Organizational Behavior

An organization, no matter how well designed, is only as good as the people who work in it. 

Organizational Behavior Organizational Behavior

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Contents
Table of contents

    - Dee Hock

    Organizations would not exist without people. As a result, the core concept behind organizational behavior (OB) involves understanding the people within the organization. To explore organizational behavior, we look at the different dynamics, behaviors, communication, and processes that employees, teams, and leaders share within an organization.

    A key factor in organizational behavior is that every person in an organization contributes to its success in accomplishing its mission. However, unfortunately, as with every social group of people, problems can arise. Therefore, by studying and implementing organizational behavior practices, we find solutions and implement processes that effectively contribute to the organization's performance and success.

    Why is Organizational Behavior Important?

    Organizational behavior plays an important role in business. Although finance, accounting, marketing, etc., are all essential for a company, people and dynamics are central to the functioning of an organization. Essentially, without people, any organization would fail to exist.

    Organizational behavior is the study of human behavior in an organizational context.

    How employees and managers act within an organization can impact the business's overall performance.

    Let's say an employee is frequently late or absent from work. Absenteeism results in the employee producing output that is not up to the organization's standards. Therefore, the organization's overall performance is also negatively impacted due to the employee's individual performance.

    Now, why is this employee frequently absent? Is it because they have problems working with their team? Is the work environment toxic in terms of office politics? Does the team leader fail to motivate employees? These are all questions organizational behavior can answer.

    As a result, we study organizational behavior to understand how to make a business more efficient in terms of people, culture, structure, leadership, etc.

    Organizational Behavior & Management

    One of the primary applications of organizational behavior is in management. Managers play a significant role in ensuring that an organization performs efficiently. We can broadly categorize a manager's function can into five different aspects:

    1. Planning - setting goals and objectives that contribute to the organization's mission.

    2. Organizing - assigning tasks to the right teams and employees.

    3. Motivating - communicating with and providing feedback and rewards to employees.

    4. Administrating - overseeing absences, new hires, payroll, etc.

    5. Controlling - tracking progress and performance, and ensuring projects are completed on time.

    Check out our explanation of managers to refresh your memory on the roles and responsibilities of organizational leaders.

    Beyond the five primary functions of management, managers also have a range of roles and skills they must use in their day-to-day tasks. According to Mintzberg, we can divide these roles into three broad categories:

    1. Interpersonal roles - including being a figurehead, a leader, and a liaison for the organization.

    2. Informational roles - being a spokesperson, disseminator, and monitoring all internal and external aspects of the organization.

    3. Decisional roles - being a negotiator, disturbance handler, entrepreneur, and resource allocator.1

    Finally, a manager must also possess considerable managerial skills, such as:

    • Interpersonal and people skills,

    • Technical skills,

    • Problem-solving skills,

    • Analytical skills,

    • Communication and networking skills.

    These skills help managers fulfill their roles effectively and thus contribute to not only their performance but that of the employees they manage and, thus, the organization as a whole. Therefore, managers are vital to an organization's success. As a result, many organizations implement vigorous recruitment and selection programs, in addition to training and development programs for those in management positions.

    Organizational Behavior Theories

    There are a variety of organizational behavior theories that encompass the different aspects of an organization. Beyond management and leadership, communication, culture, structure, and human resources are also central to organizational behavior. Some of the critical organizational behavior theories are as follows:

    • Organizational psychology is the study of moods, emotions, personality, values, and value systems within an organization. Key theories include affective events, situation strength, and cultural values theories.

    • Job satisfaction relates to employees' happiness with their roles and the organization. The organization needs to make sure that employees are satisfied, as this increases their motivation and performance at work and contributes to the overall organizational culture and environment.

      Check out our explanation of Job Satisfaction to learn more about the organizational factors contributing to employee satisfaction levels.

    • Group dynamics describe organizational teams. Group dynamics explore how we interact and behave within groups and how two or more groups interact with one another. Positive group dynamics can drive creativity and innovation, but unfavorable dynamics hinder team progress. As a result, this concept is fundamental in organizations that rely on large teams to complete tasks and projects.

    • Organizational communication is another crucial organizational behavior theory, as communication is the backbone of all organizational tasks. The way communication flows within an organization can have a significant impact on team and individual performance. Additionally, manager and leader communication influences motivation which is also essential for performance.

      Want to learn more about the types of communication? Head over to our Organizational Communication explanation.

    • Organizational leadership, as you may already know from the previous section, is essential for motivating the workforce, overseeing tasks, and carrying out the organization's mission. Therefore, leadership theories are central to organizational behavior.

    • Organizational structure and culture lay the foundations of an organization. Organizational structure influences team structure, communication flow, and project outcomes. On the other hand, organizational culture can impact dynamics, values, and relations between employees at all levels of the organization.

    • Human resource (HR) policies communicate expectations and procedures regarding employees in the organization. The human resource function represents all people aspects of the organization, from recruitment and selection to training and termination. Along with individual managers, human resources also play a crucial role in delivering feedback to employees and the organization as a whole.

      Learn more about the human resource function of an organization in our Human Resource Policies explanation.

    Organizational Behavior and Human Decision Processes

    A key part of organizational behavior includes studying human decision processes. As a result, the topic of organizational behavior is a blend of business, psychology, sociology, and anthropology concepts. Although both business and economics study human decision-making processes, let's take a closer look at how organizational behavior combines all the different topics to assess businesses.

    • Psychology provides a basis for understanding human behavior concerning emotions, attitudes, leadership, values, perceptions, etc. Psychology also helps us understand group communication, decision-making processes, and the factors influencing decision-making.

    • Sociology helps us understand communication, the idea of change in the organizational context, and organizational culture.

    • Anthropology helps us understand organizational culture and the internal and external environment and facilitates the processes of international teams and organizations.

    Organizational Behavior Models

    Many different organizational behavior models are applied from the various fields of study beyond business management. However, we can describe the overarching organizational behavior model as follows.

    The organizational behavior model consists of three components:

    1. Inputs,

    2. OB processes,

    3. Outcomes.

    Inputs can range from individual to group or organizational inputs.

    For example, group norms are a group input that can influence the communication processes of the group and, therefore, the group's performance (outcome). On the other hand, the organizational structure is an organizational-level input that could impact organizational communication and overall performance.

    Therefore, OB processes are the actions individuals, groups, and organizations engage in due to input influences. In turn, each action (OB process) leads to an outcome. Some examples of outcomes include:

    • Performance,

    • Attitudes,

    • Behavior (positive or unwanted),

    • Stress,

    • Group development,

    • Productivity, and

    • Survival.

    Examples of Organizational Behavior

    Let's now take a look at some examples of organizational behavior in action based on the general OB model.

    On an individual level, personality and values can impact processes and outcomes. For example, someone with high agreeableness and extraversion might be motivated to perform well on an individual and organizational level. Therefore, their task performance will be high. Similarly, they might bring a positive attitude to work, be satisfied with their job, and present practical ways of managing stress. These factors are the outcomes of individual inputs in the OB model.

    Secondly, let's look at group-level inputs, processes, and outcomes.

    For example, group roles and responsibilities are an input that can impact group processes. Let's say the organization has created a designated group to work on a new marketing project. The team is composed of employees who hold similar roles in the organization. There is no designated manager or leader part of the team. Two of the group members try to assume the position of 'group lead,' which creates conflict. The two employees are fighting for power, giving rise to office politics. The other employees also feel disappointed as the two leaders distract the group. They have therefore created two sub-groups within the team to avoid conflict. As a result, their group cohesion and performance are very poor (outcome).

    Finally, to finish today's explanation, let's observe an organizational-level situation.

    Imagine an organization with a rigid, hierarchical structure (input). This organization is attempting to implement change. Unfortunately, due to the rigid structure and lack of communication, employees have no idea why the organization is trying to implement change and feel threatened. Due to the resistance to change from half the employees, the organization remains stagnant, decreasing productivity and putting the organization's survival at risk (outcome).

    Organizational Behavior - Key takeaways

    • Organizational behavior is the study of human behavior in an organizational context.
    • Managers play a significant role in ensuring that an organization performs efficiently.
    • A manager's role involves planning, organizing, motivating, administrating, and controlling.
    • Organizational psychology, job satisfaction, communication, group dynamics, leadership, culture, structure, and human resources are some of the organizational behavior theories.
    • Organizational behavior combines business and management with psychology, sociology, and anthropology.
    • The organizational behavior model consists of inputs, OB processes, and outcomes.

    References

    1. Amit Shah, Carl McDaniel, and Lawrence J Gitman. Introduction to Business. 2018.
    Frequently Asked Questions about Organizational Behavior

    What is organizational behavior?

    Organizational behavior is the study of human behavior in an organizational context. We study organizational behavior to understand how to make a business more efficient in terms of people, culture, structure, leadership, etc. 

    What are some examples of organizational behavior?

    We can observe examples of organizational behavior through the OB model. On an individual level, personality and values can impact processes and outcomes. For example, someone with high agreeableness and extraversion might be motivated to perform well on an individual and organizational level. Therefore, their task performance will be high (outcome). 

    How does leadership affect organizational behavior?

    How employees and leaders act within an organization can impact the business's overall performance. Leadership impacts organizational culture, structure, communication, and motivation, which, in turn, influence the organization's overall performance. 

    Why is motivation important in organizational behavior?

    Motivation plays a key role in organizational behavior as it is essential for job performance. The organization needs to make sure that employees are satisfied, as this increases their motivation and performance at work and contributes to the overall organizational culture and environment. 

    Why is organizational behavior important?

    Organizational behavior plays an important role in business. Although finance, accounting, marketing, etc., are all essential for a company, people and dynamics are central to the functioning of an organization. Essentially, without people, any organization would fail to exist. As a result, the core concept behind organizational behavior (OB) involves understanding the people within the organization.

    Test your knowledge with multiple choice flashcards

    What is NOT among the six common elements of organizational structure types?

    What are the three most common types of organizational structure?

    Which is true about an organization with a simple structure?

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