Organizational Behaviour

Chapter-1

Introduction to OB & Cognitive Processes- I

Introduction

Organizational Behaviour (OB) is the study of how individuals and groups act within
organizations. It examines the impact of individual behavior, group dynamics, and organizational
structure on performance and effectiveness.

OB looks at how employees behave, what motivates them, and how their actions affect the
company's success. By understanding these patterns, managers can improve teamwork,
communication, and overall efficiency.

OB is a multidisciplinary field that draws from other disciplines, such as psychology, sociology,
and anthropology. It's considered a separate field of study rather than a discipline because it's
not based on a specific theoretical foundation.

Definition of Organizational Behaviour

• According to Fred Luthans, “OB/ Behaviour are directly concerned with the
understanding, prediction and control of human behaviour in organizations”.

• According to Stephen P Robbins “OB defines as the study of how individuals and groups
of individuals behave in an organization, and how to use that knowledge to improve the
organization's effectiveness”.
Importance of Understanding the Organizational Behaviour

Understanding the importance of organizational behaviour is important for the following

reasons:

• Managers understand employee behaviour and interactions, helping them create a

positive work environment.
• Organizations improve communication, ensuring that information flows smoothly and
reducing misunderstandings.
• Companies increase productivity and efficiency by aligning employee actions with
organizational goals.
• Employees experience greater satisfaction and motivation when their needs and concerns
are addressed.
• Teams resolve conflicts effectively, to build an efficient workplace.
• Managers promote teamwork and collaboration, enabling employees to work together
towards common objectives.
• Leaders implement effective management practices that drive performance and support
employee development.
• Companies enhance overall performance and achieve goals by leveraging a deep
understanding of organizational behaviour.

Nature of Organizational Behaviour

• OB is a systematic study: As it is concerned to the field of study of body of theory, research

and application associated with growing concern of people at organizations.
• OB is way of thinking: It is based on the belief that needs and motivations of people are
of high concern. So, it deals with thinking and feeling of human beings with an attention
of people from humanistic and optimistic point of view.
• OB is multidisciplinary: OB is a multidisciplinary field that draws from other disciplines,
such as psychology, sociology, and anthropology.
• OB has levels of study: OB analysis on three levels of behaviors as Individual behaviors
(Micro level), Group behaviors (Meso level) and Organizational behaviors (Macro level).
• OB is change orientation: Change impacts on employees' psychology, behavior, and
habits and OB as a change agent helps employees adjust and understand organizational
changes and align themselves with the changes.
• OB is both Science and an Art: The systematic knowledge about human behaviour is a
Science and the application of behavioral knowledge and skills are said as Art. So, OB
provides solutions to all such organizational problems.

Scope of Organizational Behaviour

The following aspects are covered under the scope of organizational behaviour:

1. Individual Behaviour
Individual behaviour is also covered under the scope of organizational behaviour in the
following way:

• Personality and Traits: Individual behaviour studies how unique characteristics like
introvert and extrovert employees as well as emotional stability impact work performance
and interactions.

• Attitudes and Job Satisfaction: It examines how employee attitudes towards their job,
colleagues, and company affect motivation, productivity, and retention.

• Perceptions and Cognitive Biases: Understanding how employees perceive their

environment and how cognitive biases influence their decisions and actions helps
minimize misunderstandings and errors.

• Motivation and Incentives: This includes understanding what drives employees to perform
well, such as intrinsic and extrinsic motivators, and how incentives can boost engagement
and productivity.

• Learning and Development: It focuses on how individuals acquire new skills and
knowledge and the impact of training programs on performance and career progression.

2. Group Dynamics
The scope of organizational behaviour includes group dynamics in the following way:

• Communication Patterns: Group dynamics studies how information is shared within a

team, the effectiveness of communication channels, and how clear and open
communication leads to better collaboration.

• Leadership Roles: It examines different leadership styles within groups, how leaders
influence group performance and the impact of leadership on team morale and
motivation.

• Team Cohesiveness: Understanding what makes a team cohesive, including trust, shared
goals, and mutual respect, and how cohesion affects productivity and job satisfaction.

• Conflict Resolution: It involves studying the sources of conflict in groups, how conflicts
are managed, and strategies for resolving disputes to maintain a positive and productive
team environment.

• Group Decision-Making: Exploring how groups make decisions and how different
perspectives lead to innovative solutions.
Others aspects of OB scope are
 • Ensures Employee satisfaction, develop human skills and performance.

• It determines motivation system and develops positive attitude.

OB as Environmental and Organizations Context

External Environment

• Economic Conditions: It is important to understand how factors like economic

growth, inflation, and unemployment rates influence organizational strategies, employee
behaviour, and overall business performance.
• Technological Advancements: People must study the impact of new technologies on work
processes, and employee skills requirements. It is also important to understand the impact
of continuous learning and adaptation.

• Social Trends and Demographics: There is a need to examine how changes in societal
values, cultural trends, and workforce demographics affect organizational policies,
diversity initiatives, and employee expectations.

• Regulatory Changes: The impact of laws and regulations on organizational operations

and compliance requirements must be understood. It is also important to understand how
companies adapt to new legal standards.

• Globalization and Competition: It is essential to understand how global market trends,

competition, and international business practices influence organizational strategies, cross-
cultural interactions, and competitive positioning.

Organizational Structure

• Hierarchy and Authority: Within the scope of organizational behaviour, emphasis is also
put on how different levels of authority and clear hierarchical structures influence
employee behaviour and decision-making efficiency.
 • Role Clarity and Responsibilities: It is necessary to understand the importance of well-
defined roles and responsibilities in reducing ambiguity, enhancing performance, and
ensuring smooth operations.

• Types of Organizational Structures: Analyzing various structures like flat, hierarchical, and
matrix organizations, and their impact on communication, collaboration, and flexibility.

• Workflow and Coordination: Studying how organizational structure affects workflow, the
ease of coordination between departments, and the overall efficiency of processes.

• Adaptability and Change Management: Exploring how different structures support or

hinder the organization's ability to adapt to changes and implement new strategies or
technologies effectively.

Impact of Globalization and Information Technology of OB

Globalization has shifted organizational behavior as companies now bring together employees
from various backgrounds, cultures, and beliefs to work towards common goals. Globalization
and information technology have had a significant impact on organizational behavior, including:
• Cultural diversity
Globalization has increased the need for collaboration across cultures, which can lead to
challenges like miscommunication and conflict. However, these challenges can also be
opportunities for learning and development.
• Job design
Information technology has allowed companies to expand the responsibilities of roles
within the company.
• Work schedule flexibility
Technology has allowed companies to adapt to the changing expectations of employees
by providing tools for flexible work schedules.
• Performance monitoring
Technology has provided tools for real-time performance monitoring and feedback,
which can contribute to a transparent evaluation system.
• Reward systems
The effectiveness of a reward system can contribute to employee attitudes and
performance.
• Organizational structure
 Information technology has allowed companies to reduce the number of organizational
subunits by increasing the scope of activities within a given subunit.
• Organizational change
Organizations need to be able to manage resistance to change, which can come from both
individuals and the organization itself.
• Global talent management
Information technology can help companies manage global talent in a diverse cultural
environment.
• Supply chain management
Information technology can help companies manage global supply chains.

Cognitive Processes- I
Introduction to Perception
We humans seem to attach meanings, interpretations, values and aims to our actions. What we
do in the world depends on how we understand our place in it, depends on how we perceive
ourselves and our social and physical environment, and depends on how we perceive our
circumstances. We explain behavior with terms like ‘reasons’, ‘motive’, intention’, ‘purpose’,
‘desire’ and so on.
Therefore, the issue is- each one of us perceives the world around us in different ways. It is our
personal perception of that reality which shapes and directs our behavior, and some ‘objective’
understanding of external reality.
For example: If one person on a hillside perceives that it is cold, he will reach for his sweater.
On the other hand, if the person standing next to him perceives that it is warm, he will remove
his sweater. These contrasting behaviors can be witnessed happening at the same time, regardless
of the actual ambient temperature as measured by a thermometer.

Another example would be the universal assumption made by managers that subordinates always
want promotion when, Perception and Attribution in fact, many subordinates really
psychologically forced to accept a promotion.

Managers rarely attempt to find out and sometimes them-selves do not know, whether
promotion should be offered. Thus, it is clear that human behavior is a function of the way in
which we perceive the world around us, and how we perceive other people and events in that
world.

Definition of Perception: “It is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment”.
It is the base of every individual's behaviour. We perceive what we like to perceive. “Perception
is the process of gathering, organizing and interpreting the information from environment”.

Perception- “We don’t see things as they are, We see as we are”.

Perception in Organizations-
• How Individuals view others?
• How those people behave within the business?

Nature of Perception: “Perception refers to the interpretation of sensory data. In other words,
sensation involves detecting the presence of a stimulus where as 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.

Importance of Perception: Perception is very important in understanding the human behaviour

because
• Every person perceives the world and approaches their life problems differently- whatever
we see and feel is not necessarily the same as it really is.
• If people behave on the basis of their perception, we can predict their behaviour 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.
• 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.
• Perception is very important to managers who want to avoid errors while 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.

Case Study:
If consumers were to only rely on sensation, it is unlikely they would be able to draw any distinction
between similar products. Peanut butter, cola, ice cream…each of these product categories have
competitors vying to differentiate their products from one another. If you were to organize blind taste-
tests with your friends where they could only rely on the sensation of taste, they may not be able to
distinguish between them. So while sensation is what we experience when our sensory receptors are
engaged, it is perception, that ultimately influences our consumer decisions and forms the basis of our
preferences.

For marketers, having your brand stand out in a crowded and noisy marketplace is critical to success:
playing to consumers’ senses is “next level” marketing as these rich experiences can code a brand into
the consumer’s memory. Capturing the consumer’s attention through stunning visual appeals, catchy
sounds, tasty samples, delicious aromas and hands-on experiences (also known
as Guerilla Marketing) have completely over-taken the passive advertisements and billboards of the
past. When done successfully, sensory marketing transitions a brand from “barely being noticed” to
earning a top position in the consumer’s mind.

Perceptual Process
• The perceptual process begins when our sensory receptors (eyes, ears, tongue, nose, and
skin) come in contact with sensory stimuli ( sights, sounds, tastes, odors, and textiles )
around us.
• Through our sensory system, we are exposed to an infinite amount of stimuli, some of
which we pay attention to, and some we tune out completely.
• Those that receive our attention we evaluate and interpret their meaning based on our
methods of cognitive and behavioral processing.
• After time, some of these stimuli become adapted and we seize to remark on their
significance.

• Exposure/ Sensation: Individuals ability to detect stimuli in the immediate environment

• Selection/ Attention: The process a person uses to eliminate some of the stimuli that have
been sensed and to retain others for further processing.
 • Interpretation/ Organization: The process of placing selected perceptual stimuli into a
framework for “storage”.
• Adaption/ Translation: The stage of the perceptual process at which stimuli are interpreted
and given meaning.

Factors Influencing Perceptual Process

A number of factors shape and sometimes distort perception. These factors can reside in the
perceiver, in the form of object or target being perceived or in the context of the situation in
which the perception is made.

Situation Factors Perceiver Factors

Time Attitude
Work Setting Motives
Social Setting Interests
Experience
Expectations

Target Factors

Novelty
Motion
Sounds
Size
Background
Proximity
Similarity

Types of Perceptual Errors

• Stereotyping- Making positive or negative generalizations about a group or category of
people, usually based on inaccurate assumptions and beliefs and applying these
generalizations to an individual member of the group.
 • Horn Effect- Based on one negative quality, we assume the person is BAD. Ie., we perceive
the whole person, based on one quality.
• Selective Perception- Perceptual selectivity refers to the tendency to select certain objects
from the environment for attention. The objects which are selected are those which are
relevant and appropriate for an individual or those which are consistent with our existing
beliefs, values and needs.
External and internal factors influence selective perception.
External factors like: Size, Intensity, Repetition, Status, Novelty and Familiarity.
Internal factors like: Learning, Ambiguity cause, Motivation, Personality.
• Halo Effect- Drawing general impression of individual on the basis of a single characteristic
i.e., if someone is good at one dimension, he/ she are perceived to be good at other
dimensions as well.
• Recency Effect- When the most recent information influences our judgement, Even though
we have a whole of other information on the person.
• Primary Effect- Tendency to form a judgement or an opinion quickly based on the first
information we received. Subsequently, we may receive other information, but we base
our judgement on the first information.
• Similar to Me Effect- We tend to give favors/ likes or favorable judgement to those who
are similar to us.
• Self Serving Bias- The tendency for individuals to attribute their own successes to internal
factors while putting the blame for failures on external factors.

Overcoming Perceptual Errors

Correcting the perceptual errors in the perception process or eradicating misperception.
• Rectifying Yourself
• Acting as a mediator
• Avoiding negative decision making

Attribution
It is the process of using information gathered through observation to understand the causes of
people's behaviors. It's a key component of social perception, which is the process of forming
impressions of others based on available information.
Definition of Attribution: The process by which an individual assigns causes and attributes to the
behavior of others. For example, people can attribute outcomes to effort, luck, or ability.
Determinants of Attribution Theory (Kelly’s Model)
Attribution is a process by which people interpret the causes of their own and others behavior.
It is concerned with an individual’s interpretation of events and its relation to their thinking and
behavior.

• There is internal and external attribution affected by internal and external determinants.

• External determinants are task, people, situation etc. Externally caused behavior is
believed to be driven by situational factors that forces individuals to show certain
behavior.

• Internal determinants are ability, attitudes, mood etc. Internally caused behavior is under
personal control of an individual.

• The cause of various behaviors of every person is different. For understanding individual’s
behavior it is necessary to observe them wisely.

• Therefore, Attribution Theory was designed to account for how people explain others’
behavior.

Attribution Theory Framework

• Distinctiveness: It means whether individuals have different behavior in different

situations. It is the extent to which a person behaves in the same way in similar situations

• Consensus: It refers to whether everyone facing a similar situation responds in the same
way. It extends to how everyone behaves in the same way in similar situations
 • Consistency: It shows whether a person shows the same behavior over time. i.e it is the
extent to which a person shows similar behavior every time the situation occurs.

Attribution Theory Matrix

Stable Vs Unstable Attribution

• When people make a stable attribution, they infer that an event or behavior is due to
stable, unchanging factors.

• When making an unstable attribution, they infer that an event or behavior is due to
unstable, temporary factors.

Example: Lee gets “D” Grade inn his sociology term paper. If he attributes about his grade
to the fact that he always has bad luck, then he is making stable attribution otherwise, his
attribution about grade to the fact that he did not have much time to study in that week,
and then he is making an unstable attribution.

Attribution Error: It is basically concerned with making mistakes while understanding the
situation and showing certain behavior. Since individuals are not perfect, they show different
behavior in the same situation. It results in perceptual difference among individuals.

1) Fundamental Attribution Error

The Fundamental Attribution Error concerns the judgment made focusing internal factors rather
than external factors. Here, people underestimate the influence of external factors and
overestimate the influence of internal factors while judging others. It is popular among
individualistic culture.
Example: Managers blame the efficiency of employees on less production, though deficiency on
production is due to decreased manufacturing plants. It shows weakness in individual decision
making. It may provide a negative impact on long-term functioning of the organization.

2) Self Servicing Bias

It focuses or gives importance on internal factors for success and blame on external factors for
failure. It gives credit to internal factors like ability, dedication, honesty, hard working etc for
success. If individuals become failure, he blames external threats like bad luck, change in
technology, competitors etc.

Locus of Control
Locus of Control refers to how strongly people believe that they have control over situations
and experiences that affect their lives.
In attribution theory Locus of Control refers to a person's belief about whether the cause of an
event is internal or external.
A person with an internal locus of control believes that he/ she can influence their events and
their outcomes, while someone with an external locus of control blames outside forces for
everything.
Attribution theory is a theory that describes how people use information to structure and control
their social environment.
Locus of control is related to other theories, including:
• Self-efficacy: A person's confidence in their ability to perform a specific task or achieve a
specific goal.
• Learned helplessness: When people perceive an inability to escape negative events and a
lack of control.
• Attribution biases: When people seek out inaccurate explanations for behaviors.

Internal Locus of Control

• Are more likely to take responsibility for their actions.
• Work hard on their goals for achievement.
• Report being happier and more independent.
• Achieve greater success.
Combination of Both (Internal & External Locus of Control)
• May have hard time for accepting responsibilities.
• May need a great deal of assurance.
• More successful if tasks/ projects are broken down into steps.
• Can be good collaborators.

External Locus of Control

• Blame outside forces for their circumstances.
• Don’t believe they can change the situations.
• Feel helpless and powerless.
• Credit luck or chance for success and failure.

Impression Management
The concept of “Impression Management” was coined by a Sociologist “Erving Goffman” in his
book “The Presentation of Self in Everyday Life” during 1959.
Impression management is the process of influencing how others perceive a person, object, or
event through conscious or subconscious actions. The goal is to present oneself in a way that
aligns with how one hope’s to be perceived.
In Impression management, a person influences another person’s interpretation on a person,
place or thing by controlling the information they receive.
Targets are especially likely to use impression management tactics when interacting with
perceivers who have power over them and on whom they are dependent for evaluations, raises
and promotions.
Some techniques for impression management include:
• Self-presentation: A cornerstone of impression management
• Body language and nonverbal communication: Can be used to influence how others
perceive you
• Appearance: How you look can help you make an impression
• Verbal communication: How you speak can help you make an impression
• Social media presence: How you present yourself on social media can help you make an
impression
• Networking and building relationships: Can help you make an impression
• Flexibility and adaptability: Can help you make an impression

Some examples of impression management include:

• A job candidate presenting themselves well in an interview
• A business highlighting its strengths in a sales pitch
• A celebrity maintaining their public image
• A company issuing a public apology after a negative event