CHAPTER – ONE

An overview of Organizational Behavior

1
 Question for Brain Brush

What is manager? What is organization?

What managers do?

Describe the manager’s:

functions,
roles, and
skills.

2
Short Summary for Brain Brush Questions

What Managers Do

Managerial
ManagerialActivities
Activities
••Make
Makedecisions
decisions
••Allocate
Allocateresources
resources
••Direct
Directactivities
activitiesofofothers
othersto
to
attain
attaingoals
goals
3
 Where Managers Work

An organization is defined
as a collection of people
who work together to
achieve a wide variety of
goals.
4
Management Functions

Planning
Planning Organizing
Organizing

Management
Management
Functions
Functions

Controlling
Controlling Leading
Leading

5
Managerial Roles

EXHIBIT 1-1a

6
Cont………..

EXHIBIT 1-1b

7
Cont…….

EXHIBIT 1-1c
8
Management Skills

9
 Brainstorming Question

What do you know about OB?

10
“The stellar universe is not so difficult
of comprehension as the real actions
of other people”. —Marcel Proust

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 Definition and concepts of OB
• Organizational behaviour (OB) is a field of study
that investigates the impact that individuals,
groups, and structure have on behaviour within
organizations, for the purpose of applying such
knowledge toward improving an organization’s
effectiveness.
• OB is the study of human behaviour in
organizational settings, how human behaviour
interacts with the organization, and the
organization itself
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 Cont…..
• It studies three determinants of behaviour in organizations:

individuals, groups, and structure

• In addition, OB applies the knowledge gained about individuals,
groups, and the effect of structure on behaviour in order to make
organizations work more effectively.

• Therefore, OB is the study of what people do in an organization

and how their behaviour affects the organization’s performance.
• because OB is concerned specifically with employment-related
situations, you should not be surprised that it emphasizes
behaviour as related to concerns such as jobs, work, absenteeism,
employment turnover, productivity, human performance, 13and
management.
 Cont………

• Although debate exists about the relative

importance of each, OB includes the core topics
of motivation, leader behaviour and power,
interpersonal communication, group structure
and processes, learning, attitude development
and perception, change processes, conflict, work
design, and work stress.

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 Example

Online shoe retailer Zappos.com understands how organizational behaviour

affects an organization’s performance. Zappos maintains good employee
relationships by providing generous benefits, extensive customer service
training, and a positive, fun-loving work environment. Employees are
empowered to make decisions that increase customer satisfaction and are
encouraged to create fun and a little weirdness.” At Zappos, employee loyalty,
job satisfaction, and productivity are high, contributing to the company’s growth.
(Robbins & Judge, 2013)

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Contributing Disciplines to the OB Field

EXHIBIT 1-3a

16
Cont……….

EXHIBIT 1-3b

17
Cont…..

EXHIBIT 1-3c

18
Cont…..

EXHIBIT 1-3d

19
Cont……

EXHIBIT 1-3f

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Why study OB?

22
 Understand
Behaviour

Predict
Influence
Behaviour Behaviour
Why study
OB?

23
Model of OB

24
Basic OB Model

25
 Cont….
• A table on the next slide presents, the skeleton on
which construct OB model.

• It proposes three types of variables (inputs, processes,

and outcomes) at three levels unit of analysis
(individual, group, and organizational).

• The model proceeds from left to right, with inputs

leading to processes and processes leading to
outcomes.

• Notice that the model also shows that outcomes can

26
influence inputs in the future.
 Processes
Inputs Outcomes
Individual Level
Individual Level • Emotions and moods Individual Level
• Diversity • Motivation • Attitudes and stress
• Personality • Perception
• Task performance
• Values • Decision making
• Citizenship
Group Level behaviour
Group Level • Withdrawal
• Communication
• Group structure • Leadership behaviour
• Group roles • Power and politics
• Team • Conflict and Group Level
responsibilities negotiation • Group cohesion
• Group functioning
Organizational Level Organizational Level
• Structure • Human resource Organizational Level
• Culture management
• Productivity
• Change practices 27
• Survival
The Dependent Variables

x
28
Cont….

29
Cont……

30
Cont……

31
Cont…..

32
 The Independent Variables

Independent
Independent
Variables
Variables

Individual-Level Group-Level Organization

Organization
Individual-Level Group-Level System-Level
Variables
Variables Variables
Variables System-Level
Variables
Variables

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Enter Organizational Behavior

34
 Foundations of OB

Brain Brush Question

Discuss about Evolution of Management

Thought?
35
Evolution of Management Thought

36
• How management concepts are evolved?
• The origin of management can be traced back to the days
when man started living in groups.
• One can argue that management took the form of
leadership which was essential to coordinate the efforts of
the group members in order to arrange the necessities of
life.
 The principle of management can be traced back many centuries:
prehistoric times-hunting, food preparation, etc. in primitive society
 Egypt- The Egyptians organized their people and their slaves to build
their cities and pyramids – need for effective management
 Roman- The Roman Empire is thought by many to have been so
successful because of the Romans‘ great ability to organize the
military and conquer new lands. Emperor Diocletian’s (A.D. 284)
 Roman Catholic Church - with its efficient
formal organization and management
techniques. The most important contributions:
 Hierarchy of authority: there was a hierarchical
structure from pop-bishop- priest – laity
 Specialization of activities: there was a training
to be a pop, bishop, priest & laity
 Bible (exodus 18: 13-16)- Jethor, Moses’ father
in-law, observed Moses spending an entire day
listening to the complaints & problems of this
people
Then, Jethor advised Moses to relief him of his
burden:
 Ordinance & laws should be taught to the people – policies, rules & procedures
 Leader should be selected & assigned to be rulers of thousands, hundreds, fifties &
tens – delegation of authority
 The rulers should administer all routine matters & should bring to Moses the
important questions – the principle of exception
 China- the great wall of china – the importance of
organizational effectiveness
 Ethiopia- the magnificent obelisk of Axum, rock hewn
churches of Lalibela- the need for effective organization
 Various ancient civilization of Greek, Mesopotamia, India
etc. contributed to the early management thought
 All these are good examples that indicate how modern mgmt was practiced in
ancient times
 Although management practices go back several
thousands years, the development of management as a field
of knowledge is much recent.
 Much of the impetus for the development of management
theories & principles grew out the industrial revolution of
the early 1800s
 It was manifested by the:
• Revolution of factories & large organization
• Substitution of human labor by machine power
• Need for the coordination of the efforts of large numbers of
people
 Thus, attempts to develop theories & principles of
management as a discipline evolved almost 200 years ago
 Cont….
• systematic body of knowledge and distinct
discipline is the product of 20th C. When
different schools of management thought
began to develop.
• industrial revolution which began in 18th c
and run through 20th c
• Industrial revolution resulted in:
• economic growth of countries, minimized
dependency on agriculture, and expansion of
many and giant industries which needed
many employees/workers.
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 Pre-  Robert Own-(1771-1858)
Pre-classical
classical
Management
Management A British industrial & an owner –
theory manager of several successful cotton mills
theory
in Scotland

 Recognized the importance of human resources in

an organization
 Improved working conditions of employees in the
factory
 Argued, improving the condition of employees would
inevitability lead to increased production & profits
 Was considered as father of modern personnel
management spirit of cooperation b/n workers &mgt.
 Pre-
Pre-classical
classical  Charles Babbage-(1792-1871)
Management
Management A British mathematician who built the
theory
theory first practical mechanical calculator

 Known as a “father of modern computing.”

 Emphasized the idea work specialization
 Not only physical work but also mental work could be
specialized.
 He was an early advocator of division of labor principle-
specialization:
 To improve skills of workers
 To reduce learning time & other expenses
 His management ideas also anticipated the concept of
incentive pay & profit sharing to improve productivity.
 Harmonious r/ship between management and workers
 Pre-
Pre-classical
classical  Adam Smith-(1776)
Management
Management A British economist – the wealth of
theory
theory Nations

 Made an important contribution to the development of management

thought division of labor (the breakdown of jobs into narrow,
repetitive tasks) would bring to organizations and society.
 His conclusion was specialization could to increased efficiency.
This is because:
 The dexterity of an employee increases in every particular work
 The time lost in passing from one type of work to another will be
saved
 Leads to the invention of great number of machines, which enables to
perform more
 Thus, the focus was mainly on the mechanical side of the job-
division of labor, coordination of activities, & control of operations
 Broadly, there are different approach to management:
pre-classical, classical, & modern. However, the major,
approach, to management as a field of study are
presented as follows:
School of management thoughts

Classical theory Neo-classical theory

(Bureaucracy theory by Human relations theory -- Modern management
Weber (1900) theory
(1930)
Scientific management Behavioral science * Operations research
Theory-Taylor (1910) * * Contingency Theory
theory - Maslow and Mc
Process management * System Approach to
Gregar (1940)
theory (Administrative Management
theory) Fayol-(1910) * TQM, Re-engineering
 1. Classical Management Theory
Classical  Evolved in an effort to develop
Classical
Management
Management techniques that would solve problems
theory
theory of organizational efficiency in the
production of goods and services
 Three perspectives: based on the issues and problems that they
address
 Scientific management emerged By American scholars and
managers
 Focused on in the management of work and workers (lower level managers).
 Administrative theory: evolved from a concern by both
European and American academicians and managers
 Focused on the problem of top managers in managing the entire organization
Bureaucracy theory, emerged by The German sociologist
 Concentrate on structure and design of organization
 characterized by a hierarchy of authority, formalized rules and regulations
that serve to guide the coordinated functioning of an organization .
A. scientific management Theory(SMT)

Frederick Winslow Taylor

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  Arose because of the need to increase
Scientific
Scientific productivity and efficiency.
Management
Management
Theory
Theory
 The emphasis was on trying to find the best way to get the most
work done by examining how the work process was actually
accomplished and by analyzing the skills of the workforce
 Frederick W. Taylor (1856–1915)
 A pioneer who advocated scientific principles of management as
the result of his intense research in different industrial activities
 Started work as an beginner pattern making in a small workshop in
Midvale steel company
 Within 8 years, he progressed from ordinary laborer to chief
engineer (time keeper, machinists, gang boss, foreman, assistant
engineer)
He worked in Bethlehem steel company till 1901,
acquired a technical excellence in the field of
engineering
Published principle of scientific management (1911)
Thus, he is considered as the father of scientific
management
 He saw that the employees were deliberately working at
a pace slower than one capabilities.
 He suggested some principles to overcome this
problems. These principles formed the basis of scientific
management theory.
 Cont…

• The major reasons for inefficiency were as

follows:
• Standards of performance were not properly
determined.
• The existing pay system was not motivating
• The responsibilities of management and other
workers were not clearly distinguished
• There was no specialization as such.
• there were an antagonistic relationship between
management and subordinates

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 Cont…

• Consequently, the basic components of scientific

management were profounded (developed) by
him. These include:
• determination of standards of performance
scientifically (time-motions involved in performing a particular task. )
• differential and piece-rate payment system
• specialization of functional foreman ship
• identification of response abilities of
management
• mental revolution
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 Cont…

Principles of Scientific management Theory:-

• Management should develop Scientific methods by
which workers could do their jobs.
• Management should scientifically select, train, teach
and develop each worker.
• Management should cooperate with the workers in
ensuring that all of the work is done in accordance
with the principles of scientific management.
• Management should divide work responsibility
between management and non- management
workers with fitness assumptions.

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Henry Gantt (1861-1919)

53
 Cont…

• Gantt is best known for his graphic system of

planning and control system that is still used
today.
• managers coordinate related activities, avoid
delays, and otherwise make sure that dead
lines are met.

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 Henry Gant (1861-1919)

Task Duration Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 2 mo.

2 2 mo.

3 2 mo.

4 2 mo.

5 2 mo.

6 2 mo.

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  Contributions of scientific management theory

• Demonstrated the importance of compensation

for better performance.
• indicated the importance of personnel selection,
training-etc
• Developed management principles which have
an application in modern management system.

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  Limitations of scientific management theory

• Assumed that workers were motivated only by

monotary reward.
• Concentrated only on how to increase efficiency
of workers separately with out giving emphasis
on how to manage the entire organization as a
whole.
• The fact that workers were receiving
instructions from several functional foremen
could confuse workers.
• Considered workers as machines.
• Did not acknowledge individual difference
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 B. Administrative Management Theory
 Administrative theory focuses on the total
Administrative
Administrative organization and attempts to develop
Management
Management principles that will direct managers to
Theory
Theory more efficient activities.
 It had two major purpose:
 Develop basic principles that could guide the design, creation &
maintenance of large corporations
 Identify the basic functions of managing organization
 Henri Fayol (1841-1925)
 Henri Fayol was a French mining engineer who spent many of his
later years as an executive for a French coal and iron combine
 Henri Fayol is the one who identified:
 The major types of activities
 Management as a separate field of study
 General management principles
 EVOLUTION OF MANAGEMENT THOUGHTS
 The major types of activities involved in an industry or a
business as
Activities of a Business

Technical Commercial Financial Security Accounting Managerial

Planning Organizing Commanding Coordinating Controlling

 Management as a separate field of study

 Management is a discipline worth studying (formal
managerial training schools are needed)
 Managerial ability could be applied to the home, church,
military, politics, & industry.
• Scientific management theory emphasized on
how to increase productivity of individual
worker and the management of work.
• But the classical organizational theory, also
called administrative management theory, was
aiming at administration of entire
organization.
• Henry fayol, marry parkers Follet and James
D. Mooney were among the great
contributors to the theory.
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Henery Fayol (1841-1925)

61
 Cont…

• He was interested in administrative side of

operations in an organization.
• In particular he was concerned with the fact
that different abilities were needed as one
moved up the management ranks.
• He identified /classified business activities in
to six. These are:
• Technical activities, Commercial activities,
Financial activities, Security activities,
Accounting activities, Managerial activities.
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 Fayol's 14 principles

 Fayol believed that these principles were essential

to increase the efficiency of management process.
The principles are:
(1) Division of labor, (2) Authority & responsibility, (3)
Discipline, (4) Unity of Command, (5) Unity of
Direction, (6) Subordination of individual interest to
the general interest, (7) Remuneration, (8)
Centralization, (9) Scalar Chain/The hierarchy, (10)
Order, (11) Equity, (12) Stability of Tenure of
personnel, (13) Initiative, (14) Esprit do corps

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1. Division of labour : Division of work leads to specialization
resulting in higher output.
2.Authority : Managers must have the authority to issue orders and
instructions to the subordinates.
3.Discipline : Discipline means respect for rules and agreements.
4.Unity of command : There should be one boss for one
subordinate.
5. Unity of direction : All operations in an organization need to be
directed towards one objective.
6.Subordination of individual interest to general interest : If
there is a conflict between the individual goals and organizational
goals, preference should be given to organizational goals,
7. Remuneration : There should be a fair system of remuneration
that ensures equal pay for equal work.
8. Centralization : It refers to declining role of subordinates in the
decision making.
9. Scalar Chain (Hierarchy) : This the line of authority running
from top level to lower level of management.
10. Order : People and material should be in the right place at the
right time.
11. Equity : Managers should be fair to their subordinates.
12. Stability of staff : Employee turnover should be less to ensure
efficiency of an organization.
13. Initiative : Subordinates should have the freedom to conceive
new ideas and do their task, even though they commit mistakes.
14. Esprit de corps : ‘ Unity is strength’. People should work as a
team to enjoy the benefits of synergy.
 Contributions of classical organization or administrative Theory

1. Demonstrated the importance of different skills at

different levels of management for managers.
2. Systematically identified functions of management,
3. Developed several important principles of management.

Limitation of classical organization

• Assumed several difficult principles which are difficult to
apply in management of modern organizations.

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 C. Bureaucracy theory

Max Weber (1864-1920)

67
 Cont…

• Bureaucracies are founded on legal or rational

authority which is based on law, procedures,
rules, and so on.

• characterized by division of labor, a clearly

defined hierarchy, detailed rules & regulations
and impersonal relationships.

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 Cont..
• Efficiency in bureaucracies comes from:

• (1.) clearly defined and specialized functions;

(2.) use of legal authority; (3.) hierarchical
form; (4.) written rules and procedures; (5.)
technically trained bureaucrats; (6.)
appointment to positions based on technical
expertise; (7.) promotions based on
competence; (8.) clearly defined career
paths.

69
Cont…

70
 Cont…

• Features of Weber's ideal bureaucracy:

• Division of labour, Authority Hierarchy,

Formal selection /technical competence,
Formal Rules & Regulations, Impersonality
and Career Orientation /Separation from
ownership

71
 2. Neo classical theory

• Neo classical theory was built on the basis of

classical theory.

• It modified, improved and extended the

classical theory.

72
 Behavioral or Human relation approach

• Behavior school recognized employees as

individuals with concrete human need, as
apart of work groups, and as a member of
large society.

• It focused on human dimension of

organization.

73
 George Elton Mayo (1880-1949)
(Australian Psychologist)
• He headed a group of researchers in
conducting the How throne studies,
• The objective of the behavioral theorists was
to identify factors that will serially affect
productivity of employees.
• But the initial purpose of how throne studies
was to determine the effect of illumination
on outputs.

74
 how throne study

• The study conducted at howthrone works of

western Electric company in Chicago, USA.

• The study had four phases

– Illumination Experiments
– The relay assembly Test Room Experiment
– The Interviewing program
– The bank wiring observation.

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 These experiment signified new approach to the problem
of productivity
 b/c scientific management theorists believed that physical
factors are determinants of workers productivity

 Illumination experiments :
 The intension of this experiment was to learn if there was
any correlation b/n intensity of light & productivity
 Accordingly, two group of women were taken for the
experiment:
 The experiment group- one subjected to variety in the
intensity of light
 A controlled group –which was exposed to constant
illumination intensity
 After their experiment, the researchers were puzzled
by their experiment:
 Productivity constantly increased in both the
experimental & controlled groups
 Surprisingly, productivity kept on ascending even if
they:
 Increased the intensity of illumination in the
experimental room
 Diminished the light so that it was barely enough
to see in the control room
 After seeing this puzzle, researchers concluded that
illumination has little or no effect on productivity.
 Relay assembly test room experiment :
 This set of experiments was conducted under the guidance of
Elton Mayo.
 The researchers selected six women employees of the relay
assembly test room, and were put in a separate room.
 In the test room, a number of variables were altered, like
increased wages and rest period, shortened workday and
workweek etc.
 Productivity increased during the study period.
 Such results led the researcher to believe that better treatment
of subordinates made them more productive.
 They highlighted the significance of social relations. This
condition was later labeled as the Hawthorne effect.
The researches concluded that socio-psychological factors such as
feeling of being important, recognition, attention, participation,
cohesive workgroup, and non-directive supervision held the key for
higher productivity.
 INTERVIEW PHASE :
Large number people were interviewed. The purpose of
the interviews was to explore the attitude of workers in
depth. The conclusions that emerged were.
 All objects, persons, and events carry some social meaning.
They relate to employee’s satisfaction or dissatisfaction.
 Workers assign meaning to their status in the organization and
give value to events, objects, and specific features of their
environment
 Workers derive satisfaction or dissatisfaction from the
social status of an organization. This means that they
also look for social rewards, associating them with an
organization.
 Workers’ social demands are influenced by social
experiences in groups, both inside and outside the
workplace
 BANK WIRING OBSERVATION ROOM EXPERIMENT
 In this experiment there were fourteen participants including
wiremen, solder men and inspectors.
 There was no change in the physical working conditions.
 Sample workers were paid based on an incentive pay plan,
relating their pay to output. They had the opportunity to earn
more by increasing the output.
 However, it was observed that the output was constant at a
certain level.
 Analysis of the results showed that the group encourages neither
too much nor too little work.
 They enforce ‘a fair day’s work’ on their own. Group norms,
therefore more important to the worker than money.
 This study, thus provided, some insight into informal social
relations within groups
 Cont..

• From studies conducted at how throne

researchers concluded:
• Individual workers could not be treated in isolation,
but must be seen as members of groups
• Employee motivation was based not only on the
satisfaction of physical needs but also social and
psychological needs.
• Democratic style of leadership is important for
employees' satisfaction.
• Informal groups were important in organizational
work environment.
81
 Cont…

• Contributions of Behavioral/Human Relations

Theory.

• Demonstrated the social context of organization

• Found out that the satisfaction of social and
psychological needs could result in more
performance of workers.

82
 Cont…

• Limitations of Behavioral (Human Relations

Theory)
• Failed of develop an integrated theory of
management as it followed only the basic
background laid by classical theorists.
• There style was unethical as they used
human beings as experimental units in
laboratory.

83
 Modern Approach

• This approach is the last approach to it

consists:

• the systems approach

• The contingency approach

84
 1. The system approach

• system- is a group of interrelated and

interdependent parts working together to
attain one common objective.
• Systems obtain input from the environment,
process the inputs and provide out puts to the
environment it can be shown

85
 Cont…

Input Process Out put

Raw materials Methods goods service

human resources
finance techniques customer satisfaction
Technology Decisions employee satisfaction
information Actions Etc

86
 Cont…

• A system has several distinguishing features

– A system can be open or closed

– System has boundary
– System has subsystems
– Failure in one subsystem can be considered as
failure of the entire system

87
2. contingency theory/ no absolute method

• contingency theory is also known as situational

approach because it focused on the idea that
supports all methods of management could be good
based on the situations in external environment
• there is no one method of management which is
always right.
• Because these factors in environment change
rapidly it is not right to insist on only one way of
managing an organization therefore it rejected the
idea of one best way of managing.
• Instead it supported situational management style.
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• THANK YOU FOR YOUR ATTENTIVE
LISTENING!!

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