Brindavan College of Engineering

PRINCIPLES OF MANAGEMENT AND ORGANIZATIONAL BEHAVIOR

22MBA11

1st Semester

Prepared by

BHUVANESHWARI.A
Assistant Professor

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

MODULE 3
Organisational Behaviour: Introduction, Meaning, History of Organisational Behaviour,
Organisational effectiveness, Organisational learning process, Stakeholders, Contemporary challenges
for Organisations.

ORGANISATIONAL BEHAVIOUR

Meaning of Organizational Behavior

Organizational behavior (OB) is the study of human behavior in the workplace, the
interaction between people and the organization, and the organization itself. OB
studies what people do inan organization and how that behavior affects the
performance of the organization.

DEFINITION OF OB

Organizational Behavior is a field of study that investigates the impact that

individuals, groups, and structure have on behavior within organizations for the
purpose of applying suchknowledge toward improving an organization’s
effectiveness- Stephen P. Robbins

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

Stephen P Robins defines “Organizational behavior as a systematic study of the

actions and attitudes that people exhibit within organizations.”
Nature of OB

 A field of study and not a discipline

 Interdisciplinary Approach
 A science and art
 Normative Science
 Humanistic & optimistic
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
  Oriented Towards Organizational Objectives
 A total Systems Approach
1. A separate field of study and not a discipline only
It has assumed the status of a distinct field of study.
It is a part of general management.
It represents behavioral approach to management.
2. An inter-disciplinary approach
The OB is heavily influenced by several other behavioral sciences and social sciences
like psychology, Sociology and anthropology.
OB has psychological foundations.
The concept like learning, perception, attitude, motivation etc. is borrowed from
psychology, sociology and anthropology.

3. A Normative Science
Organizational behavior is a normative science.
A normative science prescribes how the various findings of researches can be
applied to get organizational results, which are acceptable to the society.
Thus, what is acceptable by the society or individuals engaged in an organization is
a matter of values of the society and people concerned.

4. A Science and Art

Organization behavior is both art and science.
It is considered as art because it contains knowledge about behavior of
individuals. It is considered as science because it involves application
of science

5. Humanistic and Optimistic Approach

Organizational behavior focuses the attention on people from humanistic
point of view. It is based on the belief that needs and motivation of people
are of high concern.
Further, there is optimism about the innate potential of man to be independent,
creative, predictive and capable of contributing positively to the objectives of the
organization.

6. Oriented towards Organizational Objectives

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
 Organizational behavior is oriented towards organizational objectives.
In fact, organizational behavior tries to integrate both individual and organizational
objectives so that both are achieved simultaneously.

7. A Total System Approach

An individual's behavior can be analyzed keeping in view his psychological
framework, interpersonal-orientation, group influence and social and cultural factors.
Thus, individual's nature is quite complex and organizational behavior by applying
systems approach tries to find solutions for this complexity.

Goals of Organisational behaviour

The four goals of organizational behavior are to describe, understand, predict and
control.
To describe:
The first objective is to describe how people behave under various conditions. For
example, as a manager, I have information about a particular junior officer that he
comes office in late and leaves the office early.
1. To understand:
The second goal of organizational behavior is to understand why people
behave as they do.
Managers have to understand the reasons behind a particular action.
For example, as a manager, I must find out the reason why the junior officer is
coming late and going earlier.
2. To predict:

Predicting future behavior of employee is another goal of organizational behavior.

Usually, managers would have the capacity to predict why the employees are
committed to the organization or not. For instance, I have to realize why he wants to
leave my organization, how I can hold the officer in my organization, what should
be done by me in this situation or what my role is etc.
3. To control:

The final goal of organizational behavior is to control and develop a friendly

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
 atmosphere for the organization. Since managers are responsible for the overall
performance of an organization, they must develop workers’ teamwork, skill and
commitment. Managers should take necessary action for themselves.
In the above case, I can increase the financial benefits of the officer if it is not
satisfactory for him or I can help him to solve his personal problem, or I can negotiate
him to solve any organizational problem.

IMPORTANCE OF OB
 Effective communication
 Effective organizational climate
 Good human relations
 Introduction of change in the organization
 Road map to our lives in organizations
 Highly useful in the field of marketing
 Helps in career planning and development

Approaches to OB
1. Human resources approach.
2. Contingency approach.
3. Productivity approach.
4. Systems approach.

1. Human Resources Approach

This approach recognizes the fact that people are the central resource in any
organization and that they should be developed towards higher levels of competency,
creativity, and fulfillment. People thus contribute to the success of the organization.

The human resources approach is also called as the supportive approach in the sense
that the manager’s role changes from control of employee to active support of their
growth and performance. The supportive approach contrasts with the traditional
management approach.

In the traditional approach, managers decided what employees should do and closely
monitored their performance to ensure task accomplishment.

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

 In the human resources approach, the role of managers changes from structuring and
controlling to supporting.

1. Contingency Approach

The contingency approach (sometimes called the situational approach) is based on the
premise that methods or behaviors which work effectively in One situation fail in
another.

For example; Organization Development (OD) programs, way work brilliantly in one
situation but fail miserably in another situation.

Results differ because situations differ, the manager’s task, therefore, is to identify
which method will, in a particular situation, under particular circumstances, and at a
particular time, best contribute to the attainment of organization’s goals.

The strength of the contingency approach lies in the fact it encourages analysis of
each situation prior to action while at the same time discourages the habitual practice
of universal assumptions about methods and people.

The contingency approach is also more interdisciplinary, more system – oriented and
more research-oriented titan any other approach.

2. Productivity Approach

Productivity, which is the ratio of output to input, is a measure of an organization’s

effectiveness. It also reveals the manager’s efficiency in optimizing resource
utilization. The higher the numerical value of this ratio, the greater the efficiency.

It is generally measured in terms of economic inputs and outputs, but human and
social inputs and outputs also are important. For example, if better organizational
behavior can improve job satisfaction, a human output or benefit occurs.
Organizational behavior decisions typically involve human, social, and/or economic
issues, and so productivity usually a significant part of these decisions is recognized
and discusses extensively in the literature on OB.

3. Systems Approach

The Systems Approach to OB views the organization as a united, purposeful system

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

 composed of interrelated parts. This approach gives managers a way of looking at
the organization as a whole, whole, person, whole group, and the whole social
system.

In so doing, the systems approach tells us that the activity of any segment of an
organization affects, in varying degrees the activity of every other segment. A
systems view should be the concern of every person in an organization.

Managers, however, tend to have a larger responsibility, because they are the ones
who make the majority are people oriented.

The role of managers, then, is to use organizational behavior to help build an

organizational culture in which talents are utilized and further developed, people are
motivated, teams become productive, organizations achieve their goals and society
reaps the reward.

Models of OB

The five models of organizational behavior are:

1. Autocratic model
2. Custodial model
3 .Supportive model
4. Collegial model and
5. System model
1. Autocraticmodel: This model relies on power.For example, managers have the
ability, authority to control their employees and the employee’s performance in this
stage will be much lower than expected.
1. Depends on power
2. Managerial orientation is authority
3. Employee orientation is obedience
4. Employee psychological result depends on boss
5. Employee needs met is subsistence
6. Performance result is minimum

2. Custodial model
This model usually depends on economic resources (money).

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

 For instance, managers can simulate their employees by offering them facilities, and
benefits, but in this model, the employee’s won’t work as a team (Less sharing with
others) because everyone will depend on his self to get more benefits than the others.
1. Depends on economical resource
2. Managerial orientation is money
3. Employee orientation is security and benefit
4. Employee psychological result depends on organization
5. Employee needs met is security
6. Performance result is passive cooperation

3. Supportive model
This model relies on leadership.
For example, managers support their employees by encouraging, and supporting
them to perform a better job, get along with each other and as well as developing
their skills. The Performance results will be awakened drives.
1. Depends on leadership
2. Managerial orientation is support
3. Employee orientation is job and performance
4. Employee psychological result is participation
5. Employee needs met is status and recognition
6. Performance result is awakened drives

Employees depend on each other cooperatively and work as a team to do the task.
Everyone will be having a normal enthusiasm self- discipline, and responsible
behavior towards their tasks.
1. Depends on partnership
2. Managerial orientation is teamwork
3. Employee orientation is responsible behavior
4. Employee psychological result is self-discipline
5. Employee needs met is self-actualization

Performance result is moderate enthusiasm

6.
5.System model

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

This model is based on trust, self-motivation, and the performance results will be more
than expected, because employees will be committed to do their tasks as expected, and
as well as organizational goals.
1. Depends on trust, community, understanding
2. Managerial orientation is caring, compassion
3. Employee orientation is psychological ownership
4. Employee psychological result is self-motivation
5. Employee needs met is wide range
6. Performance result is passion, commitment, organization goal.

Organizational effectiveness: It refers to how an organization has achieved full

self-awareness due in part to: Leaders setting well-defined goals for employees
and outlining ways to efficiently execute those goals. Management implementing
cleardecision-making processes and communication pipelines.

Organizational effectiveness is defined as an extent to which an organization

achieves its predetermined objectives with the given amount of resources and
meanswithout placing undue strain on its members.
The various approaches to organizational effectiveness are

 Goal approach – The goal approach refers to optimal profit by offering the
best service that will lead to high productivity. The limitation of the goal
approach is that it is a bit difficult to identify the real goal and not the ideal
goal
 System-resource approach – The system resource approach puts its
onus on the interdependency of processes that align the organization with its
environment. It takes the form of input-output transactions and includes
human,economic and physical resources. The limitation of this approach is
that acquisition of resources from the environment becomes aligned with the
goal of the organization and thus it becomes quite similar to the goal-
oriented approach

 Functional approach – The functional approach assumes that the

organization has already identified its goals, and now the focus should be
upon attainment of these goals and how to serve society. The limitation of
this approach is that the organization has the autonomy to take independent
action for attaining its goals and so why will it accept serving society as its
ultimate goal.
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
 Organizational learning: It is the process of creating, retaining, and transferring
knowledge within an organization. An organization improves over time as it gains
experience. From this experience, it is able to create knowledge. This knowledge is
broad, covering any topic that could better an organization.

The three types of organizational learning are as follows

Double-loop learning

This type of organization learning leads to a change in a theory which was in use till date.
The organization detects and corrects the error and then changes its entire strategies,
values, and assumptions that were till now governing its actions so that they can

Single-loop learning

This type of organizational learning is connected to error correction. Single-loop

learning includes a single feedback loop when an unexpected and undesired result
leads to modification in a strategy. create a better and productive environment.

Deutero learning

This type of organization learning deals with the process of the learning system to
improve the system itself. Deutero learning includes behavioral and structural
components that emphasize “learning how to learn.”

If an organization is interested in improving its learning

processes, it must include all the above The forms of
organizational learning
The various forms of organizational learning are as follows-

Individual learning
In this form of learning an individual gains knowledge through formal
training or experience
Continuous Learning
In this type of learning, the organization provides development
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
opportunities to its employees through various programs
Learning through empowerment
In this type of learning, the teams can gather more information because of
their increased responsibilities
Embedded Systems Learning
In this type of learning, knowledge is gained directly from the various
systems in the organization like work-flow system, operational and process
systems, learning management systems, etc.
Learning from the leadership
In this type of learning, employees learn directly and indirectly from the
action and behavior of their leaders as they are their role models
Dialogue and Inquiry Learning
In this type of learning, it is possible to gain knowledge through conversations
and dialogues.
Team Learning
In this type of learning the team has to undergo formal as well as informal
learning to gain knowledge

What Is a Stakeholder?
A stakeholder is a party that has an interest in a company and can either affect or
be affected by the business. The primary stakeholders in a typical corporation are its
investors, employees, customers, and suppliers.

Types of stakeholders
Stakeholders can come from a variety of connections to the organization or project.
The most common types of stakeholders include the following:

 Customers usually expect organizations to deliver products of value.

 Employees are often project stakeholders, who want to contribute to a project
that is related to their job.
 Owners supply an organization's equity and capital and are
responsible .
 Investors are shareholders, who invest in organizations in exchange for
financial returns and often receive regular on the companies they invest in as

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A

 well as voting power in major decisions.
 Creditors, such as banks and bondholders, lend money to an organization
to be paid back with interest.
 Suppliers are and have an interest in their business and the projects they
pursue.
 Communities have an interest in businesses being healthy, safe and
beneficial to local economies. Businesses create jobs and business for local
communities. Environment, sustainability and governance are increasingly
important values for consumers and investors.
 Governments collect taxes from companies and their
employees.

Internal vs. external stakeholders

Stakeholders are often categorized into the two main groups of internal stakeholders and
external stakeholders.

Internal stakeholders
Internal stakeholders are those within a company whose interest stems from direct
employment, ownership or investment. Internal stakeholders of a company or project can
include employees, boards of directors, donors and investors. These individuals are often
referred to as primary stakeholders, or key stakeholders, because they have a direct stake
and important role in the company's or project's success.

External stakeholders
External stakeholders are those outside of a company who are indirectly affected by its
decisions and outcomes. External stakeholders include customers, suppliers, government
agencies, creditors, labor unions and community groups. These entities are also referred
to as secondary stakeholders because their stake in the company or project is often more
representational than direct.

Examples of stakeholders
Stakeholders exist across industries. For example, in healthcare, stakeholders are those
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
who have a direct interest in healthcare services provided and the decisions made around
them. These include doctors, nurses and other medical professionals hospitals, clinics and
Another example is a stakeholder in a legal process. There, a stakeholder is an individual
or group in temporary possession of money or property while the owner is being
determined in court.

In a project setting, the stakeholders are people who have direct influence on whether a
project is successful. They include the following:

 customers, whose satisfaction with a product or project is the end

goal
 project managers, who manage and lead a project;
 project sponsors, who finance a project; and
project team members, who are the employees executing a project

Stakeholders vs. shareholders: What is the difference?

Shareholders are stakeholders who are financially invested in an organization. While
stakeholders are interested in a company's overall performance, shareholders have an
added interest in the company's stock performance.

A shareholder's investment helps fund an organization and its activities. Depending on the
size of investment, shareholders can sometimes have more influence on an organization
and its projects than stakeholders. Investment can grant shareholders the right to regular
financial information about an organization and to participate in business decisions.

Diversity in the Workforce

Today's world is often described as a melting pot. The term melting pot is a metaphor
used to describe how various cultures and ethnicities have joined together in our society
(just as a melting pot blends different ingredients). Similar to you waking up in 2015 after
a 30-year nap, organizations also must adapt to the changes in society in order to remain
functional.
One of the contemporary challenges that organizations face is diversity. It's a challenge
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
 primarily because those organizations which are lacking a diverse workforce are viewed
as outdated, and in many circles, discriminatory.
The lack of diversity in the workplace also presents a challenge because it does not
account for the perspectives and opinions of others. A successful organization provides a
diverse workplace, that allows various opinions from different cultures and backgrounds,
which helps to breed new and inventive ideas. To combat the challenge of having a
homogeneous (similar) workforce, the following can be done:

Outsourcing
Outsourcing can be defined as moving jobs out of an organization to another company or
party in an effort to lower costs, and save money. To better understand outsourcing, let's
assume that you are the owner of a manufacturing company. One of your primary duties
is to hire all of the employees of your business. After a thorough review, you have
decided that instead of hiring an in-house accountant, your business will outsource those
duties to an independent firm. That firm will now handle all of the accounting duties at a
fraction of the cost of performing the duties in-house.
Outsourcing also occurs internationally as well, with many organizations choosing to
have services performed overseas to save money. Outsourcing is a challenge for
organizations, because it is often perceived by many that it eliminates jobs from the
U.S., which can damage the economy. This public black-eye hurts the reputation of the
organization. The following can help organizations deal with the challenge of
outsourcing:
 Investigate ways to lower costs in other areas in the organization.
 Look at ways to improve the current technology, eliminating the need to outsource.

1. Turnover
 High turnover refers to an organizational issue where employees leave their
companies frequently and at high volumes. To compensate, an organization has to
regularly hire new people to fill those roles. This can take up company resources
and cause delays in company workflows. Some reasons for high turnover rates may
include:

 Employees are discontent with management and their leadership officials.
 They feel dissatisfied with their work and do not find it fulfilling.
 Staff members are underpaid and want more compensation for their work.
 Employees don't believe their employer hears their voices, ideas and concerns.
 Team members don't see a path for growth within the company.
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
  To overcome this challenge, it may help organizations if they reach out to their
employees and receive feedback from them. It's beneficial for managers to listen to
their employees concerns and seriously consider where they can change or
improve. Taking actionable steps to meet the concerns of your team members can
help increase employee retention rates and improve productivity.
2. Productivity
 Productivity refers to the volume of work employees complete successfully and
according to schedule. Having high productivity means a company is meeting their
production quotas, business operations are on track and the business is fulfilling all
orders on time. An organization may suffer from productivity losses because:

 Teams are understaffed.

3. Process management
 Managers use process management to ensure that their team is following the best
processes for completing their work in an efficient and timely manner. The
manager has to set the rules and guidelines and decide what practices to maintain
and identify which ones don't add value. Poor process management can occur
because:

 Managers establish processes that are convoluted and complicated.

 Company leadership isn't flexible and ignores feedback from employees.
 Managers lack an in-depth understanding of their team's work and what they
need toaccomplish it.

 To overcome process management problems, a manager should work closely with

their team, understand their needs and take steps to implement processes that allow
them to do their work simply and efficiently.

4. Role specification
 Role specification means hiring the most qualified person for a job and assigning
work to the most appropriate employee. A lack of quality role specification can
disrupt workflows, reduce efficiency and decrease communication between team
members.

5. Innovation is how companies develop new ideas and expand their products and
services. An organization that is innovative opens itself up to new opportunities,
integrates updated technology tools and becomes an industry leader. Teamwork
 Teamwork involves employees working together to achieve a common goal.
Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A
 Effective teamwork increases productivity, revenue and makes everyone's job
easier to complete. Teamwork within an organization can falter when:
 Team members have conflicting personality traits.
 Some individuals contribute more to projects than others.
 Managers show favoritism towards specific people.
 The organization has poor communication channels.

Principles of Management and Organizational Behavior 22MBA11 BHUVANESHWARI.A