and supervising subordinates. It includes necessary instructions for
work performance. Direction should be precise, clear and acceptable. It should be
understood, received and respected.
6. Motivation: It creates the willingness in the personnel to work and work for the
accomplishment of common purposes. It is the force that inspires a man to put
his best for the fulfilment of his assigned task. It is a powerful tool in the hands of
the managers to develop a desire in every member of the organization to work
effectively for achieving the established goals.
7. Co-ordination: It involves unification and integration of group efforts. It is the
orderly arrangement of group efforts to provide unity of action in the pursuit of a
common purpose. It maintains a balance between different activities of an
enterprise and helps running it smoothly.
8. Control: Control is to see that the performances are matched with the plans. It is
the ultimate weapon in the hands of the managerial force to remove mistakes or
faults, to modify defective plans, and to effect, and to effect co-ordination of
diverse elements where it is lacking.
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Limitations of Management
Like other social sciences, management is also subject to certain limitations. They are
as follows:
1. Management techniques and policies should be adjusted according to specific
circumstances. One principle may be good for one enterprise, but it may not be
suitable for another enterprise. Likewise, a technique may be extremely useful in
England, but it may be unworkable in India.
2. Principles of management are not static in nature. The concepts about
management changes with the development of science and technology. New
ideas are innovated, new products being put on the market, new likes and dislikes
are developing every year. So what was successful in 2015 may lead to failure in
2016. Thus, a great deal of adjustment is to be done to cope with the changing
times.
3. Management is concerned with human element in an organization. Different
groups and different persons even in the same group, behave differently under
different circumstances. This human aspect of management provides the greater
challenge to its scientific treatment.
1.4 Human Relations and Management

In the ancient civilizations, there are instances of the application of the principles of
management. The leadership was reflected in homes, clubs, games, churches and
other social and political organisations. With the onset of Industrial Revolution, the
structure of industry became complex. The expanding industries and the complexities
of human relationship posed a serious challenge in the task of management. At this
stage the development of a formal theory of management was indeed necessary. This
situation led the theorists to make a thorough analysis of the problems and come up
with theories for management for effective and easy work performance.
Different schools of management thought and the contributions made by the
pioneers are discussed below:
 Scientific management School: Frederick Winslow Taylor popularly known as
‘Father of Scientific Management Movement’ was the first to recognize and
emphasize the need for adopting a systematic scientific approach to the task of
managing an enterprise. With a background in mechanical engineering, Taylor
was very interested in efficiency. While advancing his career at a U.S. steel
manufacturer, he designed workplace experiments to determine optimal
performance levels. This resulted in activity analyses, time studies and
methodology studies, the start of Taylorism. he found that by calculating the time
needed for the various elements of a task, he could develop the "best" way to
complete that task. Working in the steel industry he had observed the
phenomenon of soldiering by workers, i.e. working purposely below their
capacity. Taylor argued that even the most basic tasks could be planned in such a
way that it would dramatically increase the productivity. Taking what he learned
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from these workplace experiments, Taylor developed four principles of scientific

management. These principles are also known simply as "Taylorism".
Four Principles of Scientific Management
 Replace working by "rule of thumb," or simple habit and common sense and
instead use the scientific method to study work and determine the most efficient
way to perform specific tasks.
 Rather than simply assign workers to just any job, match workers to their jobs
based on capability and motivation, and train them to work at maximum
efficiency.
 Monitor worker performance, and provide instructions and supervision to ensure
that they're using the most efficient ways of working.
 Allocate the work between managers and workers so that the managers spend
their time planning and training, allowing the workers to perform their tasks
efficiently.
He published many papers and books and all his contributions were compiled in
his book ‘The Principles of Scientific Management’. Taylor’s ideas on scientific
management were greatly expanded by H.S. Pearson, Henry L. Gantt, Lillian
Gilbreth, Harrington Emerson and M.L. Cooke.
 Management Process School: This school considers management as a process of
getting things done by people who operate in the organization. The management
process can be divided in five broad functions such as: planning, organizing,
staffing, directing and controlling. It seeks to analyze the nature, purpose,
structure and the underlying process of each of these functions. Henry Fayol is
the father of this school of thought. The other scholars associated with this school
are J.D. Mooray, A. C. Railay, Lyndall, Urwick, Harold Koontz, McFarland. These
scholars evolved certain principles having universal applicability. These principles
are equally applicable to all types of organizations, business, government or any
other organization. The features of management process are:
(i) Management is what management does. It is the study of functions of
managers.
(ii) The functions of managers are the same in all types of organizations.
(iii) The experiences of managing help us in distilling the principles. These can be
improved upon by applying them.
(iii) Principles provide useful theory of management.
(iv) The functions of management i.e. planning, organizing, staffing, directing and
controlling are the core functions of management.
(v) Management principles have universal application.
 Human Relations School: The immediate period after World War Two saw a
different approach in organisational studies. Until that time, there was only talk
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of Scientific Management, which mainly focused on productivity, efficient division

of labour and workers as an extension of machinery.1950 saw a change to this
discourse with the introduction of the Human Relations Theory.
The Hawthorne Experiment
Elton Mayo is considered the founder of the Human Relations Theory. Prior to this
trend, Elton Mayo already started an experiment in the Hawthorne plants in 1924;
the Hawthorne experiment. There was a great deal of discontent among the
30,000 workers in the Hawthorne plants in Chicago in the early twenties of the
last century. This was somewhat peculiar, because this phone parts plant already
acted extremely progressively towards its workers (through pensions and sickness
benefits), something which was almost unthinkable in this period. Elton Mayo and
his assistants, including Fritz Roetlishberger, conducted research into changing
working conditions.
They experimented with light, duration of breaks and working hours. A group of
women were exposed to either more or less light. It turned out that, regardless
of the amount and duration of lighting, this had a positive effect on their
performances. The same was true for rest periods; shorter or longer breaks both
led to an increase in labour productivity.
The conclusion drawn from the Hawthorne research was that giving attention to
employees resulted in improved performances.
Thus he concluded:
(a) Individual employees must be seen as members of a group;
(b) Salary and good working conditions are less important for employees and a
sense of belonging to a group;
(c) Informal groups in the workplace have a strong influence on the behaviour of
employees in said group;
(d) Managers must take social needs, such as belonging to an (informal) group,
seriously.
 Human Behavioural School: This theory relies on the notion that managers will
better understand the human aspect to workers and treat employees as
important assets to achieve goals. Mental reactions like emotions, feelings, aims,
instincts, hopes and desires regulate a man’s behaviour or conduct. As a result of
the experiments, observations and researches of many psychologists and
sociologists and after the Hawthorne Experiment, ‘Human Behaviour
Management Thought’ was evolved out. In this context, the contribution of Mary
Parker Follet, is particularly worth mentioning. Other eminent propagators of this
school are A.F.Maslow, F.H. Herzberg, McGregor and Keith Davis.
 System Approach School: System approach considers the organisation as a
dynamic and inter-related set of parts. Each part represents a department or a
sub-system. Each department has its sub-system. Continuous and effective
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interaction of sub-systems helps to attain goals of the larger system. Thus, every
sub-system is a system and has sub-systems which together make an organisation
a set of mutually dependent parts and their sub-parts. Organisations constantly
respond to changes in the internal and external environmental conditions. They
also act as market leaders in the dynamic, competitive environment. The major
contributors to this school are Kenneth, Boulding, Johnson, Katz and Kahn and
C.W. Churchman.
 Decision Theory School: The Decision Theory of management led by Herbart
Simon looks management process as a decision making process. Whatever a
manager does, he does through making decisions. Hence, decision making is
central to managing. Simon developed the administrative model of decision
making which describes how decisions are actually made. Managers are often
faced with uncertainty and non-programmed decision making situation. The
manager who seeks to take logical and rationale approach to decision can follow
the following six steps:
(1) Recognize and define the decision situation.
(2) Identify appropriate alternatives.
(3) Evaluate each alternative.
(4) Select the best alternative.
(5) Implement the alternative, and
(6) Evaluate the results and follow up.
 Mathematical or Quantitative School: According to R.M. Hodgetts, “The
Quantitative School, which is also called Management Science School, consists of
those theorists who see management as a body of quantitative tools and
methodologies designed to aid today’s manager in making the complex decisions
related to operations and productions.” Management science also known as
operations research uses mathematical models such as linear programming,
PERT, CPM, games theory, probability, sampling theory, capital budgeting,
financial structure theories and symbols to solve organisational problems.
Whenever management has a problem, it calls a team of experts from relevant
disciplines which analyses business problems and frames a mathematical model
by collecting the relevant data (like cost of machine, cost of raw material, selling
price of the product etc.) and tries to maximise the output and minimise the cost,
Computers have simplified application of these models to deal with various
problem-solving situations. The eminent theorists in this context are L. Ackoff,
C.W Churchman, Newman, Hicks and Joel Dean.
 Contingency Approach School of Management: The contingency approach to
management is based on the idea that there is no single best way to manage.
According to this approach, management is a subject that is situational by nature.
Effective organizations must tailor their planning, organizing, leading, and
controlling to their particular circumstances. The contingency approach to
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management assumes that there is no universal answer to many questions

because organizations, people, and situations vary and change over time. Thus,
the right thing to do depends on a complex variety of critical environmental and
internal contingencies. Contingency theorists suggest that the systems approach
does not adequately spell out the precise relationship between the organisation
and the environment.
Modern management has evolved through different stages with the change of time and
gradual evolution of civilization. Management has been recognized as one of the elements of
production and universal process in the twentieth century. Different theories have been built
up centring around the thoughts, concepts, approaches expressed at different times by various
management thinkers.
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Introduction to Organization Behaviour Organizational Behaviour
CHAPTER 2
INTRODUCTION TO ORGANIZATION
BEHAVIOUR
Learning Objective:
2.1 Understanding Organizational Behavior
2.2 Why we study Organization Behavior?
2.3 Emerging issues of organizational behavior
2.4 Dynamics of Organizational life
2.1 Interdisciplinary Function of Organizational Behavior

Most of us would have been a part of an organization and if not a business
organization, at least that of a school. We would also have observed at least small
business organizations such as a shop in the neighborhood, a small factory, etc. Why
and how do they work is perhaps something that has never crossed our mind and we
take the organization for granted. We must also have seen some organizations or
business thrive and become larger and larger, some remain the same for a long time,
and some die. When we become professional managers, we have to have a more
intimate knowledge of this so that we can ensure or help in making the organization
in which we work more effective and enable it to grow.
We shall now define an organization is a social system of people who are structured
and managed to meet some goals.
Organizational Behavior (OB), is an interdisciplinary field dedicated to the better
understanding and managing of people at work. OB has replaced most other terms
because it focuses on behavior that results in productivity and all organizations are
about productivity. The study of human behavior, attitudes and performance in
organizations and also what people think, feel, and do, in and around organizations.
OB researchers systematically study individuals, teams, and structural characteristics
that influence behaviors within organizations.
Adam Smith advocated a new form of organizational structure based on division of
labor, the German sociologist Max Weber wrote about rational organizations and
initiated discussions on charismatic leadership. Soon after, Frederick W. Taylor
introduced the systematic use of goal setting and rewards to motivate employees. In
the 1920s, productivity studies at Western Electric’s Hawthorne plant reported that
an informal organization-that is, an organization where employees casually interact
with each other-operates alongside the formal organization.
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Organizational Behaviour Introduction to Organization Behaviour
OB is interdisciplinary in approach. It draws heavily from other disciplines like

psychology, sociology and anthropology. It also draws from economics, political
science, law and history and integrates the relevant aspects. It integrates the relevant
contents of these discipline to make them applicable for organizational analysis. For
example, it addresses issues of workplace motivation or conflict which are oriented
towards organizational objectives.
Organizational behavior is an applied behavioral science that is built upon
contributions from a number of behavioral disciplines. The main areas are psychology,
sociology, social psychology, anthropology, and political science.
Psychology
Psychology is the science that attempts to measure, explain, and at times change the
behavior of humans and other animals. Early industrial/organizational psychologists
were concerned with problems of fatigue, boredom, and other factors relevant to
working conditions that could disrupt/ impede efficient work performance. More
recently, their contributions have been expanded to include learning, perception,
personality, emotions, training, leadership effectiveness, needs and motivational
forces, job satisfaction, decision making processes, performance appraisals, attitude
measurement, employee selection techniques, work design, and job stress.
Sociology
Sociologists study the social system in which individuals fill their roles; that is,
sociology studies people in relation to their fellow human beings. Their significant
contribution to OB is through their study of group behavior in organizations,
particularly formal and complex organizations.
Social Psychology
Social psychology blends the concepts of psychology and sociology. It focuses on the
influence of people on one another. The major challenge deals with the issue of how
to implement it and how to reduce barriers to its acceptance.
Anthropology
Anthropology is the study of societies to learn about human beings and their activities.
Anthropologists work on cultures and environments; for example, they have aided in
understanding differences in fundamental values, attitudes, and behavior among
people in different countries and within different organizations.
Political Science
Political science studies the behavior of individuals and groups within a political
environment. It focuses on areas, such as, conflict, intra-organizational politics and
power.
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Exhibit 2.1 Interdisciplinary Function
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2.2 Relevance of Organizational Behavior

Organizational behavior refers to the study of individual, group performance, and
activity within an organization. It is an attempt to create the business organization in
a creative manner. It helps to provide an understanding to examine the factors that
are necessary to create an effective organization.
Exhibit 2.2 Importance of Organizational Behavior
It is very important to study the Organizational behavior. It gives the direction to an

organization and also helps to understand the organizational life. Let’s discuss the
importance of Organizational behavior:
Skill development
Helps to develop the skills of the employees and gain of knowledge to enhance the
performance of the employees. Employees should remain up to date with new
technology and use existing one in a better way. Training also improves the required
skills of the employees and teach them to perform the tasks independently.
Understanding customer behavior

The behavior of the customer helps the organization to decide what products and
services to be offered. When an organization builds a strong connection with the
customer, an organization will get an idea about the customer needs. For
understanding the customer behavior, the organization must conduct surveys and
one on one interviews.
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Employee Motivation
Motivating your employees is not a big task. In fact, it schedules to have a
conversation with them. It is the level of energy, commitment and the creativity that
helps the organization. Use employee reviews on a regular basis to discuss the
improvements.
Goals of Organizational behavior

Every organization uses a structure that will help to promote the business
performance. The organization guru Drucker has identified 8 key elements which will
explain the goals of organization behavior briefly. The elements are:
Innovation
Innovation means the positive change in the implementation of organization by
providing the relevant solutions to the customers or full fill their needs in the unique
ways.
Productivity
Productivity is “anything that makes an organization function better.” It is one of the
most important goal, i.e. to produce the large output with small inputs. It requires the
active participation between the employer and employee on a regular basis.
Development and the management performance

Management training is important because it is the key to organizational success.
Most of the activities within the company are organized for the development of an
employee and organization. Some companies provide special training programs to the
managers. IBM organizes 15 days training management program every year.
Exhibit 2.3 Models of organizational behavior
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Autocratic
This model depends on power. Power is given to the employees those who complete
their task on time. The penalty is charged for not completing the task on time. Those
who are in command have the power to say “you do it or else.”
 Depends on power
 Employees result is depended on the boss
 Employee need is subsistence
 Performance result is minimal
Custodial
This model depends upon economic resources. The employees are oriented towards
the benefits, security and depend upon the organization. In this, employees won’t
work as a team.
 Depends on economic resource
 Employee orientation is security and benefit
 Employees are self-dependent
 Performance result is passive cooperation
Supportive
This model depends on leadership. Managers motivate their employees to perform
better. They spend time with their employees in order to understand them in a better
way.
 Depends on leadership
 Employee orientation is security and benefit
 Employee result in participation
 Employee needs status and recognition
Collegial
In this model, employees are dependent on each other and work as team
management.
 Depends upon partnership
 Employee orientation is responsible behavior
 Employee needs is self-actualization
 Performance result is moderate enthusiasm
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System
This model is based on the performance and on the trust factor. It reflects the values
where managers focus their attention to help the employees by developing the
feelings of hope and courage.
 Depends upon trust and understanding
 Employee orientation is ownership
 Employee result is self-motivation
 Performance result is passion and organizational goal
Relation of models to human needs

 These five models are related to human needs
 Each model performance is connected with each other
Exhibit 2.4 List of organizational behavior concepts
The main concepts of organizational behavior are: -

 The nature of the people
 The nature of organization
The nature of the people includes

Individual differences
Individual difference is the reality that makes every individual different from another
individual. The difference can take place in many ways for example likes, dislikes,
physical appearance, interest, etc.
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Example- Manager should not judge anyone apart from their work, and all the
employees should be equally treated.
Perception
Perception tells about their behavior in the organization. It helps in noticing the
information and categorizing this information. After categorizing apply this
information within the framework.
Example- Rohit thinks that late night parties will spoil the youth. Whereas, Neha thinks
that late night parties are a way of making new friends. Here you can see that both
Rohit and Neha both have different perception about night parties.
Motivational behavior
It is the force which helps the employees to achieve the goals. Managers should apply
motivational techniques to help the employees in achieving the desired goals.
The motivational behavior approaches are:

Intrinsic Approach
In this, the employees enjoy their work. Employees enjoy their job’s challenges
because they get personal satisfaction out of it.
Extrinsic Approach
In this, employees participate in an activity for reward. These rewards are the benefits
which are provided to the workers in return for work.
Values
Employees should be valued and appreciated for their skills. So, it is important to pay
attention and actively look for the opportunity to reward all the employees.
Nature of organization
Organizations include different types of activities to achieve organizational goals and
objectives. In an organization, work is assigned to every individual according to their
skills and efficiency.
The nature of organization includes-

Social System
It is a system in which human interaction takes place in different ways. A system which
interacts with the surrounding.
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Types of social system

Formal
 Organization, in which the job of each employee is clearly defined.
 Focuses on work experience
 Purpose is to fulfill the ultimate objectives of the organization
 Example- Success party after getting a job
Informal
Organization formed within the formal organization as network of relationship. In this
people interact with each other.
 Focuses on personal relationships
 Purpose is to satisfy their social and psychological needs
 Example- Birthday party
Mutual Interest
It is a coordination which takes place between the organization and employees. Every
organization needs employees or vice-versa. So, it’s a mutual understanding between
organization and employees, that helps the organization to achieve respective goals
and objectives.
Morals and Ethics

They are the principles concerned with group, individual and organization. Leaders
use ethics in an organization to manage employees. Leaders use code of ethics to
determine discipline procedures and acceptable behavior for all workers in
organization.
Benefits of observational behavior

The study of observational behavior is beneficial in many ways
 It encourages the social interaction within them
 Helps in improving the functional behavior within the organization. Helps in
achieving the higher productivity.
 Helps in motivating the people in the organization
 Observation behavior implies the effective management of human resources
 Observation behavior delivers the job satisfaction to employees and creates the
positive environment in the organization.
 Observational behavior develops the interaction between the individual and
organization.
 It maintains the relationships between the individual and organizational
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Why study Organizational behavior

Study of observational behavior is important to understand how to build and maintain
a strong and cooperative work force. It is not only important for the organization but
also for the students and manager’s perspective also. Managers in the organization
have different and important roles. That’s why manager must have organization skills
to run the department smoothly.
Time Management
Time Management helps the managers to establish department goals and determine
the objectives to reach those goals on deadline. There are “Three Ps” for the effective
time management. They are planning, and procrastination with the help of these
three Ps. Managers can divide their task. The “to-do list” is also important to keep the
records and to priorities the task accordingly. He must ensure that goal has been
achieved efficiently to the business standards.
Professional development
The managers should maintain a professional decorum between his staff and himself.
The rules and regulators should be the same for everyone. The manager should
interact with employees on a regular basis to provide the feedback to help them. He
must be aware of his responsibilities.
Communicate with executive leadership

There should be a regular communication between the managers and employees.
Managers should have the learning skills in order to see career progression with the
company. Communication will also help the organization to convey the status and
contribution made to an overall business.
Importance of organizational behavior in management

Organizational behavior provides solutions as well the challenges which are faced by
organizations. The importance is:
 Organizations are mix of people in terms of age, gender and race etc. Managers
have to deal with the groups and the employees belongs to the different cultures.
They have to exercise control and channelize the behavior in each direction.
 Organizations behavior helps in better management as it helps in improving the
skills.
 Organizational behavior helps the management to become flexible and enable to
execute the organization on global scale.
 Management has to ensure that employees do everything to satisfy the customer
needs.
 Management has to effectively deal with work force by promoting its awareness.
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2.3 Emerging Issues of Organizational Behavior

Nudge is a concept in behavioral science, political theory and behavioral economics
which proposes positive reinforcement and indirect suggestions as ways to influence
the behavior and decision making of groups or individuals. Nudging contrasts with
other ways to achieve compliance, such as education, legislation or enforcement.
The concept is a relatively subtle policy shift that encourages people to make decisions
that are in their broad self-interest. It’s not about penalizing people financially if they
don’t act in certain way. It’s about making it easier for them to make a certain
decision.
“By knowing how people think, we can make it easier for them to choose what is best
for them, their families and society,” wrote Richard Thaler and Cass Sunstein in their
book Nudge, which was published in 2008.
For example,
A good recent example can be found in UK pension policy.
In order to increase worryingly low pension saving rates among private sector workers
the Government mandated employers to establish an “automatic enrolment” scheme
in 2012.
This meant that workers would be automatically placed into a firm’s scheme, and
contributions would be deducted from their pay packet, unless they formally
requested to be exempted.
The theory was that many people actually wanted to put more money aside for
retirement but they were put off from doing so by the need to make what they feared
would be complicated decisions.
The idea was that auto enrolment would make saving the default for employees, and
thus make it easier for them to do what they really wanted to do and push up savings
rates.
Nudge theory
Nudge theory is a flexible and modern concept for:
 understanding of how people think, make decisions, and behave,
 helping people improve their thinking and decisions,
 managing change of all sorts, and
 identifying and modifying existing unhelpful influences on people.
Nudge theory can also be used to explore, understand, and explain existing influences
on how people behave, especially influences which are unhelpful, with a view to
removing or altering them. There are lots of these unhelpful 'nudges' everywhere -
notably in advertising and government; some accidental, etc. etc.
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2.4 Dynamics of Organization Life

The Roles by Mintzberg
Mintzberg published his Ten Management Roles in his book, "Mintzberg on
Management in 1990.
The ten roles are:
1. Figurehead.
2. Leader.
3. Liaison.
4. Monitor.
5. Disseminator.
6. Spokesperson.
7. Entrepreneur.
8. Disturbance Handler.
9. Resource Allocator.
10. Negotiator.
The 10 roles are then divided up into three categories, as follows:
Category Roles
Figurehead
Interpersonal Leader
Liaison
Monitor
Informational Disseminator
Spokesperson
Entrepreneur
Disturbance Handler
Decisional
Resource Allocator
Negotiator
Let's look at each of the ten managerial roles in greater detail.
Interpersonal Category
The managerial roles in this category involve providing information and ideas.
1. Figurehead – As a manager, you have social, ceremonial and legal responsibilities.
You're expected to be a source of inspiration. People look up to you as a person
with authority, and as a figurehead.
2. Leader – This is where you provide leadership for your team, your department or
perhaps your entire organization; and it's where you manage the performance
and responsibilities of everyone in the group.
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3. Liaison – Managers must communicate with internal and external contacts. You
need to be able to network effectively on behalf of your organization.
Informational Category
The managerial roles in this category involve processing information.
4. Monitor – In this role, you regularly seek out information related to your
organization and industry, looking for relevant changes in the environment. You
also monitor your team, in terms of both their productivity, and their well-being.
5. Disseminator – This is where you communicate potentially useful information to
your colleagues and your team.
6. Spokesperson – Managers represent and speak for their organization. In this role,
you're responsible for transmitting information about your organization and its
goals to the people outside it.
Decisional Category
The managerial roles in this category involve using information.
7. Entrepreneur – As a manager, you create and control change within the
organization. This means solving problems, generating new ideas, and
implementing them.
8. Disturbance Handler – When an organization or team hits an unexpected
roadblock, it's the manager who must take charge. You also need to help mediate
disputes within it.
9. Resource Allocator – You'll also need to determine where organizational
resources are best applied. This involves allocating funding, as well as assigning
staff and other organizational resources.
10. Negotiator – You may be needed to take part in, and direct, important
negotiations within your team, department, or organization.
Applying the Model
You can use Mintzberg's 10 Management Roles model as a frame of reference when
you're thinking about developing your own skills and knowledge. (This includes
developing yourself in areas that you consciously or unconsciously shy away from.)
Once you've identified your weak areas, use the following resources to start
improving your abilities in each role.
Figurehead
Figureheads represent their teams. If you need to improve or build confidence in this
area, start with your image, behavior, and reputation . Cultivate humility and
empathy, learn how to set a good example at work , and think about how to be a
good role model .
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Leader
This is the role you probably spend most of your time fulfilling. To improve here, start
by taking our quiz, How Good Are Your Leadership Skills? This will give you a
thorough understanding of your current abilities.
Next, learn how to be an authentic leader , so your team will respect you. Also, focus
on improving your emotional intelligence – this is an important skill for being an
effective leader.
Liaison
To improve your liaison skills, work on your professional networking techniques. You
may also like to take our Bite-Sized Training course on Networking Skills.
Monitor
To improve here, learn how to gather information effectively and overcome
information overload . Also, use effective reading strategies , so that you can process
material quickly and thoroughly, and learn how to keep up-to-date with industry
news .
Disseminator
To be a good disseminator you need to know how to share information and outside
views effectively, which means that good communication skills are vital.
Learn how to share organizational information with Team Briefings . Next, focus on
improving your writing skills . You might also want to take our communication skills
quiz , to find out where else you can improve.
Spokesperson
To be effective in this role, make sure that you know how to represent your
organization at a conference . You may also want to read our articles on delivering
great presentations and working with the media (if applicable to your role).
Entrepreneur
To improve here, build on your change management skills, and learn what not to do
when implementing change in your organization. You'll also need to work on
your problem solving and creativity skills , so that you can come up with new ideas,
and implement them successfully.
Disturbance Handler
In this role, you need to excel at conflict resolution and know how to handle team
conflict . It's also helpful to be able to manage emotion in your team .
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Resource Allocator
To improve as a resource allocator, learn how to manage a budget , cut costs ,
and prioritize , so that you can make the best use of your resources. You can also
use VRIO Analysis to learn how to get the best results from the resources available
to you.
Negotiator
Improve your negotiation skills by learning about Win-Win Negotiation and
Distributive Bargaining .
You might also want to read our article on role-playing – this technique can help you
prepare for difficult negotiations.
Information? This will help you decide which areas to work on first.
Management Skills
Types of Management Skills
According to American social and organizational psychologist Robert Katz, the three
basic types of management skills include:
Exhibit 2.5 Management skills
1. Technical Skills
Technical skills involve skills that give the managers the ability and the knowledge
to use a variety of techniques to achieve their objectives. These skills not only
involve operating machines and software, production tools, and pieces of
equipment but also the skills needed to boost sales, design different types of
28 BIBS
products and services, and market the services and the products.
2. Conceptual Skills
These involve the skills managers present in terms of the knowledge and ability
for abstract thinking and formulating ideas. The manager is able to see an entire
concept, analyze and diagnose a problem, and find creative solutions. This helps
the manager to effectively predict hurdles their department or the business as a
whole may face.
3. Human or Interpersonal Skills
The human or the interpersonal skills are the skills that present the managers’
ability to interact, work or relate effectively with people. These skills enable the
managers to make use of human potential in the company and motivate the
employees for better results
Examples of Management skills

There is a wide range of skills that management should possess to run an organization
effectively and efficiently. The following are six essential management skills that any
manager ought to possess for them to perform their duties:
1. Planning
Planning is a vital aspect within an organization. Planning is one’s ability to
organize activities in line with set guidelines while still remaining within the limits
of the available resources such as time, money, and labor. It is also the process of
formulating a set of actions or one or more strategies to pursue to achieve certain
goals or objectives with the available resources. The planning process includes
identifying and setting achievable goals, developing necessary strategies, and
outlining the tasks and schedules on how to achieve the set goals. Without a good
plan, little can be achieved.
2. Communication
Possessing great communication skills is crucial for a manager. It can determine
how well information is shared throughout a team, ensuring that the group acts
as a unified workforce. How well a manager communicates with the rest of his
team also determines how well outlined procedures can be followed, how well
the tasks and activities can be completed, and thus, how successful an
organization will be.
Communication involves the flow of information within the organization, whether
formal or informal, verbal or written, vertical or horizontal, and it facilitates
smooth functioning of the organization. Clearly established communication
channels in an organization allow the manager to collaborate with the team,
prevent conflicts, and resolve issues as they arise. A manager with good
communication skills can relate well with the employees and thus, able to achieve
the company’s set goals and objectives easily.
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3. Decision-making
Another vital management skill is decision-making. Managers make numerous
decisions, whether knowingly or not, and making decisions is a key component in
a manager’s success. Making proper and right decisions results in the success of
the organization, while poor or bad decisions may lead to failure or poor
performance. For the organization to run effectively and smoothly, clear and right
decisions should be made. A manager must be accountable for every decision that
they make and also be willing to take responsibility for the results of their
decisions. A good manager needs to possess great decision-making skills, as it
often dictates his/her success in achieving organizational objectives.
4. Delegation
Delegation is another key management skill. Delegation is the act of passing on
work-related tasks and/or authorities to other employees or subordinates. It
involves the process of allowing your tasks or those of your employees to be re-
assigned or re-allocated to other employees depending on current workloads. A
manager with good delegation skills is able to effectively and efficiently re-assign
tasks and give authority to the right employees. When delegation is carried out
effectively, it helps facilitate quick and easy results.
Delegation helps the manager to avoid wastage of time, optimizes productivity,
and ensures responsibility and accountability on the part of employees. Every
manager must have good delegation abilities to achieve optimal results and
accomplish the required productivity results.
5. Problem-solving
Problem-solving is another essential skill. A good manager must have the ability
to tackle and solve the frequent problems that can arise in a typical workday.
Problem-solving in management involves identifying a certain problem or
situation and then finding the best way to handle the problem and get the best
solution. It is the ability to sort things out even when the prevailing conditions are
not right. When it is clear that a manager has great problem-solving skills, it
differentiates him/her from the rest of the team and gives subordinates
confidence in his/her managerial skills.
6. Motivating
The ability to motivate is another important skill in an organization. Motivation
helps bring forth a desired behavior or response from the employees or certain
stakeholders. There are numerous motivation tactics that managers can use, and
choosing the right ones can depend on characteristics such as company and team
culture, team personalities, and more. There are two primary types of motivation
that a manager can use, which includes intrinsic and extrinsic motivation.
30 BIBS
Bottom Line
Management skills are a collection of abilities that include things such as business
planning, decision-making, problem-solving, communication, delegation, and time
management. While different roles and organizations require the use of various
skillsets, management skills help a professional stand out and excel no matter what
their level. In top management, these skills are essential to run an organization well
and achieve desired business objectives.
Many factors influence employees' well-being, but one main influence is the way in which the
people in an organization work together. When people don't work well together, their
satisfaction plummets along with their productivity, loyalty to the company and many other
signifiers of happiness. These are the basics of organizational behavior — the study of how
individuals interact within groups. And it's a critical component in the world of business. We
will also focus on changing context of organization behavior in the next chapter.
BIBS 31
Changing Context Organizational Behaviour
CHAPTER 3
CHANGING CONTEXT
3.1 Understanding the way how world is flat.
3.2 Outcomes of technology and artificial intelligence
3.3 Diversification of employees and customers
3.4 Knowing Modern Systems
3.1 Flattening of globe

"When the world is flat, you can innovate without having to emigrate. “But what does
that mean by "flat," and how did the world get that way?
Friedman believes the world is flat in the sense that the competitive playing field
between industrial and emerging market countries is leveling; and that individual
entrepreneurs as well as companies, both large and small, are becoming part of a
large, complex, global supply chain extending across oceans, with competition
spanning entire continents.
The author suggests that the trigger events for this phenomenon were the collapse of
communism, the dot-com bubble (resulting in overinvestment in fiber-optic
telecommunications), and the subsequent outsourcing of engineers enlisted to fix the
perceived Y2K, the millennium bug, problem. Yet we are only now beginning to feel
and understand the full implications of these events.
Friedman's emphasis of the great changes taking place in our time, as lightning-swift
advances in technology and communications put people all over the world in touch as
never before — creating an explosion of wealth in India, China and elsewhere, turning
eBay hobbyists sitting in their living rooms into prosperous international
merchants...and challenging the rest of us to run even faster if we hope to keep pace.
He demystifies this brave new flat world, allowing people to make sense of the often
bewildering scene unfolding before their eyes, and helping them to understand what
it all means to countries, companies, communities, and individuals.
Another popular interpretation by Noam Chomsky challenges the truth of all three
propositions. Firstly, he holds that the story of ‘a world of free markets’ is something
of a myth. It isn’t a complete myth; it is just that the reality is more complex: a tangled
mixture of free trade, planning and protectionism. For instance, he points out that a
vast amount of world trade is internal to corporations. Where planning is concerned,
he does not just mean that big corporations have to plan their investment and
production and sales campaigns if they are to avoid expensive mistakes. He means
32 BIBS
Organizational Behaviour Changing Context
that, often, research and development costs are paid for by the government out of
the public purse while the benefits eventually accrue to private corporations as part
of what Chomsky calls the ‘public funding, private profit’ syndrome. An example of
this to which he frequently returns is the development of the Internet: a state-funded
military project ironically lauded as an achievement of the superior efficiency of free
markets. Where protectionism is concerned, Chomsky again points out with irony that
there is some bitter truth in the free market rhetoric: the poor and weak must sink or
swim according to market forces; but the rich and powerful must be protected against
the cold winds of the market by the State. ‘Welfare for the Rich’ takes various forms:
corporate bail-outs, government-funded research schemes, tax cuts for the wealthy,
government aid and tax relief for business, and so on.
Secondly, Chomsky argues that no one in the know really believes that the free
market and free trade are the best way forward. He seems to believe that both
government and business, whatever their official free market rhetoric, tacitly accept
the Keynesian truth that the State must intervene in the market to alleviate economic
and social problems. In a national economy, there is need for a national government
with the power to do this. But in today’s global economy, a global political structure
is required for this purpose. It is commonly held that, since the global economy
exceeds the control of any national government, it must be out of control. Not so, says
Chomsky; unelected international bodies like the WTO and IMF actually represent
what he calls “a de facto world government” who all too effectively plan and control
the world economy for us. Or, more correctly, not for us, but in the interests of the
‘prosperous few’ at the expense of the ‘restless many’. So whereas commentators like
Gray and Soros argue about the need for ‘global governance’, Chomsky claims that we
already have it!
Thirdly, he says, ‘military Keynesianism’ is very much alive and well, since the
‘Pentagon System’ – Chomsky’s name for the military-industrial complex – constitutes
a crucial internal dynamic to keep the economy sweet. In a world dominated by one
superpower, the US, there can be no genuine security or strategic reasons for massive
spending on defense and arms. Further, the domestic and global demand for arms is
largely a created one, driven by business and economics and taking full advantage of
the built-in obsolescence factor to generate continual profits and economic health.
The future of global organizations lies in sharing resources and coordinating both
strategy and execution. This is the only way to capture synergies and attain
efficiencies of scale. So in theory, executives understand that they must rely on each
other to collaborate. But in practice, executives quickly realize that interdependence
across organizational boundaries is hard to achieve.
A collaborative culture requires the right behaviors. In teams, it must be built through
higher interaction intensity as well as personal risk investment (see Exhibit 3.1). As
one participant emphasized, “Time is key. It takes years to achieve this level of
collaboration.” Furthermore, the investment required goes beyond time. The litmus
test for collaboration is whether executives are willing to risk something that is
important to them – for example their reputation or their track record – in order to
BIBS 33
achieve success in an inter-team project. The test of collaboration is: Are you putting
yourself on the line?
Exhibit 3.1 Test of Collaboration

Given the high level of investment required to make collaboration gel, what makes it
worthwhile? The answer is that each specific type of collaboration drives important
business results:
 When people collaborate in order to exchange knowledge, the result is an
increase in average unit performance. In other words, better information flows
boost performance.
 When people collaborate to achieve mutual adjustment, it increases alignment –
internal alignment for higher efficiency, on the one hand, and consistent
interfaces externally, on the other hand.
 Collaboration on joint initiatives drives value-creating innovation for proactive
market leadership.
3.2 Impact of Technology and Artificial Intelligence

Human Resource is no longer just a supporting function of an organization – with the
growing importance of human capital and its management in the corporate setup, HR
is now a collection of highly specialized and essential capabilities, each with distinct
goals, needs, and tasks.
The advent of technology has changed all the aspects of our lives – HR being no
exception to the fact. Earlier HR was a department that was defined by piles of paper
and files along with a consistent struggle to multitask between the hiring of
candidates, compliance, storage and management of employees’ data, reference
checks, on boarding and exit procedures, payroll, managing control and reward
34 BIBS
systems and so on. By simplifying these responsibilities, technology has drastically

improved the efficiency and effectiveness of the department thereby facilitating the
time to focus on the major issues that require their attention. In my opinion, apart
from the umpteenth number, the major noticeable contributions of technology to the
HR department as a whole are as follows:
Recruitment: Earlier the process of sourcing the potential employees for any
organization was dependent on the posts on newspapers, word of mouth, internal
referrals or face to face networking. Today through postings on job portals like
Naukri.com, Sheroes.com, Monster.com, etc. and professional social networks like
LinkedIn, recruiters can now reach out to a wide number of candidates and need not
settle for any less. They can now select the right for both the role and the organization
as a whole. On the other hand, evaluating an applicant’s skill set and personality is
also a lot easier now through in-house or outsourced online test platforms thereby
saving cost and time in the long run and giving the best-desired results.
Data Management: Managing the data of employees, potential candidates, legal
compliance related data, etc. required a lot of space and were not very easy to locate
when needed. Cloud storage has now allowed to store data on cloud using electronic
files (e-files). This made data storage easy to organize and was available within a few
clicks. This streamlining has saved paper, space and a lot of time thereby improving
the level of security and confidentiality too.
Performance Management: Various software using HRIS (Human Resource
Information System) like Clear Company, Halogen Performance, PerformancePro,
High Ground, Lattice, and Big Data Analytics have made performance management of
employees more accurate and helped in giving suitable rewards to the personnel. This
has resulted in increased employee satisfaction and loyalty towards the work and
organization.
Flow of information: Can we imagine a day without our office inbox not functioning?
No right? Technology has made communication between people within an
organization easier by giving and receiving prompt replies and important information
over emails or in-house messengers. Cloud-based mobile platforms allow employees
to access relevant information easily and initiatives like work from home and while on
holidays have been made possible for the welfare of the employees.
Despite the huge list of advantages, many organizations today have still not adopted
the technology based HR systems. The benefits of cost saving, time saving, accuracy
and environment protection far outweigh the initial challenges of setting the system
and welcoming the change. Hence, I believe this is just a matter of time and soon all
the organizations would embrace this new change with both arms open also because
using technology in Human Resource just like in any other function will be the only
way out to sustain and survive the competition of the dynamic corporate world.
Nowadays, entrepreneurs with business acumen have acknowledged the power of
information technology (IT) tools for reaching business targets. It not only helps
achieve the business goals but also optimizes the work processes.
BIBS 35
Human Resource Management (HRM) includes activities such as recruiting, training,

developing and rewarding people in the organization. HRM must aim at achieving
competitiveness in the field of HR by providing constant educational and training
programs for the personal and professional development of the employees of the
organization.
It has been conventionally proved that Information and Communication Technology
(ICT), such as the Internet, mobile communication, new media, and such in HR can
greatly contribute to the fulfillment of personnel policies of the organization.
Technological advancement can have a huge impact on the HR department of an
organization. It allows the company to improve its internal processes, core
competencies, relevant markets and organizational structure as a whole.
Human Resource must mainly be focused on the strategic objectives of the
organization. These strategies must be led to incorporate an IT strategic plan for the
organization. These are activities related to any development in the technological
systems of the entity, such as product design (research and development) and IT
systems.
Technology development is an important activity for the innovation process within
the business, and may include acquired knowledge. In the context, all activities may
have some technical content, and results in greater technological advancement.
Information Technology may have a greater impact on organizations that exist in a
dynamic environment. This will lead to greater efficiency and effectiveness of the
Human Resources. Hence, utilizing IT application for database management and
advances recruitment system will increase the efficiency of the business.
However, innovation in Human Resource Management can manifest itself in a number
of ways:
1. To identify solutions quickly and flexibly during a negotiation
2. To identify new ideas for products and services
3. To identify new markets
Innovations such as these are supplemented with Information Technology to create a
positive impact in HR. Rosabeth Moss Kanter, one of the leading management
theorists of her time, argued that the re-birth and success of business organizations
will depend upon innovation (developing new products, introducing new services, and
operating methods), entrepreneurship (taking business risks) and inclusive
management (encouraging all employees to participate in making decisions about
work).
Information and Communication Technology (ICT) can make the following major
impacts in Human Resource Management.
1. Better services to Line Managers
Both HR and line managers primary interest is the success of the business. The
human resource’s main function is to support the workforce needs of the
organization. Strategic planning between HR and line managers is important for
36 BIBS
reviewing projections concerning future business demands to determine whether

to train current employees, to prepare them for promotion or to recruit
candidates with the higher level of skills to supplement the current employee
knowledge database. Training and developing the line managers in IT tools will,
therefore, prepare the line managers for a number of leadership tasks.
2. Enhancing management
Human Resource IT tools that can supplement management and enhance
efficiency and effectiveness, which can lead to the success of the organization as
a whole. For example, currently, Success Factors Solutions has developed an HR
IT tool of talent management for Hilton Worldwide, which had a worldwide
operational capacity. Organizations across the world are driving to improve
organizational performance regardless of the size of the organization or the
industry. Managers within the organization measure performance, sometimes by
comparing it against a benchmark. They analyze and assess their findings and
design their controls accordingly to advance the organization’s performance.
According to the Gallup survey, engaging your employees to organizational goals
is the key feature of every business. The management should also ensure that all
departments are improving its procedures and controls and targeting its activities
on better achieving the company’s competitive differentiation through what the
employees do and how they are doing it. These can be better utilized by
customized HR IT tools according to the organization.
3. Effective recruiting
Nowadays, organizations have realized that effective recruiting cannot be done
without the use of IT. Organizations now use job portals on the internet to search
for the best candidates for the position. The process has been made effective with
the use of the internet as many people come to know of the offer and hence
increases the probability of hiring efficient employees.
Employers can present all necessary information related to job, careers and
personal development of each employee on portals online. This is a great
promotional tool for the organization. Currently, Envoy has developed Asana, an
IT tool for recruiting that analyzes details down to where a potential candidate’s
high priority values are. The HR IT tools not only help hire the best potential but
also retain it.
4. Data management and critical analysis
Data management becomes easier when IT is used and it becomes paper-free.
Many of the monotonous work is no longer manual. This increases the efficiency
of the work and the effectiveness of it. Organizational performance can lead to
the timely success of the business whether in a stable or an unstable environment.
Jobs that do not offer much variety in their performance and are of a highly
repetitive nature are disliked by employees and eventually results in low retention
or decreased effectiveness.
Employee’s performance data can be critically analyzed by the HR IT tools more
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often if it’s online and becomes readily accessible to everyone. For

instance, Zenefits has recently developed an HR IT tool, which has made Passport
completely paperless. The tool is further hierarchy sensitive and pings the
manager for approval once it is submitted. Thus letting an individual get rid of the
hassle of filling the paperwork. Thus by developing this HR IT tool, Zenefits has
helped Passport radically simplify and manage its HR internal processes.
5. Inventory management tools and Human Resource Management
Entrepreneurs with business acumen describe that the performance of an
organization can be made more effective and efficient by customer intimacy,
operational efficiency, and leading edge. Customer needs must be met by
customization and by providing outstanding customer instances. For this purpose,
organizations use HR IT tools to provide a universal set of products and diversify
the business by providing improved products and services.
6. Cost-reduction and efficiency
Considerable benefit can be obtained as various reports can be made using IT
tools.
Xero wanted to save its resources and make them easier to manage. Xero then
implemented PlanSource’s benefits system and ACA compliance technology with
their payroll provider and now all their benefits are in one place and easy to
access. This lead to cost reduction and efficient and work processes.
Organizational performance can be increased by implementing management by
objectives and using a participative style of management through Human
Resource Information Technology tools. Managers can perform well and justify
their authority only if they produce the desired economic results, for instance, the
profits they have desired to achieve in a period of time. Management often uses
the Operation’s Research to maximize the profit, yield, utilization and the
performance. The management of an organization usually creates a measurement
system to set targets for change and measure organizational performance.
7. Customer service and Human Resource Management
Organization performance can also be described by evaluating the reliability of
service and by understanding the quality of customers of the organization. Value
can come from providing a reliable service, so that the customers know that they
will receive the service on time, at the promised time, to a good standard of
performance. As organizational change is inevitable, critical success factors and
key performance indicators should be revised, and relevant Human Resource IT
tool must be devised for the better quality of work. Doing good quality work and
providing quality results will increase organizational performance.
8. Career Development and Human Capital Management
The career planning tool is a learning and knowledge-based system that helps
successful businessman around the world to manage their personal development
and career paths along with those of their employees. Performance evaluation
and career progression can be a key motivating factor for the employees to work
effectively and efficiently. Performance measurement and reward systems in an
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organization establish views of priority i.e. what is important and what is not so
important. Thus sound performance evaluation systems HR IT tool is crucial for
the organization. The system must be a sound one so that people can rely on it.
Rewards systems should be amended so that the rewards to managers and other
employees are based on performance targets as stored in the HR IT tools.
Employees should be rewarded for performance based on the desired behavior
and results as per the HR IT tool database. Also, according to Vroom, one of the
best management theorists of his time, instrumentality (rewards system) affects
motivation for the increase in organizational performance. Managers must keep
their promises that they have given of rewards for performance and try to make
sure that the employees believe that the management will keep its promises.
However, performance targets do not usually have to be financial targets. They
can be in other forms such as recognition, promotion etc.
Globalization makes us realize how IT can contribute to the fulfillment of business
strategy in the frame of Human Resources management in order to direct the
business towards quality and to reach the competitiveness in the market.
Research reveals that information technology sustains reaching the HR goals
moderately and the precise plan of implementation of HR information system can
significantly support HR strategy in the company to attain defined key
performance indicators (KPI). This should mainly contain what has to be achieved.
It means how the HR IT tools can support the KPI and which kind of HR IT tools
should sustain.
3.3 Changing Profiles of Employees and Customers

Diversification can be understood as the corporate strategy that a company
implements to increase the market share and sales volume by introducing new
products in new markets or industry, which is distinct from its core business.
Simply put, diversification refers to the expansion of business by entering into a
completely new segment or investing in a business which is external to the scope of
the company’s existing product line. Businesses use this strategy for managing risk by
potential threats during the economic slowdown.
Exhibit 3.2 Product/Market grid:
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Types of Diversification
1. Vertically Integrated Diversification: The form of diversification in which the firm
intends to enter in the business which is associated with the firm’s present
business. In this way, the firm stays in the same business and moves ahead or
reverse in the chain and introduces new product so as to enter the new business
for the firm.
 Forward Integration: It is a kind of vertically integrated diversification,
wherein the firm decides to move ahead in the value chain that is directly
related to the firm’s existing business, so as to ease the distribution process.
 Backward Integration: In this type of integration, the firm opts to move
backwards in the value chain so as to create an effective supply of the goods
by expanding the business and entering the business of suppliers.
2. Horizontally Integrated Diversification: In horizontal diversification, the firm
acquires one or more than one businesses that are engaged in the similar business
and at the equivalent level of production-marketing chain to enter into
complementary goods, or taking over competitor’s products.
 Related Diversification: When the new business has some sort of connection
with the existing business then it is known as related diversification. It
includes the exchange of business assets by exploiting marketing skills,
manufacturing skills — economies of scale, brand name, research and
development, etc. Example: A cloth manufacturing firm enters into the
distribution of clothes.
 Unrelated Diversification: When the new business has no relation to the
value chain activities of the company. It includes investing in new product
portfolios, concentrate on multiple products, minimization of risk by
operating in various product markets, implementation of new
technologies. Example: An FMCG company enters into the textile industry.
3. Concentric Diversification: It is similar to related diversification, wherein the new
business entered into by the firm is associated with the existing business by way
of process, technology or market. The newly entered product is a spin-off from
the already existing facilities. Hence, there are advantages of synergy with the
existing operations.
4. Conglomerate Diversification: The conglomerate diversification is similar to
unrelated diversification, there is no relationship between the new business or
product and the existing business or product in any way.
Firm’s use diversification strategy to reduce risk, use surplus cash, build corporate
brand equity, increase customer base, exploit new opportunities, effective capital
utilization, build shareholder’s wealth, access to the new market, etc.
What is required is real change-in attitudes, practices, structure and policies-from
the executive suite down. The human resources manager should not be the sole
person responsible for driving the diversity initiative. Companies must spread out
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the responsibility, or the program may die early. Many organizations have used
the following five steps as a basic framework for setting up successful diversity
initiatives:
Create a diversity task force. A diversity task force can provide the leadership,
focus and continuity to direct your company’s diversity effort. Frequently, its first
order of business will be to create a “vision” or mission statement that reflects
the organization’s goals in beginning the diversity program.
Human resources will often be responsible for putting this task force together.
Here are some pointers: Involve a broad cross section of employees when
choosing group members; selected people should represent different races,
genders, ages, sexual orientations and physical abilities. Involve individuals from
different levels and departments within the organization, as well as people with
expertise and those with basic knowledge of diversity issues.
Publicize the task force’s purpose and focus to attract members. Explain what will
be expected of them and talk about the benefits of both of serving on the task
force and the ultimate improvements expected for the company as a whole.
Human resources will probably need to facilitate early meetings, helping the
group define responsibilities.
The task force should focus most of its time and energy on putting together a
strategy for way to connect the initiative with other business goals. A well-
designed and well-implemented cultural audit will provide the information the
task force needs to meet its goals.
1. Design a cultural audit.
When properly designed and administered, the cultural audit will identify an
organization’s strengths, climate, issues, understanding, obstacles and challenges.
The audit might suggest possible starting points for the diversity initiative, help assess
training needs or identify legal issues.
Throughout the process, the audit will draw on a broad spectrum of people from
throughout the organization. The design should include both qualitative data (from
focus groups and interviews), and quantitative information (from surveys).
A cultural audit provides the empirical data that can suggest future directions and
actions to take. Its goal is to provide a diversity “climate” overview, enabling leaders
and trainers to understand all issues and concerns. As clearly as possible, the audit
strives to tell your organization where it is now.
The first step in the process is to write an “inventory survey” tailored to the
organization’s culture and needs. This survey will generate data useful in developing
the strategic plan for diversity. It should be answered anonymously by a
representative cross section of employees or, if time permits, by everyone in the
organization.
Focus groups are the next step, comprised of four to six people with a common trait.
For example, there could be a focus group of older workers, one of night-shift
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workers, one of women. These focus groups will provide insights into how each
separate group views the questions or situations proposed to them. Deep-seated
organizational issues can often be revealed by contrasting the responses of the
various groups.
Individual interviews can probe more deeply into the way people perceive diversity
within their organization. Thirty minutes is enough time to allow for this one-on-one
phase. Open-ended questions work best. The perspective of outsiders-vendors,
customers, temporaries-can also add valuable and objective information. Find some
way to include their comments in the audit.
2. Develop the overall strategy.
The next step is to take all of the information and forge it into an overall strategic
diversity plan for the organization. While these plans vary the same as the
organizations they serve, successful plans include these elements:
 Senior management has committed to the plan-it is not a surprise and their input
has been solicited and included.
 The plan links diversity with other organizational strategies and initiatives, such
as customer service, continuous improvement and employee recognition.
 The plan clearly outlines long-term strategies as well as short-term actions.
 Existing systems are used to carry out the plan whenever possible.
 Included is an ongoing evaluation system that will give feedback quickly across
the whole organization.
 Success criteria will be clearly stated and measurable.
 The plan will provide guidance for trainers in both designing and delivering
diversity training.
3. Deliver training.
Training is just part of the strategy for implementing a diversity initiative, but it can
“anchor” the initiative in several important ways. Without discussing actual training
design, some of the unique characteristics of diversity training should be pointed out.
The training has to be planted firmly in the real world of business-participants must
clearly see how the diversity initiative ties to the bottom line. The initiative needs
support throughout the organization; to gain that support, diversity needs to be seen
by everyone as an issue. Diversity training cannot be a one-time event. Like safety
initiatives, it will work only if its tenets and corresponding behaviors are used every
day.
Diversity training often deals with perception and awareness, and may help change
both. Everyone must be included in diversity training at all levels in the organization.
Diversity training has a strong emotional content, and the trainer is not immune from
these emotions. Training sometimes gets personal, requiring extreme skill and
sensitivity on the part of the trainers.
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Finally, because co-facilitation models teamwork, it is an effective approach for

diversity training. A pair of trainers who are different in some physical way or who use
totally different styles give participants an opportunity to learn that differences can
complement and benefit a team. Two facilitators can also be helpful if the discussion
becomes difficult or hard to manage. Again, emotions run high in diversity training
classrooms.
4. Measure its effectiveness.
It is a real challenge to measure whether all the meetings, policy changes, written
information and trainings have had the desired effect. What does “valuing” diversity
really mean, and is it happening? Are the lessons of consciousness raising and
behavior modification transferring to the job?
Several quantitative measurements have been used with success. For example, some
organizations ask participants to develop personal action plans before leaving the
course, then follow up over time. Some conduct “before and after” surveys to test
awareness building.
An organization can check the number of equal employment opportunity (EEO)
complaints received before the diversity instruction. How do they compare with those
after the training? (Of course, complaints always increase immediately after a
training. You need to take samplings over time.)
Look at retention figures. Review expenses for EEO-related litigation. Determine what
your exit interviews tell you about why people leave the organization. An intuitive
argument suggests that an employee is not working at his or her best when faced with
a frustrating employer or inhibiting workplace and the organization is adversely
affected.
There is also the empirical method: Take a walk through the company lunchroom or
keep an eye open at the company picnic. Compare the racial or ethnic segregation
that can be observed now to a time before the diversity initiative was in place.
With the balanced leadership of human resources and the sincere efforts of everyone
involved, the workplace can be fair and free of hostility. This workplace will function
smoothly, creatively and productively. It will belong to an organization that will reach
out profitably to its diverse markets and customers with the right messages and the
right goods and services.
The company that successfully implements a diversity initiative will be healthy, vital
and fit to compete in today’s tougher marketplace.
3.4 Determination of Organization Structure

The industry urgently needs a breed of employees and workers capable of taking the
initiative, demonstrating bold new thinking and original product development in an
age of aggressive analog-to-digital transition. With automation and the industry
radically shrinking the factory value chain, hiring for the auto industry will need to
bridge the technology talent gap by sourcing fresh talent from campuses. The sector
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is likely to hire over lakh engineers by 2020, to meet the demand for new tech-based
skills that are fast arising. These skills, which are currently at a deficit in the industry,
include social intelligence, computational thinking, artificial intelligence, virtual
collaboration, automotive design, computational thinking.
The industry’s digitization is also forcing it to become leaner, and more prepared to
serve as a battleground for a gap that exists between early comers and new entrants,
instead of the cemented dominance of established leaders. Therefore, new hiring
policies will have to increasingly focus on fresh blood to tap new market
opportunities, while staying competitive in areas like customer service and overall
value creation.
The industry’s current talent pool will need to be reskilled and upskilled away from
the tried-and-tested methods and technologies. In line with global competencies, silos
will need to be broken to forge a workforce that can rapidly collaborate in today’s
increasingly unpredictable business climate. To ensure that these changes stay in
alignment with career aspirations and don’t trigger attrition, employees will need to
be provided with multi-layered functional career forums for dialogue, and
opportunities for intra-organizational career mobility.
For many years the focus on HR technology was to automate and integrate HR
practices. This meant online payroll, record-keeping, learning management, resume
capture, interview and hiring, assessment, performance appraisals, compensation,
management, resume capture, interview and hiring, assessment, performance
appraisals, compensation, etc. A wide range of cloud-based HRMS and payroll vendors
are now in the market, and you get very little credit for "automating" HR.
A HRMS (Human Resource Management System) is a combination of systems and
processes that connect human resource management and information technology
through HR software. A HRMS may help to revolutionize a workplace.
Human Resource Management System (HRMS) refers to an array of software
including Human Capital Management (HCM) and Human Resource Information
System (HRIS)that help HR staff take care of an organization’s most valuable assets,
people. HR tasks are too complex and time-consuming when performed manually.
Leveraging the help of a technological solution like an HRMS can help you save time,
cut costs, and manage your staff better.
Depending on your needs, you could opt for a simple HR Management Software with
features that takes care of day-to-day administrative tasks like Employee
Management, Leave Management, etc. Or you could choose a solution that addresses
the strategic areas of human resource management like Training & Development,
Performance Management, and Recruitment.
The automation of repetitive and time consuming tasks associated with human
resources management frees up some of the companies most valuable employees
and allows the focus to shift to culture, retention, and other highly impactful areas.
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Let’s take an example One of the most popular Indian Brand TATA MOTORS sounds
to be most familiar when the word Automobile Industry is listed. It was Tata Group of
Industries that was first founded by Jamshed Jii Tata in 1945 and later on Shri Ratan
Tata laid the foundation for Tata Motors with its Headquarters in Mumbai. It is one of
the largest Automobile Company with the revenue of INR 2,32,834 corers (USD 38.9
billion) in 2013-14. The amazing count of 8 million vehicles runs on the roads from
Tata Motors.
It Products ranges from Passenger cars or Concept Vehicle that is named as Cars and
Utility Vehicle. Also trucks and buses along with defense vehicle. Hence it is clearly
shown that the range of product is very wide focusing over different market
segmentation.
The following picture shows the Automotive Organizational structure with
involvement of Sales Department as an integral part of the company’s working.
This is one of the highest levels in any automobile industry where professional are
completely dedicated to perform their job duties and give best to the company itself.
As these are senior professionals they have a required experience of years and also
depth in knowledge of their own field. There was an amazing growth in statics for the
net revenue and profit before tax. Hence the success of this company is quite evident
and is motivated by a good sales organization structure.
Organizational behaviors outline the mission and goals of a business and define how its people
interact within one another within its setting. But they also speak to where an organization
fits into the bigger picture. For example, a hospital may need to address multiple issues
internally, such as leadership, employee hierarchy, communication, staff diversity, group
dynamics, conflict management, team building, negotiation models and more. But it also
needs to understand where that healthcare facility fits into the broader industry. Will its
organization be a leader in research or cutting-edge procedures? Will it be a teaching hospital?
Will it serve mainly as a community health center? Or perhaps it will be some combination of
all of these and further discussed in the next chapter ‘Societal Culture and Organization’.
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Societal Culture and Organisation Organizational Behaviour
CHAPTER 4
SOCIETAL, CULTURE AND ORGANISATION
4.1 What is Organisational Culture
4.2 What do Cultures do
4.3 Creating and Sustaining culture
4.4 How employees learn culture
4.1 What is Organisational Culture?

Organizational culture includes an organization’s expectations, experiences,
philosophy, as well as the values that guide member behavior, and is expressed in
member self-image, inner workings, interactions with the outside world, and future
expectations. Culture is based on shared attitudes, beliefs, customs, and written and
unwritten rules that have been developed over time and are considered valid.
Jane Doe starts a software company in the mid-south (let’s say Nashville) and she hires
many of her best contacts to help with development of apps for the smartphone and
tablet industry. Many of those who have come to work for Jane are creative types, so
they like a workplace that allows flexibility and rewards for accomplishment. They
may come to work at 11:00 am, but they may not leave until midnight. In addition,
many of them like to work from home. Key words to describe this culture include
Dynamic, Entrepreneurial, Risk Taking and Innovative.
Picture an organization that is charged with delivering messages in print form as well
as packages to clients across the country and in many parts of the world. They have
been in business over 200 years and are quite regulated in how they conduct their
business. Their workforce is ruled by organized labor and they struggle in the ability
to make ends meet because of increased competition and innovation by their
competitors. Some of the words seen here include stability, internally focused and
rigid.
The primary characteristics of the organisational culture:
(a) Innovation and risk taking: The degree to which employees are encouraged to be
innovative and risk taking.
(b) Attention to detail: The degree to which employees are expected to exhibit
precision and attention to detail.
(c) Outcome orientation: The degree to which management focuses on results.
(d) People orientation: The degree to which management takes into consideration
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Organizational Behaviour Societal Culture and Organisation
the effect of outcomes on people in the organisation.

(e) Team Orientation: The degree to which work is organized around teams.
(f) Aggressiveness: The degree to which people are aggressive and competitive.
(g) Stability: The degree to which organisational activities emphasize on maintaining
the status quo.
Strong Versus Weak Cultures

With a family-oriented business focus, The Walt Disney Company emphasizes decency
in its organizational culture. For example, the company’s product portfolio, human
resource training and development programs, and management strategies motivate
employees to ensure decency in their behaviors, especially in directly communicating
with customers. This cultural trait contributes to the excellent positive reputation
linked to the company’s brand image, which is a business strength and competitive
advantage.
The Walt Disney Company’s organizational culture involves excellent storytelling
skills. The company’s history is a story to tell, so are its products in the global mass
media, entertainment and theme park industries. Through this cultural factor, the
business facilitates employee behaviors that add value to products. This cultural
characteristic is evident in the company’s movies and related programs, as well as in
Disneyland theme parks and related resorts, as workers are motivated to put on a
show that makes customers’ experiences magical.
In a strong culture, the organisation’s core values are both intensely held and widely
shared. With a strong culture, employees and management understand what is
required of them and they will try to act in accordance with the core values. A key
benefit of a strong culture is that there is less need for detailed policies and
procedures because the "way things are done around here" is well understood and
accepted. If most employees have the same opinions about the organisation’s mission
and values, the culture is strong. If opinions vary widely, it is a weak culture.
Culture Versus Formalization

In a formal organizational culture, the management and divisions within a company
are typically written and explained so all employees understand how things work. This
documentation may take the form of an organizational chart that visually depicts how
each level of management works to prevent misunderstandings. In an informal
organizational culture, the business doesn’t operate under the guidelines of a written
document that spells out the rules, regulations and chain-of-command.
The stronger the organisation’s culture the less the management need to be
concerned with developing formal rules and regulations to guide the employee
behaviour.
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4.2 What do Cultures do?

Culture’s Functions
Consider Google's “20 percent time” philosophy, which gives its engineers one day a
week to work on whatever they want, projects that interest them, or jobs that aren’t
in their job description, or a bug that needs fixing.
But autonomy and flexibility aren’t part of the lexicon at Apple. In large part, this is a
function of the organisational structure. Basically, employees work on what Steve
Jobs says they should work on. But beyond that, focus is highly valued at Apple.
Culture creates boundary or distinctions between organisations. It conveys a sense of
identity for organisation members. Culture facilitates the generation of commitment
which is something larger than self-interest. It makes the social system stable.
Although two completely contrasting culture exists in Google and Apple, the culture
is very strong, employees highly motivated towards organisational goal in both the
cases.
Culture creates Climate

Organisational climate refers to the shared perceptions organisational members have
about their organisation and work environment. e three dimensions of climate
assessed by the OSC are engagement, functionality and stress. In engaged
organizational climates, service providers perceive their work related
accomplishments as personally meaningful and report that they are personally
involved in their work with clients. In functional climates, service providers perceive
that they receive the levels of support and cooperation from coworkers and
administrators that they need to do their job and have a clear understanding of their
roles within the organization and how they contribute to its success. In stressful
climates, service providers report high levels of role overload, role conflict, and
emotional exhaustion.
Adobe products are synonymous with creativity, and only through the avoidance of
micromanaging are the people who create those products truly free to create. For
example, Adobe doesn’t use ratings to establish employee capabilities, feeling that
that inhibits creativity and harms how teams work. Managers take on the role of a
coach, more than anything, letting employees set goals and determine how they
should be assessed. Employees are also given stock options so that they know they
have both a stake and reward in the company’s success.
Culture as a Liability
Culture enhances organisational commitment and increases the consistency of
employee behaviour.
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Institutionalization
When an organisation becomes institutionalized it is valued for itself and not only for
the goods and services it produces. It takes on a life of its own, apart from its founders
or any of its members. Ross Perot created Electronics Data Systems (EDS) in the early
1960s, but he left in 1987 to find a new company Perot Systems. EDS has continued
to thrive despite the departure of its founder. Sony, Gillette, McDonald’s and Disney
are examples of organizations that have existed beyond the life founder or any one
member.
Barriers to Change
Gray Electric is a company with a long tradition of innovation. In 1973, they invented
the world's first cellular phone and spent many years trying to understand how this
new technology would impact their existing business. Gray Electric was in a position
to become the first company in the world to develop and market a cell phone, but the
upper management of Gray Electric had become complacent with making corded
phones and could not imagine a world without landline phones. Because they had
been the industry leader for decades and had faced very little competition along the
way, the culture of Gray Electric had become rule-oriented and placed a high value on
stability. Upper management decided that producing cell phones would only hurt
their landline phone sales and quickly abandoned their cell phone endeavor.
In 1987, they realized what a bad mistake they had made. Sales of their landline
phones were decreasing drastically every year, and Gray Electric was losing money
and cutting jobs in all departments. They began to frantically attempt to produce a
marketable cell phone. In 1989, Gray Electric introduced their first cell phone, but
their rule-oriented culture did not fit this rapidly changing industry, and their product
development process took much longer than the other cell phone manufacturers. By
the time their first cell phone was introduced, it was two or three generations behind
the competition.
Culture is a liability when the shared values are not in agreement with those that
further the organisation’s effectiveness. Consistency of behaviour, an asset in stable
environment, may then burden the organisation and make it difficult to respond to
changes.
Barriers to Diversity
Strong cultures put a lot of pressure on the employees to conform to the accepted
values and styles of the organisation. Even the new employees who belong to
different race, religion etc. are expected to conform to the organization’s core cultural
values, otherwise they are deemed to be unfit for the organisation. Strong cultures
do not acknowledge the fact that people from different backgrounds bring unique
strengths to the organisation.
According to a New York Times report, there are only 5 African-American CEOs out of
Fortune 500 companies. Furthermore, a University of Wisconsin study revealed that
people with African-American sounding names are 14% less likely to get a callback.
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Barriers to Acquisitions and Mergers

Culture can act as barrier to mergers and acquisitions. Historically financial matters
and product synergy alone were considered to decide which company should acquire
which company or which unit should merge with which firm. But in the recent years
there has been a change in the trend. Cultural compatibility has become a primary
concern while deciding about acquisitions and mergers. Favourable financial
statement or product line are, of course, the initial attractions at the time of
acquisition, but another important factor to be considered is how well the cultures of
the two organisations match with each other.
When Daimler announced that it would be merging with Chrysler it was called a
merger of equals, as both operated in the same industry and effectively produced the
same product. However, Daimler had a culture of conservatism, efficiencies and
playing it ‘safe’. Chrysler was daring, diverse and creative. Months following the
merger, it was deemed a fiasco. Different company cultures had both Daimler and
Chrysler at war. Both companies were fundamentally different on every level,
including formality, philosophies and operating styles. German culture took over the
once laid back culture at Chrysler. Employee satisfaction dropped to all-time lows and
by 2000 the company was making major losses.
4.3 Creating and Sustaining culture

The Beginning of a Culture
The organisational culture does not start out of thin air, it has to be established. The
founder brings in one or more other key people and creates a core group that shares
a common vision with the founder. All these key people are those who believe that
the idea is a good one, is workable, is worth running risks for and is worth the
investment of time, money and energy that will be required. The founders of the
organisation, traditionally have a major impact on that organization’s early culture.
They have a vision or mission of what the organisation should be. They are
unconstrained by previous customs or ideologies. When the organisation succeeds,
the founder’s personality becomes embedded in the culture.
McDonald’s is a definite example of a powerful and successful organisational culture.
If you walk into any one of the more than 10,000 McDonald restaurants all over the
world you will see a familiar layout, a common menu and one of the most efficient
organisations in the world. Every employee of the McDonald’s knows the company’s
basic operating principles-quality, service and cleanliness. Don’t compromise, use the
basic ingredients.
The McDonald culture came from its founder Ray Kroc. Kroc died in 1984 but the
culture he left behind is still very much alive in McDonald’s franchise across the globe.
His office at corporate headquarters is preserved as a museum, his reading glasses
untouched in their leather case on the desk. New employees receive videotaped
messages from the late Mr. Kroc.
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Today’s executives at McDonald’s cite Mr. Kroc so often that he still seems to be in
charge. His photo smiles down on every desk. These executives have been so
indoctrinated in Kroc’s philosophy; they usually arrive at answers consistent with
decisions made when Kroc headed the company. This explains, to a large degree, why
McDonald’s has become a symbol of stability & consistency.
Keeping a Culture Alive
Once a culture is in order, practices within the organisation maintaining it by giving
employees a set a set of similar experiences. The forces which play a particularly
significant role in sustaining culture are: Selection practices, Actions of top
management and Socialisation methods.
 Selection: The explicit goal of the selection process is to identify and hire
individuals with the knowledge, skills and abilities to perform successfully. The
final decision identifies people whose values are essentialy consistent with at
least a good portion the organisation’s.
Zappos Technique: ‘The Nice Guy Test’
According to Rebecca Henry, the former Director of Human Resources for Zappos, the
recruitment process at Zappos is more like a courtship than a traditional recruitment
process. “A lot of our candidates are from out of town, and we’ll pick them up from
the airport in a Zappos shuttle, give them a tour, and then they’ll spend the rest of the
day interviewing,” Hsieh says. “At the end of the day of interviews, the recruiter will
circle back to the shuttle driver and ask how he or she was treated. It doesn’t matter
how well the day of interviews went, if our shuttle driver wasn’t treated well, then we
won’t hire that person.”
Such a clever yet simple interview technique and it gives you real-life insight to a
candidate before you make any hiring decisions.
 Top Management: The actions of senior executives have a significant impact on
the organisation’s culture. The senior executives establish norms throughout the
organisation through their speech and behaviour on issues like the appropriate
attire, the actions which lead to promotions and pay rise etc.
Want to change the culture: RUN!!
When Conant first arrived as CEO at Campbell’s, the company was beleaguered by
poor quality and newly fierce competitors; he was hired to turn the company around.
He knew he was not a master of social conviviality. “Every time I take a Myers-Briggs
test,” said Conant, “it shows I’m an introvert.” He knew it would not be easy for him
to interact comfortably with a diversity of people throughout the organization, but he
had to find a way to do it.
At the time, the Campbell’s “people strategy” emphasized employee health, using an
American Heart Association program that encouraged people to walk 10,000 steps
every day. So Conant began donning a track suit and pedometer and running around
the headquarters building complex in Camden, N.J., every day. Because of his
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constantly changing schedule, he ran at different times every day, and he made a
point of running through different parts of the complex. People never knew when
they would see him jogging nearby, but they always knew the reason—he wasn’t
checking up on them, he was just getting his 10,000 steps in. This practice gave an
introvert a highly visible, easy way to interact informally with people he would
otherwise see only at formal meetings, and Conant’s running soon slowed to a walk.
“It got to the point where I was so comfortable that people weren’t afraid of
approaching me,” he said. He eventually dubbed this practice “management by
wandering around.”
 Socialization: The process that helps new employees adapt to the prevailing
culture is called socialization.
Exhibit 4.1
a) Pre- Arrival Stage: This stage recognizes that every individual employee comes
with set of values and hope. New comers to high profile organisations with a
strong market position might make their own assumptions about the work and
the work place. Most new recruits will expect Nike to be dynamic and exciting and
Indian Army to require both discipline and courage. What people know before
joining the organisation or how proactive the personality is, are the critical
predictors of how well they adjust to the new culture.
b) Encounter stage: Here the employees enter into the real working conditions of
the organization. For example, the expectations of the job, co -workers,
immediate seniors and the business as a whole. Here, if the expectations confirm
to be more or less correct, this stage reaffirms the employees of the perceptions
generated in past. If the reality is different, socialization helps the employees in
understanding to replace these. But socialization cannot totally resolve the
differences in expectations.
Google has no trouble attracting great talent, but that doesn’t mean it won’t fight
to keep them. The company is deeply invested in career development and
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coaching to help its employees find their path. In 2010, it launched Career Guru,
a program through which employees can receive one-on-one support from
experienced Google alumni. To become a Guru, employees need to have been
with Google for at least two years and must work at a senior level or be a subject
matter expert. This program has proven hugely popular among Googlers, who
consistently rate their Gurus highly. Within the first two years alone, more than
900 Google engineers took advantage of the program. This model also helps new
recruits to be guided by veterans thus encouraging retention.
c) Metamorphosis stage: At this final stage of socialization, employees understand
the organization and identify themselves with it. Employees develop a sense of
belongingness and become contributors to achieving organizational goals and
objectives. The more management relies on formal, collective, sequential, fixed
and serial socialization programs the more the differences will be stripped away
between new comers and experienced employees and replaced by standardized
predictable behaviours. These practices are common in police departments, fire
departments and other organisations that value rule following and order.
Practices that are informal, individual, random, variable are more likely to provide
newcomers an innovative sense of their role and methods of working. Creative
fields like research and development, advertising rely on these practices.
4.4 How employees learn culture

Culture is transmitted to employees in a number of forms, the most potent being
stories, rituals, material symbols and language.
 Stories: Nike has a number of senior executives who spend much of their time
serving as corporate story tellers. And the stories they tell are meant to convey
what Nike is about. When they tell the story of how cofounder (and Oregon track
coach) Bill Bower man went to his workshop and poured rubber into his wife’s
waffle iron to create a better running shoe, they’re talking about Nike’s spirit of
innovation. When new hires heard tales of Oregon running star Steve
Prefontaine’s battles to make running a professional sport and to attain better
performance equipment they learn of Nike’s commitment in helping athletes.
Although J.N. Tata, the founder of the Tata group had studied to become a Parsi
priest chose a career in industry as he believed that he could help more people by
setting up a factory. He encouraged the employees to give importance to charity
and justice. Over years the stories have been passed through the organisation and
even today the Tata employees are proud of the core values at the Tata Group.
 Rituals: Rituals are repetitive sequences of activities that express and reinforce
the key values of the organization — what goals are most important which people
are important, and which people are expendable. One of the better Known
corporate rituals is Wal-Mart’s company chant. Begun by the company’s founder,
Sam Walton as a way to motivate and unite his workforce, “Gimme a W, gimme
and A gimme and L, gimme a squiggle, give me an M, A, R ,T !” has become a
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company ritual that bonds Wal-Mart workers and reinforces Sam Walton’s belief
in the importance of his employees to the company’s success. Similar corporate
chants are used by IBM, Ericsson, Novell, Deutsche Bank, and Pricewaterhouse
Coopers.
Ambuja Cement starts every meeting, program, day or shift in its plants with
collective singing of the hindi song ‘hum ko man ki Shakti dena’. It is a ritual that
helps foster bonds between people and breaks the monotony of the work.
 Material Symbols: Symbols are extremely powerful in that they help enable
people to do things and attribute meaning to their actions. Most symbols won't
sense to people outside the organization, but that is one of the factors that make
them powerful. Over time, they build in meaning and power for the people that
are in the know.
The design of the building and the use of bright colours used in Walt Disney
company convey the values of creativity and imagination related to the company
and the people working in it.
A reception area which is warmly lit and decorated with plants gives a homely
feeling and indicates a people oriented company.
Office putting-greens, vintage subway cars and revolving bookcases are among
the zany features that can be found in Google’s charismatic offices. Google is
renowned for its unusual and extraordinary workspace designs as part of its
model of motivation. While Google also provides the standard perks including no-
cost health and vacation benefits, and in keeping with its philosophy that “life at
Google is not all work”, what contributes to this culture is its unconventional
workspace design.
 Language: Many organizations and units within organizations use language as a
way to identify members of culture or subculture. By learning this language,
members attest their acceptance of the culture and, in so doing help to preserve
it. If you’re a new employee at Boeing you will find yourself learning a whole
unique vocabulary of acronyms including: BOLD (Boeing online data). CATIA
(computer graphics aided three dimensional interactive application), MAIDS
(manufacturing assembly and installation data system). POP (purchased outside
production) and SLO (service level objectives.)
A positive organisational culture emphasizes building on employee strengths, rewards more

than it punishes and emphasizes individual vitality and growth. A strong organisational culture
provides stability to an organisation.
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Organizational Behaviour Perception
CHAPTER 5
PERCEPTION
Learning objectives:
5.1 Understanding Perception
5.2 Knowing Perceptual selection
5.3 Determining how one person perceives another
5.4 Describing the primary errors in perception that people make
5.1 Shaping Perception

Perception is the awareness of something through the senses. In other words, it's the
ability to see, hear, understand or become aware of something. Perception is
important due to the following reasons:
 It's a physiological process through which everything is this world is
interpreted and understood.
 It's the way people perceive things that defines their character and attitude.
Kindness, hate, love and all other emotions originate from one's perceptions
about something.
 It's just perception which defines what happiness means to a person. For
some earning money is happiness, for some spending money is happiness.
 Human perception towards god is the main reason why are having so many
religions today. It not just shows that perceptions are varied but also
perceptions of a few have the ability to influence the mankind as a whole.
 Perceptions help in shaping up a person's goal and his/her outlook on life.
It's the thing that initiates anyone to find their purpose in life.
Perception is a process by which people regard, analyze, retrieve and react to any
kind of information from the environment. “Perception is the process through which
the information from outside environment is selected, received, organized and
interpreted to make it meaningful to you. This input of meaningful information results
in decisions and actions.”
A few definitions of perception as given by different authors are as explained below:
“Perception may be defined as a process by which individuals organize and interpret
their sensory impressions in order to give meaning to their environment.”
According to Joseph Reitz, “Perception includes all those processes by which an
individual receives information about his environment—seeing, hearing, feeling,
tasting and smelling. The study of these perpetual processes shows that their
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Perception Organizational Behaviour
functioning is affected by three classes of variables—the objects or events being

perceived, the environment in which perception occurs and the individual doing the
perceiving.”
According to S. P. Robbins, perception can be defined as “the process by which
individuals organize and interpret their sensory impressions in order to give meaning
to their environments.”
Perception includes the 5 senses; touch, sight, taste smell and sound. It also includes
what is known as perception, a set of senses involving the ability to detect changes in
body positions’ and movements.
It also involves the- cognitive processes required to process information, such as
recognizing the face of a friend or detecting a familiar perfume.
The study of these perpetual processes shows that their functioning is affected by
three classes of variables—the objects or events being perceived, the environment in
which perception occurs and the individual doing the perceiving.
In simple words, we can say that perception is the act of seeing what is there to be
seen. But what is seen is influenced by the perceiver, the object and its environment.
The meaning of perception emphasizes all these three points.
Nature of Perception:
“Perception refers to the interpretation of sensory data. In other words, sensation
involves detecting the presence of a stimulus whereas perception involves
understanding what the stimulus means. For example, when we see something, the
visual stimulus is the light energy reflected from the external world and the eye
becomes the sensor. This visual image of the external thing becomes perception when
it is interpreted in the visual cortex of the brain. Thus, visual perception refers to
interpreting the image of the external world projected on the retina of the eye and
constructing a model of the three dimensional world.”
From the above explanation it becomes clear that perception is something more than
sensation. It correlates, integrates and comprehends diverse sensations and
information from many organs of the body by means of which a person identifies
things and objects, the sensations refer to.
Perception is determined by both physiological and psychological characteristics of
the human being whereas sensation is conceived with only the physiological features.
Thus, perception is not just what one sees with the eyes it is a much more complex
process by which an individual selectively absorbs or assimilates the stimuli in the
environment, cognitively organizes the perceived information in a specific fashion and
then interprets the information to make an assessment about what is going on in
one’s environment.
Perception is a subjective process, therefore, different people may perceive the same
environment differently based on what particular aspects of the situation they choose
to selectively absorb, how they organize this information and the manner in which
they interpret it to obtain a grasp of the situation.
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5.2 Perception, Deception and Truth

Perception and Sensation
There is a distinction between sensation and perception. Sensation is the response of
a physical sensory organ. The physical senses are vision, hearing, tough, smell and
taste. These senses are bombarded by stimuli and reactions in particular sense organ
take place because of these, e.g., of sensation may be reaction of eye to color, ear to
sound and so on. Sensation precedes perception. Perception is much more than
sensation. Perception depends upon the sensory raw data. The perceptual process
adds to or/and subtracts from the sensory world. Perception is determined by both
physiological and psychological characteristics, of the organism. However, sensation
only activates the organs of the body and is not affected by such psychological factors
as learning and motives. Activation of eyes to see an object is sensation and the
inference what is being seen is perception. For managerial action, it is the latter which
is important.
Deception
Deception refers to the act—big or small, cruel or kind—of causing someone to
believe something that is untrue. Even the most honest people practice deception,
with various studies showing that the average person lies several times a day. Some
of those lies are big (“I’ve never cheated on you!”) but more often, they are little white
lies (“That dress looks fine,”) that are deployed to avoid uncomfortable situations or
spare someone's feelings.
Deception isn’t always an outward-facing act. There are also the lies people tell
themselves, for reasons ranging from healthy maintenance of self-esteem to
serious delusions beyond their control. While lying to oneself is generally perceived
as harmful, some experts argue that there are certain kinds of self-deception—like
believing one can accomplish a difficult goal even if evidence exists to the contrary—
that can have a positive effect on overall wellbeing.
Researchers have long searched for ways to definitively detect when someone is lying.
One of the most well-known, the polygraph test, has long been controversial, and
evidence suggests that those with certain psychiatric disorders like Antisocial
Personality Disorder cannot be accurately measured by polygraphs or other
commonly-used lie detection methods.
Exhibit 5.1 Perceptual Process
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5.3 Work Behavior and Perception

Perception is a process of receiving, selecting, organizing, interpreting, checking and
reacting to stimuli. This is like an input-through put-output process in which the
stimuli can be considered as 'inputs' transformation of 'input' through selection,
organization and interpretation as 'through puts' and the ultimate behavior/action as
'output'. The whole perceptional process can be presented as follows: These are
explained one by one
1. Receiving Stimuli: The first process in the perception is the presence of stimuli.
The stimuli are received from the various sources. Through the five organs. It is a
physiological aspect of perception process. Stimuli may be external to us (such as
sound waves) and inside us (such as energy generation by muscles).
2. Selection of Stimuli: After receiving the stimuli or data, some are selected. Others
are screened out. Two types of factors affect selection of stimuli for processing:
external and internal factors. External factors relate to stimuli such as intensity of
stimuli, its size, movement, repetition, etc. Internal factors, relate to the perceiver
such as his/her age, learning, interest, etc. Normally, he will select the objects
which interest him and will avoid that for which he is indifferent. This is also called
'selective perception'.
3. Organization of Stimuli: Organizing the bits of information into a meaningful
whole is called "organization". There are three ways by which the selected data,
i.e., inputs are organized. These are:
(i) Grouping, (ii) Closure and (iii) Simplification.
(i) Grouping: In grouping, the perceiver groups the various stimuli on the basis
of their similarity or proximity. For example, all the workers coming from the
same place may be perceived as similar on the basis of proximity.
(ii) Closure: When faced with incomplete information, people fill up the gaps
themselves to make the information meaningful. This may be done on the
basis of past experience, past data, or hunches. For example, in many
advertisement, alphabets are written by putting electric bulbs indicating the
shape of the concerned alphabets but broken lines. In such cases, people tend
to fill up the gap among different bulbs to get meaning out of these.
(iii) Simplification: People identify main stimulus features and assesses how they
are organized. He interprets a stimulus situation, the perceiver simples the
information.
Importance of Perception:
(i) Perception is very important in understanding the human behavior, because
every person perceives the world and approaches the life problems differently-
Whatever we see or feel is not necessarily the same as it really is. It is because
what we hear is not what is really said, but what we perceive as being said. When
we buy something, it is not because it is the best, but because we take it to be the
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best. Thus, it is because of perception, we can find out why one individual finds a
job satisfying while another one may not be satisfied with it.
(ii) If people behave on the basis of their perception, we can predict their behavior in
the changed circumstances by understanding their present perception of the
environment. One person may be viewing the facts in one way which may be
different from the facts as seen by another viewer.
(iii) With the help of perception, the needs of various people can be determined,
because people’s perception is influenced by their needs. Like the mirrors at an
amusement park, they distort the world in relation to their tensions.
(iv) Perception is very important for the manager who wants to avoid making errors
when dealing with people and events in the work setting. This problem is made
more complicated by the fact that different people perceive the same situation
differently. In order to deal with the subordinates effectively, the managers must
understand their perceptions properly.
Thus, for understanding the human behavior, it is very important to understand their
perception, that is, how they perceive the different situations. People’s behavior is
based on their perceptions of what reality is, not on reality itself. The world as it is
perceived is the world that is important for understanding the human behavior.
Errors in Perception
As seen above perception is the process of analyzing and understanding a stimulus as
it is. But it may not be always possible to perceive the stimuli as they are. Knowingly
or unknowingly, we mistake the stimulus and perceive it wrongly.
Many times the prejudices in the individual, time of perception, unfavorable
background, lack of clarity of stimulus, confusion, conflict in mind and such other
factors are responsible for errors in perception.
There are some errors in perception;
 Illusion.
 Hallucination.
 Halo Effect.
 Stereotyping.
 Similarity.
 Horn Effect.
 Contrast.
Illusion
The illusion is a false perception. Here the person will mistake a stimulus and perceive
it wrongly.
For example, in the dark, a rope is mistaken as a snake or vice versa. The voice of an
unknown person is mistaken as a friend’s voice. A person standing at a distance who
is not known may be perceived as a known person.
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Hallucination
Sometimes we come across instances where the individual perceives some stimulus,
even when it is not present. This phenomenon is known as a hallucination. The person
may see an object, person, etc. or he may listen to some voice though there are no
objects and sounds in reality.
Selective Perception: Selective perception means the situation when people
selectively interpret what they see on the basis of their interests, background,
experience, and attitudes.
It means any characteristics that make a person, object, or event stand out will
increase the probability that it will be perceived. Because it is impossible for us to
assimilate everything we see, only certain stimuli can be taken in.
Halo Effect
The individual is evaluated on the basis of perceived positive quality, feature or trait.
When we draw a general impression about an individual on the basis of a single
characteristic, such as intelligence, sociability, or appearance, a halo effect is
operating.
In other words, this is the tendency to rate a man uniformly high or low in other traits
if he is extraordinarily high or low in one particular trait: If a worker has few absences,
his supervisor might give him a high rating in all other areas of work.
Stereotyping
People usually can fall into at least one general category based on physical or
behavioral traits then they will be evaluated. When we judge someone on the basis
of our perception of the group to which he or she belongs, we are using the shortcut
called stereotyping.
or example, a boss might assume that a worker from a Middle East country is lazy and
cannot meet performance objective, even if the worker tried his best.
Similarity
Often, people tend to seek out and rate more positively those who are similar to
themselves. This tendency to approve of similarity may cause evaluators to give better
ratings to employees who exhibit the same interests, work methods, points of view
or standards.
Horn Effect
When the individual is completely evaluated on the basis of a negative quality or
feature perceived. This results in an overall lower rating than acceptable rate. He is
not formally dressed up in the office, that’s why he may be casual at work too.
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Contrast
The tendency to rate people relative to other people rather than to the individual
performance he or she is doing. Rather will evaluate an employee by comparing that
employee’s performance with other employees.
In the early 20th Century, Wilhelm Wundt identified contrast as a fundamental
principle of perception, and since then the effect has been confirmed in many
different areas.
These effects shape not only visual qualities like color and brightness but other kinds
of perception, including how heavy an object feels. One experiment found that
thinking of the name “Hitler” led to subjects rating a person as more hostile.
Basically, we use the above shortcuts when we judge others. Perceiving and
interpreting what others do is burdensome. As a result, individuals develop
techniques for making the task more manageable.
These techniques are frequently valuable-they allow us to make accurate perceptions
rapidly and provide valid data for making projections. But sometimes it also creates
problems. Because firstly, we have said that these are the shortcuts.
By these ways, we can judge others in a short period of time but sometimes we
mistakenly judge others by these shortcuts.
When Perception Fails

Perception often provides false interpretation of sensory information.
Such cases are known as illusions, a term used by psychologists to refer to incorrect
perceptions.
There are two types of illusions: those due to physical processes and those due to
cognitive processes. Illusions due to distortion of physical conditions include
hallucination, in which an individual perceives objects which are non-existent, as for
example, water on a dry road.
Cognitive processes result in many illusions but more common shape illusions which
often result in unsettling consequences. Consider a real-world example involving the
Poggendorf illusion.
In this illusion, a line disappears at an angle behind a solid figure, reappearing at the
other side at what seems to be the incorrect positions. Incorrect perceptions of the
world around them may lead to problems to personnel.
Budding managers who flame out do so because they fail to read situations properly
and act accordingly. They develop poor working relationships, are too authoritarian,
or have a conflict with upper management. As a result, their careers come to
screeching halt.
This should be avoided and they had been able to correctly perceive what they should
be doing and had the emotional maturity and ability to make the necessary changes.
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Why Perception Vary

Our perceptions vary from person to person, and the meaning we take from those
perceptions varies. This is why people have different tastes in music, art, architecture,
clothes, etc.
Different people perceive different things about the same situation. But more than
that, we assign different meanings to what we perceive.
And the meanings might change for a certain person.
One might change one’s perspective or simply make things mean something else. Two
people with identically tested seeing and hearing will still have different taste in what
they like to see and hear.
The way we perceive the world around us varies and is as unique as our individual
personalities. Even though we might look at the same picture, what we interpret will
vary depending on a number of factors, including what we expect to see.
Basically, perception is a very interesting facet of life and business. How we perceive
our world and how we think our world, perceives us can dictate how we act and how
we respond in certain situations.
Thus, perception, or apprehending by means of the senses or the mind, can be a very
powerful and influential aspect of our lives. It can direct our actions and Our thoughts,
which in many ways guide who we are.
Exhibit 5.2 Factors of Perception
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A number of factors operate to shape and sometimes distort perception. These

factors reside.
i. In the perceiver
ii. In the object or target being perceived or
iii. In the context of the situation in which the perception is made.
Characteristics of Perception in Organizational Behavior

Characteristics of the Perceiver
Several characteristics of the perceiver can affect perception. When an individual
looks at a target and attempts to interpret what he or she, that interpretation is
heavily influenced by personal characteristics of individual perceiver. The major
characteristics of the perceiver influencing perception are:
A. Attitudes: The perceiver's attitudes affect perception. For example, suppose
Mr. X is interviewing candidates for a very important position in his organization
–a position that requires negotiating contracts with suppliers, most of whom are
male. Mr. X may feel that women are not capable of holding their own in tough
negotiations. This attitude will doubtless affect his perceptions of the female
candidates he interviews.
B. Moods: Moods can have a strong influence on the way we perceive someone.
We think differently when we are happy than we do when we are depressed. In
addition, we remember information that is consistent with our mood state
better than information that is inconsistent with our mood state. When in a
positive mood, we form more positive impression of others. When in a negative
mood, we tend to evaluate others unfavorably.
C. Motives: Unsatisfied needs or motives stimulate individuals and may exert a
strong influence on their perceptions. For example, in an organizational context,
a boss who is insecure perceives a subordinate's efforts to do an outstanding
job as a threat to his or her own position. Personal insecurity can be transferred
into the perception that others are out to "get my job", regardless of the
intention of the subordinates.
D. Self-Concept: Another factor that can affect social perception is the perceivers'
self-concept. An individual with a positive self-concept tends to notice positive
attributes in another person. In contrast, a negative self-concept can lead a
perceiver to pick out negative traits in another person. Greater understanding
of self allows us to have more accurate perceptions of others.
E. Interest: The focus of our attention appears to be influenced by our interests.
Because our individual interests differ considerably, what one person notices in
a situation can differ from what others perceive. For example, the supervisor
who has just been reprimanded by his boss for coming late is more likely to
notice his colleagues coming late tomorrow than he did last week. If you are
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preoccupied with a personal problem, you may find it hard to be attentive in

class.
F. Cognitive Structure: Cognitive structure, an individual's pattern of thinking, also
affects perception. Some people have a tendency to perceive physical traits,
such as height, weight, and appearance, more readily. Others tend to focus
more on central traits, or personality dispositions. Cognitive complexity allows
a person to perceive multiple characteristics of another person rather than
attending to just a few traits.
G. Expectations: Finally, expectations can distort your perceptions in that you will
see what you expect to see. The research findings of the study conducted by
Sheldon S Zalkind and Timothy W Costello on some specific characteristics of
the perceiver reveal.
 Knowing oneself makes it easier to see others accurately.
 One's own characteristics affect the characteristics one is likely to see in
others.
 People who accept themselves are more likely to be able to see favorable
aspects of other people.
 Accuracy in perceiving others is not a single skill.
These four characteristics greatly influence how a person perceives others in the
environmental situation.
Characteristics of the Target

Characteristics in the target that is being observed can affect what is perceived.
Physical appearance plays a big role in our perception of others. Extremely attractive
or unattractive individuals are more likely to be noticed in a group than ordinary liking
individuals. Motion, sound, size and other attributes of a target shape the way we see
it.
Physical appearance plays a big role in our perception of others. The perceiver will
notice the target's physical features like height, weight, estimated age, race and
gender.
Perceivers tend to notice physical appearance characteristics that contrast with the
norm, that are intense, or that are new or unusual. Physical attractiveness often
colourour entire impression of another person. Interviewers rate attractive
candidates more favorably and attractive candidates are awarded higher starting
salaries.
Verbal communication from targets also affects our perception of them. We listen to
the topics they speak about, their voice tone, and their accent and make judgements
based on this input.
Non-verbal communication conveys a great deal of information about the target. The
perceiver deciphers eye contact, facial expressions, body movements, and posture all
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in an attempt to form an impression of the target.

The perceiver, who observes the target's behavior, infers the intentions of the target.
For example, if our manager comes to our office door way, we think "oh no! he is
going to give me more work to do". Or we may perceive that his intention is to
congratulate us on a recent success. In any case, the perceiver's interpretation of the
target's intentions affects the way the perceiver views the target.
Targets are not looked at in isolation, the relationship of a target to its background
influences perception because of our tendency to group close things and similar things
together.
Objects that are close to each other will tend to be perceived together rather than
separately. As a result of physical or time proximity, we often put together objects or
events that are unrelated. For examples, employees in a particular department are
seen as a group. If two employees of a department suddenly resign, we tend to
assume their departures were related when in fact, they might be totally unrelated.
People, objects or events that are similar to each other also tend to be grouped
together. The greater the similarity, the greater the probability we will tend to
perceive them as a group.
Characteristics of the Situation

The situation in which the interaction between the perceiver and the target takes
place has an influence on the perceiver's impression of the target. For example, a
professor may not notice his 20-year-old female student in a bikini at the swimming
pool. Yet the professor will notice the same girl if she comes to his organizational
behavior class in bikinis. In the same way, meeting a manager in his or her office
affects your impression in a certain way that may contrast with the impression you
would form had you met the manager in a restaurant.
The strength of the situational cues also affects social perception. Some situations
provide strong cues as to appropriate behavior. In these situations, we assume that
the individual's behavior
can be accounted for by the situation, and that it may not reflect the individual's
disposition. This is the discounting principle in social perception. For example, you
may encounter an automobile sales person who has a warm and personable manner,
asks you about your work and hobbies, and seems genuinely interested in your taste
in cars. Can you assume that this behavior reflects the sales person's personality? You
probably cannot, because of the influence of the situation. This person is trying to sell
you a car, and in this particular situation he probably treats all customers in this
manner.
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5.4 Decision Making & Emotional Competence

Frequently Used Shortcuts in judging others: Perceiving and interpreting what others
do is burdensome. As a result, individuals develop techniques for making the task
more manageable. These techniques are not fool proof. Several factors lead us to
form inaccurate impressions of others. These barriers to perception are inaccurate
impressions of others. These barriers to perception are
1. Selective Perception: We receive a vast amount of information. Therefore, it is
impossible for us to assimilate everything we see - on eye certain stimuli can be
taken. That is why their boss may reprimand some employees for doing
something that when done by another employee goes unnoticed. Since, we
can't observe everything going on about us, we engage in selective perception.
Selective perception is also out tendency to choose information that supports
our view points; Individuals often ignore information that makes them feel
uncomfortable or threatens their view points.
Selective perception allows us to "speed-read" others, but not without the risk
of drawing an inaccurate picture. Because we see what we want to see, we can
draw unwarranted conclusions from an ambiguous, perception tends to be
influenced more by an individual's attitudes, interests, and background than by
the stimulus itself.
2. Stereotype: A stereotype is a generalization about a group of people. When we
judge someone on the basis of our perception of the group to which he or she
belongs, we are using the shortcut called stereo typing. Stereo types reduce
information about other people to a workable level, and they are efficient for
compiling and using information. It is a means of simplifying a complex world
and it permits us to maintain consistency. It is less difficult to deal with an
unmanageable number of stimuli if we use stereo types. Stereo types can be
accurate, and when they are accurate, they can be useful perceptual guidelines.
However, most of the times stereotypes are inaccurate.
Attractiveness is a powerful stereo type. We assume that attractive individuals
are also warm, kind, sensitive, poised, sociable, outgoing, independent, and
strong. Are attractive people sociable, outgoing, independent, and strong? Are
attractive people really like this? Certainly all of them are not.
In organizations, we frequently hear comments that represent stereo types
based on gender, age, nationality etc. From a perceptual stand point, if people
expect to see this stereo type, that is what they will perceive, whether it's
accurate or not.
3. Halo Effect: The halo error in perception is very similar to stereo typing. Where
as in stereo typing the person is perceived according to a single category, under
the halo effect the person is perceived on the basis of one trait.
When we draw a general impression about an individual based on a single
characteristic, such as intelligence, sociability or appearance, a halo effect is
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operating. The propensity for the halo effect to operate is not random. Research
suggests it is likely to be most extreme when the traits to be perceived are
ambiguous in behavioral terms, when the traits have moral over tones, and
when the perceiver is judging traits with which he or she has limited experience.
Example of halo effect is the extremely attractive women secretary who is
perceived by her male boss as being an intelligent, good performer, when, in
fact, she is a poor typist.
4. First-impression error: Individuals place a good deal of importance on first
impressions. First impressions are lasting impressions. We tend to remember
what we perceive first about a person, and sometimes we are quite reluctant to
change our initial impressions. First - impression error means the tendency to
form lasting opinions about an individual based on initial perceptions. Primacy
effects can be particularly dangerous in interviews, given that we form first
impressions quickly and that these impressions may be the basis for long-term
employment relationships.
5. Contrast Effect: Stimuli that contrast with the surrounding environment are
more likely to be selected for attention than the stimuli that blends in. A
contrasting effect can be caused by color, size or any other factor that is unusual
(any factor that distinguishes one stimulus from others at present). For example,
a man walking down the street with a pair of crutches is more attention getting
than a common man. A contrast effect is the evaluation of a person's
characteristics that are affected by comparisons with other people recently
encountered that rank higher or lower on the same characteristics. The
"contrast" principle essentially states that external stimuli that stands out
against the background or which are not what are expecting well receive their
attention. The contrast effect also explains why a male student stands out in a
crowd of female students. There is nothing unusual about the male students
but, when surrounded by females, he stands out.
An illustration of how contrast effects operate in an interview situation in which
one sees a pool of job applicants. Distortions in any given candidate's evaluation
can occur as a result of his or her place in the interview schedule. The candidate
is likely to receive a more favorable evaluation if preceded by mediocre
applicants, and a less favorable evaluation if preceded by strong applicants.
6. Projection: It is easy to judge others if we assume they are similar to us. This
tendency to attribute one's own characteristics to other people is called
projection.
Projection can distort perceptions made about others. People who engage in
projection tend to perceive others. According to what they are like rather than
according to what the person being observed is really like. When managers
engage in projection, they compromise their ability to respond to individual
differences. They tend to see people as more homogeneous than they really are.
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7. Implicit Personality Theories: We tend to have our own mini-theories about

how people look and behave. These theories help us organize our perceptions
and take shortcuts instead of integrating new information all the time. Implicit-
personality theory is opinions formed about other people that are based on our
own mini theories about how people behave. For example, we believe that girls
dressed in fashionable clothes will like modern music and girls dressed in
traditional dress like saree will like Indian classical music. These implicit
personality theories are barriers because they limit our ability to take in new
information when it is available.
8. Self-Fulfilling Prophecies: Self-fulfilling prophecies are the situation in which
our expectations about people affect our interaction with them in such a way
that our expectations are fulfilled. Self -fulfilling prophecy is also known as
the Pygmalion effect, named after a sculptor in Greek mythology who carved a
statue of a girl that came to life when he prayed for this wish and it was granted.
The Pygmalion effect has been observed in work organizations as well. A
manager's expectations of an individual affect both the manager's behavior
toward the individual and the individual's response. For example, suppose a
manager has an initial impression of an employee as having the potential to move
up within the organization. Chances are that the manager will spend a great deal
of time coaching and counselling the employee, providing challenging
assignments and grooming the individual for success.
Perception theory by Gestalt
Gestalt is a decisive trend in psychology history. It was born in Germany at the
beginning of the 20th century. It was Christian von Ehrenfels, an Austrian philosopher,
who gave this movement its name in The Attributes of Form, his most important work.
There is no perfect English translation of the term “gestalt”. But we can interpret it as
“totality”,” figure”,” structure”, “configuration” or “organized unity”.
“The whole is more than the sum of its parts” is its maximum. The main authors of
Gestalt proposed alternatives to the dominant psychological paradigms and made
great contributions to cognitive psychology.
This particular focus was a breath of fresh air and allowed people who did not feel
represented by the main currents of psychology to find an alternative.
Gestalt Theory: Characteristics
 Its main predecessors of gestalt theory are philosophers: Thinkers such as Kant,
Descartes or Husserl developed the theoretic basis on which this school
developed. The psychologists belonging to this current were able to take their
ideas to the laboratory and obtain amazing results.
 We must treat people as a whole: We cannot explore the different dimensions
that shape us in isolation. A holistic approach is needed when speaking about
mental health. The complexity of the human mind cannot be reduced. Gestalt
theory explores the dynamic relationships that connect the various elements of
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reality. Gestalt theory does not conceive separating processes such as learning
from memory.
 We are active in understanding reality: We do not all perceive reality, in the same
way, we have our own vision. Each one structures the information they receive
according to their previous experiences. Our mental representations do not
correspond completely with those that exist in reality, we construct them
ourselves. We are also able to adapt our mental processes and contents as new
situations arise.
 They opposed the predominant schools in their time: Gestalt theory
psychologists did not agree with approaches such as behaviorism, which limits
human behavior to associations between stigmas and responses. This perspective
leaves mental processes aside and does not contemplate the potential of human
intelligence. On the other hand, they did not adhere to psychoanalysts either,
seeing people as passive agents without willpower.
 Gestalt theory’s main study area is perception: Gestalt theorist focused
especially on seeking simple and natural explanations that could be adapted to
our natural way of perceiving reality. Through perception, we are able to acquire
knowledge of the world, interact with it and connect with others.
Our senses and mental processes interact to allow us to perform tasks as varied as
removing the hand from a burning surface or notice that the person speaking to us is
upset by their frowning. Gestalt theory focuses on visual perception. However, their
ideas have been adapted to fields such as music.
Gestalt Theory: Main contributions
Gestalt psychologists are known for their contributions to the study of the learning
process and problem-solving. However, their most relevant contribution, which was
started by Wertheimer, is the elaboration of some basic laws that govern our
perception.
Gestalt Theory Laws
We can see a host of examples of these principles around us. In addition, they are fully
applicable to our daily life.
1. Law of Prägnanz
Perception tends to organize the elements in the simplest possible way. Our brain
prefers harmonious compositions. Mental processes are not infinite, we cannot
dedicate time and resources to everything around us. Therefore, we simplify what
we perceive and prefer simplicity. In this picture, we don’t need any more data to
know that we are looking at a cup.
2. Figure-ground law
We have all seen Rubin’s glass at one time or another, it is the best-known
example of this phenomenon. We will have realized that it is impossible to
perceive the faces and the cup at the same time.
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3. Law of proximity
The elements closest to each other tend to form a group as if they were one set.
If you look at three piles of candy, you’ll notice three groups instead of seeing all
the candy separately. In this example, we perceive the objects in each box as a
single block.
4. Law of similarity
Similar figures seem to have the same shape. Their similarity may be due to the
fact that they have a similar color, shape or any other characteristic that allows us
to draw a parallel between them. We know that each tree has its own
characteristics; not all trees have exactly the same height and color. However,
from this point of view, they seem to us to be practically the same because of
their similarity.
5. Common Fate law
Elements that seem to move together towards a certain orientation are perceived
as a whole. If we see some children running to an ice cream stand, we will look at
them as a whole. However, we can also look at them one by one if we are
interested. In this case, we perceive the group in a homogeneous way.
6: Law of Closure
We tend to mentally close the contours to simplify reality. If we see a slightly
curved curve that is practically closed, we will notice a circumference. It is also
possible to apply this law to verbal messages.
For example, advertisers release suggestive phrases for their audience to
complete. This technique requires a little effort on the part of the public to be
effective. However, it maintains its interest and can achieve greater involvement.
This photograph leads us to imagine a closed line that unites all people. We see
that they are separate, but our brain reduces the information.
7. Law of Good Continuity
We prefer to ignore the abrupt changes in an image we are seeing. Generally
speaking, we pay more attention to the characteristics of a stimulus that allow us
to perceive a smooth continuity.
One example is that if we are walking around and notice on a poster an A covered
in half by a street lamp, we will continue to know that the letter is A and read the
text without difficulties. In this example, we can see the continuity of the
branches.
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Gestalt Theory: Applications

Basic research
The study of basic psychological processes such as attention or perception has been
influenced by Gestalt theory. Their research is fundamental for other authors to apply
their discoveries to practice.
For example, advances in the field of perception make it possible for us to carry out
programmes to improve road signs and avoid accidents. Their ideas continue to be
reviewed and modified by experts to help us better understand how we work.
Problem solving
Gestalt psychologists believed that the circumstances are composed of several
components that interact with each other. If we want to solve a problem, we have to
reorganize its components to discover a new solution. This idea can be extrapolated
to all areas of our life. What do we have to do every day to solve a problem?
Wertheimer proposed the difference between productive thinking, which consists in
carrying out creative reorganizations of the elements of the problems in order to solve
them, and reproductive thinking, which is limited to applying the previous knowledge
in a mechanical way.
Gestalt theory insists on using productive thinking, which will help us to reach insight.
This term refers to the eureka moment, which takes place when we suddenly realize
what the answer to our difficulties is.
Education
Students should be more than just data recorders and learn to look for ways to solve
their difficulties on their own. Practically all the contributions of the Gestalt can be
integrated into the field of education. From their insights into mental processes to
their ideas about therapy, they enable students to progress both academically and
personally.
Practical examples clarifying perception effects on decision making:
1. Employment interview: Early impressions are very effective and important.
Perceptual judgments are often inaccurate and may lead to inaccurate decisions
in selecting candidates to be hired.
2. Performance Expectations: People attempt to validate their perceptions of
reality, even when they are faulty. A situation in which a person inaccurately
perceives a second person and the resulting expectations cause the second
person to behave in ways consistent with the original perception. This will lead to
misunderstanding in actual intensions of the two persons and hinder their
communication.
3. Performance Evaluations: many subjective components (perceptions) are used in
the evaluation of employees. This will affect decisions taken in performance
appraisal procedures in organizations.
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4. Employee Effort: how is effort perceived is often a reason for terminations.

Managers may tend to perceive the effort of their employees is not enough as
they expect. This is depending on the managers’ perceptions.
If a manager, in an organization, comes to each employee’s desk and interacts with him, one
employee may perceive the manager’s visits as friendly in nature while another may perceive
the visits as an attempt by the manager, to keep an eye on them. The perception of two
individuals may differ even if they are exposed to the same stimuli, under the same condition.
Thus people respond to situations on the basis of their perception about reality rather than the
reality itself. We will discuss personality in the following chapter.
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Organizational Behaviour Personality Traits and Measuring Personality
CHAPTER 6
PERSONALITY TRAITS AND MEASURING
PERSONALITY
6.1 Implicit versus Scientific ideas about personality
6.2 Personality at work
6.3 Measuring and assessing personality
6.4 Relation between attitude and values
We can think of personality as the sum total of ways in which an individual reacts to interacts
with others. Personality has both internal and external elements. The external traits are the
observable behaviours that is noticed in an individual’s personality, for example, sociability.
The internal states represent the thoughts, values and genetic characteristics that we infer
from the observable characteristics.
6.1 Implicit versus Scientific ideas about personality

As two people are different in their physical appearances they also differ
psychologically in temperament and character. We often tend to make assumptions
about the people we meet about the kind of people they are. Everyday theorizing
about personality and individual traits is referred to as ‘implicit personality theory’.
Some of the theories are
Psychoanalytic Theory
Through his study of the psychosexual development of humans, Sigmund Freud was
able to develop the Structural Model, which explains the three parts of a person's
personality (id, ego, and superego). Freud believes that a person is born with Id, the
pleasure-seeker portion of our personality. He believed that as newborns, the Id was
crucial because it drives us to get our basic needs satisfied. For instance, a child is
hungry and his Id wants food; this causes him to cry until his need is gratified. The Id
is said to be inconsiderate of other circumstances - all it cares about is its own
satisfaction.
In a span of three years, the baby grows and starts to learn new things as he interacts
with the environment. During this time his Ego develops. The ego is rooted on the
principle of reality as it is the part of one's personality. It aims to satisfy Id but
considers the situation at hand, thus balancing the Id and the Superego.
When the child reaches the age of five, he begins to learn about the moral and ethical
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Personality Traits and Measuring Personality Organizational Behaviour
rules and restraints imposed by his parents, teachers and other people. This is the
time the Superego develops. It is based on the moral principle as it tells us whether
something is right or wrong.
Social Learning Theory
There are two ways of learning: learning through reinforcement, direct experience
and learning by observing others also called vicarious learning. For social learning
theorists, reinforcement is not always necessary for learning. The model suggests that
person, environment and behaviour are constantly affecting each other.
Bandura developed what famously became known as the Bobo Doll experiments. In
these studies, children watched adults model either violent or passive behavior
towards a toy called Bobo Doll, and what they saw influenced how they subsequently
interacted with the dolls. Children who observed violent behavior imitated this
behavior and were verbally and physically aggressive toward the doll. Children who
witnessed nonviolent behavior behaved less aggressively toward the doll. Bandura
concluded that children learn aggression, violence, and other social behaviors through
observation learning, or watching the behaviors of others.
The most common (and pervasive) examples of social learning situations are
television commercials. Commercials suggest that drinking a certain beverage or using
a particular hair shampoo will make us popular and win the admiration of attractive
people. Depending upon the component processes involved (such as attention or
motivation), we may model the behavior shown in the commercial and buy the
product being advertised.
 Determinants of personality
Heredity: Hereditary, or the genetic transmission of characteristics from parents
to offspring, determines personality to a certain extent. Hereditary characteristics
manifest at birth such as hair and eye color, skin color and body type. Hereditary
also includes aptitude or the capacity to learn a skill or inclination for a particular
body of knowledge.
A set of twins separated for 9 years and raised 45 miles apart were found to drive
the same model of car (even the same colour). They smoked the same brand of
cigarettes, owned dogs of the same name and regularly went on vacation within
three blocks of each other in a beach community 1,500 miles away.
Researchers have found that genetics accounts for about 50% of the personality
similarities between twins and more than 30% of the similarities in occupational
and leisure interests. The following classification of characteristics is said to be
inherited by all humans:
(a) Physical structure (how tall or short a person is, large or small feet etc)
(b) Reflexes (response to external stimuli)
(c) Innate drivers (impulses to act based on physiological tensions)
(d) Intelligence (the capacity to learn etc)
(e) Temperament (responses associated with basic emotional makeup)
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Environment: Environment includes the culture in which we are raised, our early
conditioning, rules among our family, friends and social group. These factors play
an important role in sharing our personality. Culture establishes rules, attitudes
and values that are passed from one generation to the next. A belief held in one
culture may not be supported in other culture.
Every culture has its own subcultures, each with its own views about such qualities
as moral values and standards, cleanliness, style of dress and definitions of
success.
For example, in Indian culture the children are supposed to respect the elders and
girls are expected to learn household work.
 Personality traits
 The Big Five Personality Traits: Many contemporary personality psychologists
believe that there are five basic dimensions of personality, often referred to
as the "Big 5" personality traits. The five broad personality traits described by
the theory are:
Extraversion: Extraverts tend to be gregarious, assertive and sociable.
Introverts tend to be reserved, timid and quiet.
Example, a person with extraversion characteristics loves going out and is
generally life of the parties.
Agreeableness: It refers to a person’s ability to get along with others. They
are cooperative and trusting.
Example, a person who is agreeable doesn’t mind taking time out for other
people. If a person takes time out of his busy schedule at work to meet a
friend for lunch, he is agreeable.
Conscientiousness: It refers to the number of goals that a person focuses on.
A highly conscientious person focuses on relatively few goals at a time. He or
she is likely to be organized, systematic, careful, responsible and persistent.
Example, if a person is highly self- disciplined, say he always does his chores
done right away, he can be called conscientious.
Emotional stability: It refers to an individual’s ability to cope with stress. An
individual with positive emotional stability tends to be calm, enthusiastic and
secure. A person with low emotional stability tends to be nervous, depressed
and insecure.
Example, if a person easily loses his temper when he doesn’t get his order in
time or there is too much sugar in his coffee, such people have low score on
emotional stability.
Openness to experience: It addresses one’s range of interests. Extremely
open people are fascinated by novelty and innovation. They are willing to new
ideas and to change their own ideas, beliefs and attitude.
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Example, if a person is open to traveling new places spontaneously, he can be

considered open to new experiences.
Pepsico CEO Indra Nooyi scores high on all personality dimensions of
Big Five model. These traits have contributed to Nooyi’s high job performance
and career success.
 The Myers Briggs Type Indicator
It is the most widely used personality assessment instrument in the world
designed to identify a person's personality type, strengths, and preferences. The
questionnaire was developed by Isabel Myers and her mother Katherine Briggs
based on their work with Carl Jung's theory of personality types. It is a 100
question personality test that asks people how they usually feel or act in particular
situations. Based on the answers to the questions on the inventory, people are
identified as having one of 16 personality types. The goal of the MBTI is to allow
respondents to further explore and understand their own personalities including
their likes, dislikes, strengths, weaknesses, possible career preferences, and
compatibility with other people. The different dimensions are:
 Extraverted (E) versus Introverted (I): Extraverts are "outward-turning" and tend
to be action-oriented, enjoy more frequent social interaction, and feel energized
after spending time with other people. Introverts are "inward-turning" and tend
to be thought-oriented, enjoy deep and meaningful social interactions, and feel
recharged after spending time alone.
 Sensing (S) versus Intuitive (N): People who prefer sensing tend to pay a great
deal of attention to reality, particularly to what they can learn from their own
senses. They tend to focus on facts and details and enjoy getting hands-on
experience. Those who prefer intuition pay more attention to things like patterns
and impressions. They enjoy thinking about possibilities, imagining the future, and
abstract theories. They rely on unconscious processes and look at the ‘big picture’.
 Thinking (T) versus Feeling (F): People who prefer thinking place a greater
emphasis on facts and objective data. They tend to be consistent, logical, and
impersonal when weighing a decision. Those to prefer feeling are more likely to
consider people and emotions when arriving at a conclusion.
 Judging (J) and Perceiving (P): Those who lean toward judging prefer Control,
structure and firm decisions. People who lean toward perceiving are more open,
spontaneous, flexible, and adaptable.
Examples
INTJ: INTJ (introverted, intuitive, thinking, and judging) is one of the 16
personality types. Sometimes referred to as the "Architect," or the "Strategist,"
people with INTJ personalities are highly analytical, creative and logical. According
to psychologist David Keirsey, developer of the Keirsey Temperament Sorter,
approximately one to four percent of the population has an INTJ personality type.
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o INTJs tend to be introverted and prefer to work alone.

o INTJs look at the big picture and like to focus on abstract information rather
than concrete details.
o INTJs like their world to feel controlled and ordered so they prefer to make
plans well in advance.
IFSP: IFSP (introverted, feeling, sensing, perceiving) is often referred to as
‘the artist’. People with an ISFP personality are frequently described as quiet,
easy-going and peaceful.
o ISFPs like to keep their options open, so they often delay making decisions in
order to see if things might change or if new options come up.
o ISFPs are kind, friendly, sensitive and quiet.
o While they are quiet and reserved, they are also known for being peaceful,
caring, and considerate. ISFPs have an easy-going attitude and tend to accept
other people as they are.
o ISFPs like to focus on the details. They spend more time thinking about the
here and now rather than worrying about the future.
Other Personality Traits
Machiavellianism
Karan is a young bank manager in Bangalore. He’s had three promotions in the
past 4 years and makes no apologies for the aggressive tactics he has used to push
his career forward. He says that he is ready to do whatever it takes to go ahead.
He can be called a Machiavellian.
Machiavellianism is a term derived from the writing of Nicolo Machiavelli refers
to individual’s propensity to manipulate people. Machiavellianism, often
abbreviated Mach, is a personality trait that is characterized with the use of
manipulation to achieve power. An individual high in Machiavellianism is
pragmatic, maintains emotional distance and believes that ends can justify
means.
High Machs are those who would be considered highly manipulative, not easily
persuaded, but persuade others more than low Machs, successful in reaching
their goals and tend to win more. People with a high Mach personality tend to be
calm, unattached, calculated and look for ways to exploit loose structures or
vulnerability in people. High Machs flourish in face-to-face settings where there
are limited rules and structure and when emotions hold little value in goal
achievement. Therefore, high Machs are best matched in professions that reward
their 'do whatever it takes' attitude such as sales or jobs that offer commission
for results.
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Locus of Control
It refers to an individual’s belief that events are either within one’s control
(internal locus of control) or are determined by forces beyond one’s control
(external locus of control).
Those with an Internal Locus of Control
o Are more likely to take responsibility for their actions.
o Tend to be less influenced by the opinions of other people.
o Often do better at tasks when they are allowed to work at their own pace.
o Feel confident in the face of challenges.
o Often achieve greater success in the workplace.
Those with an External Locus of Control
o Blame outside forces for their circumstances.
o Often credit luck or chance for any successes.
o Don't believe that they can change their situation through their own efforts.
o Frequently feel hopeless or powerless in the face of difficult situations.
Example: Kirti had been busy going out with friends and spending time on
facebook before the final semester exams. Afterwards, she was rejected from
many jobs due to her poor marks and lack of knowledge. She was upset and
blamed her luck for the consequences. Her locus of control was external.
Jaya on the other hand was Kirti’s friend and faced similar situations due to poor
marks. However, she realized that it was her mistake and thought of a plan to
correct it. She started preparing diligently for the interviews. She finally cracked a
decent job for her domain knowledge and technical skills. Her locus of control was
internal.
Self-monitoring
Ravi is always at trouble at work despite of being a competent and hardworking
employee. In his performance reviews he is rated no better than average. His problem
is that he is politically inept. He is unable to adjust his behaviour to fit changing
situations. Ravi can be described as a low self-monitor.
Self-monitoring refers to how a person behaves in different contexts (work, visiting
friends, or shopping). A high self-monitoring person is someone who monitors and
adapts their own behavior to match their surroundings. A low self- monitor tends to
use their internal values and beliefs to figure out how to behave.
Narcissism
Anil likes to be the centre of attention everywhere. He looks at himself in the mirror
a lot, has extravagant dreams and considers himself to be the best. Anil is a narcissist.
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The term comes from the Greek myth of Narcissus, a man so vain and proud that he
fell in love with his own image.
Narcissism describes a person who has a grandiose sense of self-importance, requires
excessive admiration and is arrogant. They also tend to be selfish, exploitive and
believe others exist for their benefit.
Example: Alexander the Great exhibited all the characteristics of a raging narcissist.
He assembled a huge army for one reason, to realise his own personal ambitions. He
believed that you were either with him or against him and he took his faithful soldiers
on endless battles, much to their expense, solely for his own glory and personal
conquests. He showed no emotion for the bloodshed of his generals or soldiers but
believed in his grandiose visions. Alexander the Great named over 70 cities after
himself.
Risk taking
Dhirubhai Ambani, the founder of the Reliance Group was the son of a school teacher
and started his entrepreneurial career by selling pakoras to pilgrims in Mount Girnar.
At the age of 17, he went to Aden and worked for A.Besse & co. Ltd. In 1958 he started
his first company, Reliance Commercial Corporation (trading and export). He started
his own company in 1965 and in 1966 he started a textile mill in Ahmedabad.The rest
is history. He was successful because of his phenomenal risk taking ability and his
belief in taking on and managing calculated risks.
People differ in their willingness to take chances which affects how much time and
information managers need to make a decision. The work population as a whole also
differs in risk propensity. A high risk taking propensity may lead to more effective
performance for a stock trader in a brokerage firm because that type of job demands
rapid decision making. On the other hand, for an accountant taking risks might prove
to be a major obstacle.
Type A and Type B personality
A person with Type A personality is ‘aggressively involved in a chronic, incessant
struggle to achieve more and more in less and less time, if required against the
opposing efforts of other things or other persons.
Type As exhibit the following characteristics:
 Are always moving, walking and eating rapidly.
 Feel impatient with the rate at which most events take place.
 Strive to think or do two or more things at once.
 Cannot cope with leisure time.
 Are obsessed with numbers, measuring their success in terms of how many or
how much of everything they acquire.
The Type B is exactly the opposite. They never suffer from a sense of urgency with
its accompanying impatience, can relax without guilt and so on.
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Type Bs exhibit the following characteristics:

 They are not concerned about time.
 They compete for fun, not to win.
 Mild-mannered.
 Never in a hurry and has no pressing deadlines.
 Laid back and live stress-less life.
6.2 Personality at work

Personality affects all aspects of a person's performance, even how he reacts to
situations on the job. Not every personality is suited for every job position, so it's
important to recognize personality traits and pair employees with the duties that fit
their personalities the best. This can lead to increased productivity and job
satisfaction, helping your business function more efficiently.
Openness to experience: As well as displaying receptiveness to new tasks, employees
with this trait also tend to be more intellectually curious and creatively minded. Such
employees are likely to benefit when given the variety they crave, while still having
close management as a guide to keep them focused.
Conscientiousness: Employees with this trait tend to be more reliably disciplined, not
only planning their own work, but also fulfilling those plans. They might shrink from a
more free-flowing job role, and tend towards more stubborn behaviour, but with the
opportunity to organise their work they are likely to achieve a high level of efficiency.
Extraverts: Because people with high extraversion tend towards more outgoing,
sociable activities, they are very well suited to team projects. These co-workers are
the ones who will provide energy and drive communication during collaboration.
However, they can also tend towards attention-seeking behaviour, which can
overwhelm those around them.
Introverts: More introverted colleagues will be much more reserved, thinking things
through internally and less likely to engage in large group conversations. This allows
them to excel at work which involves working alone without disrupting those around
them.
Agreeableness: These people are more likely to work cooperatively with their team
members, foster more trust and present a helpful attitude.
Sensitive: These employees will also display more excitement about tasks they enjoy,
inspiring the same reaction in their colleagues.
Ideally, a team is composed of the six major personality types: driver, adventurer,
energizer, cheerleader, stabilizer and perfectionist. Each person has a dominant
personality type and a latent personality type. By combining all of these personalities
on the same team, you have the ingredients for success in a project.
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6.3 Measuring and Assessing personality

Self-ratings can be done through personality inventories and paper and pencil test.
Some popular personality inventories are:
1. California Tests of Personality.
2. Minnesota Multiphasic Personality Inventory (MMPI).
3. Bell’s Adjustment Inventory.
4. Woodworth Personal Data Sheet.
5. Edward Personal Preference Schedule.
6. Cornell Index.
7. Boyd’s Personality Questionnaire.
8. Guilford-Zimmerman Temperament Survey.
9. Minnesota Counselling Inventory.
10. Thurstone Temperament Schedule
11. Eysenck’s Personality Inventory.
12. The Shipley Personal Inventory.
13. I.P.P. Personality Inventory Test.
14. Comrey Personality Scales.
15. Saxena’s Personality Inventory.
16. Mittal’s Adjustment Inventory.
Example, Eysenck Personality Questionnaire
The Eysench Personality Questionnaire is based on Eysenck’s model of personality,
and was developed from a large body of research and laboratory experiments.
Eysenck’s inventory focuses on three dimensions: psychoticism, extraversion, and
neuroticism.
Minnesota Multiphasic Personality Inventory (MMPI)
The Minnesota Multiphasic Personality Inventory (MMPI) is the most widely used
personality inventory for both clinical and nonclinical populations, and is commonly
used to help with the diagnosis of personality disorders. It was first published in 1943,
with 504 true/false questions; an updated version including 567 questions was
released in 1989, and is known as the MMPI-2. The original MMPI was based on a
small, limited sample composed mostly of Minnesota farmers and psychiatric
patients; the revised inventory was based on a more representative, national sample
to allow for better standardization.
Projective measures
Projective measures, unlike objective tests, are sensitive to the rater’s or examiner’s
beliefs. Projective tests are based on Freudian psychology (psychoanalysis) and seek
to expose people’s unconscious perceptions by using ambiguous stimuli to reveal the
inner aspects of an individual’s personality. Two of the most popular projective
measures are the Thematic Apperception Measure and the Rorschach test.
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Thematic Apperception Test

The Thematic Apperception Test (TAT) consists of 30 cards (including one blank card)
depicting ambiguous drawings. Test-takers are asked to tell a story about each
picture, including the background that led up to the story and the thoughts and
feelings of the characters. Like the Rorschach test, the results are thought to indicate
a person’s personality characteristics and emotional functioning.
6.4 Relation between attitude and values

Attitudes are evaluative statements about objects, people or events. They reflect how
we feel about something.
 The ABC model
The statement “my pay is low” is the cognitive component of an attitude – a
description of or belief in the way things are. It sets the stage for the more critical
part of an attitude – its affective component. Affect is the emotional or feeling
segment of an attitude and is reflected in the statement “I am angry over how
little I am paid.” It can lead to behavioral outcomes. The behavioral component
of an attitude describes an intention to behave in a certain way toward someone
or something. For example, “I am going to look for another job that pays better.”
The three components described above constitute the ABC model. In
organisations, attitudes are important for their behavioral component. For
example, if workers believe that supervisors, auditors, bosses are all in conspiracy
to make them work harder for less money, it makes sense to try to understand
how these attitudes are formed, their relationship to actual job behaviour and
how they might be changed.
 Major job attitudes
Job satisfaction: It refers to the general attitude of employees towards their jobs.
A person with high level of job satisfaction holds positive feelings about his job
while a person with low job satisfaction holds negative feelings.
Job involvement: It measures the degree to which people identify psychologically
with their job and consider their perceived performance level important to self-
worth. Employees with high level of job involvement strongly identify with and
really care about the kind of work they do.
Organisational Commitment
In organisational commitment, an employee identifies with a particular organisation
and its goals and wishes to remain a member. The three separate dimensions are:
1. Affective commitment: It is an emotional attachment to the organisation and a
belief in its values. For example, a Petco (Pet Supplies, Pet Food, and Pet Products)
employee may be affectively committed to the company because of its
involvement with animals.
2. Continuance commitment: It is the perceived economic value of remaining with
an organisation. An employee may be committed to an employer because she is
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paid well and feels it would hurt her family to quit.

3. Normative commitment: It is an obligation to remain with the organisation for
moral or ethical reasons. For example, Sam had been leading a new initiative and
couldn’t leave even after getting a better offer as he felt he would leave the
employer in the lurch if he left.
Organizational Citizenship Behavior
Most employees understand that their primary duty is to do the work that is assigned
to them, stay away from behaviors that could be deemed troublesome, and deliver
work that is acceptable and beneficial to the organization. Organizational citizenship
behavior deals with the actions and behaviors that are not required by workers. They
are not critical to the job, but benefit the team and encourage even greater
organizational functioning and efficiency. Organizational Citizenship Behavior allows
employees to feel they have greater control over the work they do, and how they do
it. Workers get the opportunity to decide what they want to put more time into and
how they want to accomplish it.
Values
Values represent stable, long – lasting beliefs about what is important. They are
evaluative standard that help us define what is wrong or right, good or bad in the
world. An understanding of how values differ across cultures can explain and predict
behaviour of employees from different countries.
Hofstede’s framework for assessing cultures
The Hofstede’s Cultural Dimensions Theory, developed by Geert Hofstede, is a
framework used to understand the differences in culture across countries and to
discern the ways that business is done across different cultures. The Hofstede’s
Cultural Dimensions Theory was created in 1980 by Dutch management researcher
Geert Hofstede. The aim of the study was to determine the dimensions in which
cultures vary. Hofstede identified six categories that define culture:
 Power Distance Index
 Collectivism vs. Individualism
 Uncertainty Avoidance Index
 Femininity vs. Masculinity
 Short-Term vs. Long-Term Orientation
 Restraint vs. Indulgence
Power Distance: It describes the degree to which people in a country accept that
power in institutions and organisations is distributed unequally. High power distance
index indicates that a culture accepts inequity and power differences, encourages
bureaucracy, and shows high respect for rank and authority. Low power distance
index indicates that a culture encourages organizational structures that are flat,
decentralized decision-making responsibility, participative style of management, and
places emphasis on power distribution. Examples, Mexico, India, Korea has high
power distance where lower-level employees tend to follow orders as a matter of
procedure. In countries like USA, Austria power distance is less. In high power distance
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cultures power will be reflected through status symbols. The salary gap between
levels will be higher. Status will be highly valued and have more motivation.
Management is more by control than by participation.
Collectivism vs. Individualism: Individualism indicates that there is greater
importance on attaining personal goals. A person’s self-image in this category is
defined as “I.” Collectivism indicates that there is greater importance on the goals and
well-being of the group. A person’s self-image in this category is defined as “We”. For
example, Americans, high on individual score readily go to court against authority and
each other to claim their rights. Conversely, countries like Pakistan or South-east Asian
countries are high on collectivism.
Uncertainty Avoidance Index: It is the extent to which people feel threatened by
ambiguous situations and have created beliefs and institutions that try to avoid those.
Cultures with high uncertainty index tend to have high need for security and a strong
belief in experts and their knowledge. Examples would include Germany, Spain and
Japan. Members in these countries are more anxiety prone and have high job stress.
Employees place high premium on job security, career planning and retirement
benefits. Countries with low uncertainty avoidance index are more entrepreneurial,
innovative and exhibit less emotional resistance to change. These cultures desire for
and implementation of both formal and informal governing structures like laws. Life
is perceived as being stressful, and in certain high uncertainty avoidance cultures,
open displays of emotions are acceptable. Children in high UAI countries are generally
expected to follow traditional gender roles. For example, Swedes culture which has
low uncertainty avoidance index suppress emotions and see shyness as a positive trait
and talkativeness as a negative one. In business they opt for the rational than the
emotional course. Sweden, USA, UK are countries with low Uncertainty avoidance
index.
Femininity vs. Masculinity: Masculinity is the degree to which the culture favours
traditional masculine roles such as achievement, power, control as opposed to
viewing men and women as equals. A high femininity rating means the culture sees
little differentiation between male and female roles and treats women as the equals
of men in all respects. Countries like Norway with a low masculinity index tends to
place great importance on co-operation, friendly atmosphere and employment
security. The workplace has a cordial atmosphere and the managers give more credit
to employees and freedom to act. Companies with a high masculinity index like Spain
and Germany favour large scale enterprises. Economic growth is more important than
conservation of environment.
Short-Term vs. Long-Term Orientation: Long-term orientation shows focus on the
future and involves delaying short-term success or gratification in order to achieve
long-term success. Long-term orientation emphasizes persistence, perseverance,
tradition and long-term growth. Short-term orientation shows focus on the near
future, involves delivering short-term success or gratification and places a stronger
emphasis on the present than the future. For example, in long term oriented cultures
like Hong Kong, and China there are plenty of cases where a mortgage runs for 80
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years if not longer. This means it carries over a generation. A member of the Long-
Term Orientated country might go to the grocery for fruit hoping to buy strawberries,
but when he or she sees the blueberries are on sale she is likely to buy them instead.
In contrast a Short-term Oriented woman may travel to the produce section hoping
to buy strawberries and be content with this because she plans to make her traditional
strawberry shortcake for her weekend guests.
Restraint vs. Indulgence: The indulgence vs. restraint dimension considers the extent
and tendency for a society to fulfill its desires. In other words, this dimension revolves
around how societies can control their impulses and desires. Indulgence indicates that
a society allows relatively free gratification related to enjoying life and having fun.
Restraint indicates that a society suppresses gratification of needs and regulates it
through social norms. For example, in Indian culture (high restraint index) students
are not allowed to dress casually in the classrooms. A reserved culture like China
would need to be treated with a high degree of professionalism and structure.
Australia, a high indulgence rating culture, can be approached with a little more
creativity and appeal to indulgence.
 Emotions
Emotions are intense feelings directed at someone or something. In the 20th
century, psychologist Paul Ekman identified six basic emotions (anger, disgust,
fear, happiness, sadness, and surprise) and Robert Plutchik eight, which he
grouped into four pairs of polar opposites (joy-sadness, anger-fear, trust-distrust,
surprise-anticipation).
An emotion is normally quite short-lived, but intense. Emotions are also likely to
have a definite and identifiable cause. For example, after disagreeing with a friend
over politics, you might feel angry for a short period of time. A mood, on the other
hand, is usually much milder than an emotion, but longer-lasting. In many cases,
it can be difficult to identify the specific cause of a mood. For example, you might
find yourself feeling gloomy for several days without any clear, identifiable
reason. Emotions play a critical role in how we live our lives, from influencing how
we engage with others in our day to day lives to affecting the decisions we make.
Emotional Labour
Harry works as a customer service agent for Spiro Airlines. Every day, he has to handle
dozens of customer requests - from the routine to disgruntled people. No matter what
personal and work issues and emotions Harry has to deal with, he has to put on a
happy face for excellent job reviews. He needs to be able to regulate his emotions,
and this is called emotional labor. In other words, it is a way of emotion regulation in
which employees control their emotions and feelings at work.
Emotional dissonance is a negative feeling that can develop when a person views an
emotion as a potential conflict to his or her identity. Harry's personal life was in
shambles last year when his wife left him one weekend morning. He had to go to work
on Monday morning and act accordingly to be happy and polite to airline customers.
Inside, Harry was devastated and depressed. He had a feeling of uneasiness as his real
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emotion and his fake emotion were drastically at odds with each other.
There are two specific types of emotional labor, and they are called deep acting and
surface acting. Deep acting is about a person trying to feel a specific emotion that
they are thinking about in their mind. For example, before his wife left him, Harry used
to think about her and their plans while working. This would put Harry in a happy
mood, and he would respond to customers' issues with enthusiasm and politeness.
Surface acting, however, is when a person has to fake emotion to meet certain social
or work rules. For example, the Monday after Harry's wife left him, he was very upset.
His supervisor had no clue that Harry was in personal turmoil since he still provided
upbeat and positive customer service to all of his airline customers.
Emotional Intelligence
Emotional Intelligence is the measure of an individual’s abilities to recognise and
manage their emotions, and the emotions of other people, both individually and in
groups.
o People with higher emotional intelligence find it easier to form and maintain
interpersonal relationships and to ‘fit in’ to group situations.
o People with higher emotional intelligence are also better at understanding their
own psychological state, which can include managing stress effectively and being
less likely to suffer from depression.
For example, two people had a fight with their boss at work. One of them was
emotionally intelligent and the other wasn't. On returning to their homes the first,
who wasn't emotionally intelligent, started shouting at his children. This guy acted
based on his emotions without thinking about them in an emotionally intelligent way.
when the second person returned home and found that the kids were noisy he just
told himself, “well, why should I shout at the kids, they are not the ones to blame for
my feelings, they always make that loud noise while playing. The main reason I am
feeling bad is because of my boss.” That person recognized his emotions, thought
about them, then acted in an emotionally intelligent way.
Being aware, and responding to other people’s emotional states shows an
understanding that all humans experience strong emotions and, says that a person’s
feeling matter. A workplace where people feel confident in speaking their minds,
exchanging views, and expressing their emotions is also demonstrating emotional
intelligence. Emotionally intelligent leaders understand the changing demands of
others and are prepared to work with them rather than trying to impose restrictions
on how people go about their work.
Screening job candidates for the big five traits is an analytical approach for the manager for
the person-job fit. Employees’ performance and satisfaction are likely to be higher if their
values fit well in the organisation. Emotionally intelligent leaders understand the changing
demands of others and are prepared to work with them rather than trying to impose
restrictions on how people go about their work.
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Organizational Behaviour Work Motivation
CHAPTER 7
WORK MOTIVATION
7.1 Concepts of motivation
7.2 Classification of motives
7.3 Theories in motivation
7.4 Knowing Motivational tools
7.1 Understanding Motivation

Motivation is “the process that account for an individual’s intensity, direction, and
persistence of effort toward attaining a goal.” Intensity is concerned with how hard a
person tries. This is the element most of focus on when we talk about motivation.
Direction is the orientation that benefits the organization. And persistence is a
measure of how long a person can maintain his/her effort.
Stephen P. Robbins defines motivation as “The willingness to exert high levels of effort
towards organizational goals, conditioned by the effort’s ability to satisfy some
individual need.”
According to B.F. Skinner, “Motivation in school learning involves arousing, persisting,
sustaining and directing desirable behavior.”
According to Woodworth, “Motivation is the state of the individual which disposes
him to certain behavior for seeking goal.”
Motivation can also be defined as a condition that is initiated by a physiological or
psychological deficiency or need in an individual, which causes the individual behave
in a certain manner in order to achieve a particular goal or incentive.
Motivation consists of three interacting and independent elements – needs, drives
and incentives. Need form the basis for drives, which in turn seek the attainment of
certain incentives. To understand the process of motivation, we should first
understand the meanings of needs, drives and incentives, and the relationship
between them.
Needs
A physiological or psychological imbalance leads to the creation of a need. For
example, the need for food or water arises when a person is hungry or thirsty.
Similarly, people who are deprived of the company of other people may look for
friends or companions.
However, psychological needs may sometimes arise without any deficiency or
imbalance. For instance, a person who has a strong need to progress may move from
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Work Motivation Organizational Behaviour
success to success. Even if a person has several extraordinary achievements to his

credit, he may still feel the need to achieve more. For example, many millionaires
strive to make more and more money, even though they are considered rich by
regular standards.
Drives
Drives or motives propel individuals to attain their goals or satisfy their needs. A
physiological drive is a condition which causes a person to work in a particular
direction. Both physiological and psychological drives push an individual towards
achieving a certain goal or accomplishing a certain task. Drives constitute the core
element in motivation. For example, the need for food and water is transformed into
the drives of hunger and thirst, and the need to achieve manifests itself as the
achievement drive.
Incentives
Anything that can mitigate a need and decrease the intensity of a drive is called an
incentive. When a person obtains the incentive, the strength of that drive is reduced
and physiological or psychological balance is restored. For example, eating food,
drinking water, or finding friends reduces the corresponding drives and helps in
achieving balance. Here food, water and friends are the incentives.
Exhibit 7.1 Classification of Motives
Psychologists are not in agreement as to how to classify various human motives.

However, most psychologists agree that some motives are learned while others are
not learned, but instead have a physiological basis. Those motives which are
physiologically based are called primary motives. Secondary motives are the motives
which are learned over time. The motives which cannot be classified as purely primary
or purely secondary are called general motives. Like primary motives, general motives
too, are not learned, but they differ from primary motives in that they are not
physiologically based. The different types of motives are as follows:
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Primary Motives
A motive is termed as a primary motive when it satisfies both the criteria – it is not
learned, and it is physiologically based. The most common primary motives are
hunger, thirst, sleep, sex, avoidance of pain and maternal concern. Since all human
beings have the same basic physiological makeup, they all have the same primary
needs. This is not true of the secondary needs or motives, which are learned.
It should be clarified that the term ‘primary’ does not mean that these motives are
more important than the general and secondary motives. Although primary motives
take precedence over the other kinds of motives in some theories of motivation,
secondary motives do dominate over the primary motives in certain situations. The
practice of celibacy among priests and nuns of some religions, or fasting for religious
causes, are examples of cases where the secondary motives are stronger than the
primary motives.
General Motives
General motives include those motives which are neither purely primary nor purely
secondary, but rather something in between. A motive is considered to be a general
motive if it is not learned, but is also not based on physiological needs. While primary
motives induce an individual to reduce the tension within him/her, general motives
stimulate tension within the individual. General motives are, therefore, also called
“stimulus motives.” The motives of curiosity, manipulation, motive to remain active
and to display affection are examples of general motives. To have a better
understanding of human behavior at work, it is important to understand general
motives.
1. Exploration:
Human beings as well as animals like to explore their environment. When an
organism actively moves about and satisfies curiosity, the motive is said to be
exploration.
We spend a great amount of time exploring novel situations and places than
exploring familiar ones. It is this motive that makes us visit different places. In
mountaineers and explorers, this motive is highly active.
2. Curiosity:
Interest in novel situations is called curiosity motive. All scientific discoveries and
inventions by men are the result of this motive. This motive is common among
animals and human beings. Once a curiosity motive is satisfied interest in a given
task may decline.
3. Need for sensory stimulation:
Human beings as well as animals engage in activities that give them sensory
stimulation. It is because of this need that we view television and movies or listen
to music or indulge in dancing. Lack of sensory stimulation is unpleasant and leads
to abnormal behavior.
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4. Manipulation:
It is very similar to curiosity and exploratory motive; it refers to the motive to
handle new objects out of curiosity to know more about them. Children indulge
in manipulation motive by tearing books, separating the different parts of toys, or
opening boxes to see what they contain.
5. Contact-comfort or Affection Motive:
It is the motive to receive and shower affection on others. This motive is
independent of the physiological motive of sex. We show affection to our parent’s
brothers, sisters and relatives. Husband and wife show affection to each other
and to their children. Affection motive brings us in contact with others and gives
us comfort. Hence, it is also called the ‘contact-comfort’ motive.
In a study conducted by Harlow, baby monkeys were separated from their real
mothers and provided with mother surrogates, one artificial mother was made of
wire mesh. This was the ‘wire mother’. The other was made of wool covered with
sponge, rubber and soft cloth. This was the ‘cloth mother’ Feeding bottles were
fitted at the center of the breast of each mother. Half of the monkeys were fed
by the wire mother and the other half by the cloth mother.
The time the young monkeys spent with each mother was recorded. It was found
that the monkeys spent more time with the cloth mother than with the wire
mother. The cloth mother, being soft, resembled the real mother more than the
wire mother did and contact with this mother was comforting to the young ones.
Other similar studies have found that contact with a mother-like object reduces
fear and gives confidence to the individual to explore the environment.
6. Competence:
It refers to the motive to master challenges in the environment. It plays an
important role in human behavior. This motive can be observed very easily in
children. Very young children are learning to master various developmental tasks
like standing, walking, talking, etc. They make efforts to master these tasks. When
a baby successfully pulls itself up to stand, it gives out a cry of triumph. This shows
the satisfaction it has derived through mastering the act of standing. This type of
motive is found in human adults also.
A concept that is closely related to competence motivation is intrinsic motivation.
It is defined as a ‘person’s need for feeling competent and self- determining in
dealing with him? environment’. It gives internal satisfaction to the person.
7. Fear:
It is a negative motive that makes an organism withdraw from a given situation.
Fear, in some situations, helps us to avoid danger. In other situations, fear hinders
adjustment and interferes with the satisfaction of other motives.
8. Self-actualization:
It is the highest motive in Maslow’s hierarchy of needs. It refers to the need for
self-fulfillment, to realize potentialities and to become what one is capable of
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becoming. Very few individuals are able to satisfy this motive. Satisfaction of this
move is a sign of healthy adjustment.
Secondary Motives
Secondary motives are the most significant motives in the study of organizational
behavior. Learned secondary motives play a very important role in understanding
motivation in a complex and economically advanced society.
A secondary motive is a motive that has been learned or acquired over time. Some
important secondary motives are power, achievement and affiliation. Human life has
not only just biological aspect but also social aspect. Hence human behavior is
activated by the following social motives.
1. Achievement motives
2. Affiliation motives
3. Aggression motives
4. Power motives
5. Curiosity motives.
These are called social motives since they develop as a result of relationships with
people.
1. Achievement motives:
They refer to a drive towards some standards of excellence. People with high-
level achievement motives prefer tasks that would promise success and are
moderately difficult. David C McClelland has found that while high achievers tend
to succeed, low achievers tend to avoid failures.
High achievers challenge failures and work harder while low achievers accept
failures and go for less difficult tasks. High achievers prefer personal responsibility
and like to get feedback about their works.
A very effective tool for determining the achievement drive in an individual is the
Thematic Appreciation Test (TAT). The test is carried in the following manner. A
picture is shown to the person taking the test, who is supposed to tell a story
about what he sees in the picture. For example, in the TAT, a subject (employee)
may be shown a picture which depicts a young man working in a field as the sun
is about to set. The subject is asked to interpret the picture, and this
interpretation is used to determine his motivation level. For example, the person
who is taking the test may feel that the man in the picture is feeling sad that the
day is coming to an end as he has more work to do and he wants to finish the
work before it is dark. Such an interpretation would indicate that the subject is a
high achiever. On the other hand, if the subject is happy that the sum is going
down, and feels he can now go home and relax, then he can be categorized as a
low achiever.
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2. Affiliation motives:
Man cannot exist in isolation. The need to be with other people is known as
affiliation need. This need is revealed through one’s attraction to others through
friendship, sociability or group membership. They make more local phone calls,
visits and seek approvals of others.
Need to rely on others which is called dependency motive is one form of the need
for affiliation. When little children are frightened, they seek others to comfort
them. This kind of experience in early life makes one seek the friendly company
of others when faced with anxiety and fear.
3. Aggression motives:
Intense frustrations after high expectations, verbal and nonverbal insults, fear and
anxiety can trigger aggression. Television and cinema depicting violence can make
youngsters model themselves to aggressive behavior.
Psychoanalysts maintain that each individual, as part of his biological inheritance,
possesses destructive death urges as well as constructive life urges. In most of us,
a favorable balance exists between life and death urges so that kindness triumphs
over cruelty. Social learning (modeling), classical conditioning and instrument
conditioning are the ways in which hostile aggression may be learned.
4. Power motives:
Social power is defined as the ability of an individual to produce intended effect
on the behavior or emotions of other people. Persons with power motives will be
concerned with having impact, influence and reputation.
They exercise their power by joining political parties, voluntary organizations, and
associating themselves with prominent and popular men. They select jobs which
have an impact on others and dominate weaker sections of the society. They often
try to convince others, play more competitive sports and tend to drink more.
5. Curiosity Motives:
Almost all individuals have a desire to have some standing position among the
people of his society or group. Nobody likes to be considered inferior. Efforts to
achieve a rank in the hierarchy of the group are present not just in human beings,
but even among birds and animals, e.g. ‘pecking order’ among hens.
Motivation is a vast and complicated subject encompassing many theories. Some
theories were developed through work with animals in laboratories. Others are
based on research with humans in situations using games and puzzles.
7.3 Early Theories of Motivation

Behaviorist Approaches to Motivation
According to the behavioral view, the motivation depends on the incentives and
rewards present in the environment. A reward is an attractive object or event supplied
as a consequence of a particular behavior. An incentive is an object or event that
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encourages or discourages behavior.

If the person is consistently reinforced for certain behaviors, then he/she may develop
habits or tendencies to act in a certain way. Providing grades, stars, stickers and other
reinforcements for learning or demerits for misbehavior is an attempt to motivate
students by extrinsic means of incentives rewards and punishments.
Humanistic Approaches to Motivation
In the early 1940s, Carl Rogers, one of the proponents of humanistic psychology
emphasize that intrinsic sources of motivation as a person’s needs. So, from the
humanistic perspective to motivate means to encourage people’s inner resources,
their sense of competence, self-esteem autonomy and self-actualization, Maslow’s
Theory is a very influential humanistic explanation of motivation.
Exhibit 7.2 Maslow’s Hierarchy (of Needs):
Abraham Maslow (1970) suggested that humans have a hierarchy of needs ranging
from lower level needs for survival and safety to higher level needs for intellectual
achievement and self-actualization.
Maslow’s Hierarchy
Maslow called four lower level needs-for survival, then safer; followed by belonging,
then self-esteem. When these needs are satisfied, the motivation for fulfilling them
decreases. He labeled the three higher level needs, intellectual achievement, then
aesthetic appreciation and finally, self-actualization being needs.
When they are met, a person’s motivation does not cease, instead it increases to
further fulfillment. Unlike the deficiency needs, there being needs can never be
completely filled.
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The strive for improvement is always there in the individual. Maslow’s theory has
been criticized because the people do not always appear to behave as the theory
would predict. Sometimes, people get motivated by many different needs; at the
same time. All the needs are inter-related.
Maslow's hierarchy is most often displayed as a pyramid. The lowest levels of the
pyramid are made up of the most basic needs, while the most complex needs are at
the top of the pyramid.
Needs at the bottom of the pyramid are basic physical requirements including the
need for food, water, sleep, and warmth. Once these lower-level needs have been
met, people can move on to the next level of needs, which are for safety and security.
As people progress up the pyramid, needs become increasingly psychological and
social. Soon, the need for love, friendship, and intimacy become important. Further
up the pyramid, the need for personal esteem and feelings of accomplishment take
priority.
Deficiency Needs vs. Growth Needs
Maslow believed that these needs are similar to instincts and play a major role in
motivating behavior. Physiological, security, social, and esteem needs are deficiency
needs, which arise due to deprivation. Satisfying these lower-level needs is important
in order to avoid unpleasant feelings or consequences.
Maslow termed the highest level of the pyramid as growth needs. These needs
don't stem from a lack of something, but rather from a desire to grow as a person.
While the theory is generally portrayed as a fairly rigid hierarchy, Maslow noted that
the order in which these needs are fulfilled does not always follow this standard
progression. For example, he noted that for some individuals, the need for self-
esteem is more important than the need for love. For others, the need for creative
fulfillment may supersede even the most basic needs.
Physiological Needs
The basic physiological needs are probably fairly apparent—these include the things
that are vital to our survival. Some examples of the physiological needs include:
 Food
 Water
 Breathing
 Homeostasis
In addition to the basic requirements of nutrition, air and temperature regulation, the
physiological needs also include such things as shelter and clothing. Maslow also
included sexual reproduction in this level of the hierarchy of needs since it is essential
to the survival and propagation of the species.
Security and Safety Needs
As we move up to the second level of Maslow’s hierarchy of needs, the requirements
start to become a bit more complex. At this level, the needs for security and safety
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become primary. People want control and order in their lives, so this need for safety
and security contributes largely to behaviors at this level.
Some of the basic security and safety needs include:
 Financial security
 Health and wellness
 Safety against accidents and injury
Finding a job, obtaining health insurance and health care, contributing money to a
savings account, and moving into a safer neighborhood are all examples of actions
motivated by the security and safety needs.
Together, the safety and physiological levels of the hierarchy make up what is often
referred to as the basic needs.
Social Needs
The social needs in Maslow’s hierarchy include such things as love, acceptance, and
belonging. At this level, the need for emotional relationships drives human behavior.
Some of the things that satisfy this need include:
 Friendships
 Romantic attachments
 Family
 Social groups
 Community groups
 Churches and religious organizations
In order to avoid problems such as loneliness, depression, and anxiety, it is important
for people to feel loved and accepted by other people. Personal relationships with
friends, family, and lovers play an important role, as does involvement in other groups
that might include religious groups, sports teams, book clubs, and other group
activities.
Esteem Needs
At the fourth level in Maslow’s hierarchy is the need for appreciation and respect.
When the needs at the bottom three levels have been satisfied, the esteem needs
begin to play a more prominent role in motivating behavior.
At this point, it becomes increasingly important to gain the respect and appreciation
of others. People have a need to accomplish things and then have their efforts
recognized.
In addition to the need for feelings of accomplishment and prestige, the esteem needs
include such things as self-esteem and personal worth. People need to sense that they
are valued and by others and feel that they are making a contribution to the world.
Participation in professional activities, academic accomplishments, athletic or team
participation, and personal hobbies can all play a role in fulfilling the esteem needs.
People who are able to satisfy the esteem needs by achieving good self-esteem and
the recognition of others tend to feel confident in their abilities. Those who lack self-
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esteem and the respect of others can develop feelings of inferiority.

Together, the esteem and social levels make up what is known as the psychological
needs of the hierarchy.
Self-Actualization Needs
At the very peak of Maslow’s hierarchy are the self-actualization needs. "What a man
can be, he must be," Maslow explained, referring to the need people have to achieve
their full potential as human beings.
According to Maslow’s definition of self-actualization:
"It may be loosely described as the full use and exploitation of talents, capabilities,
potentialities, etc. Such people seem to be fulfilling themselves and to be doing the
best that they are capable of doing... They are people who have developed or are
developing to the full stature of which they capable."
Self-actualizing people are self-aware, concerned with personal growth, less
concerned with the opinions of others, and interested fulfilling their potential.
Criticisms of Maslow’s Hierarchy of Needs
Maslow's theory has become wildly popular both in and out of psychology. The fields
of education and business have been particularly influenced by the theory. While
popular, Maslow's concept has not been without criticism.
Chief among these:
Needs Do Not Necessarily Follow a Hierarchy
While some research showed some support for Maslow's theories, most research has
not been able to substantiate the idea of a needs hierarchy. Wahba and Bridwell
reported that there was little evidence for Maslow's ranking of these needs and even
less evidence that these needs are in a hierarchical order.
The Theory is Difficult to Test
Other criticisms of Maslow's theory note that his definition of self-actualization is
difficult to test scientifically. His research on self-actualization was also based on a
very limited sample of individuals, including people he knew as well as biographies of
famous individuals that Maslow believed to be self-actualized.
So Why Was Maslow's Hierarchy of Needs So Influential?
Regardless of these criticisms, Maslow’s hierarchy of needs represents part of an
important shift in psychology. Rather than focusing on abnormal behavior and
development, Maslow's humanistic psychology was focused on the development of
healthy individuals.
While there was relatively little research supporting the theory, the hierarchy of
needs is well-known and popular both in and out of psychology. In a study published
in 2011, researchers from the University of Illinois set out to put the hierarchy to the
test.
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What they discovered is that while the fulfillment of the needs was strongly correlated
with happiness, people from cultures all over the world reported that self-
actualization and social needs were important even when many of the most basic
needs were unfulfilled.
Such results suggest that while these needs can be powerful motivators of human
behavior, they do not necessarily take the hierarchical form that Maslow described.
Herzberg’s Two-Factor Theory of Motivation
Herzberg had close links with Maslow and believed in a two-factor theory of
motivation. He argued that there were certain factors that a business could introduce
that would directly motivate employees to work harder (motivators). However, there
were also factors that would de-motivate an employee if not present but would not
in themselves actually motivate employees to work harder (hygiene factors)
Motivation - Herzberg (Two Factor Theory)
Motivators are more concerned with the actual job itself. For instance, how
interesting the work is and how much opportunity it gives for extra responsibility,
recognition and promotion. Hygiene factors are factors which 'surround the job'
rather than the job itself. For example, a worker will only turn up to work if a business
has provided a reasonable level of pay and safe working conditions but these factors
will not make him work harder at his job once he is there.
Herzberg believed that businesses should motivate employees by adopting a
democratic approach to management and by improving the nature and content of the
actual job through certain methods. Some of the methods managers could use to
achieve this are:
 Job enlargement – workers being given a greater variety of tasks to perform (not
necessarily more challenging) which should make the work more interesting.
 Job enrichment - involves workers being given a wider range of more complex
and challenging tasks surrounding a complete unit of work. This should give a
greater sense of achievement.
 Empowerment means delegating more power to employees to make their own
decisions over areas of their working life.
Key summary for Herzberg:
 Workers motivated to work harder by motivators e.g. more responsibility, more
interesting work, more praise for good work
 Workers can become de-motivated if hygiene factors are not met e.g. pay,
working conditions, relationships with colleagues.
Cognitive Approaches to Motivation
Cognitive theorists believe that the behavior of an individual is determined by the
thinking process and not by rewards and punishment. Behavior is initiated and
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regulated by plans, goals, schemas, expectations. and attributions. People respond to

their interpretations of the external events or physical conditions. Cognitive theorist
emphasizes on intrinsic motivation.
Attribution Theory of Motivation
It is the cognitive explanation that describes the individual’s explanations, justification
and excuses about self and others that influence motivation. Bernard Weiner
propounded the Theory of Attribution.
Weiner gave three dimensions of the attributed causes for success and failure. The
three dimensions are the following:
Three Casual Dimensions
1. Locus: Location of the cause internal or external to the person. Locus dimension
refers to the perception of the cause of any event as internal or external.
If a learner believes that she failed her math test because she lacked inability, she
is referring to her internal attribution. On the other hand, if she blames the
teacher to be incompetent, she is referring to the external attribution.
2. Stability: Whether the cause stays the same or can change. Stability dimension
refers to whether the cause of the event is stable or unstable across time and
situations.
From the previous example, if she believes that she failed her math exam because
of her inability in math, the cause is stable. The cause is more stable if she believes
that her lack of ability is permanent. On the other hand, if she believes that had
she not been sick, she could have aced the test, the cause is unstable, as illness is
a temporary factor.
Attributions to permanent factors or stable causes are more likely to lead the
learner towards success if the learner experiences success. However, in case of
failure, attributions to stable causes are likely to decrease the morale and
expectations of the learner in the future.
3. Controllability: Whether the person can control the cause. Controllability
dimension refers to whether or not the cause of any event is under the control of
the learner.
From the aforementioned examples; if she believes that she could have done
better in the test had she practiced more, the cause is controllable. On the other
hand, if she doubts her ability in math, the cause is uncontrollable. Environmental
or external attributions cannot be considered as controllable.
Contemporary Theories of Motivation
McClelland’s theory of needs
McClelland’s Needs Theory was proposed by a psychologist David McClelland, who
believed that the specific needs of the individual are acquired over a period of time
and gets molded with one’s experience of the life. McClelland’s Needs Theory is
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sometimes referred to as Three Need theory or Learned Needs Theory.

McClelland has identified three basic motivating needs, Viz. Need for Power, need for
Affiliation and Need for Achievement and, along with his associates performed a
considerable research work on these basic needs.
Exhibit 5.3 McClelland’s need theory:
Need for Power (n-pow): What is Power? Power is the ability to induce or influence
the behavior of others. The people with high power needs seek high-level positions in
the organization, so as to exercise influence and control over others. Generally, they
are outspoken, forceful, demanding, practical/realistic-not sentimental, and like to
get involved in the conversations.
Need for Affiliation (n-affil): People with high need for affiliation derives pleasure
from being loved by all and tend to avoid the pain of being rejected. Since, the human
beings are social animals, they like to interact and be with others where they feel,
people accept them. Thus, people with these needs like to maintain the pleasant
social relationships, enjoy the sense of intimacy and like to help and console others at
the time of trouble.
Need for Achievement (n-ach): McClelland found that some people have an intense
desire to achieve. He has identified the following characteristics of high achievers:
 High achievers take the moderate risks, i.e. a calculated risk while performing the
activities in the management context. This is opposite to the belief that high
achievers take high risk.
 High achievers seek to obtain the immediate feedback for the work done by them,
so as to know their progress towards the goal.
 Once the goal is set, the high achiever puts himself completely into the job, until
it gets completed successfully. He will not be satisfied until he has given his 100%
in the task assigned to him.
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 A person with a high need for achievement accomplishes the task that is
intrinsically satisfying and is not necessarily accompanied by the material rewards.
Though he wants to earn money, but satisfaction in the accomplishment of work
itself gives him more pleasure than merely the cash reward.
Hence, McClelland’s Needs Theory posits that the person’s level of effectiveness
and motivation is greatly influenced by these three basic needs.
Vroom’s Expectancy Theory
Vroom’s Expectancy Theory was proposed by Victor. H. Vroom, who believed that
people are motivated to perform activities to achieve some goal to the extent they
expect that certain actions on their part would help them to achieve the goal.
Vroom’s Expectancy Theory is based on the assumption that an individual’s behavior
results from the choices made by him with respect to the alternative course of action,
which is related to the psychological events occurring simultaneously with the
behavior. This means an individual selects a certain behavior over the other behaviors
with an expectation of getting results, the one desired for.
Thus, Vroom’s Expectancy Theory has its roots in the cognitive concept, i.e. how an
individual processes the different elements of motivation. This theory is built around
the concept of valence, instrumentality, and Expectancy and, therefore, is often called
as VIE theory.
Victor Vroom uses a formula to calculate the motivational force:
Motivational Force = Expectancy x Instrumentality X Valence
Expectancy: Expectancy, another factor that determines the motivation, refers to the
probability that a particular action will lead to the desired outcome. The expectancy
is different from the instrumentality in the sense; it relates efforts to the first level
outcome, whereas the instrumentality relates to first and second-level outcomes to
each other. Thus, expectancy is the probability that a particular action will lead to a
particular first-level outcome.
Instrumentality: Another major input into the valence is the instrumentality of first
level outcome in obtaining the second level outcome, i.e. a degree to which the first
level leads to the second level outcome. For example, suppose an employee desires
promotion and he feel that superior performance is a key factor to achieve the goal.
Thus, his first level outcomes are superior, average and poor performance and the
second level outcome is the promotion.
Hence, the first level outcome of high performance acquires the positive valence so
as to have the expected relationship with the second level outcome of the promotion.
Thus, an employee will be motivated to perform efficiently with a desire to get
promoted.
Valence: It refers to the value that an individual place on a particular outcome or a
strength of an individual’s preference for the expected rewards of the outcome. To
have a positive valence, one should prefer attaining the outcome to not attaining it.
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For example, if an employee gets motivated by promotions, then he might not value
offers of increased incentives. The valence is zero if an individual prefers not attaining
outcomes to attaining it. In the above example, an employee agrees with the
increased incentives.
7.4 Motivational Tools in Organization

Understanding the theories is of little use unless we can convert them into action.
Therefore, let us look at some tools we can use to motivate.
Management by Objective (MBO) – Management by objectives emphasis
participative set goals that are tangible, verifiable, and measurable. Its power to
motivate is explained by goal theory, Vroom’s expectancy theory, need achievement,
drive to comprehend and direction and also fulfils the self-esteem needs. An example
might be “increase customer base by 10 percent.” You can also tailor goals to
individual employees. For example, restaurants often use comment cards and ask
customers to rate the servers. If a server is lacking in customer service skills, it can
harm the business. You could give that employee an objective to increase his
customer service skills and interact better with the clientele.
Employee Recognition Programs – This involves personal attention, expressing
interest, approval, and appreciation for a job well done. It fulfils the social and self-
esteem needs, components of Vrooms theory, need affiliation, the need to bond and
comprehend and other theories such as need affiliation. For example, In recognition
of an employee's continued contributions to an organization over a number of years,
a 'Years of Service' award can be given at specific intervals, or milestones. ‘Years of
Service' awards do not often involve financial compensation, but may include a gift of
some kind. An annual bonus is financial compensation given to employees in addition
to their base pay. Annual bonuses are given once per year, usually at the end of the
fourth business quarter. Annual bonuses can be given for a multitude of reasons, but
are usually based on performance, either the performance of the organization, the
individual, or both.
Employee Involvement Programme – Employee involvement includes participative
management, workplace democracy, empowerment, and employee ownership. This
affects the self-esteem and the need to comprehend. For instance, a chemical
company with 1,200 employees has found numerous ways to include its employees
in the site’s safety and health program. For example, the safety and health
committee, which includes equal labor and management membership, has
responsibility for a variety of activities including monthly plant inspections, accident
investigations and examination of any unsafe conditions in the plant. Employees also
are involved in process and operations review teams, safety inspection teams and
quality teams. Two hourly employees work full-time at monitoring the safety and
health performance of on-site contractors.
Participative Management – Participative management is a method of creating
involvement. Here, the subordinates share a significant degree of decision-making
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power with their immediate supervisors. Work councils, board representative and
quality circles are example of this. They motivate as explained by self-esteem, the
need to comprehend and other theories of motivation. Toyota is the best example.
The company has been following suggestion schemes and employee involvement
procedures for over a decade now. The management receives almost 2,000,000
suggestions and ideas every year and around 95 percent of these are implemented by
the company. Who is not aware of Toyota’s success rate? Around five thousand
improvements per year have made Toyota one of the fastest growing organizations
globally. The need is to develop and implement a comprehensive company policy and
everything works well.
British Airways is another great example of participatory management. During
economic downsizing, employees’ suggestions helped them cut annual cost of their
operations by 4.5 million pounds. This is just unbelievable. The company would have
suffered from huge losses, had it not adopted employees’ suggestions. It is right to
some extent that employees can misuse industrial democracy but with a proper
management of HR functions, this problem can be solved and the operations of
organization can be taken to the next level.
Employee Stock Ownership Plans (ESOPs) – Perhaps the ultimate reward to workers
is for them, to own part of the organization. Employee stock ownership plans are
company-established benefits plans in which employees acquire stock as part of their
benefits. ESOPs have the potential to increase employee job satisfaction and work
motivation. However, when the stocks do not rise in price then it does not motivate
people. Nowadays, ESOPs are widely used as tools for creating wealth for employees
as also motivating them to continue working for the Company. This also helps cash
crunched company by warding off the immediate payment of bonus/ other benefits.
In ESOP, employee is allowed shares at very low price then the fair market value of
share i.e. MP= Rs.200 but employee only has to pay say Rs. 5. Here is a simple example
to understand ESOP:
Vesting period is the period that an Employee needs to wait or keep working in the
company. In between the vesting period employee doesn’t get any shares. If he dies
or leaves company, he won’t get any shares either.
Exercise period is the period when employee can exercise the plan. But he has to pay
the exercise amount otherwise the employee shall not be allowed to participate until
the company again allows the employee to exercise the plan. At allotment, if the
market price of share is high enough then it’s worth waiting otherwise it’s not that
worth waiting. The company can further prolong the contract if employee agrees.
Reward System – Organizations provide both extrinsic and intrinsic rewards:
1. Intrinsic Motivation
2. Extrinsic Motivation
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Exhibit 5.4 Intrinsic and Extrinsic Motivation
Drives, needs, incentives, fears, goals, social pressure, self-confidence, interest,

curiosity, beliefs, values, expectations are the energizers that direct our behavior.
Some psychologists have explained motivation in terms of personal traits or individual
characteristics. Other psychologists see motivation more as a state of temporary
situation. Some explanations of motivation rely on internal, personal factors such as
needs, interests and curiosity. Other explanations point to external factors such as
rewards, punishments, social pressure and so on.
Intrinsic motivation is the natural tendency to seek out and conquer challenges as we
pursue personal interests and exercise capabilities. When we are intrinsically
motivated, we do not need incentives or punishments because the activity itself is
rewarding. Intrinsic motivation is when you do something because the process is
personally rewarding. While you don't have a tangible goal in mind, you may just enjoy
playing a sport or working on a puzzle.
You simply enjoy doing what you are doing. You may have small victories along the
way, but you would be doing whatever you are doing regardless of what you get out
of it, simply because you like doing it.
On the other hand, if we do something in order to earn a grade, avoid punishment or
for some other reason that has very little to do with the task itself, then it is known
as Extrinsic motivation. Extrinsic motivation comes when you feel the urge to do
something in order to gain a specific reward, or steer clear of a punishment.
An example of this would be working hard on a paper to get a good grade, or practicing
a sport to win an award. Or maybe you go to work every day just to get that paycheck
at the end of the month. No matter what the reward is, it is coming from an exterior
source, and you are chasing something very specific.
Recently, the notion of intrinsic-and extrinsic motivation as two ends of a continuum has been
challenged. An alternative explanation is that just as motivation can include both trait and
state factors, it can also include both intrinsic and extrinsic factors. Intrinsic and extrinsic
tendencies are two independent possibilities and at any given time, we can be motivated by
some of each. Motivation depends on the individual as well as on the situation. For example,
a person who can finish reading a novel in one sitting may find it difficult to read a textbook
for even twenty minutes. Therefore, it should be kept in mind that while different people have
different levels of motivation, for each individual too, the motivation level is different in
different situations. We will discuss the work groups and teams in the next chapter.
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Work Group and Teams Organizational Behaviour
CHAPTER 8
WORK GROUP AND TEAMS
8.1 Understanding Work group and Teams
8.2 Knowing the types of groups and life cycle of teams
8.3 Designing team building tool kit
8.4 Managing multicultural project team
8.1 Understanding Work groups & Teams

In today’s world everyone speaks of group, group effect and the impact of group.
People hire you for your ability to work in groups, business schools train you for it and
eventually you are assessed and even rewarded for this.
A group is defined as two or more individuals who have regular contact and frequent
interaction, mutual influence, common feeling of camaraderie and who work together
to achieve a common set of goals. ‘Size, interaction, influence and goal’ are the key
ingredients of this definition and enables us to distinguish a group from a collection
of people. Group are almost always a subset of a larger organization e.g., it can be a
group in a company where the company is the superset, football group of the village
where the village is the superset, dance group in school where the school is the
superset, etc.
A group is based on the concept of synergy to attain the goal. By synergy we mean
that the sum total of the output by the individual members are collectively surpassed
by the group and this happens because of its ability to create better input (ideas) and
work practices that cover the deficiencies of each other. Social facilitation theory
explains how performance tends to improve or decline in the presence of others. In
fact, the synergy is dependent on social facilitation. Social facilitation effect also
results in people who are proficient in a job doing the same job faster and better in
the presence of a group and those who are not proficient in a job doing the same job
faster and better in the presence of a group and those who are not proficient doing it
worse in the presence of a group. Interestingly, if we have to train people on simple
things, it is better to do it in a group as the learning is faster and if on complex things,
it is better to train them individually. That perhaps explains why mentoring is far more
effective than a class room session or group activity in training managers to take
decisions.
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Organizational Behaviour Work Group and Teams
Purpose of groups
People join groups for various reasons such as:
 Companionship – groups provide members to simply be in the company of other
people.
 Survival and security – From a historic or evolutionary perspective our ancestors
would partake in group experiences for hunting and defense.
 Affiliation and status – membership into various groups can provide individuals
with certain socials status’ or security.
 Power and control– with group membership comes the opportunity for
leadership roles; individuals who feel they need to exert their power and opinions
over others can have such experiences within group settings.
 Achievement – groups have the capability to achieve more than individuals acting
alone.
Organizations typically form groups in order to accomplish work related tasks;
however, as a member of a work group you may unintentionally reap the numerous
benefits independent of the original group construct.
Defining characteristics of groups
Currently there is not a universal definition of what constitutes a group. Groups can
have varying numbers of members, communication styles, and structures. Research
has identified a few common requirements contributing to the recognition of
individuals working in a collaborative environment to be considered a “group”:
 Interdependence: In order for an individual of the collective to accomplish their
part in the assigned task they depend, to some degree, on the outputs of other
members of the collective.
 Social interaction: In order to accomplish the goal some form of verbal or
nonverbal communication is required to take place amongst the members of the
collective.
 Perception of a group: All members of the collective must agree they are, in fact,
part of a group.
 Commonality of purpose: All the members of the collective come together to
serve or attain a common goal.
Some researchers suggest additional characteristics need to be identified in order for
a collective of individuals to be categorized as a group such as: working the same
shifts, shared physical work locations, and reporting to the same manager. However,
the commonalities of the multiple definitions reviewed suggest that the definition of
a group is based on the interdependence of people who come together to accomplish
a common goal.
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8.2 Evidence and Life Cycle

Types of groups
Group types are routinely distinguished by the work that the groups do:
 Production groups consist of front line employees who produce some tangible
output. Autonomous production groups are self-directed or self-managing while
semi-autonomous production groups typically have a dedicated supervisor who
oversees all operations.
 Service groups consist of employees that work with customers on a repeated
basis, such as airline teams, maintenance groups, sales groups, call centers, etc.
 Management groups consist of an executive or senior manager along with
managers that report directly to him/her. Management groups are often able to
organize themselves towards goals such as policy making, budgeting, staffing, and
planning.
 Project groups are generally cross-function groups of individuals brought
together for the duration of a specific, time-limited project. Project groups are
usually disbanded once the project is complete.
 Action and performing groups are groups that typically consist of expert
specialists who conduct complex, time-limited performance events. Examples
include musical bands, military crews, surgery teams, rescue units or professional
music groups.
 Advisory groups consist of employees that work outside of, but parallel with,
production processes. Examples include quality circles, selection committees, or
other advisory groups pulled together to make recommendations to an
organization.
Groups may be classified according to a number of dimensions, including function, the
degree of personal involvement and degree of organization.
Types of Groups are;
 Formal Group.
 Informal Group.
 Managed Group.
 Process Group.
 Semi-Formal Groups.
 Goal Group.
 Learning Group.
 Problem-Solving Group
 Friendship Group.
 Interest Group.
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Let’s look at the

Formal Groups
 Formal groups are created to achieve specific organizational objectives. Usually,
are concerned with the coordination of the work activities.
 People are brought together on the basis of different roles within the structure of
the organization. The nature of the task to be undertaken is a predominant
feature of the formal groups.
 Goals are identified by management and short and rules relationship and norms
of behavior established. Formal groups chain to be related to permanent although
there may be changes in actual membership.
 However temporary formal groups may also be created by management, for
example, the use of project teams in a matrix organization.
Informal Groups
 Within the formal structure of the organization, there will always be an informal
structure.
 The formal structure of the organization and system of role relationship, rule, and
procedures, will be augmented by interpretation and development at the
informal level.
 Informal groups are based more on personal relationships and agreement of
group’s members than on defined role relationships. They serve to Satisfy
psychological and social needs not related necessarily to the tasks to be
undertaken.
 Groups may devise ways of attempting to satisfy members affiliations and other
social motivations which are lacing in the work situation, especially in industrial
organizations.
Managed Group
 Groups may be formed under a named manager, even though they may not
necessarily work together with a great deal. The main thing they have in common,
at least the manager and perhaps a similar type of work.
Process Group
 The process group acts together to enact a process, going through a relatively
fixed set of instruction. The classic environment is a manufacturing production
line, where every movement is prescribed.
 There may either be little interaction within process groups or else it ‘is largely
prescribed, for example where one person hands something over to another.
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Semi-Formal Groups
 Many groups act with less formality, in particular where power is distributed
across the group, forcing a more collaborative approach that includes-
negotiation rather than command and control.
 Families, communities and tribal groups often act as semi-formal ways as they
both have nominal leaders yet members can have a high degree of autonomy.
Goal Group
 The goal group acts together to achieve a shared objective or desired outcome.
Unlike the process groups, there is no clear instruction on how they should
achieve this, although they may use a number of processes and methods along
the way.
 As there is no detailed instruction, the members of the goal group need to bring
more intelligence, knowledge, and experience to the task.
Learning Group
 The learning group comes together to increase their net knowledge. They may act
collaboratively with discussion and exploration, or they may be a taught class,
with a teacher and a syllabus.
Problem-Solving Group
 Problem-solving groups come together to address issues that have arisen. They
have a common purpose in understanding and resolving their issue, although
their different perspectives can lead to particular disagreements.
 Problem-solving may range along a spectrum from highly logical and
deterministic, to uncertain and dynamic situations their creativity and instinct
may be better ways of resolving the situation.
Friendship Group
 Groups often develop because individual members have one or more common
characteristics. We call these formations of friendship groups.
 Social alliances, which frequently extend outside the work situation, can be based
on similar age or ethnic heritage, support for Kolkata Knight Riders cricket, or the
holding of similar political views, to name just a few such characteristics.
Interest Group
 People who may or may not be aligned into a common command or task groups
may affiliate to attain a specific objective with which each is concerned. This is an
interest group.
 Employees who band together to have their vacation schedules altered, to
support a peer who has been fired, or to seek improved working conditions
represent the formation of a united body to further their common interest.
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 Differences between Formal Group and Informal Group
Basis for Comparison Formal Group Informal Group

Groups created by the organization, Groups created by the
for the purpose of accomplishing a employees themselves, for
Meaning
specific task, are known as Formal their own sake are known as
Groups. Informal Groups.
Formation Deliberately. Voluntarily
Size Large. Comparatively small.
Life Depends on the type of group. Depends on the members.
Structure Well Defined. Not well defined.
Importance is given to Position. Person.
Relationship Professional. Personal.
Communication Moves in a defined direction. Stretches in all the directions.
Tuckman’s Model
Tuckman stages group of development provide insight into the development of a
team over time. According to Bruce Tuckman the stages should be followed in a
predetermined order. Only then a team can function optimally. A team cannot
perform well unless it has experienced conflicts and has set behavioral standards.
Bruce distinguishes five stages of group development. These stages need not always
be strictly followed one after the other; teams often get stuck halfway through the
process. Rules of behavior and agreements will then have to be drawn up but these
are not always very productive. During the first two stages of the Tuckman stages of
group development, it is about social-emotional tasks. Stage three and four of
Tuckman stages of group development are more focused on task-oriented tasks:
Exhibit 8.1 Life cycle of a Group
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Forming
A new team still has to be organized and is therefore concerned with orientation;
what kind of people are in the team and what are their tasks? Despite the
independent behavior of the team members, they still look to the team leader for
guidance. They do not really know what the objectives of the entire team are and
what is expected of them. This is why many team members feel insecure. In order to
create a good team, it is important that a team leader trusts the team members and
that he discusses with them what his expectations are.
Storming
The team is becoming more close-knit and the team members are gaining each other’s
trust. They voice their opinions as a result of which conflicts may arise. The individual
personalities of the team members emerge when they confront each other’s ideas
and perspectives. Still, they hesitate to voice their opinions for fear of being excluded
from the group. The team leader has a guiding role in this difficult transition stage. He
has to encourage team members to speak freely and to be open-minded. A tolerant
attitude is of crucial importance in this. In addition, it is essential that team members
resolve possible conflicts by themselves. Only then can they proceed to the next stage
within Tuckman stages of group development.
Norming
After the storming stage of the Tuckman stages of group development, the team
starts working in a fulfilling manner. Criticism is not taken personally any more, but is
considered to be constructive and task-oriented. The team members are open to each
other’s ideas. The team cooperates on establishing rules, values, standards and
methods. This increases the efficiency of the team. The team is developing its own
identity. The team leader can give the team more autonomy so that the team can
work independently.
Performing
During the performing stage, the team functions as a unit and the energy of the group
will benefit the task. All team members know exactly what is expected of them and
they work together towards goals and objectives. Team members understand the
objectives of the team and they support them. The atmosphere in the team is good
and the cooperation is clear. The team functions excellently and is capable of making
decisions independently and autonomously without having to confer with the team
leader.
Adjourning
When the tasks of the team have been completed, the team can be dissolved. The
team members may experience anxiety as they will have to let go of the group. This
is why they will distance themselves from each other so that the sense of loss will be
more bearable. The team leader would do well to pay attention to the dissolution of
the team, for example by planning an official farewell party.
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8.3 Team Building Tool Kit

A team can be defined as a group of people operating with complementary skills and
a high degree of interdependence and accountability to achieve a common and
usually difficult goal collectively with authority to execute and the rights to share
rewards for the performance.
A team is any group of people organized to work together interdependently and
cooperatively to meet a purpose or a goal. Teams are created for both long term and
short term interaction. A product development team or an executive leadership team
are examples of long lasting ones. A team’s focus is collective performance, with both
individual and mutual accountabilities. For example, all of the people who work in
accounting constitute a group, but people from each functional department who
meet regularly to standardize financial procedures are a team. Before we look more
closely at what constitutes an effective (high-performing) team, we will review the
advantages and disadvantages of using teams in the workplace.
Team Building Toolkit by Google
Moving away from the startup world to get some enterprise examples, it turns
out that humans are humans no matter what size company they work in. Google
found the most important way to improve team relationships was to encourage
the open sharing of feelings.
“The Google research found that people don’t want to have to put on a ‘work
face’ when they arrived at their desk each morning, that is to have complete
separation of work and home life. It turns out we want people to ask how they
are feeling and have a safe environment to share our feelings no matter how
messy or sad or excited we are feeling, without fear of reprisal. Leaders need to
allow for the creation of an emotional safety net to develop within their teams.
One way to create this environment is to carve out time for people to actually
share their feelings and not just updates on the latest reports or budget
numbers.”
The way Google implemented this strategy was, unsurprisingly, by developing
software. The software allowed members do a 10-minute pulse check on the
following 5 elements:
 Psychological safety: Team members feel safe to take risks and be vulnerable
in front of each other
 Dependability: Team members get things done on time and meet Google’s
high bar for excellence
 Structure & clarity: Team members have clear roles, planes, and goals
 Meaning: Work is personally important to team members
 Impact: Team members think their work matters and creates change
Then, they’d have a live in-person chat to talk about the test results and be
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provided with resources to help teams improve across these 5 areas. Over 3,000
Googlers have used the tool, and reported that having framework to talk about
their issues openly was the most
impactful part of the experience, as well as reporting a 6% lift in psychological
safety and a 10% life in structure and clarity.
Sometimes teams just need a little introduction to get communicatio n going.
These activities are perfect for when a new hire or group of new hires are being
introduced to the company.
Types of Teams
A cross-functional team is just what it sounds like—a team that pulls its members
from across the different functional areas of an organization. For example, cross-
functional teams may be composed of representatives from production, sales,
marketing, finance, and legal. The strength of this type of team lies in its members
having different functional backgrounds, education, and experience. The diversity of
experience aids innovative problem solving and decision making.
Unfortunately, the very factors that give cross-functional teams strength can also lead
to weaknesses. Without a strong leader and very specific goals, it may be hard to
foster social cohesion in cross-functional teams and to create a system of
accountability. A cross-functional team might be brought together to review and
make recommendations on potential acquisitions or mergers.
A task force is a group or committee, usually of experts or specialists, formed for
analyzing, investigating, or solving a specific problem. Quite often, a task force is
formed in reaction to a problem or specific event, and once the job is done, the task
force is disbanded. The goal of a task force is to offer solutions, support, and, if
possible, create preventive measures for issues. Types of concerns that may generate
task forces in the workplace include bullying, health and wellness, employee training,
increasing customer sales, or improving employee job satisfaction. A project team is
similar to a task force, but a project team is often ongoing and covers a wider range
of tasks.
Virtual teams are groups of individuals working together with a common purpose but
from different locations. People may be in different time zones or even different
organizations. The obvious advantage of a virtual team is the low cost, both in time
and money to maintain it. Meeting in virtual time increases flexibility for the members
(no need to get dressed before the meeting!) and allows the organization to use the
talent of people from around the globe. The idea of virtual teams is relatively new.
Virtual teams are possible thanks to advances in communications and technology,
such as e-mail, the World Wide Web (Internet), videoconferencing, and other
products.
Working across cultures can be as challenging as working cross-functionally. Working
with different cultures means working with very different leadership styles and
decision-making processes. In the United States, managers tend to gather data, make
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a quick decision, and move forward, making corrections as need. Northern Europeans
prefer to slowly build consensus, whereas French schoolchildren are trained to debate
and confront. Some business consultants will tell you that decisions in Japan are made
in small, informal conversations before the formal meeting ever takes place.
In spite of these barriers, many companies have been adapting virtual teams. SAP is
the world’s largest inter-enterprise software company with more than thirty thousand
employees in sixty countries. It relies on virtual teams to survive. It has five
headquarters around the globe, each one with a specific area of expertise shared via
virtual meetings. IBM and General Electric are corporations that also depend on
virtual team strategies.
Self-Managing Teams
A self-managed team is a group of employees that’s responsible and accountable for
all or most aspects of producing a product or delivering a service. It could be thought
of as a mini-company within a larger organization. Traditional organizations assign
tasks to employees depending on their skills or the functional department (sales,
finance, production). A self-managed team carries out the supporting tasks as well,
such as planning and scheduling the technical workflow tasks, and human resource
tasks such as managing vacations and absences. Team members may take turns
leading and assuming technical responsibilities.
Because of the autonomy given to self-managed teams, these teams have greater
ownership of the jobs they perform. Some benefits of self-managed teams are: team
members share accountability for what they accomplish, which can be a great
motivator; individuals have greater commitment to the task because they’re directly
responsible for its results; and they take on some of a manager’s work so he can
continue on other tasks.
However, self-managed teams are not without problems. Groupthink occurs more
frequently with these teams. Members may struggle during the transition from
supervisor-led management to self-management, possibly because of lack of
interpersonal skills or poor implementation by the company. Not surprisingly, the
most effective self-managing teams are found in companies where the corporate
culture supports democratic decision making and the employees are generally well-
educated.
Advantages of a Team
Ideally, the purpose of teams within an organization is to bring together a group
of qualified people to work together as a unit to accomplish common goals.
Although teams within organizations offer many benefits to a company, they can
also present several challenges. Many organizations spend valuable resources
developing and managing teams in the workplace. Employers who understand the
advantages and disadvantages of teams can more effectively manage them to
achieve the best results.
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Promotes Creativity
When employees work together in a group, they are often times able to collaborate
together to brainstorm innovative and creative ideas to benefit the organization.
Many organizations form diverse teams, which allows these teams to draw from the
experiences and abilities of one another. Diversity within teams is beneficial
because people from different backgrounds and cultures approach problems and
topics differently. Teams are also more productive when they are cognitively
diverse.
Generates Motivation
Team members working together in harmony are able to motivate one another. The
sense of accomplishment received from working with a productive team increases
employee morale and causes employees to desire to achieve greater success.
Motivated employees benefit the company by providing excellent customer service
and an increase in efficiency and productivity.
Builds Trust
Another advantage of teams within organizations is that working as a team can build
trust among employees. Employees who trust each other do not compete with one
another unnecessarily. They understand that working together is for the benefit of
the organization. Employees who trust one another are more willing to work
together in the future and ask for help from each other when needed.
Disadvantage of a Team
Interpersonal Conflict
One disadvantage of teams within an organization is the possibility of conflicts
arising between team members. One team member may disagree with the ideas of
another team member, which may lead to an argument. Hostility within teams limits
productivity, creativity and the decision-making process. Managers must effectively
manage teams to keep conflict at a minimum.
Compatibility Problems
One of the disadvantages of working in a team is personal incompatibility. Some
employees work better by themselves than in a group. An employee who does not
work well within a group can hinder the progress of the entire team. The
incompatible employee may detach himself from the rest of the team and refuse to
participate. If negative feelings arise from the rest of the team members toward the
incompatible employee, communication may suffer within the group. Management
must effectively handle incompatible employees by providing training or removing
them from the group.
Free-Riding Issues
Some team members may take advantage of the efforts that other team members
make within the group. This can cause issues within the group because the team
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members making the effort may feel like other team members are coasting along
and not pulling their weight. If this issue is not handled immediately, unmotivated
team members may feel entitled toward not putting forth the same effort as others.
Other individuals on teams may willingly do the work of unproductive employees to
avoid any problems, but resentment will build. To avoid free riding, managers may
have to implement metrics for measuring each team member's performance.
Some People are not Team Players
Another disadvantage is that not all employees are suited to teamwork. Some
employees work more efficiently on their own, and being part of a group may not
maximize their skill set.
8.4 Threats & Challenges

Simple and obvious behaviors distinguish effective groups from ineffective groups.
They are obvious enough that managers tend to overlook them until they impede
group performance or create significant conflict. Barriers to group effectiveness are
caused by:
 No clear sense of purpose; goals and objectives have not been clarified (often this
can be attributed to ineffective management)
 Formality surrounding and encumbering the group; the environment is void of
humor, excitement, or fulfillment; members dread the workplace and any
interaction with group members or the leader
 Unequal member participation; certain members are stigmatized, ignored, or
undervalued; weighted participation is necessary to gain diverse and quality
input; decisions consistently made by the same group members generate tunnel
vision and reduce creativity and innovation
 Poor listening skills; team members’ inability to listen to each other creates errors
and misunderstandings; the inability to listen effectively impacts all other points
(goal attainment, environment, conflict, participation, communication, and
roles); poor communication creates barriers
 Lack of openness and healthy conflict; expression and idea exchange must be
encouraged (it is counterproductive to view differing opinions as antagonistic)
 Lack of trust and communication; fear of reprisal encourages members to conceal
personal aspects about themselves and their work; the higher the level of trust,
the greater the confidence level, which is necessary to take creative risks
Groupthink
A primary threat to group effectiveness is groupthink. Groupthink thrives on
conformity and stems from low confidence and trust levels. It creates problems within
cohesive in-groups, which in turn restricts moral judgment and puts too much
emphasis on agreement and accord. Groupthink tends to override realistic appraisals
of alternative courses of action.
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Overcoming Groupthink
Groupthink protects shortsighted and narrowly focused group norms that prevent
openness, creative problem solving, decision making, and performance expansion.
Strategies for overcoming groupthink include practicing impartiality, encouraging
openness, requiring participation, and inviting outside opinions.
Managers who wish to control the effects of groupthink decisions might consider that
groups with moderate cohesiveness produce better decisions than either low or
highly cohesive groups. Although highly cohesive groups have more confidence in
their decisions, when victimized by groupthink, these groups make the worst
decisions.
Self-Justification
Self-justification within the group is characterized by persistence and overconfidence
in decisions. When decisions prove fallible, a strong tendency to save face and to
justify the reasoning process is the result. Overconfidence results in unclear objectives
defined by the group’s perception of, and assumptions about, an issue. During the
decision/integration phase, group members who should be acting as liaisons between
information gatherers and those responsible for implementing decisions may not
make the necessary effort. Work is done with a “good enough to get by” attitude. As
a result, information processing may be inaccurate due to perceptual bias or selective
attention. The quality of the decision, then, is inflated, while rejected alternatives are
deflated, illustrating the bias. This type of fail-safe groupthink can lead to risky choices
with no available alternatives.
Social Loafing
Social loafing significantly impacts quality and production. Singularly, individuals who
are social loafers are productive and motivated. But when they are put in groups or
on teams, they bury themselves within the unit and allow other members to perform
the bulk of the work. They believe other team members can do the work, rather than
understand the reality that they need to contribute their talents and skills to help
make the task easier and the outcome better.
Groups have values. Social loafing is linked to cultural and individual values rather
than collective values. People in collective societies normally view themselves as part
of a group. Their concern is not to let group members down and to strive for
harmonious productivity. But groups with strong individual values encourage loafers,
since members are more concerned with individual investment and achievement.
Social loafing most often occurs when individual roles and responsibilities are not
clearly defined, are difficult to track, and performance is difficult to measure. This
“fuzziness” allows an individual to fade quietly into the background, while others
compensate for their absence. When members discover the loafer, they slow down
their production and efforts as well. As a result, team effectiveness declines.
Social loafing may be prevented by clarifying each member’s roles and
responsibilities, as well as tracking and publicizing each member’s accomplishments.
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Caution is advised, since overstressing individual accomplishments may undercut

cohesiveness.
Group-Serving/Self-Serving Bias
A self-serving bias may be characterized by the tendency to take more personal
responsibility for success than for failure. Groups tend to attribute success to internal
factors, such as ability and hard work. They attribute their failures to uncontrollable
external factors, such as the difficulty of the task, unproductive coworkers, or
unsympathetic bosses. The group may approach a problem, complaining about lack
of time or too much information to analyze. In the end, however, if the decision
succeeds, emphasis will be put on the group members’ abilities, efforts, and the skill
in collectively managing the difficult task as a team. Failure may produce internal
criticisms of group members. Model awareness, communication, and data mining may
aid the group.
Conformity
Conformity to a group standard, whether correct or not, results when members are
insecure about their behavior or ideas. Conformity is promoted among people in
groups of three or more when:
 People feel incompetent
 The group is undivided and influential
 No prior commitment has been made
 Behavior will be observed
 People have been socialized in a culture that encourages respect for social
standards
The effects of conformity work two ways. Little is accomplished without deadlines,
commitments, and standards. However, conformity also stifles input, creative
analyses, and objective evaluations. Conformity encourages unanimity, which
contributes to self-censorship. Group members tend not to dispute assumptions,
explain mistakes, or disagree, for fear of reprisal. A totally conforming group indirectly
restricts what information is accepted or rejected.
Diversity Influences within the Group
Managing a diverse group or team requires balancing approaches. On one hand,
diversity offers:
 More, and different, perspectives
 A tendency toward increased creativity
 Flexibility
 Increased problem-solving capacity
On the other hand, diversity within groups adds to:
 The problem of coordination
 Miscommunications
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 Ambiguity or different interpretations of similar information presented to the

group
 Difficulty in reaching a single solution or agreeing on a specific course of action
Conclusion:
A team is qualitatively different from a group. A team plays a very vital role in the life of the
members. The team members as it motivates the members for working creatively and actively
participating in the team tasks. Moreover, a team stimulates the members to work for/with
one another in an achieving an objective.
The Group is also not less; the group also helps the members in developing a sense of
conformity between the members and respect the group values. It increases their resistance
to change. Above all, the power of a group is always more than an individual and moreover
power, politics & conflicts will be discussed in the next chapter.
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Organizational Behaviour Power, Politics and Conflict
CHAPTER 9
POWER, POLITICS AND CONFLICT
9.1 Approaches to understanding power and politics in organisation
9.2 Types of Power tactics
9.3 Conflict and Stress: A potential casual link
9.4 Managing Superior and Subordinate Conflict
9.1 Approaches to understanding power and politics in organisation

"Nearly all men can stand adversity, but if you want to test a man's character, give
him power." ~ Abraham Lincoln
Organizations provide a power base for individuals. From a purely economic
standpoint, organizations exist to create a surplus of income over costs by meeting
needs in the marketplace. But organizations also are political structures which provide
opportunities for people to develop careers and therefore provide platforms for the
expression of individual interests and motives. The development of careers,
particularly at high managerial and professional levels, depends on accumulation of
power as the vehicle for transforming individual interests into activities which
influence other people.
Power refers to the capacity that A has to influence the behaviour of B so that b acts
in accordance with A’s wishes. It is a function of dependency. Suppose, you are a
student at college who is dependent on parents for funds, they hold power over you.
Once you are out of college and have a stable source of income, the power of your
parents over you will be significantly reduced.
 Bases of Power
Formal Power: It is based on an individual’s position in an organisation. It can
come from the ability to coerce or reward or from formal authority.
 Coercive Power: It depends on fear of the negative results from failing to
comply. It rests on the application, or the threat or the controlling by force of
basic physiological and safety needs. A great example of the coercive power
is in the classic David Mamet film, "Glengarry Glen Ross." It’s about employees
at a New York real estate office who learn that, at the end of the week,
everyone except the top two realtors will be fired. The result is a fevered sales
frenzy in which the realtors will do anything they can to make a sale. It’s an
effective power play but destructive to the morale and integrity of all in the
office.
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Power, Politics and Conflict Organizational Behaviour
 Reward Power: The opposite of coercive power, this type influences other with
rewards like promotions and bonuses. It generates an incentive to motivate
someone to do something and acts as a positive reinforcement for behavior. For
example, when Kelly exceeds her sales quota for the first quarter of the
organization's fiscal year, her manager Jack rewards her with a bonus check for
$500 and sends out an e-mail to her coworkers acknowledging the good job Kelly
has done.
 Legitimate Power: Legitimate power stems from the manager's position in the
organization and the authority that lies in that position. Subordinates
acknowledge the legitimate power that comes from being in a leadership position
in an organization. In the army or any of the defense forces in any country, a
commanding officer, literally has absolute control over the soldiers under his
command. This is a consequence of legitimate power that he possesses due to his
rank in the chain of command.
Personal Power: Personal power is a source of influence and authority a person has
over his or her followers.
 Expert Power: Expert power is influence wielded as a result of expertise, special
skill and knowledge. As an example consider a company that sells all of their
products online. At 3pm on a Friday afternoon their database crashes. Employees
leave at 6pm, and many of them can’t work later as they have flights booked for
a weekend away etc. In this situation the manager is facing the prospect of lost
sales not just for that night, but for the whole weekend. This scenario would cost
the company hundreds of thousands of dollars in lost sales. Now suppose that a
relatively junior engineer said they could fix the problem temporarily, at least for
the weekend, in just two hours. All of the sudden this relatively junior engineer
holds all the power, at least for the next two hours.
 Referent Power: It is based on identification with a person who has desirable
resources or personal traits. This is why celebrities are offered large sums of
money for endorsing products Marketing research reveals that celebrities like
Amitabh Bachchan and Sachin Tendulkar have the power to influence people with
their choice of air-conditioners, credit cards and others.
9.2 Types of Power Tactics

People use various power tactics to translate power bases into specific actions.
 Legitimacy: This tactic relies upon compliance with rules, laws, and regulations. It
is not intended to motivate people but to align them behind a direction. Think
about the number of commercials with doctors, lawyers, and other professionals
who look and sound the part, even if they are actors. People want to be convinced
that the person is an authority worth heeding. Authority is often used as a last
resort. If it does not work, you will not have much else to draw from in your goal
to persuade someone.
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 Rational Persuasion: It includes using facts, data, and logical arguments to try to
convince others that your point of view is the best alternative. To prove to his
boss “Don” that he is qualified for the job, John needs to illustrate all of the time
he acted like a vice president and was successful at it. John presented logical
arguments as well as factual evidence to his boss and demonstrates that his
request is reasonable.
 Inspirational Appeals: These focus on values, emotions, and beliefs to gain
support for a request or course of action. Such sayings like ““Ask not what your
country can do for you, ask what you can do for your country” (John Kennedy) or
“Stay hungry, stay foolish” (Steve Jobs) are good examples of this tactic.
Inspirational appeals are effective when they are authentic, personal, big-
thinking, and enthusiastic.
 Consultation: It refers to the influence agent’s asking others for help in directly
influencing another person or group. Consultation is most effective in
organizations and cultures that value democratic decision making. Some
employees are more likely to accept change when managers use consultative
tactics. That is, employees often want to be involved in the process of making
decisions, rather than being told what should be done, even if the decision is the
same in the end.
 Personal Appeals: It refers to helping another person because you like them and
they asked for your help. Personal appeals are most effective with people who
know and like you.
 Exchange: Exchange refers to give-and-take in which someone does something
for you, and you do something for them in return. The rule of reciprocation says
that “we should try to repay, in kind, what another person has provided us.” The
application of the rule obliges us and makes us indebted to the giver. Quite often
the trade union uses this power tactic to influence the management.
 Ingratiation: Ingratiation refers to different ways of making others feel good
about themselves. Ingratiation is effective when it is honest, infrequent, and well
intended. A team leader can motivate the team members through this tactic.
 Pressure: It refers to pushing someone to do what you want or else something
undesirable will occur. This often includes threats and frequent interactions until
the target agrees. Pressure tactics are most effective when used in a crisis
situation. For example, the trade unions may threaten strikes if their demands are
not met by the management. On the other hand, management may threaten a
lock out in the factory, if the trade unions do not accept its terms.
 Coalition: Coalition is the temporary alliance of two or more individuals or groups
who combine their efforts and energy for the common goal. By forming a
coalition, the members are able to increase their power over groups not in their
coalition. Unions are common examples of coalitions within organizations.
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The effectiveness of some influence tactics depends on the direction of the influence.
Rational persuasion is the only tactic which is effective across organisational levels.
Exhibit 9.1
 Factors influencing political behavior of individuals in the organization
The political behaviour of individuals in the organisation is influence by variety of
factors. These factors can be broadly categorized into individual and
organisational factors.
 Individual Factors: At the individual level, researchers have identified certain
personal traits, needs, and other factors likely to be related to political behaviour.
It has been found that the employees who are high self-monitors, possess internal
locus of control are more likely to engage in political behaviour. The Machiavellian
personality characterized by the will to manipulate and the desire for power is
comfortable using politics as a means to further his self -interest. Also, an
individual’s expectations of success influence the degree to which he will pursue
illegitimate means of political action. The possession of a scarce knowledge or
skill, a prominent reputation, or influential contacts outside the organization- the
more likely that individual is to risk illegitimate political actions.
 Organisational factors: There are some of the organisational factors that
influence the individuals to play politics in the organisations.
1. Limited Resources in the organisation: When there are limited resources in
the organisation then every individual in the organisation wants to have
optimum resources. It results in making individuals getting engaged
themselves in politics to get the maximum advantage of the distribution of
resources.
2. Performance evaluation: The individuals tend to play politics in the
organization when performance evaluation and its outcome are subjective,
qualitative and unclear.
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3. High Performance pressure: The individuals play politics when they are
enforced with high performance pressure. The politics playing in the
organization becomes measure to pressurize authority to withdraw control
and lower the performance target.
4. Decision-making culture: Democratic and participative decision-making
culture of the organisation is also liable to organisational politics as every
individual wants to enhance his/ her importance and thereafter give opinion
on crucial and important matters.
9.3 Conflict & Stress: A Potential Casual Link

 The Traditional View of conflict: It was first developed in the late 1930s and early
1940s, with the most linear and simple approach towards conflict. According to
the traditional view, any conflict in an organization is outright bad, negative and
harmful. The traditional view only sees conflict as dysfunctional and destructive.
The conflict was treated negatively and discussed with such terms as violence,
destruction, and irrationality to reinforce its negative implication.
 The Interactionist View of conflict: With passing time and further studies in the
field of organizational behavior, people started to accept conflict as an integral
and somewhat positive aspect. It suggests that an ongoing, minimum level of
conflict is actually necessary and beneficial for a group. In the interactionist view,
an organization or group with no conflict is more likely to become static, non-
responsive, inflexible and inadaptable. It states that a minimum level of conflict is
actually beneficial for the group because it maintains a certain level of creativity,
self-evaluation, and competition among the individuals.
 Resolution Focused View of conflict: Researchers, including those who had
strongly advocated the interactionist view, have begun to recognize some
problems with encouraging conflict. There are some very specific cases in which
conflict can be beneficial. However, workplace conflicts are not productive; they
take time away from job tasks or interacting with customers, and hurt feelings
and anger often linger after conflicts appear to be over. People seldom can wall
off their feelings into neat categories of “task” or “relationship” disagreements,
so task conflicts sometimes escalate into relationship conflicts. Conflicts produce
stress, which may lead people to become more close minded and adversarial.
The Conflict Process: The process has the following 5 stages
Stage 1: Potential Opposition or Incompatibility
The first step is the appearance of conditions that create opportunities for conflict
to arise.
 Communication: Mitali had worked in supply-chain management at Maersk,
a shipping company for 3 years. She enjoyed her work in large part because
her boss, Mr. Sudhir Paul was a great boss. Then Sudhir got promoted and Mr.
Rao took his place. Six months later Mitali says her job is very frustrating as
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she thought her wavelength did not match that of Mr. Rao. Mitali says that
Mr. Rao tells her to do something and then tells her that she did it wrong. She
gets upset as he shouts at her everyday.
These comments indicate that communication could be a source of the conflict.
 Structure: Arpita and Anjali both work at Homeland --- a large home utilities
and décor retail store. Arpita is a salesperson and Anjali is the manager. The
women know each other for years, stay in the same neighborhood and their
daughters are best friends. Arpita’s job is to sell the products and much of it
is sold at credit. On the other hand, Anjali’s job is to minimize credit losses for
the company. Hence they are always at a battle with each other. Although
nothing personal, the requirements of the job bring them into conflict. This
includes variables such as size, degree of specialization in the tasks assigned
to group members, jurisdictional clarity, member-goal compatibly, leadership
styles, reward systems, and the degree of dependence between groups. The
potential for conflict increases when Groups are larger or more specialized,
Group members are younger or have less tenure, Turnover is high, Jurisdiction
and/or responsibility for action are ambiguous and Diversity of goals exists
among groups.
 Personal Variables: Personality types, values, and emotions can lead to
conflict. In particular, people high in the personality traits of
disagreeableness, neuroticism or self-monitoring are more likely to engage in
conflict with others. Emotions can also lead to conflict.
Stage 2: Cognition and Personalization
This is the point when the parties decide what the conflict is about. Emotions play
a major role in shaping perceptions. Negative emotions allow us to oversimplify
issues, lose trust, and put negative interpretations on the other party’s behavior.
In contrast, positive feelings increase our tendency to see potential relationships
among the elements of a problem, take a broader view of the situation, and
develop more innovative solutions.
Stage 3: Intentions
Intentions intervene between people’s perceptions and emotions and their overt
behavior. They are decisions to act in a given way. We separate out intentions as
a distinct stage because we have to infer the other’s intent to know how to
respond to his or her behavior. A lot of conflicts are escalated simply because one
party attributes the wrong intentions to the other. Using two dimensions—
cooperativeness (the degree to which one party attempts to satisfy the other
party’s concerns) and assertiveness (the degree to which one party attempts to
satisfy his or her own concerns)—we can identify five conflict-handling intentions:
competing (assertive and uncooperative), collaborating (assertive and
cooperative), avoiding (unassertive and uncooperative), accommodating
(unassertive and cooperative), and compromising (midrange on both
assertiveness and cooperativeness).
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o Competing: When one person seeks to satisfy his or her own interests
regardless of the impact on the other parties to the conflict, that person is
competing. You compete when you place a bet that only one person can win,
for example.
o Collaborating: In collaborating, the parties intend to solve a problem by
clarifying differences rather than by accommodating various points of view. If
you attempt to find a win–win solution that allows both parties’ goals to be
completely achieved, that’s collaborating.
o Avoiding: A person may recognize a conflict exists and want to withdraw from
or suppress it. Examples of avoiding include trying to ignore a conflict and
avoiding others with whom you disagree.
o Accommodating: A party who seeks to appease an opponent may be willing
to place the opponent’s interests above his or her own, sacrificing to maintain
the relationship.
o Compromising: There is a willingness to ration the object of the conflict and
accept a solution that provides incomplete satisfaction of both parties’
concerns. The distinguishing characteristic of compromising, therefore, is that
each party intends to give up something.
Stage 4: Behaviour
When most people think of conflict situations, they tend to focus on stage IV
because this is where conflicts become visible. The behavior stage includes the
statements, actions, and reactions made by the conflicting parties, usually as
overt attempts to implement their own intentions. As a result of miscalculations
or unskilled enactments, overt behaviors sometimes deviate from these original
intentions. It helps to think of stage IV as a dynamic process of interaction.
Stage 5: Outcomes
These outcomes may be functional, if the conflict improves the group’s
performance, or dysfunctional, if it hinders performance.
Functional Outcomes: Normally associated with low-to-moderate levels of task
and process conflict (and excluding relationship conflict) these outcomes result in
an improvement in the group's performance.
Dysfunctional Outcomes: Uncontrolled opposition breeds discontent, which acts
to dissolve common ties, and eventually leads to the destruction of the group.
Managing Functional Conflict
Hewlett- Packard rewards dissenters or people who hold on to ideas even when
management rejects them. Herman Miller Inc, an office furniture manufacturer
has a formalized system where employees evaluate and criticize the bosses.
The most disruptive conflicts successfully discuss differences of opinion openly
and are prepared to manage conflict when it arises. An open discussion makes it
much easier to develop a shared perception of the problems at hand. Managers
need to emphasize shared interests in resolving conflicts.
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9.4 Managing Superior Subordinate Conflict
Exhibit 9.2
 Negotiation: It is a process that occurs when two or more parties decide how to
allocate scarce resources.
Bargaining Strategies
 Distributive Bargaining: Suppose you see a used car sale online. You like the car
and contact the owner. You don’t want to pay that much. The two of you
negotiate over the price. This is called Distributive Bargaining. Every rupee you
can reduce from the seller’s price is every rupee you save and every rupee the
seller can get from you comes at your expense. So this kind of bargaining is
negotiating over who gets what share of a fixed pie.
Each party is a negotiator. Each has a unique target point (what he or she would
like to achieve) and resistance point (the lowest acceptable outcome before
negotiations are broken off). The area between each negotiator’s target and
resistance points is that negotiator’s aspiration range. If the two ranges overlap,
this common area is referred to as the settlement range. When you are engaged
in distributive bargaining, research consistently shows one of the best things you
can do is make the first offer—and make it an aggressive one.
 Integrative Bargaining: This type of bargaining operates under the assumption
that one or more settlements can create a win-win solution.
In 2009, Tata Motors announced it would consolidate its operations in Britain and
likely close down one of the Jaguar Land Rover plants. However, after an impressive
financial growth the management of Tata Motors negotiated with the labour union
for continuation of all the three plants. It was agreed that the workers would be given
a pay rise of 5% in November 2010 and rise of 3% in November,2011. It was also
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agreed that new hires will be offered lower starting salaries and will receive lower
shift premiums.
1) Integrative bargaining bonds negotiators and allows them to leave the bargaining
table feeling they have achieved a victory.
2) Integrative bargaining bonds negotiators and allows them to leave the bargaining
table feeling they have achieved a victory.
3) It tends to build animosities and deepen divisions when people have to work
together on an ongoing basis.
 The Negotiation Process
It is made up of five steps:
1. Preparation and Planning
2. Definition of ground rules
3. Clarification and justification
4. Bargaining and problem solving
5. Closure and Implementation
Preparation and Planning: Before you start negotiating, you need to do your
homework.
a) What’s the nature of the conflict?
b) What’s the history leading up to this negotiation?
c) Who’s involved and what are their perceptions of the conflict?
d) What do you want from the negotiation?
e) What are your goals?
For example, suppose you are a supply manager at HP Computers and your goal is get
significant cost reduction from the supplier of your monitors, make sure that this goal
is your priority.
Once the goal is set you need to determine the strategy.
An important consideration in any negotiation is to determine the best alternative to
a negotiated agreement (BATNA) for both the negotiator and the opponent. This is
similar in concept to a resistance point: the negotiator must determine when it is
better strategically to cease negotiations and accept some other alternative. For
example, expert chess players know in advance how they will respond to a given
situation.
Definition of Ground Rules: The step determines the who, what, when, and how of
the negotiation process.
During this phase the parties will exchange their initial demands or proposals.
Clarification and Justification: In this step each party will explain, amplify, clarify,
bolster, and justify the original demands or proposals.
This step should be more explanatory in nature, rather than confrontational; it should
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be used to build understanding between the parties.

Bargaining and Problem Solving: It is the actual give-and-take necessary to
accomplish agreement.
It is likely that both parties will have to make some concessions in order to reach
agreement.
Closure and Implementation: The final step in the process is formalizing the
negotiated agreement and developing any necessary procedures for implementing
and monitoring that agreement.
This step can be accomplished by anything from creating a formal contract through
simply shaking hands on it.
An effective manager accepts the political nature of organizations. By assessing behaviour in

a political framework, he can predict the actions of others and use that information to
formulate political strategies that will gain advantages for him as well as the work unit. Also,
an optimal level of conflict is one that prevents stagnation, stimulates creativity, allows
tensions to be released and initiates the seeds of change without being disruptive.
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Organizational Behaviour Leadership
CHAPTER 10
LEADERSHIP
10.1 Trait Theories & Behavioral theories
10.2 Contingency theories and LMX theory
10.3 Leadership Styles
10.4 Leadership in Global context
Leadership in business is the capacity of a company's management to set and achieve

challenging goals, take fast and decisive action when needed, outperform the competition,
and inspire others to perform at the highest level they can. Leadership differs from
management. In a given situation same individual acts as a leader as well as a manager.
Beginning from the early 20th century, experts have advocated several models on leadership.
10.1 Trait Theories

Adolf Hitler had domineering, fear-inducing, controlling, ego-maniacal tendencies. He
“led” his people with fear and brain-washed those into believing that led by him, their
people could rule the world. The traits Hitler possessed were not necessarily positive
ones – not by a long shot – but he certainly was influential.
Abraham Lincoln, 16th President of the United States, led with passion for civil rights
and equality. He led our people with moral aptitude and garnered sympathy for
minorities. He led with passion and dedication with dreams of egalitarianism
throughout our great nation. He also was known for his honesty and his pure ethical
fiber. He didn’t adopt the nickname “Honest Abe” for nothing. Traits like integrity,
honesty and drive made him a leader who was loved and revered by many.
Trait theories of leadership identify the specific personality traits that distinguish
leaders from non-leaders. They are based on the premise that leaders are 'born, not
made' (i.e., that leadership is largely innate, rather than being developed through
learning). This line of research emerged as one of the earliest types of investigations
into the nature of effective leadership and is tied to the "great man" theory of
leadership first proposed by Thomas Carlyle in the mid-1800s. It is important to know
that good leadership is being honest, forward looking, inspiring, and competent.
Leaders that have these skills are the enthusiastic motivators of the group and they
have an intense desire to lead others to reach shared goals. Their followers always
look upon them because they have high levels of effort, ambition, energy and
initiative. Leaders are also known to have charisma, creativity, self-confidence,
intelligence, integrity, sociability, determination and flexibility.
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Leadership Organizational Behaviour
Early research (Mann, 1959; Stogdill, 1948) focused on the relationship between
personality and leadership, but reported little supporting evidence. In order to review
the evidence of a substantive relationship between personality and leadership, a
meta-analysis was conducted by Lord, De Vader and Alliger (1986). This included the
studies originally reviewed by Mann (1959) and subsequently published studies. Lord
et al. (1986) demonstrated that there were significant meta-analytic correlations
between leadership perceptions and intelligence, masculinity and dominance. A later
meta-analysis, conducted by Judge, Bono, Iles and Gerhardtl (2002), found that the
Big Five personality dimensions (i.e., agreeableness, conscientiousness, extraversion,
neuroticism, and openness) were significant predictors of both leadership emergence
(explaining 28% of the variance) and leader effectiveness (explaining 15% of the
variance).
One of the major criticisms of trait theory is its simplistic approach; that it fails to take
account of other factors that will influence the development of a successful leader
(e.g., situational and environmental factors). Recent research, based on identical and
fraternal twins, was able to estimate the heritability of leadership emergence at 30%
(Avery, Zhang, Avolio, Kruegar, 2007). This means that the remaining 70% is
accounted for by situational factors (e.g., exposure to leader role models) during one's
career. Nevertheless, many organisations use personality assessment as part of their
selection procedures for managerial or leadership roles.
Behavioral theories
Behavioral theories of leadership are classified as such because they focus on the
study of specific behaviors of a leader. Trait research provides a basis for selecting the
right people for leadership. In contrast, behavioral studies implied we could train
people to be leaders. The most comprehensive and replicated behavioral theories
resulted from the Ohio State Studies and the Michigan Studies.
The Jobs way
The Steve Jobs saga in entrepreneurial creation is phenomenal. Steve Jobs cofounded
Apple in his parents’ garage in 1976, was ousted in 1985, returned to rescue it from
near bankruptcy in 1997, and by the time he died, in October 2011, had built it into
the world’s most valuable company. Along the way he helped to transform seven
industries: personal computing, animated movies, music, phones, tablet computing,
retail stores, and digital publishing.
When Jobs returned to Apple in 1997, it was producing a random array of computers
and peripherals, including a dozen different versions of the Macintosh. After a few
weeks of product review sessions, he’d finally had enough. “Stop!” he shouted. “This
is crazy.” He grabbed a Magic Marker, padded in his bare feet to a whiteboard, and
drew a two-by-two grid. “Here’s what we need,” he declared. Atop the two columns,
he wrote “Consumer” and “Pro.” He labeled the two rows “Desktop” and “Portable.”
Their job, he told his team members, was to focus on four great products, one for
each quadrant. All other products should be canceled. There was a stunned silence.
But by getting Apple to focus on making just four computers, he saved the company.
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“Deciding what not to do is as important as deciding what to do,” he told me. “That’s
true for companies, and it’s true for products.”
Jobs’s leadership style was complex. He was intensely focused when committed,
confident enough to take risky leaps, and charismatic enough to enlist legions of
employees and customers in the relentless pursuit of his aspirations. He was a task-
oriented perfectionist.
JRD Tata
Established in 1859, the Tata Group was already India's biggest business conglomerate
when Tata became its fourth chairman in 1938. He was then just 34 years old. Under
his leadership, the Tata assets climbed from Rs 62 crore (Rs 620 million) in 1939 to
over Rs 10,000 crore (Rs 100 billion) in 1990.
JRD adopted a managed by consensus style. Tata spotted talent easily. And once he
was confident that a manager would perform, he gave him (alas, no women) a long
rope. If they wanted to be on their own, like Sumant Moolgaokar, he left them to it.
If they occasionally wanted a shoulder to cry on, like Darbari Seth, JRD was there.
Tata Steel became one of the earliest companies in India to have a dedicated human
resources department. Tata commented: 'If our operations required the employment
of, say, 30,000 machine tools, we would undoubtedly have a special staff or
department to look after them, to keep them in repair, replace them when necessary,
maintain their efficiency, protect them from damage, etc. But when employing 30,000
human beings each with a mind and soul of his own, we seem to have assumed that
they would look after themselves and that there was no need for a separate
organisation to deal with the human problems involved.'
After J.R.D.’s entry, the management of Tisco changed its policy of confrontation. The
trade union became not only acceptable but also an association which was vital to the
interests of the workers.
Ohio State University Leadership Studies: The Bureau of Research at Ohio State
University conducted these studies. The main objective of the studies was to identify
the major dimensions of leadership and to investigate the effect of leader’s behaviour
on employee behaviour and satisfaction. these studies narrowed the description of
leader behaviour to two dimensions:
(i) Initiating Structure (Task oriented leadership)
(ii) Consideration (People oriented leadership)
 Initiating Structure: It is the extent to which a leader is likely to define and
structure his or her role and those of employees in the search for goal attainment.
The purpose of initiating structure is to:
(a) Establish well defined patterns of organization.
(b) Develop channels of communications and methods or procedures.
(c) To supervise the activities of employees.
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 Consideration: It is the extent to which a person’s job relationships are characterized

by mutual trust, respect for employee’s ideas and regard for their feelings. A leader
high in consideration
(a) Helps employees with personal problems
(b) Is Friendly and approachable
(c) Treats all employees as equals
(d) Expresses appreciation and support
Exhibit 10.1
Michigan Leadership Studies: These empirical studies were conducted slightly after
World War II by the Institute of Social Research at the University of Michigan by the
famous organizational psychologist, Dr. Rensis Likert. The purpose of these studies
was to identify styles of leadership behaviour that results in higher performance and
satisfaction of a group. These studies distinguished between two distinct styles of
leadership:
 Production Oriented Leadership: This leadership is also known as task oriented
leadership. It focused on certain points
(a) Rigid work standards, procedure and rules.
(b) Close supervision of the subordinates.
(c) Technical aspect of the job.
(d) Employees were not to be considered as tools to accomplish the goals of the
organisations.
 Employee Oriented Leadership: This style is also known as relation oriented
leadership because it emphasizes on human relations. It focused on
(a) To treat subordinates as human beings.
(b) To show concern for the needs of employees, welfare, advancement etc.
(c) To encourage employee participation in goal setting and in other work related
decisions.
(d) To help ensure high performance by inspiring respect and trust.
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These studies failed to determine whether leadership behaviour is a cause or effect.

Employee centred leadership makes the group productive or the productivity of the
group induces the manager to be employee centred. These studies ignore the
personal characteristics of subordinates, group characteristics and the other
situational variables. A review of 160 studies found the followers of leaders high in
consideration were more satisfied with their jobs, were more motivated and had
more respect for their leader.
10.2 Contingency theories

Contingency theories primarily focus on the context of leadership. They look at the
effects of the situation on the success of a leader. Put differently, the propose that a
leader’s effectiveness is heavily determined by the situation he is in. The relationship
between leadership style and effectiveness suggested that under condition a, style x
would be appropriate, whereas style y was more suitable for condition b.
 The Fiedler Model:
o Identifying Leadership Style: One of the very first contingency theories was
proposed by Fred. E. Fiedler in the 1960s. Fiedler’s theory proposes that a
leader’s effectiveness hinges on how well his or her leadership style matches
the current context and task. He created the least preferred co-worker
questionnaire to identify that style by measuring whether a person is task or
relationship oriented. The Least Preferred Coworker (LPC) scale requires a
person to rate the one individual they would least want to work with – the least-
preferred coworker – using a range of 18 to 25 bipolar (positive or negative)
adjectives, with ratings from 1 to 8. The LPC score is then computed by totaling
all the ratings. A high LPC score indicates that the individual is a relationship-
oriented leader, while a low LPC score suggests a task-oriented leader.
A typical set of bipolar adjectives used in the LPC scale would include
pleasant/unpleasant, friendly/unfriendly, supportive/hostile, and so on. The
responses are graded from 1 for the least favorable attribute (for example,
unpleasant/unfriendly), to 8 for the most favorable one (pleasant/friendly).
The LPC scale assumes that people whose leadership style is relationship-
oriented tend to describe their least preferred coworkers in a more positive
manner, while those whose style is task-oriented rate them more negatively.
o Defining the Situation: Fiedler has identified three contingency or situational
dimensions
(a) Leader Human Relations is the degree of confidence, trust and respect
members have in their leader.
(b) Task Structure is the degree to which the job assignments are structured
or unstructured.
(c) Position Power is the degree of influence a leader has over power
variables such as hiring, firing, discipline, promotions and salary increases.
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Fiedler states that the better the leader-member relations, the more highly structured
the job, and the stronger the position power, the more control the leader has.
Matching Leaders with Situations: Combining the three contingency dimensions
yields eight possible situations in which leaders can find themselves.
Exhibit 10.2
Fiedler concluded that task- oriented leaders perform better either in situations highly
favourable or highly unfavourable to them. Relationship oriented leaders perform
well in moderately favorable situations. From Fiedler’s perspective, you would place
leaders into situations that are most suited to their style.
 Contingency Theory Example: Pizza Hut Restaurant Manager
In this example, we’re going to imagine that you have been newly appointed the
manager of a Pizza Hut restaurant. In this scenario we might expect the following
situational factors:
 Trust will be low. This is because you are new to the job so your team won’t trust
you. Secondly, staff turnover is high so it’s going to be difficult to build strong
relationships.
 Task structure is high. This is because there are extremely clear operating
procedures to follow covering everything from how to make each pizza, to how
to welcome customers to the restaurant.
 Position power is high. You have the ability to hire and fire and reward and punish
as is required.
 According to Fiedler’s Contingency Theory of Leadership, and using our table
above, a relationship-oriented leader is best suited to this type of role.
However, the logic underlying the LPC questionnaire is not well understood and
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respondents’ scores are not stable.

 Hersey and Blanchard’s Leadership Theory: Hersey and Blanchard suggested that
there are four primary leadership styles:
(a) Telling (S1): In this leadership style, the leader tells people what to do and
how to do it.
(b) Selling (S2): This style involves more back-and-forth between leaders and
followers. Leaders "sell" their ideas and message to get group members to
buy into the process.
(c) Participating (S3): In this approach, the leader offers less direction and allows
members of the group to take a more active role in coming up with ideas and
making decisions.
(d) Delegating (S4): This style is characterized by a less involved, hands-off
approach to leadership. Group members tend to make most of the decisions
and take most of the responsibility for what happens.
Hersey and Blanchard's theory identifies four different levels of maturity, including:
 M1: Group members lack the knowledge, skills, and willingness to complete the
task.
 M2: Group members are willing and enthusiastic, but lack the ability.
 M3: Group members have the skills and capability to complete the task, but are
unwilling to take responsibility.
 M4: Group members are highly skilled and willing to complete the task.
The Hersey-Blanchard model suggests that the following leadership styles are the
most appropriate for these maturity levels:
 Low Maturity (M1)—Telling (S1)
 Medium Maturity (M2)—Selling (S2)
 Medium Maturity (M3)—Participating (S3)
 High Maturity (M4)—Delegating (S4)
Example
An emergency room in the hospital demands the leader to be authoritative. In this
case, the leader, considering the emergency, has to direct his subordinates (Telling)
completely, using his skill and expertise. Another situation can be a war situation,
where the military commander might have to direct the troops to follow a particular
strategy (Telling/Selling), in case the situation demands it as the subordinates might
have low or medium maturity.
 Situational Leadership Theory: Situational Leadership theory focuses on the
followers. It says successful leadership is achieved by selecting the right
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leadership style contingent on the followers’ readiness, or the extent to which

they are willing and able to accomplish a specific task.
o If followers are unable and unwilling to do a task, the leader needs to give
clear and specific directions.
o If the followers are unable and willing, the leader needs to display high task
orientation to compensate for followers’ lack of ability and high relationship
orientation to get them to buy into the leader’s desires.
o If the followers are able and unwilling, the leader needs to use a supportive
and participative style.
o If they are both able and willing, the leader doesn’t need to do much.
It acknowledges the importance of followers and builds on the logic that leaders can
compensate for their limited ability and motivation.
Example
Phil Jackson coached NBA superstars Michael Jordan, Kobe Bryant and Shaquille
O’Neil. However, despite the amass talent level of these players they each had various
personalities and qualms with their teammates that made it extremely difficult for
them to be coached. Prior to Phil Jackson’s arrival as Coach of the Bulls and Coach of
the Lakers none of the star players listed won any NBA championships. As the theory
of Situational Leadership suggests leaders are supposed to act in a way that matches
their follower’s levels of commitment and competence. This is the theories most
controversial ten of emphasis. Primarily because it asks an individual to judge a
person’s level of competence and commitment and categorize them.
When coaching Michael Jordan he was aware that Jordan was known for working the
hardest in the gym and often pushing his teammates beyond their level of
commitment to achieve their goals. This means that he has a high level of both
competence and commitment. Accordingly, Phil Jackson could entrust Michael Jordan
with a huge amount of responsibility.
 Path – Goal Theory: It was developed by Robert House and extracts elements
from Ohio State leadership research and the expectancy theory of motivation.
The path-goal theory can best be thought of as a process in which leaders select
specific behaviors that are best suited to the employees' needs and the working
environment so that they may best guide the employees through their path in the
obtainment of their daily work activities (goals) (Northouse, 2013).
The Welch Mantra
Jack Welch, was former CEO of General Electrics for 20 years and known as one of the
best business leaders of all time. He made GE one of the most profitable companies
in the world. General Electric’s market value increased from $12 billion to an amazing
$280 billion. Jack was focused on implementing both performance goals and learning
goals at GE. He took a personal interest in using GE’s Crotonville facility to upgrade
the level of management skills and to instill a common corporate culture. Next, Jack
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put in place an assessment based on a “vitality curve,” and requested his managers to
rank all their staff into the “top 20,” “the Vital 70” and the “bottom 10”. The “top 20”
were groomed for larger assignments, and the “bottom 10” were coached out of the
organization. Welch reinforced the importance of the ranking system by matching it
with an appropriate compensation structure. Top 20 players received raises that were
two to three times the increases given to Vital 70 s, and also received a significant
portion of the stock option grants. Bottom 10 received no raises or options.
The Differentiation ‘Vitality’ curve was based on goals called 4E s and 1P. They are
Energy, Energize others, Edge, Execution and Passion.
Exhibit 10.3
It predicts the following:
 Directive Leadership yields greater satisfaction when tasks are ambiguous or
stressful than when they are highly structured and well lay laid out. Here the
leader provides guidelines, lets subordinates know what is expected of them, sets
performance standards for them, and controls behavior when performance
standards are not met. He makes judicious use of rewards and disciplinary action.
 Supportive Leadership results in high performance and satisfaction when
employees are performing structured tasks. he leader is friendly towards
subordinates and displays personal concern for their needs, welfare, and well-
being.
 Participative Leadership believes in group decision-making and shares
information with subordinates. He consults his subordinates on important
decisions related to work, task goals, and paths to resolve goals.
 Achievement-oriented Leadership sets challenging goals and encourages
employees to reach their peak performance. The leader believes that employees
are responsible enough to accomplish challenging goals.
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Task and Environmental Characteristics

 Design of the task - The design of the task might call for the leader's support. For
example, if the task is ambiguous, then the leader might have to give it more
structure or an extremely difficult task might call for leader support.
 Formal authority system - Depending upon the task authority, the leader can
provide clear goals and/or give the employee some or all control.
 Work group - If the team is non-supportive, then the leader needs to be
cohesiveness and espouse esprit-de-corps that provides comradeship,
enthusiasm, and devotion to all team members.
Contingencies
The theory states that each of these styles will be effective in some situations but not
in others. It further states that the relationship between a leader’s style and
effectiveness is dependent on the following variables
 Employee characteristics: These include factors such as employees’ needs, locus
of control, experience, perceived ability, satisfaction, willingness to leave the
organization, and anxiety. For example, if followers are high inability, a directive
style of leadership may be unnecessary; instead a supportive approach may be
preferable.
 Characteristics of work environment: These include factors such as task structure
and team dynamics that are outside the control of the employee. For example,
for employees performing simple and routine tasks, a supportive style is much
effective than a directive one. Similarly, the participative style works much better
for non-routine tasks than routine ones.
The theory has been subjected to empirical testing in several studies and has
received considerable research support. This theory gives a guide map to the
leaders about how to increase subordinate’s satisfaction and performance level.
Indra Nooyi, the CEO and chairman of PepsiCo, has endeared herself to
employees. She takes an interest in the personal lives of employees and has a
vision of the company’s future. Nooyi made news when she sent letters to the
parents of direct reports to let them know how proud they should be of their
executive adult/children. When one recruit was undecided about joining the
company, Forbes magazine reports, Nooyi called the candidate’s mom and
subsequently landed the executive.
 Leader – Participation Model: The Vroom-Yetton model is designed to help you
to identify the best decision-making approach and leadership style to take, based
on your current situation. It was originally developed by Victor Vroom and Philip
Yetton in their 1973 book, "Leadership and Decision Making." No single decision-
making process fits every scenario. Instead, Vroom-Yetton offers a number of
different processes and directs you toward the best one for your situation. For
example, if speed and decisiveness are required then it will likely point you toward
an autocratic process. The following factors should be considered.
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o Decision Quality: Sometimes, making the "right" decision is critical, and we need
to use a large number of resources (people, time, information, and so on) to
ensure that the action we take has been well thought through and is of high
quality.
o Team commitment: Some of our decisions will have a major impact on our team,
while others will go unnoticed. When a decision will likely impact our team, it's
best to use a collaborative process.
o Time constraints: When the issue at hand isn't time sensitive, we have more
"space" to research the options and to include others, which will help to boost
the quality of your decision. If the time is limited, however, it may not be feasible
to include others or to undertake thorough research.
Figure 1, below, shows the Vroom-Yetton model. As the leader answers each of
the questions, he works his way through a decision tree until he arrives at a code
(A1, A2, C1, C2, or G2). This code identifies the best decision-making process for
the leader and his team.
From firefighter to fire chief, everyone in the fire service is tasked with making
decisions at one point or another. Some decisions are routine, even mundane,
others are urgent or critical, and many fall somewhere in between. Determining
the time and energy that we should give to a decision is critical, and there are
many models out there to help us with this process.
Exhibit 10.4
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The following codes represent the five decision-making processes that are described
by the model:
o Autocratic (A1): The Leader uses the information that he already has to make the
decision, without requiring any further input from the team.
o Autocratic (A2): The Leader consults the team to obtain specific information that
he needs, and then he makes the final decision.
o Consultative (C1): The Leader informs the team of the situation and asks for
members' opinions individually, but he doesn’t bring the group together for a
discussion. The Leader makes the final decision.
o Consultative (C2): The Leader gets the team together for a group discussion about
the issue and to seek their suggestions, but he still makes the final decision by
himself.
o Collaborative (G2): The Leader works with the team to reach a group consensus
.The Leader’s role is mostly facilitative, and he must help team members to reach
a decision that they all agree on.
Founders Sergey Brin and Larry Page developed their Internet search engine while
pursuing their doctorates at Stanford. After obtaining initial financing, they did
something unusual. Brin and Page followed the advice of experienced
entrepreneurs and hired Eric Schmidt to jump-start their company. Incorporating
a blend of autocratic and democratic leadership styles, the Novell and Sun
executive brought experience into Google’s dugout. The three immediately began
scouting experienced talent to set up democratic/participative teams. Today,
Google remains relatively democratic in its approach to product development
under CEO Page.
Leader- Member Exchange (LMX) Theory: According to the theory, leaders form
different kinds of relationships with various groups of subordinates. One group,
referred to as the in-group, is favored by the leader. Members of in-group receive
considerably more attention from the leader and have more access to the
organizational resources. By contrast, other subordinates fall into the out-group.
These individuals are disfavored by the leader. As such, they receive fewer valued
resources from their leaders. The theory explains that the relationship must go
through three important phases that every leader and member will experience.
The three stages involved are Role-Taking, Role-Making, and Routinization.
o Role-taking is when team members first join the group and when managers use
their time to assess new member’s skills and abilities. This is an important phase
of the three stages because it is the first stage and it’s when the first impressions
will be made to the manager.
o Role-Making is when new team members begin to work together on goals and
assignments. In this stage managers generally expect that new team members will
work hard, be loyal and prove themselves trustworthy as they get used to their
new role. The member will take on new tasks to obtain credit from managers. In
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this stage role making allows manager to figure out where team members should
be put accordingly. This time can be used to evaluate members to see how they
face their responsibilities.
o The last phase is Routinization, when the routines between team members and
their managers are established. This phase requires hard work to maintain good
opinions by their managers. Managers need to show trust, loyalty and patience
for in group members. Once both groups have been established, then everything
after that is self-fulfilling. Managers should be striving for their groups to perform
high levels and develop in their roles.
The theory focuses on how people in a management position within a company
should interact with team members to get the most out of them. It shows that how
members of a team or organization are treated greatly and affects how they perform
on their given tasks. It also shows us how to reinforce success within our teams and
continue a successful tradition.
Exhibit 10.5
Tom is a 23-year-old valet manager at a resort, and has 15 valet attendants that work
under him. Tom has worked at the resort for the last four years and was recently
promoted to manager and has ten close friends that have also worked at the resort
for multiple years. There is a group of five valet attendants who were just hired for
the busy summer months, and they are much older than Tom and the other young
valet attendants. Most of the employees have noticed that only the young group of
valet attendants go out to the bar near the hotel after work, or participate in other
non-work related events, while the new group of older valet attendants do not
participate in any non-work activities and simply do the jobs they are asked to
perform, but nothing more. in that this theory specifically examines the interactions
between different followers and their leader.
When examining the employment history of the valet department, its is obvious that
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when a younger valet is hired and develops a personal relationship with Tom and the
in-group of young valets, there has shown to be a low rate of turnover, high
performance evaluations, better jobs attitudes, more support from management and
greater sense of organizational commitment. This can be described as high-quality
leader-member exchanges, which are beneficial for the organization.
10.3 Leadership Styles

Transformational Leadership
The Ohio State Studies, Fiedler’s model and path-goal theory describe transactional
leaders who guide their followers toward established goals by clarifying role and task
requirements. Transformational leaders inspire followers to transcend their self-
interests for the good of the organization and can have an extraordinary effect on
their followers. Transformational leadership may be found at all levels of the
organization: teams, departments, divisions, and organization as a whole. Such
leaders are visionary, inspiring, daring, risk-takers, and thoughtful thinkers.
The concept of transformational leadership started with James V. Downton in 1973
and was expanded by James Burns in 1978. In 1985, researcher Bernard M. Bass
further expanded the concept to include ways for measuring the success of
transformational leadership. This model encourages leaders to demonstrate
authentic, strong leadership with the idea that employees will be inspired to follow
suit.
Inspirational Motivation Intellectual Stimulation
Transformational
Leadership
Idealized Influence Individualized Consideration
Exhibit 10.6
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Characteristics of transformational Leadership:

 Inspirational Motivation: The foundation of transformational leadership is the
promotion of consistent vision, mission, and a set of values to the members. Their vision
is so compelling that they know what they want from every interaction. Transformational
leaders guide followers by providing them with a sense of meaning and challenge. They
work enthusiastically and optimistically to foster the spirit of teamwork and
commitment.
 Intellectual Stimulation: Such leaders encourage their followers to be innovative and
creative. They encourage new ideas from their followers and never criticize them publicly
for the mistakes committed by them. The leaders focus on the “what” in problems and
do not focus on the blaming part of it.
 Idealized Influence: They believe in the philosophy that a leader can influence followers
only when he practices what he preaches. The leaders act as role models that followers
seek to emulate. Such leaders always win the trust and respect of their followers through
their action. They typically place their followers needs over their own, sacrifice their
personal gains for them, ad demonstrate high standards of ethical conduct. The use of
power by such leaders is aimed at influencing them to strive for the common goals of the
organization.
 Individualized Consideration: Leaders act as mentors to their followers and reward them
for creativity and innovation. The followers are treated differently according to their
talents and knowledge. They are empowered to make decisions and are always provided
with the needed support to implement their decisions.
Some examples
 Steve Jobs and Tim Cook, Apple: Harvard Business Review points to Apple as an
example of “dual transformation”: Jobs innovated on original Microsoft products
while also building a software ecosystem. Cook has extended on Jobs’ vision,
maintaining a focus on innovation, software and brand loyalty.
 Jeff Bezos, Amazon: Harvard Business Review attribute’s Bezos’ “insider,
outsider” status as part of what makes him a great transformational leader. As
someone who jumped from the finance world, he brought a fresh perspective to
e-commerce through years of experience in a different industry.
 Harsh Mariwala, Marico: Harsh Mariwala tries to ensure that all stakeholders in
the business benefit from company operations. That means no squeezing or
exploitation of suppliers, consumers or employees. He believes that running a
company in which no one feels like a second class citizen is very beneficial in the
long run.
Transactional Leadership
The best way to understand transactional leadership is to think of a typical
transaction: I give you this, and you do this in return. That’s really the basis of this
leadership style. Transactional leaders dish out instructions to their team members
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and then use different rewards and penalties to either recognize or punish what they
do in response. Think of a leader offering praise to applaud a job well done or
mandating that a group member handles a despised department-wide task because
they missed a deadline. Those are examples of rewards and punishments in a work
setting. Military officers, CEOs, and NFL coaches are well known as transactional
leaders. Some examples include: Norman Schwarzkopf, Vince Lombardi, Bill Gates,
Howard Schultz.
Autocratic Leadership
John Chambers was the chairman of Cisco Systems, and under his leadership for 25
years, the relatively unknown Silicon Valley company has evolved into an estimated
$47 billion business, dominating the networking industry, mostly thanks to his
autocratic leadership where no detail was too small for his attention. Today, the
company’s stock is a bellwether holding that is used to measure the US economy.
Autocratic leadership exists on the opposite side of the spectrum from democratic
leadership. We can think of this as a “my way or the highway” approach. Autocratic
leaders view themselves as having absolute power and make decisions on behalf of
their subordinates. They dictate not only what needs to be done, but also how those
tasks should be accomplished.
They think group discussions and brainstorming only slow things down, and it’s better
if we make important decisions alone. We dislike it when employees question our
decisions—when we’ve said something, that’s final.
Bureaucratic Leadership
The term bureaucracy reveals some of the essential characteristics of the leadership
model. The Cambridge dictionary defines the word as, “a system for controlling or
managing a country, company, or organization that is operated by a large number of
officials employed to follow rules carefully”.
The term is derived from the French word bureau, which stands for office or desk, and
the Greek suffix kratia, which denotes the power of. Bureaucracy is therefore in
essence “the power of office”.
Bureaucratic leadership goes “by the book,” so to speak. With this leadership style,
there’s a prescribed set of boxes to check in order to be a true leader. They also have
a set list of responsibilities, as well as clearly-defined rules and systems for how they’ll
manage others and make decisions. They just need to follow that roadmap that’s laid
out for them. They frequently find themselves asking how their predecessor handled
certain scenarios—they want to make sure that they’re following the accepted
procedure. They always request confirmation that they’re doing things right
whenever they’re tasked with something new.
Alfred Sloan was elected president of General Motors and under his leadership, the
company reformed its approach to leadership and management. He didn’t just change
the way General Motors was managed, but also influenced the whole of the industry.
Historian Harold Livesay has argued that Sloan “bureaucratised the entrepreneurial
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function”. He created a hierarchical organization, which focused on following rules

and taking calculated risks. He decentralized a number of the functions, allowing
individual sections of the organization to manage themselves. He strongly believed in
the corporate culture, especially when it was about decentralized decision-making,
measured performance and continuous development. Organizational control was the
key to success in Sloan’s eyes.
Laissez-Faire Leadership
Warren Buffet, whose success stories have been well-documented, has surrounded
himself with people who he knows can perform their tasks creatively and adequately
without his help, and only intervened when needed to correct an unfavorable
situation, not to mention that he would even allow mistakes to happen for his people
to learn from them.
This is a French term that translates to “leave it be,” which pretty accurately
summarizes this hands-off leadership approach. It’s the exact opposite of
micromanagement. Laissez-faire leaders provide the necessary tools and resources.
But then they step back and let their team members make decisions, solve problems,
and get their work accomplished—without having to worry about the leader
obsessively supervising their every move.
Charismatic Leaders
Max Weber, a sociologist, defined charisma (from the Greek for ‘gift’) as ‘a certain
quality of an individual personality, by virtue of which he or she is set apart from
ordinary people and treated as endowed with supernatural, superhuman, or at least
specifically exceptional powers and qualities. These are regarded as exemplary or of
divine origin. The first researcher to consider charismatic leadership in terms of
organisational behavior was Robert House. According to House’s charismatic
leadership theory, followers attribute heroic or extraordinary leadership abilities
when they observe certain behaviours. Personality is also related to charismatic
leadership. Charismatic leaders are likely to be extraverted, self-confident and
achievement oriented.
Although a small minority thinks charisma is inherited and cannot be learned, most
experts believe individuals can be trained to exhibit charismatic behaviours. One step
of authors proposes a three-step process. First, develop an aura of charisma by
maintaining an optimistic view, using passion as a catalyst for generating enthusiasm
and communicating with the whole body and not merely with words.
Managers versus Leaders
Leadership doesn’t require any managerial position to act as a leader. On the other
hand, a manager can be a true manager only if he has got the traits of leader in him.
By virtue of his position, manager has to provide leadership to his group. A manager
has to perform all five functions to achieve goals, i.e., Planning, Organizing, Staffing,
Directing, and Controlling. Leadership is a part of these functions. A person can be a
leader by virtue of qualities in him. Therefore, it is true to say that, “All managers are
leaders, but all leaders are not managers.”
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Differences between Leaders and Managers

Managers Leaders
1. A person becomes a manager by virtue 1. A person becomes a leader on basis of
of his position. his personal qualities.
2. Manager is accountable for self and 2. Leaders have no well-defined
subordinates behaviour and accountability.
performance.
3. Manager has got formal rights in an 3. Rights are not available to a leader.
organization because of his status.
4. A manager’s concern is organizational 4. A leader’s concern is group goals and
goals. member’s satisfaction.
5. Manager has command over allocation 5. A leader has command over different
and distribution of sanctions. sanctions and related task records.
These sanctions are essentially of
informal nature.
6. A manager performs all five functions of 6. Leader influences people to work
management. willingly for group objectives.
7. A manager performs all five functions of 7. Leader influences people to work
management. willingly for group objectives.
8. All managers are leaders. 8. All leaders are not managers.
10.4 Leadership in Global Context

A recent analysis of the Global Leadership and Organisational Behaviour Effectiveness
(GLOBE) research project has produced some useful insights.
• India: Action oriented and charisma were found to be the most important
characteristics for effective leadership. Despite the increased preference for
individualism in urban Indians, collectivism and humane approach continue to be
the defining characteristics of Indian Culture.
• Brazil: A manager in Brazil needs to be team oriented, participative and humane.
• France: The French have a more bureaucratic view of leaders and are less likely
to be humane and considerate. A task oriented autocratic leader would do best.
• Egypt: Egyptian employees like team- oriented and participative leadership. The
leader should ask employees for their opinions, try to minimize conflicts, but not
be afraid to take charge and make the final decision.
• China: Chinese culture emphasizes being polite, confidence, considerate and
unselfish.
Leadership plays a central role in understanding group behaviour, for it’s the leader who
usually directs us toward our goals. Knowing what makes a good leader should thus be
valuable in improving group performance.
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Organizational Behaviour Learning Organisation
CHAPTER 11
LEARNING ORGANISATION
11.1 What is organisation learning?
11.2 Evaluation of learning and training process
11.3 Peter Senge’s framework
11.4 how success breeds failure
Organisational learning, in which leaders and managers give priority to learning as integral to
the practice of an organisation, is increasingly recognised as critical to making development
organisations work better. In order to make it a priority, we need to understand how and why
learning occurs in organisations, why it is an important part of a healthy organisation, and how
it can be promoted.
11.1 What is organisation learning?

Organizational learning as a strategic tool has been proposed in the field of modern
management for gaining competitive advantage and stabilizing organizational
success. The aim of learning is not only enhancing employee's knowledge and skills
but also developing and growth of the organization and building flexible dynamic
learning organization.
Double loop learning theory: There are a number of theories on how and why we
learn within organisations. One perspective, argued by Huber, assumes that learning
happens through the effective processing and interpretation of information that an
organisation finds useful. This has been criticised by Easterby-Smith and Araujo for
assuming that people and organisations behave according to rational considerations,
and ignoring the political agendas that influence organisational behaviour. An
important theory of organisational learning, first developed by Argyris and Schön, is
double-loop learning. This involves reflecting on experience and knowledge, and using
this reflection as a basis both for action and for critical questioning of the underlying
assumptions that previous strategies were based on. Double-loop learning highlights
the importance of collective reflection within organisational learning: the need to
reflect together on and challenge our deeply ingrained assumptions about how the
world works, and challenge them collectively.
Espoused theory: The first set of behavior relates to the organization's formal rules,
policies, and procedures. These represent the organization's espoused theory, which
are their values and assumptions on how things are thought to be done. A good
example is if you were having an issue with a computer program, you might read
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Learning Organisation Organizational Behaviour
manual and restart your computer.

Theory in use: By contrast, the second set of behavior relates to how things are
actually done. In other words, it's what you actually do to solve a problem. This is
called theory in use. For example, to fix the issue with the computer program, you will
probably use Google or brainstorm some solutions with your peers and colleagues.
The internal structures, rules, procedures and culture of organisations create strong
incentives or disincentives to learn. For example, the systems and structures of an
organisation mediate the ability of staff to interact, collaborate, and communicate
with each other. If these are integrated, Preskill and Torres argue, they can create
opportunities for mutual learning, but traditional organisational structures often
create silos, which may lead to disincentives for cross collaboration and learning.
Principles of learning
The most important principles are reinforcement and punishment. Reinforce means
to strengthen and the term reinforcement refers to a stimulus which strengthens the
probability of a particular response being repeated.
Law of effect: Edward Thorndike (1898) is famous in psychology for his work on
learning theory that lead to the development of operant conditioning within
behaviorism. Thorndike studied learning in animals (usually cats). He devised a classic
experiment in which he used a puzzle box (see fig. 1) to empirically test the laws of
learning. He placed a cat in the puzzle box, which was encourage to escape to reach a
scrap of fish placed outside. Thorndike would put a cat into the box and time how
long it took to escape. The cats experimented with different ways to escape the puzzle
box and reach the fish. Eventually they would stumble upon the lever which opened
the cage. When it had escaped it was put in again, and once more the time it took to
escape was noted. In successive trials the cats would learn that pressing the lever
would have favorable consequences and they would adopt this behavior, becoming
increasingly quick at pressing the lever. Edward Thorndike put forward a “Law of
effect” which stated that any behavior that is followed by pleasant consequences is
likely to be repeated, and any behavior followed by unpleasant consequences is likely
to be stopped.
Reinforcement: The term reinforce means to strengthen, and is used in psychology to
refer to anything stimulus which strengthens or increases the probability of a specific
response. For example, if you want your dog to sit on command, you may give him a
treat every time he sits for you. The dog will eventually come to understand that
sitting when told to will result in a treat. This treat is reinforcing because he likes it
and will result in him sitting when instructed to do so.
Positive Reinforcement: You may tell your child “good job” after he or she cleans their
room; perhaps you tell your partner how good he or she look when they dress up; or
maybe you got a raise at work after doing a great job on a project. All of these things
increase the probability that the same response will be repeated. The most common
types of positive reinforcement or praise and rewards, and most of us have
experienced this as both the giver and receiver.
Negative Reinforcement: Imagine a teenager who is nagged by his mother to take out
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the garbage week after week. After complaining to his friends about the nagging, he
finally one day performs the task and to his amazement, the nagging stops. The
elimination of this negative stimulus is reinforcing and will likely increase the chances
that he will take out the garbage next week.
Punishment: Punishment refers to adding something aversive in order to decrease a
behavior. The most common example of this is disciplining (e.g. spanking) a child for
misbehaving. The reason we do this is because the child begins to associate being
punished with the negative behavior. The punishment is not liked and therefore to
avoid it, he or she will stop behaving in that manner.
Extinction: When you remove something in order to decrease a behavior, this is called
extinction. You are taking something away so that a response is decreased.
11.2 Evaluation of learning and training process

The steps are as follows:
Identify
Identify the critical behaviours which have
significant impact on the individual's performance
Measure
Determine the number of times a particular
behaviour is exhibited before intrevention
Analyze
Determine the antecedent cues responsible for a
particular behaviour and the consequences that
maintain thebehaviour
Intervene
Determine an appropriate strategy to encourage
desirable behaviour
Evaluate
Assess the effectiveness of the intervention based
on various parameters
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11.3 Peter Senge’s framework

According to Peter Senge, one-third of 500 companies will disappear within 15 years,
and the average lifetime for the largest enterprises is approximately 40 years. It
addresses the question how today’s organizations can experience continuous growth
to perform better than its competitors. The Senge’s five disciplines of learning
organizations or Senge’s learning organisation describes how to manage the success
and development of an organization and how employees give the extra mile that goes
beyond the expectations of the company.
Five Disciplines of learning Organisations
 Building a Shared vision: In learning organizations, the vision should be created
through interaction with the employees in the enterprise. Many leaders have
personal visions that lack transferring them to a shared vision. The only way to
create a shared vision is by compromising the organization’s and individual’s
visions. People who do not share the same vision might not contribute as much
to the organization. The effect of sharing the same vision is that employees do
tasks because they want to do so instead of they are told to do so. It changes the
relationship with the company, and it turns its performances in a learning
mechanism.
 Systems Thinking: Instead of focusing on individual issues, systems thinking
reflects the observational process of an entire system. Managers have to
understand that every action and consequence is correlated with another. Many
times it happens that managers focus on individual actions, and therefore, forget
about seeing the big picture. When the correlation is understood, it enables us to
see interrelationships and patterns of change in particular situations. Managers
will be able to determine cause and effect.
 Mental Models: According to Peter Senge, the employees must identify the
values of the company and what the business is all about. A correct understanding
of who we are will enable us to visualize where to go and how to develop further.
The organization has to be flexible in accepting changes to new mental models
and a new image of the company. The most successful companies are those who
can learn and adapt to new models to become faster than its competitors.
 Team Learning: To accomplish excellent functional team dynamics, team-learning
is a primary importance. It is the discipline by which personal mastery and shared
vision are brought together. It is crucial for the workforce to consider its
colleagues as team members instead of rivals. It is the first step to set up dialogues
wherein people dare to be vulnerable and express their real personality. The
working environment should be safe where honest mistakes are forgiven.
Otherwise, no learning can be experienced.
 Personal Mastery: Personal mastery occurs when an individual has a clear vision
of a goal, combined with an accurate perception of reality. The gap between the
vision and reality drives the employee to practice all necessary related activities
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to realize the vision. This creative tension depends on a clear understanding of

current reality. For this reason, for personal mastery and the related discipline of
a shared vision, looking at, and sharing the truth is a crucial fundamental.
However, employees could believe they lack the competencies to achieve their
goals. A vicious circle might have established and could be difficult to remove.
According to Peter Senge, we should train our subconscious mind because it can
handle more complex problems quicker than what our consciousness can. When
people believe in their own powerlessness, it will hold them back from realizing
their vision. For this reason, we should train the subconscious mind to tackle the
stress and problems in reality.
Application of the five disciplines
Applying the five disciplines of learning organizations can be challenging for many
organizations. It would be more attractable to only focus on one or a few of these
disciplines. However, the utilization of all disciples is critical since all disciplines are
interlinked. For instance, when an organization starts to build a Shared Vision with its
team, an important aspect is to have better conversations with its team members
(Team Learning). In addition, if an organization starts to work on System Thinking to
identify common problems, its employees need to understand the Mental Models.
Since all disciplines are linked to another, it does not matter where to start. It does
not mean that the organization has to focus on all disciplines at the same time. By
focusing more narrowly on one or two disciplines and work to the others will gain
competitive advantages for the organization.
Another example is the desire from management that the team is pulling in the same
direction. According to Chris Argyris, a former professor at Harvard Business School,
most organization reward those who follow senior’s management views. Employees
who ask questions or stir the view into another direction may be penalized. As
described, management should focus on Building a Shared Vision. Thus, transferring
management vision into a shared vision by compromising both the organization’s and
individual’s vision.
11.4 How Success breeds failures

Success can breed failure by hindering learning at both the individual and the
organizational level. The first is the inclination to make what psychologists call
fundamental attribution errors. When we succeed, we’re likely to conclude that our
talents and our current model or strategy are the reasons. We also give short shrift to
the part that environmental factors and random events may have played.
The second impediment is overconfidence bias: Success increases our self-assurance.
Faith in ourselves is a good thing, of course, but too much of it can make us believe
we don’t need to change anything.
The third impediment is the failure-to-ask-why syndrome—the tendency not to
investigate the causes of good performance systematically. When executives and
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their teams suffer from this syndrome, they don’t ask the tough questions that would
help them expand their knowledge or alter their assumptions about how the world
works.
Case Study
In 2003, Bologna-based Ducati entered the Grand Prix motorcycle racing circuit (or
“MotoGP”) for the first time. Being a newcomer, it approached 2003 as “a learning
season,” its team director told us. The goal was to acquire knowledge that would help
it develop a better bike for future seasons. To that end, the team fitted its bikes with
sensors that captured data on 28 performance parameters (such as temperature and
horsepower). Riders were debriefed after every race to get input on subjective
characteristics like handling and responsiveness. The team looked like a model
learning organization.
The rookie team finished among the top three in nine races and was second overall
for the season, and its bike was the fastest in the field. But with each success the team
focused more on winning and less on learning, and it ended up analyzing little of the
data it collected.
The successful season caused the team members to believe Ducati could win it all in
2004. This confidence manifested itself in the decision to radically redesign the team’s
bike for the 2004 season rather than incrementally improve the 2003 model. More
than 60% of the 2004 model’s 915 components were new. But at the outset of that
season, it became apparent that the bike had serious handling problems and that the
team had made a big mistake in changing so much at once without giving itself the
time to test everything.
Interestingly, the team still finished third overall that year—thanks to extensive
experiments it conducted to understand the causes of the bike’s problems. Though
third place wasn’t bad, it was viewed as a failure, given the high expectations. And
this disappointment then triggered a comprehensive and ultimately quite effective
reexamination of the team’s approach to developing bikes.
The team turned in solid performances in the 2005 and 2006 seasons and took the
world title in 2007. In short, success led the Ducati Corse team to stop learning, and
only perceived failure caused it to start again.
Khan Academy – The Learning Platform for All
With Khan Academy, 20 million people a month take 10,000 short courses in 36
languages on subjects like building Web pages, practical electrical engineering, and
constructing home-made robots (with and without solder). There's art history and
economics and, and--and the list keeps growing.
Lots of people encounter subjects with the wrong timing for them. Like Nadia, Salman
Khan's niece. She got held back in her New Orleans math class, so he agreed to tutor
her. A few videos later, Khan Academy was born. Bill Gates found Sal's videos when
he wanted to tutor his own kids. He became an early fan and supporter. Since then,
Google, Bank of America, and Pixar have all jumped on board and are providing not
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only support but also relevant educational content.

To help with portfolio building, companies such as Pixar are using Khan Academy as a
platform to create tremendous learning engines for hard-to-hire jobs like dinosaur
design experts and coding. Some companies are using it to help train their teams.
Bank of America has a financial literacy module. There are hundreds of courses for
students that are approved as common core curriculum. There is a set of College
Board-backed modules on free SAT prep that is so good that just this last year test
prep companies lost 20 percent of their business, presumably to Khan. Not only that,
but four times more students were able to prep for the SAT than the year before
because they didn't have to pay an arm and a leg for it.
Google's Eric Schmidt said to Sal, "I think 50 years from now, people will say you were
the most effective and greatest educator on the planet." With a platform sharing core
learning and skills like Khan Academy, almost anything is possible--for anyone.
Once managers have established a more supportive, open environment, they can create
learning forums. These are programs or events designed with explicit learning goals in mind,
and they can take a variety of forms like strategic review, system audits, study missions and
other activities.
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Change Management Organizational Behaviour
CHAPTER 12
CHANGE MANAGEMENT
12.1 Fundamentals of Change
12.2 Steps for change by Kurt Lewin
12.3 Factors for resistance to change
12.4 HR as an agent of Change
12.1 Introduction to Change

The dynamic nature of the external environment in which organizations operate,
necessitates a proactive approach to change. Change is inevitable in the business world.
The survival of organizations on their adaptability. It becomes necessary for them to be
able to predict change and be prepared for it. Organizational change programs require
a great deal of planning before implementation. People’s reluctance to change their
style of working or to learn a new method of performing tasks makes them oppose
change. It thus becomes imperative for managers to undertake comprehensive change-
related programs in organizations to counter the resistance of employees.
Organizational change implies a change in the employee’s manner of working and
behavior. The change may sometimes increase the workload of employees drastically
and put undue pressure on them, leading to stress. Under severe stress, performance
of employees declines and this in turn affects performance of the organization.
Organizational change may be defined as “the adoption of a new idea or a behavior
by an organization” by Daft. It is a way of altering an existing organization to increase
the organizational effectiveness for achieving its objectives.
Forces of change
Forces for change can be internal or external.
Internal Forces
The internal forces are as follows:
 Change in the top management- Change in the top management and consequent
change in the ideas to run the organization. For example, change of Satyam top
management.
 Change in the size of the organization- Change in the organization’s size leads to
change in the internal structure and complexity of the operations in the
organization. For example, Tata acquiring Chorus will lead to change in Tata.
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Organizational Behaviour Change Management
 Performance gaps- When a gap between the set target and actual results (in
terms of market share, employee productivity and profit) is identified,
organizations face the forces to change and reduce the gap. For example,
Kingfisher Airlines.
 Employee needs and values- With changing needs and values of the employees,
organizations change their policies. For example, attractive financial incentives,
challenging assignments, vertical growth opportunities, and autonomy at work
may be provided in an organization to attract and retain its effective employees.
 Deficiency in the existing organization- Sometimes, changes are necessary
because of deficiency in the present organizational arrangement and process.
These deficiencies may be in the form of unmanageable span of management,
large number of managerial levels, lack of co-ordination between various
departments, obstacles in communication, multiplicity of committees, lack of
uniformity in policy decisions, lack of co-operation between line and staff, etc.
 Change/addition to business- If you change the business or add businesses, these
will force a change in the organization.
External forces
These are as follows:
 Political and legal environment
When this changes, business has to adopt and change. For example, if there is a
labor law change or if the international law of taxation changes or the country
signs agreements with other countries leading to export/import of goods,
induction of FDI, etc., the organization has to change.
 Economic
When the economic changes take place, the companies have to change. For
example, when the economic downturn took place in the world in 2008, many
changes were incorporated in India also.
 Social
With social awareness such as rules of acquisition of land and attitude towards
mining and when more inclusiveness is warranted by the society, etc., business
has to change.
 Technology
In today’s world, technology leads and compels many changes such as the change
created due to mobile phones, ATMs, etc.
12.2 Basic model of change

Kurt Lewin’s Three Stages model or the Planned Approach to Organizational is one of
the cornerstone models which is relevant in the present scenario even. Lewin, a social
scientist and a physicist, during early 1950s propounded a simple framework for
understanding the process of organizational change known as the Three-Stage Theory
which he referred as Unfreeze, Change (Transition) and Freeze (Refreeze).
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According to Lewin, Change for any individual or an organization is a complicated

journey which may not be very simple and mostly involves several stages of transitions
or misunderstandings before attaining the stage of equilibrium or stability.
For explaining the process of organizational change, he used the analogy of how an
ice block changes its shape to transform into a cone of ice through the process of
unfreezing.
Exhibit 12.1 Process of Organizational Change
Stage 1 - Unfreezing: This is the first stage of transition and one of the most critical
stages in the entire process of change management. It involves improving the
readiness as well as the willingness of people to change by fostering a realization for
moving from the existing comfort zone to a transformed situation. It involves making
people aware of the need for change and improving their motivation for accepting
the new ways of working for better results. During this stage, effective communication
plays a vital role in getting the desired support and involvement of the people in the
change process.
Stage 2 - Change: This stage can also be regarded as the stage of Transition or the
stage of actual implementation of change. It involves the acceptance of the new ways
of doing things. This is the stage in which the people are unfrozen, and the actual
change is implemented. During this stage, careful planning, effective communication
and encouraging the involvement of individuals for endorsing the change is necessary.
It is believed that this stage of transition is not that easy due to the uncertainties or
people are fearful of the consequences of adopting a change process.
Stage 3 - Freeze (Refreezing): During this stage, the people move from the stage of
transition (change) to a much more stable state which we can regard as the state of
equilibrium. The stage of Refreezing is the ultimate stage in which people accept or
internalize the new ways of working or change, accept it as a part of their life and
establish new relationships. For strengthening and reinforcing the new behavior or
changes in the way of working, the employees should be rewarded, recognized and
provided positive reinforcements, supporting policies or structures can help in
reinforcing the transformed ways of working.
The three stages of Change Management can be aptly explained through the aid of an
example of Nissan Motor Company which was on the stage of bankruptcy due to the
issues of high debts and dipping market share.
During that period, Carlos Ghosn took charge as the head of the Japanese automaker
who was faced with the challenge of implementing a radical change and turning
around the operations of Nissan, yet by keeping the resistance to change under
control which was inevitable under such circumstances by forming cross-functional
teams to recommend a robust plan of change in different functional areas. For facing
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the business challenges, he developed a change management strategy and involved

the employees in the process of change management through effective
communication and reinforcement of desired behaviors. For refreezing the behavioral
change of the employees, he introduced performance-based pay, implemented an
open system of feedback for guiding and facilitating the employees in accepting the
new behavior patterns at work.
According to Branch (2002, p. 4), Lewin’s change management model can be
implemented in three ways:
1. Changing the behavior, attitudes, skills of the individuals working in the
organization.
2. Changing the existing organizational structures, systems and processes
3. Changing the organizational climate, culture and interpersonal style.
Lewin’s model stressed on the interdependence of various units as well as subunits in
an organization. This model assumes that organizations function under static
conditions and move from one state of stability to another state of stability in a
planned way, but the present day organizations function in turbulent scenarios and
uncertain business environments. Furthermore, several critics criticized Lewin’s
planned approach to change management for the following reasons:
 It was criticized for being too simple and mechanistic, as a result of which it may
not be applicable for the present organizational scenario.
 Lewin’s Planned change model fails to take into consideration the radical or
transformational change; it is only useful if incremental change is implemented in
an organization
 This model ignores the role of Power & Politics and conflicts. Moreover, it ignores
the importance of feelings and experiences of employees which play a crucial role
in the entire change process. The model is very plan or goal driven.
 This model supports top-down approach to change management and ignores the
importance of bottom-up approach in the change management process.
12.3 Resistance to change

As the manager contemplates and initiates change in the organization one
phenomenon that is quite likely to emerge anytime in the change process is the
resistance to change.
People often resist change in a rational response based on self-interest. Resistance to
change doesn't necessarily surface in standardized ways. Resistance can be overt,
implicit, immediate, or deferred. It is easiest for management to deal with resistance
when it is overt and immediate. The greater challenge is managing resistance that is
implicit or deferred.
The sources of resistance to change can be categorized into two sources: individual
and organizational.
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1. Individual Resistance: One aspect of mankind that has remained more or less
constant is his innate resistance to change. Individuals resist change because
they attach great preference to maintain status quo. Individual sources of
resistance to change reside in basic human characteristics such as perceptions,
personalities and needs. The following are the reasons: -
a. Economic Reasons: The economic reasons to fear change usually focus on
one or more of the following:
 Fear of technological unemployment.
 Fear of reduced work hours and consequently less pay.
 Fear of demotion and thus reduced wages.
 Fear of speed-up and reduced incentive wages.
Changes in job tasks or established work routines can also arouse
economic fears if people are concerned they won't be able to perform the
new tasks or routines to their previous standards, especially when pay is
closely tied to productivity.
b. Fear of the Unknown: Change often bring with it substantial uncertainty.
Employees facing a technological change, such as the introduction of a
new computer system, may resist the change simply because it introduces
ambiguity into what was once a comfortable situation for them. This is
especially a problem when there has been a lack of communication about
the change.
c. Fear of Loss: When a change is impending, some employees may fear
losing their jobs, particularly when an advanced technology is introduced.
Employees may also fear losing their status because of a change. Another
common fears that changes may diminish the positive qualities the
individual enjoys in the job. For example, computerizing the customer
service positions, threaten the autonomy that sales representatives
previously enjoyed.
d. Security: People with a high need for security are likely to resist change
because it threatens their feeling of safety.
e. Status quo: Perhaps the biggest and soundest reason for the resistance to
change is the status quo. As human beings, we are creatures of habit.
Change may pose disturbance to the existing comforts of status quo.
When confronted with change, this tendency to respond in our
accustomed ways becomes a source of resistance. Change means they will
have to find new ways of managing them and their environment – the
ways that might not be successful as those currently used.
f. Peer Pressure: Individual employees may be prepared to accept change
but refuse to accept it for the sake of the group. Whenever change is
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unwilling to the peers, they force the individuals who want to accept
change to resist change.
g. Disruption of Interpersonal Relationships: Employees may resist change
that threatens to limit meaningful interpersonal relationships on the job.
h. Social Displacement: Introduction of change often results in disturbance
of the existing social relationships. Change may also result in breaking up
of work groups. Thus when social relationships develop, people try to
maintain them and fight social displacement by resisting change.
2. Organizational Resistance: Organizations, by their very nature are conservative.
They actively resist change. Some of the organizational resistances are explained
below:
a. Resource Constraints: Resources are major constraints for many
organizations. The necessary financial, material and human resources may
not be available to the organization to make the needed changes. Further,
those groups in organization that control sizable resources often see
changes a threat. They tend to be content with the way things are.
b. Structural Inertia: Some organizational structures have in-built
mechanism for resistance to change. For example, in a bureaucratic
structure where jobs are narrowly defined, lines of authority are clearly
spelled out change would be difficult. This is so because formalization
provides job descriptions, rules, and procedures for employees to follow.
The people who are hired into an organization are chose for fit; they are
then shaped and directed to behave in certain ways. When an organization
is confronted with change, this structural inertia acts as a counter balance
to sustain stability.
c. Sunk Costs: Some organizations invest a huge amount of capital in fixed
assets. If an organization wishes to introduce change then difficulty arises
because of these sunk costs.
d. Politics: Organizational change may also shift the existing balance of
power in organization. Individuals or groups who hold power under the
current arrangement may be threatened with losing these political
advantages in the advent of change.
e. Threat to established power relationships: Any redistribution of decision
making authority can threaten long established power relationships within
the organization. Managers may therefore resist change that introduces
participative decision making because they feel threatened.
f. Threat to expertise: Change in organizational pattern may threaten the
expertise of specialized groups. Therefore, specialist usually resists
change.
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g. Group Inertia: Even if individuals want to change their behavior, group

norms may act as a constraint. For example, if union norms dictate
resistance any unilateral change made by management, an individual
member of the union who may otherwise be willing to accept the changes
may resist it.
Factors for resistance to change
These can be broadly classified into:
 Economic factors
 Psychological factors
 Social factors
Economic Factors: People feel attached to the organization for satisfying their
needs and economic needs- physiological, job security, etc. People may
perceive that they will be adversely affected by the change in terms of their
needs satisfaction in following ways:
o Skill obsolescence- A change is generally meant for better methods of
working which may involve new techniques, technology, etc. and they may
feel that the new machine degrades their job.
o Fear of economic loss- A change may create fear of economic loss in the
sense that it may affect economic compensation adversely, reduce job
options, etc. as it happens when a new technology is introduced.
o Reduced opportunities for incentives- Employees are generally offered
incentives linked to their output in the form of incentive schemes, bonus,
etc., and the change may reduce these.
Psychological Factors: Psychological factors are based on people’s emotions,
sentiments and attitudes towards change.
o Ego defensiveness- A change may affect the ego of the people affected by
the change and in order to defend their ego, people resist change.
o Status quo- People want status quo, i.e., they do not want any disturbance
in their existing equilibrium of life and work pattern. The change initiated
by the organization disturbs such equilibrium and people have to obtain
another equilibrium which is a painful exercise. Therefore, everyone tries
to avoid it.
o Low tolerance for change- In the context of maintaining status quo, people
may differ. Some people have very low level of tolerance for change and
ambiguity as compared to others. Therefore, these people resist any new
idea.
o Lack of trust in change agent- The effect of change is perceived in the
context of change agent, that is, the person who initiates change. If people
have low degree of confidence in the change agent, they show resistance
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to change efforts. This is the reason why labor union resists changes
initiated by management because of the feeling that labor and
management are two different interest groups in the organization.
o Fear of unknown- A change may be perceived as entering into unchartered
area which is unknown. The change will bring results in the future, which
is always uncertain. This lack of certainty creates anxiety and stress in the
minds of people, and they want to avoid it. The lack of adequate
information about the likely impact of change further complicates the
problems.
Social Factors: People derive need satisfaction, particularly social needs,
through their mutual compatible interactions. They form their own social
groups at the work place for the satisfaction of their social needs. To the extent
the satisfaction of these needs is affected by a change, people resist it. The
major factors causing resistance to change are the desire to retain existing
social interaction and the feeling of outside interference.
o Desire to maintain existing social interaction- People desire to maintain
existing social interaction since it is a satisfying one. When there is any
change, their existing social interactions are likely to be changed, which
people do not want. Therefore, they resist change.
o Feeling of outside interference- A change brought about by the change
agent is considered to be interference in the working of people. This
phenomenon is heightened if the change agent belongs to another social
class. For example, the change initiated by managers affecting workers.
Challenges of Change Management
The change process can have very different challenges for the leader than for the rest
of the team. Knowing what challenges may lay ahead can best prepare you for
managing them. Here are a few to keep in mind when leading the change.
1. Handle resistance with patience
Spider-Man learned the hard way that with great power comes great
responsibility. But in the world of change management, we know that with great
change comes great resistance. Expect it, because it’s not unexpected, and handle
it patiently with conversation and feedback.
As the leader it will be your job to identify and manage resistance. Encourage
vigorous dialog on whatever issues the group is most concerned with. Set fears to
rest. Most importantly, provide the more reluctant members of the team with
certainty, as confidence is frequently contagious.
Doubts are roadblocks in the process of change. You can get a lot further on this
road with patience and clear, constructive guidance.
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2. Manage conflicts
Real leadership involves talking to your team and helping each member
understand either one another or the difficult part of the change.
And when a conflict or issue arises and threatens to disrupt your schedule, you
need to step in as quickly as possible. Whether the conflict is with a person or a
part of the process, you should be on alert to help find solutions. Being eager,
even ready, to dive into the problem quickly is one of the best qualities of an
active leader in the change process.
Patience is required here, too: If the interruption is unnecessary, give the
individual or team time to see the conflict as you see it. But if the conflict
highlights some fault in the process or planning, then this is a problem worth your
time and expertise. This is your chance to show the team their trust in you is well
placed.
3. Deal with setbacks
In transition management, upheaval is a normal part of the course of events.
Because of this, never presume the steps established for change are foolproof (as
any fool will tell you).
Keep morale up as you determine whether the setback is a critical failure or
something that can be managed or even used to some benefit. This will lighten
the effect of a setback–and with morale high, it may even shorten the delay as
the team pitches in to help.
Expecting setbacks is the first step to being ready for them, but the second step is
identifying the most challenging parts of the change in advance. Reassure the team
that there were always going to be unexpected events, but this doesn’t derail the
whole process. Then get to work managing the issue to determine if it’s going to
change the outcome critically or if it’s just a one-off problem to overcome.
4. Protect your team
Your team should believe without question that if they stand by the established
plan or process and some interdepartmental conflict occurs, you as their leader
will have their back and will stand by them.
When you’re working with the other departments or teams (such as finance, IT,
records management) with the resources or input you’ll need, you will meet other
personalities… and in the worst cases, other fiefdoms. If there’s ever a moment
where personalities, pride, uncertainty, or any of a number of unproductive or
unprofessional interdepartmental conflicts occur, your team needs to know
you’re with them. You need that buy-in, and you aren’t going to get it (or keep it
long) if the team thinks you’re only leading them as a way of promoting yourself.
Counter this in advance by developing relationships through the company. Make
connections and build bridges. A culture of cooperation for mutual benefit is a lot
easier to manage and maintain than series of small, self-important kingdoms.
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5. Look ahead
Keep your eyes forward. Be the one to see the iceberg before the rest of the team,
and you’ll encourage confidence in your people. Encourage them to think critically
and ask questions as a part of the process. Let them know why you see change as
important and why they should trust your judgment. Spotting trouble before it
can happen, or at least having a solution prepared in advance, will go a long way
toward proving you’re the right leader for the job.
Personal or professional brilliance, experience, expertise, and dedication: If you
bring all of these to bear, you’ll offer your group the confidence to move forward.
A leader faces whatever challenges with better questions and even better
solutions.
Overcome Resistance and Effectively Implement Change
1. Overcome opposition
Regardless of how well companies manage a change, there is always going to be
resistance. Companies should engage those who are opposed to a change. By
doing this, they can actively see what their concerns are and possibly alleviate the
problem in a timely manner. By allowing employees time to give their input, it
assures them that they are part of a team that actually cares about its employees.
Communicating both early and often is necessary when trying to convey anything
to employees. There should be a constant conversation between the C-Suite and
the general employees on what is happening day to day, and for what is to come
in the future. The best piece of advice that a company can take in this regard is to
be truthful, straightforward, and timely with big changes in the workplace.
Company-wide emails and intranets are great tools to utilize and this allows for
employees to ask questions and stay informed.
An explanation for why the change is needed is always a good idea. By helping
employees better understand why a change is important for the company, it’s
easier to get them on board with the change, and it can also encourage them to
become an advocate for change. With this, an explanation of “what’s in it for me?”
helps employees see the big picture and the benefits of the change, instead of
only giving them a narrow view of what is to happen in the near future.
Innovation and improvement are two things that are occurring on a daily basis.
With new ideas and suggestions there are always ways to improve as a company,
whether it be changing the outlook on an assignment, or changing the way the
office dynamic is on a day-to-day basis. Regardless of what it is, there are always
ways to improve, and this could really affect how employees look at change
management in the workplace.
2. Effectively engage employees
Listen, listen, listen. If there is another piece advice that a company should take,
it’s to receive and respond to the feedback that is provided by the employees.
They are the ones making sure that all the clients are happy and that all the work
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gets done, so keeping them in the loop is vital. Ask employees probing questions:
Is the change working? What can we do to make it work better? Do employees
have any questions or concerns? These are all great questions to ask, but if
feedback is going to be collected, it actually needs to be read and utilized. These
answers can be used to change the plan accordingly, and show employees that
their ideas and concerns are being heard.
Understanding that no two employees are the same is another important tactic
to use when trying to understand the employee’s concern. Being able to realize
that there are going to be many different reasons for opposition depending on
the person is pertinent, because then managers can tailor ways to work out these
problems.
3. Implement change in several stages
Change doesn’t happen all at once. Companies should first prepare for the
change, then take action on the change and make a plan for managing the change,
and third, support the change and assure that all is going as planned.
4. Communicate change effectively
The best way that you as an employer can communicate change is to explicitly tell
employees what is going on. Using a blend of formal and informal communication
allows you to ensure that all employees receive the news about the change in
some way or another. With all the communication outlets such as email, company
intranets, town halls, and face-to-face meetings, the message is going to get
across the company. Employing several different ways to communicate change
helps explain the vision, goals and expectations for what needs to happen and
why.
12.4 HR Manager as a change agent

The role of an HR executive is more complex today than ever before, given the
increasing workplace demands and growing diversity. Where once a human resources
department may have focused primarily on recruiting and retaining employees, its
duties have since evolved to include training, increasing productivity, managing health
and safety, and fostering a positive workplace environment.
In recent years, HR executives have functioned as change agents for a corporation,
helping it adapt to the social and economic challenges of a dynamic marketplace. It’s
vital to fully understand this emerging facet of human resources if you’re considering
a career in the field.
What Is a Change Agent?
Senior management has high expectations of HR administrators whose work stems
from the following directives:
 Find and retain the best talent.
 Manage benefits and workplace safety.
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 Oversee training.
 Resolve conflicts.
 Implement employment policy.
 Lead the transformation of corporate culture and processes.
As a change agent, you’ll help the workforce prepare for, and better adapt to, any
potential changes your organization may experience. You may even initiate changes
for a more cohesive company culture and greater productivity.
HR specialists make excellent change agents because they oversee and deal directly
with a company’s most important resource — its people. As they often have a better
sense of societal shifts and cultural politics, they can better predict the need for
change — be it in company culture, employee motivation or workplace productivity
— and propose ways to implement it.
How You Can Be an Organization’s Agent for Change
— Understand your company’s short- and long-term goals.
Having this understanding will help you hire the right people, foster employee
development and create a positive work environment. Knowing what drives the
company can help you play a key part in realizing its vision and its strategies for
success.
— Make hiring decisions with an eye to the future.
Be sure to look beyond a job outline’s strict parameters when you select
employees. The goal is to develop a cohesive workforce that can help a company
meet not only its present needs but also reach its potential.
Know your company’s growth plans to better understand the training and staff
development you’ll need to provide.
— Take a proactive role in directing change.
Because the HR department is in touch with all levels of staff, it may have a more
nuanced sense of productivity issues, including possible workplace discontent.
Leverage your communication and interpersonal skills to succinctly communicate
staff ideas and issues to management as well as management’s goals to the
workforce. Change is much easier to accept and navigate when employees trust
and respect you.
Conclusion
Companies of all types constantly experience change, because as industries grow, businesses
have to evolve. Changes such as switching to a new HR plan can affect your business in every
way, but that doesn’t necessarily mean that it has to change for the worst. Change needs to
be dealt with in an effective and responsible manner, and if done correctly, it will seriously
benefit the company and make it a smooth transition. Further change needs to be applied and
influence is given to the future organization design.
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Future Organizational Design Organizational Behaviour
CHAPTER 13
FUTURE ORGANISATIONAL DESIGN
13.1 Traditional versus Modern organisational structure
13.2 Why do structures differ?
13.3 Changing the mindset
13.4 Trends and changes
13.1 Traditional versus Modern organisational structure

HIGH-PERFORMING organizations operate as empowered networks, coordinated
through culture, information systems, and talent mobility. Companies are focused on
redesigning the organization itself, with nearly half actively studying and developing
new models. And many organizations are not only designing but also building this new
organization.
Elements of Organisational Structure
Work Specialisation: Early in the 20th century, henry Ford became rich by building
automobiles on an assembly line. Every Ford worker was assigned a specific, repetitive
task such as putting on the right-front wheel or installing the right-front door. By
dividing jobs into small standardized tasks that could be performed over and over,
Ford was able to produce a car every 10 seconds, using employees who had relatively
limited skills. Ford demonstrated that work can be performed more efficiently if
employees are allowed to specialize. Today the term, work specialisation is used to
describe the degree to which activities in the organisation are subdivided into
separate jobs.
For most of the twentieth century, managers viewed work specialisation as an
unending source of increased productivity. However, by 1960s, human diseconomies
from specialisation began to surface as boredom, fatigue, stress, low productivity and
others. Managers could increase productivity now by engaging the scope of job
activities. Providing the employees with a variety of activities to do, putting them into
teams with interchangeable skills often achieved significantly higher output with
increased employee satisfaction. High work specialisation helps McDonalds make and
sell burgers and fries efficiently and aids medical specialists in most healthcare
organisations.
Chain of Command: The chain of command is an unbroken line of authority that
extends from the top of the organisation to the lowest level and clarifies who reports
to whom. For example, if the owner of a company wants a news release written about
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Organizational Behaviour Future Organizational Design
a particular activity he feels is important, he should not meet with a PR coordinator

and assign the task; the CEO would meet with the marketing director and ask her to
assign the task to the right person in her department. Likewise, a marketing
coordinator who is upset with her manager would not bring her problem directly to
the CEO. The coordinator would first speak with her manager and then report the
problem to the marketing director. If the coordinator did break the chain of command
and went to the CEO and the CEO agreed with her, the CEO would not talk to the
manager but would contact the marketing director who is directly under him.
Today’s world is very different, communication between people has abounded, jobs
are more intellectual and many jobs are informational-based. The traditional chain of
command impedes the new options, it is slowing the process because it is too
centralist and too depending on the managers. Today information can move instantly
from the manager to the supervisors without the staff that had to move papers from
the boss’s desk to the manager desk. One email makes it in a second to all the
managerial staff. Flexibility is what we need for today’s tempo of life and work. A
waiting customer will go to the competitor; the employee will call for help to his boss
or his boss for a problem resolving. No one will let a client go without buying.
Hierarchy is less respected, sometime employee will have to take action by himself to
save the situation.
Span of control: Span of control simply refers to the number of employees that a
manager can supervise effectively at any given time without compromising his or her
own performance, or that of the employees he or she manages (Hindle, 2008).
Flat organizations have a ‘wide’ span of control and Tall organizations have a ‘narrow’
span of control.
Manager
Assistant Assistant Assistant Assistant

1 2 3 4
Exhibit 13.1Span of control = 4 (wide span of control)
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L1
L2 L2
L3 L3 L3 L4
L5 L5 L5 L5 L5 L5 L5 L5
Exhibit 13.2 Tall organisational Structure

The trend in recent years have been toward wider spans of control. They are
consistent with firms’ efforts to reduce costs, cut overhead, speed decision making,
increase flexibility etc. However, to ensure performance doesn’t suffer because of
wider spans, organisations have been investing heavily in employee training.
Centralization: Centralization is the degree to which decision-making authority is
concentrated at higher levels in an organization. In centralized companies, many
important decisions are made at higher levels of the hierarchy, whereas in
decentralized companies, decisions are made and problems are solved at lower levels
by employees who are closer to the problem in question.
Decentralized companies give more authority to lower-level employees, resulting in a
sense of empowerment. Decisions can be made more quickly, and employees often
believe that decentralized companies provide greater levels of procedural fairness to
employees. Job candidates are more likely to be attracted to decentralized
organizations.
Many companies find that the centralization of operations leads to inefficiencies in
decision making. For example, in the 1980s, the industrial equipment manufacturer
Caterpillar suffered the consequences of centralized decision making. At the time, all
pricing decisions were made in the corporate headquarters in Peoria, Illinois. This
meant that when a sales representative working in Africa wanted to give a discount
on a product, they needed to check with headquarters. Headquarters did not always
have accurate or timely information about the subsidiary markets to make an
effective decision. As a result, Caterpillar was at a disadvantage against competitors
such as the Japanese firm Komatsu. Seeking to overcome this centralization paralysis,
Caterpillar underwent several dramatic rounds of reorganization in the 1990s and
2000s.
Hitting the right balance between decentralization and centralization is a challenge
for many organizations. At the Home Depot, the retail giant with over 2,000 stores
across the United States, Canada, Mexico, and China, one of the major changes
instituted by former CEO Bob Nardelli was to centralize most of its operations. Before
Nardelli’s arrival in 2000, Home Depot store managers made a number of decisions
autonomously and each store had an entrepreneurial culture. Nardelli’s changes
initially saved the company a lot of money. For example, for a company of that size,
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centralizing purchasing operations led to big cost savings because the company could
negotiate important discounts from suppliers.
Formalization
Formalization is the extent to which an organization’s policies, procedures, job
descriptions, and rules are written and explicitly articulated. Formalized structures are
those in which there are many written rules and regulations. These structures control
employee behavior using written rules, so that employees have little autonomy to
decide on a case-by-case basis. An advantage of formalization is that it makes
employee behavior more predictable. Whenever a problem at work arises, employees
know to turn to a handbook or a procedure guideline.
Certain jobs are well known to have little formalization. Publishing representatives
who call on college professors to inform them about the company’s new publications
have a great deal of freedom in their jobs. They have only a general sales pitch which
they can customize as required and rules and regulations may be little more than the
requirement to submit a weekly sales report. On the other hand, clerical and editorial
employees in the same publishing houses might need to be at their desks by 9:00 am
and follow a set of precise procedures dictated by the management.
In a contemporary organizational structure, the rigid top-down model of the
traditional structure is removed in favor of teams that work on projects together.
Instead of relying on senior management to drive the work process, the contemporary
organizational design is all about empowering employees to make decisions and
implement changes without needing the approval of supervisors. In this type of
structure, employees are given the requirements, milestones and productivity goals
of major projects, and must determine the most efficient way to meet those goals.
13.2 Why do structures differ?

There are two models of organisational design:
Mechanistic model: It’s generally synonymous with the bureaucracy in that it has
extensive departmentalization, high formalization, a limited information network
(mostly downward communication) and little participation by low level members in
decision making.
Organic model: This model looks a lot like the boundary less organization. It’s flat,
uses cross hierarchical and cross functional teams, has low formalization, possesses a
comprehensive information network (using lateral and upward communication as
well as downward), and involves high participation in decision making.
Different organizations use different structure for different reasons. There are four
distinct reasons for variety of organizational structure. These are as follows:
Strategy: An organization’s structure is a means to help management achieve its
objectives. Because objectives are derived from the organization’s overall strategy,
it’s only logical that strategy and structure should be closely linked. More specifically
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structure should follow strategy. If management makes a significant change in its

organizations strategy, the structure will need to be modified to accommodate and
support this change. Most current strategy framework focus on three strategy
dimensions, innovation cost minimization and imitation and the structural design that
works best with each.
An innovation strategy does not mean a strategy merely for simple or cosmetic
changes from precious offerings but rather one for meaningful and unique
innovations. Innovative firms will use competitive pay and benefits to attract top
candidates and motivate employees to take risks. For example, if a Googler dies whilst
they’re under the employment of Google, their spouse will receive 50% of their salary
in a cheque for the next ten years. Well-developed communication channels, policies
for enhancing long term commitment and clear channels of authority all may make it
easier to make rapid changes smoothly.
An organization that is pursuing a cost minimization strategy tightly controls costs,
refrains from incurring unnecessary innovation or marketing expenses, and cuts prices
in selling a basic product. This would describe the strategy pursued by Wal-Mart or
the makers of generic products. Since first opening in the early 1960s, Walmart has
followed the guidance of late founder and namesake Sam Walton to keep operations
costs low. Walton himself famously drove around in an old pickup truck long after he
was a multimillionaire. In our era, the store keeps costs low by using a sophisticated
and largely automated supply-chain management system, by keeping in-store design
basic, by having executives use budget travel options.
Organizations following an imitation strategy try to capitalize on the best of both the
previous strategies. They seek to minimize risk and maximize opportunity for profit.
Their strategy is to move into new products or new markets only after viability as been
proven by innovators. They take the successful ideas of innovators and copy them.
Manufacturer of mass marketed fashion goods that are rip-offs of designer styles
follow the imitation strategy. This label probably also characteristics well known firms
such as IBM and Caterpillar. They essentially follow their smaller and more innovative
competitors with superior products but only after their competitors have
demonstrated the market is there.
Organization Size: There is considerable evince to support the ideas that an
organization’s size significantly affects its structure. For instance, large organizations
those that typically employ 2,000 or more people tend to have more specialization,
more departmentalization, more vertical levels, and more rules and regulations than
do small organizations.
Technology: Technology has changed the face of the workplace, including a focus on
two specific points of interest: automation and information technology. It can also
mean changes to the physical lay-out of an organization. For example, switching over
to computers from hand filing might mean that file clerks are no longer needed. This
changes the layout of an office. Every organisation uses atleast one technology for
converting financial, human and physical resources into products or services. For
example, Tata Motors uses assembly line process to build the products. The common
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theme that differentiates technologies is their degree of routineness. Examples of

routine activities are automated transaction processing of sales. Non-routine
activities are customized and require frequent revision and updating. At NDTV, for
instance, non-routineness characterizes the work of employees who create daily and
weekly news features and the shows rely on the knowledge of specialists like Barkha
Dutt, Prannoy Roy and others.
Environment: External environment factors, trends and developments lead to change
in internal organisation structure, processes and behaviours. As the external
environment is becoming more and more complex, organizations have to adapt to the
changes. The strategies an organization uses to manage its environment are reflected
in the structure of the organization. For example, in 2004, Motorola announced
reorganization in the framework of company, because the first deficit in the last three
years occurred. Motorola attributed the losses to lower demand for highpoint mobile
phones and continuous decline of market prices. There were only two business
departments in the firm after reorganization: research and development department
and marketing department.
13.3 Changing the mindset

Some of the common organisational designs are: the simple structure, the
bureaucracy and the matrix structure.
The Simple Structure: A simple structure is defined as a design with low
departmentalization, wide spans of control, centralized authority, and little
formalization. This type of design is very common in small startup businesses. For
example, in a business with few employees the owner tends to be the manager and
controls all of the functions of the business. Often employees work in all parts of the
business and don’t just focus on one job creating little if any departmentalization. In
this type of design there are usually no standardized policies and procedures. When
the company begins to expand then the structure tends to become more complex and
grows out of the simple structure.
Owner
Salesperson Salesperson Salesperson Salesperson Accountant
Exhibit 13.3 A simple structure for a Retail outlet

The Bureaucracy: A bureaucratic organization is a form of management that has a
pyramidal command structure. The bureaucratic organization is very organized with
a high degree of formality in the way it operates. Organizational charts generally exist
for every department, and decisions are made through an organized process. A strict
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command and control structure is present at all times. Bureaucracies are meant to be
orderly, fair and highly efficient.
Bureaucratic organizational structures have many layers of management, cascading
down from senior executives to regional managers to departmental managers - all the
way down to shift supervisors who work alongside frontline employees. So, authority
is centered at the top, and information generally flows from the top down. For
example, a senior executive may implement a new policy stating that employees must
have all overtime approved by management before actually working the overtime.
The new policy will go from the desk of the senior executive all the way down to the
frontline employees.
The Matrix Structure: In matrix management, the organization is grouped by any two
perspectives the company deems most appropriate. Common organizational
perspectives include function and product, function and region, or region and
product. In an organization grouped by function and product, for example, each
product line will have management that corresponds to each function. Matrix
structures also allow for specialization that can both increase depth of knowledge and
assign individuals according to project needs.
A disadvantage of the matrix structure is the increased complexity in the chain of
command when employees are assigned to both functional and project managers.
This increase in complexity can result in a higher manager-to-worker ratio, which can
in turn increase costs or lead to conflicting employee loyalties. It can also create a
gridlock in decision making if a manager on one end of the matrix disagrees with
another manager. Blurred authority in a matrix structure can result in reduced agility
in decision making and conflict resolution.
For example, A professor of account teaching an undergraduate course may report to
the director of undergraduate programs as well as to the chairperson of the
accounting programs.
Senior managers in a number of organisations have been working to develop new
structural options that can better help their firms to compete effectively. Many result
in fewer layers of hierarchy and more emphasis on opening the boundaries of the
organisation. Leaders managing organizational change must be able to see all
systems, and to look at the moving pieces in a way that’s logical, complete and
comprehensive. Leaders who do this well are called Alignment Leaders, and they’re
able to think holistically about what is often viewed as disparate components:
strategy, organizational capabilities, work, structure and process.
An example of a well-known alignment leader, Mike Abbott, led the bankcard group
at GE Retail Consumer Finance through plenty of change in 2002. He successfully
made a fundamental shift within the organization, to operate in a way that maximized
all areas of the business, functions and products.
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13.4 Trends and changes

The Virtual organisation: The virtual organization is a small core organization that
outsources major business functions. Dell computer, for instance owns no plants and
merely assembles computers from outsourced parts. The core functions generally
reflect the strength of the virtual organization. It can be designing, marketing,
distribution etc. The core group consists of a small group of executives overseeing
activities that are undertaken in-house and coordinating relationships with outside
organizations that carry out work on behalf of the virtual organization. Most of the
time the executives spend in developing and coordinating links with outside suppliers
through computer networks. The major advantage of the virtual structure is its
flexibility. For instance, it allows someone with an innovative idea and little money
like Dell Computer – to successfully compete with giant outfits such as IBM.
Virtual organisations have their drawbacks too. Those who work frequently with
virtual organisations also note cultural alignment and shared goals can be lost because
of the low degree of interaction among members. Team members who are
geographically dispersed find it difficult to share information and knowledge which
can slow innovation and response time.
The Boundaryless organisation: The concept of a boundaryless organization was first
formulated by the former chairman of General Electric Jack Welch, who wanted to
break down barriers, or boundaries, that existed at the time between different parts
of the company. According to his philosophy, the most important criteria of a
boundaryless organization are flexibility and adaptability. The boundaryless
organisation seeks to eliminate the chain of command, have limitless span of control
and replace departments with empowered teams.
Another defining characteristic of boundaryless organizations is that they are quite
tech-savvy and will use the latest and greatest tools brought by technology to make it
even easier to break borders that would have traditionally been unbreakable. Flexible
working schedules and virtual collaboration are a couple of examples of such tools.
Employees mainly communicate using technology, such as via text, email, social
media, and various other virtual methods of communication. This makes it possible
for them to communicate with each other from wherever they without having to
physically be in the same vicinity.
At Oticon A/S $160 million-per-year Danish hearing aid manufacturer, all traces of
hierarchy have disappeared. everyone works at uniform mobile workstations and
project teams, not functions or departments, coordinate work.
Functional departments are replaced by cross functional teams. A cross functional
team consists of employees from the same hierarchical level but from different work
areas, who come together to accomplish a task. The attempt is to turn every employee
into a kind of a generalist by putting him in various teams to improve his skills,
experience and ability to get along with others. To this end, the organization rotates
people into and out of different functional areas. Lateral transfers are also routinely
carried out. Xerox now develops new products through multidisciplinary teams that
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work in a single process instead of around narrow functional tasks.

Leaner organisation: The radical shrinking of Chrysler and General Motors in recent
years was a case of downsizing due to loss of market share and changes in consumer
demand. These companies probably needed to downsize just to survive. Others
downsize to direct all their efforts toward their core competencies. A lean
organizational structure is a structure that is designed to create more customer value
using fewer resources than a traditional organizational structure. The goal for all
members of an organization that utilizes a lean structure is to constantly find ways to
improve the processes of the organization and to make the organization more
efficient.
Jim's lean organization uses few job classifications to organize the workers. Members
of his organization are more broadly skilled and flexible and are empowered to look
for and solve problems as they occur in the day-to-day operations of the business.
Instead of functional departments, Jim's workers perform in self-managed work
teams. Working as teams, members of Jim's organization are constantly looking for
ways to improve their work processes and eliminate waste. These work teams have
regular meetings to discuss new ideas and solutions to current problems they face in
their day-to-day jobs.
Lean organizations are obsessed with customer value. They recognize that by
establishing customer value as the number one priority for every employee, manager,
and executive, other business metrics will fall in line. That's why every decision
involves an assessment of how it will impact the customer. Cross functional
collaboration and communication are necessary to tackling the biggest challenges.
Lean is a business process methodology that leverages the skills, input, and
observations of every employee. Employees who are invested in the success of the
organization and engaged in improvement are essential.
To maximize employee performance and satisfaction, managers must take individual

differences such as experience, personality, work task and culture into account and design the
organisational structures.
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Content Organizational Behaviour

Chapter No Chapter Name Page No

1 Management Process ........................................................................3

2 Introduction to Organization Behaviour ...........................................14

3 Changing Context ..............................................................................32

4 Social, Culture and Organisation ......................................................46

6 Personality Traits and Measuring Personality ..................................73

8 Work Group and Teams ..................................................................104

9 Power, Politics and Conflict ............................................................119

11 Learning Organisation .....................................................................147

13 Future Organisational Design .........................................................166

1.1 Management: Definition, objective and scope

Meaning and Definitions of management

It can be defined in the following words:

Definition of Harold Koontz

Contribution of Management to Society

1.2 Objectives of Management

Social Objectives: As a part of society, every organisation whether it is business or

Individual Objectives: Organization consists of different types of individual who joins

2. Effective Utilization of the Seven M’s

3. Directs the Organization

4. Integrates Various Interests

8. Tackles Business Problems

9. Acts as a Tool of Personality Development

1.3 Scope of management

1.4 Human Relations and Management

from these workplace experiments, Taylor developed four principles of scientific

of Scientific Management, which mainly focused on productivity, efficient division

management assumes that there is no universal answer to many questions

2.1 Interdisciplinary Function of Organizational Behavior

OB is interdisciplinary in approach. It draws heavily from other disciplines like

Exhibit 2.1 Interdisciplinary Function

2.2 Relevance of Organizational Behavior

It is very important to study the Organizational behavior. It gives the direction to an

Understanding customer behavior

Goals of Organizational behavior

Development and the management performance

Relation of models to human needs

Exhibit 2.4 List of organizational behavior concepts

The main concepts of organizational behavior are: -

The nature of the people includes

The motivational behavior approaches are:

The nature of organization includes-

Types of social system

Morals and Ethics

Benefits of observational behavior

Why study Organizational behavior

Communicate with executive leadership

Importance of organizational behavior in management

2.3 Emerging Issues of Organizational Behavior

2.4 Dynamics of Organization Life

Examples of Management skills

3.1 Flattening of globe

Exhibit 3.1 Test of Collaboration

3.2 Impact of Technology and Artificial Intelligence

systems and so on. By simplifying these responsibilities, technology has drastically

Human Resource Management (HRM) includes activities such as recruiting, training,

reviewing projections concerning future business demands to determine whether