____________________________________________________________________________________________________ COMMERCE Paper No. 1: Management Concepts & Organizational Behaviour Module No. 9 : Organizational Behaviour – An Introduction Subject Commerce Paper No and Title 1: Management Concepts & Organisational Behaviour Module No and Title 9: Organizational behaviour: An Introduction Module Tag COM_P1_M9
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Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
1. Learning Outcomes
After studying this module, we shall gather information to:
2 Emerging trends of Organizational Behavior
Organizations are everywhere and managing people is considered as one of the most
critical features of a job. Unlike the other factors of production (material and
technology), the human capital is quite complex and unpredictable. Their creative
bent of mind can, no doubt, be utilized to enhance productivity, but at the same time,
it can be deployed to frustrate rather than facilitate. Organization Behavior, therefore,
has emerged as a scientific discipline which explores and suggests remedial actions to
control and empower the tricky and complicated ‘people dimension’ of organizing
and managing.
• Identify the emerging trends of Organizational Behavior
• Know the Foundations and definition of Organization Behavior
• Identify group, inter-group and organizational processes
• Analyze the goals and elements of Organizational Behavior
After studying this module, you shall be able to:
Organization Behavior is the systematic study and the careful application of how people- as individuals and as groups - act within an organization. It is a scientific discipline in which varied research studies and conceptual developments are constantly contributing to the knowledge base. It is traditionally focused on the motivation and coordination of an organization's internal stakeholders or employees. The traditional definition of organizational behavior is thus, the study of individuals and their behavior within the context of the organization in a workplace setting. However, with the passage of time, it has become essential to redefine OB since the very concept of ‘organization’ has changed and so is the ‘behavior’. Traditionally, Robbins (2003) defined an ‘organization’ as a ‘consciously coordinated social unit, composed of two or more people, which functions on a relatively continuous basis to achieve a common goal or set of goals. It’s characterized by formal roles that define and shape the behavior of its members’. However, a modern organization can be defined as an open system that has continuous interaction with the environment through the exchange of inputs and outputs with the bidirectional feedback.
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
markets. Nestle’s high nutrients and low cost variants of
Maggie noodles (at Rs. 2/- a packet), formulated especially for the poor rural masses of
India and Pakistan is on its way to Australia and NewZealand. Similarly, laptop and
desktop parts are produced in 6 distinct countries of the world are assembled in Taiwan,
transported by Dutch companies to Indian consumers. Hence, in order to remain
competitive in this rapidly transforming globalized world, majority of the companies
have entered into joint ventures, alliances, licensing agreements etc., which has altered
the profiles of both the employees as well as the customers. The workforce diversity has
increased manifold and people from different cultures are working together. Due to this
reason, the need for global leaders, who can manage expatriate assignments and
culturally diverse teams, has arisen. Pareek (2004) observes that with the whole world
being converted into a single global marketplace, individuals and organizations buy raw
material, technology, services, and resources from the provider who offers high quality
with low price. In this context, the most complex and critical component that can be
identified is the human resource. Organizations are in a state of flux and they need to
change their structure in order to meet the challenges in the globalized corporate
environment.
2.2 Workforce diversity and the emerging employment relationship
In today’s workplace, we have come to understand that ‘Great management’ is about
character, not about techniques. In fact, it is easier to buy technology, and to borrow both
financial and material resources, but it is difficult to buy human processes, in the form of
speedy decision making, effective negotiation, team development, leadership
development, strategy formulation etc. Still more, it is difficult to retain talented
employees. It is essential not only to nurture talents, but also be able to retain them.
Although people have been regarded as the most important asset, their centrality has
become sharper in today’s fast changing world. Whereas globalization refers to
differences between people owing to different countries; work-force diversity refers to
differences that exist between people within the same country.
Management of workforce is a great concern to everyone in a changing work
environment and is the biggest challenge of the 21st century, having important
implications for management practice. Organization Behavior has contributed a lot in this
domain. Deshwal, P. and Choudhary, S. (2012) observed in their study that:
“People no longer live and work in an insular marketplace; they are now part of a worldwide economy with competition coming from nearly every continent. For this reason, profit and non-profit organizations need diversity to become more creative and open to change. Maximizing and capitalizing on workplace diversity has become an important issue for management today. Diversity is generally defined as acknowledging, understanding, accepting, valuing and celebrating differences among people with respect to age, class, ethnicity, gender, physical and mental ability, race, sexual orientation, spiritual practice, and public assistance status.”
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
Hence, managers need to shift their philosophy from treating everyone alike to
recognizing differences and responding to those differences in ways that will ensure
employee retention and greater productivity while, at the same time, not discriminating.
A more diverse workforce results in:
respect for individual and cultural differences
A legal system that emphasizes equal opportunities and non-discrimination at
work place.
High performance since it leads to nurturing the best talents and not just meeting
the targets / numerical goals.
Diversity needs to be promoted in an organization in a planned manner. Companies like
Toyota, Walmart, and Microsoft etc. understand how the uniqueness of each employee
can contribute in creating collaborative relationships. Pareek (2004) opined that empathy,
openness, democratic values, and supportive behavior help to develop a mindset
conducive to diversity. Pareek (2004) explained diversity in terms of’ demographic (age,
gender, education), social (religion, language, region, caste, tribes, physical and mental
handicaps) and ideological (different ways of perceiving issues). He observed that
‘…..the demographic profile in India is changing very fast. Younger people are entering
the workforce. Because of the spread of education, legislation, and social movements,
more women and more members of minority communities are being employed by
organizations. Organizations are finding that physically and mentally challenged persons
can be valuable human resources for specific jobs.’
The requirement of a safer and healthier work environment in the current dynamic market
situations has propelled the need to recognize the relevance of developing and retaining
high performing managers. Fundamentally, organizational success or failure or stagnation
depends on the impact that people have upon their organizations. This is the focus of
Datta, K.(2013, Business Standards) observed that ‘Tata Group Chairman, Cyrus Mistry had established his progressive credentials by unequivocally stating that he was looking forward to seeing more women in key leadership positions at Tata Global Beverages (TGB). He is on strong ground here because this company, like many fast-moving consumer goods companies worldwide, has an impressively large complement of women - 41 per cent, according to its annual report (notably too, TGB’s joint venture with Starbucks is headed by a woman). However, a little over a year ago, Britannia’s Managing Director Vinita Bali, with over a decade of experience of heading an Indian company, wryly observed that India Inc is “still very much an old boys’ network”.
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
It is not one but many such events that have happened all over the world due to which it
is being realized that today’s managers need to create a climate that portrays strong
ethical approach. Organization behavior focuses on the why and how to create ethical
work environment. It enables them to write and distribute the code of ethics to guide
employees through ethical dilemmas. Now they are offering trainings and seminars in
order to improve ethical behavior and create a healthy climate in which minimum degree
of ambiguity exists between what constitutes right and wrong behavior.
2.5 Outsourcing
Increasing completion has led to the development of cost-effective strategies. The focus
is to make an organization as lean as possible. The functions and services which do not
form the core of an organization are normally discontinued. Similarly, the organizations
are indiscriminately buying any expertise/service/function which is needed by the
organization and is very expensive, but can be arranged from outside at a lower cost. This
process of buying a function or a service from outside sources is called outsourcing. The
human resources are also being outsourced. Even the personnel training is being
outsourced on account of the fact that training is not the core function of the organization.
It will be comparatively cheaper for them to sign the MOU (memorandum of
understanding) with training organizations rather than developing high quality trainers
themselves. Hence, outsourcing requires lot of planning based on the competencies that
the management wishes to develop and retain.
3 Defining OB
Put on the Thinking Cap: What is Organization Behavior?
The recent progressive trends that find a mention above have redefined organization
behavior as the study and application of how people – as individuals and as groups – act
As per the report of Times of India, on 18th July 2012, Maruti's Manesar plant was hit by violence as workers at one of its auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates. The line differentiating between right and wrong has become all the more blurred.
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
Finally, organizations can be looked upon as a unified
system that has inter-organizational relationships for example, through mergers and joint
ventures. Whereas organization is a collection of interacting and inter- related human and
non-human resources working toward a common goal or set of goals within the
framework of structured relationships, OB also deals with the manner in which the firm
influences the nature of all the humans who are a part of the organization and how
individuals in turn influence organizations.
4 Goals of Organizational Behavior
As per Newstrom, J.W. and Davis, K (1996), there are four goals of Organizational
Behavior:
1 To describe
2 To understand
3 To predict and
4 To control
The first is to describe, systematically, the pattern of behavior of humans under a
cornucopia of situations. With the help of this element all the managers and subordinates
are in a position to effectively communicate with each other in the same language. The
second goal is to understand what leads people to behave in a specified way. Managers
would be highly frustrated if they can superficially understand the behavior of the
workers without gaining deep insight into the causes of such behavior. Predicting leads
to better identification by the managers as to which worker will be most productive and
which will be dull, lazy and unproductive at a particular time. This would allow them to
take preventive actions. The final goal of organizational behavior is to control (at least
partially) and develop some human activity at work. Because of the hierarchy of authority
and responsibility, managers will always be held responsible for work done by workers.
Describe Understand Predict Control
Organizational behavior is an inter-disciplinary field that draws freely from a number of the behavioral sciences, including anthropology, psychology, sociology, and many others. The unique mission of organizational behavior is to apply the concepts of behavioral sciences to the pressing problems of management, and, more generally, to administrative theory and practice.
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
technology, size, and the external environment. Hence,
managers need to manage the structural aspects of the organization as well.
5 Process: refers to the way by which the manager gets the things done. Here we
are referring to the abstract aspects like: how does a manager leads; motivates; manages
the perception of employees; instill the norms and values amongst them; plays a role in
developing the work culture of that place and so on. The personality, managerial
philosophy and leadership style of the manager determines how he/she handles the
critical situations. Thus, the processes used by different people to achieve the
organization goal vary from individual to individual. Some processes are more effective
than others and bring about better results. Hence, the manager is required to be
perceptive about the processes that others use and be flexible enough to achieve the
organizational goals in the right manner.
6 The external environment: The five aspects discussed above constitute the
internal aspects of the organization which constantly interact with the external
environment. The external environment relates to the dynamic global markets, supply
systems, government regulations of the respective countries, the economic-political-and
social climate, the changing demographics of the work force, the cultural environment in
which the organization is embedded. For instance,
However, many of the other aspects such as sizing up the markets, updating the
technological changes etc are all under the control of the organization. However, a
manager needs not only to be vigilant but also be adaptable to deal with difficult and
critical situations through sound decision making.
For instance, For example, the United Kingdom has a largely market-driven, democratic society with laws based upon precedent and legislation, whilst Iran has a political and legal system based upon the teachings and principles Islam and a Sharia tradition. In sum, organizations are embedded in an environment within which they operate. Some of the external factors may be completely beyond the control of the organization to change, such as the cultural, social or governmental aspects. However, many of the other aspects such as sizing up the markets, updating the technological changes etc are all under the control of the organization. However, a manager needs not only to be vigilant but also be adaptable to deal with difficult and critical situations through sound decision making
Paper No. 1: Management Concepts & Organizational Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
6 Summary
With sweeping changes taking place both within and globally, the managers need to develop their interpersonal or people skills to be effective in their jobs. Organizational behavior is a field of study that investigates the impact that the individuals, groups and structures have on behavior within the organization, and then it applies that knowledge to make organizations work more effectively. Its goals are to make the managers more effective at describing, understanding, predicting and controlling human behavior.
Organizational behavior offers both challenges and opportunities for managers. It recognizes differences and enables managers to identify the value of workforce diversity and practices that need to be changed when managing in different countries. Ob can assist the mangers to cope in a transient world and manage a workforce which is reeling under the pressures of challenges. It guides managers in creating a healthy work culture.