Organizational Behavior

People have a variety of needs. Irrespective of one's status, age,

and achievements, one would still have some unfulfilled needs. In order
to satisfy their unfulfilled needs more effectively, people have learned to
organize themselves into groups. The process of organizing facilitates an
organization in its specialization efforts. It helps the employees to
develop specialized skills and enhances the productivity and efficient
functioning of the organization.
The organizational system consists of social, technical and
economic elements which coordinate human and material resources to
achieve various organizational objectives. Some of the objectives of an
organization may be:

• To maximize profits
• To produce goods and services of good quality
• To compete with other players in the industry
• To ensure welfare of its employees
• To make efficient use of resources and achieve growth

Human behavior in organizations is as complex as the social

system itself. People differ from each other in their needs and values,
which can be understood better with the help of behavioral science.
Behavioral science considers the influence of various elements (social,
economic and technical systems) of the complex external environment
on people's behavior. It improves people's understanding of
interpersonal skills and so also their ability to work together as a team to
achieve organizational goals effectively.
Organizational Behavior Defined
Organizational behavior is the system of culture, leadership,
communication and group dynamics that determines an organization’s
actions. According to Keith Davis, “it is the study and application of
knowledge about how people act within an organization.”

Key Forces Affecting Organizational Behavior

Elements of Organizational Behavior

How people behave in an organization under a given situation is
the concern of organizational behavior. People join an organization to
achieve certain objectives. The efforts of the people are co-ordinate by
the structure of authority-responsibility relationships. People use some
technology to produce goods and services to achieve their goals. We can
call people, structure and technology as the internal organizational
elements. These elements interact with the external environment and are
influenced by it. The study of organizational behavior, thus, involves
four key elements; people, structure, technology and the environment in
which the organization operates.
1) People: People make up the internal social system of the
organization. That system consists of individuals and groups, and large
groups as well as small ones. There are unofficial, informal groups and
more official, formal ones. Groups are dynamic. We must remember that
organizations exist to serve people, rather than people existing to serve
organization. The human organization of today is not the same as it was
yesterday, or the day before. In particular, the workforce has become
richly diverse, which means that employees bring a wide array of
educational backgrounds, talents, and perspectives to their jobs.
Managers need to be tuned into these diverse patterns and trends, and to
be prepared to adapt to them.
 2) Structure: Structure defines the roles and relationships of
people in an organization. Different people in the organization are given
different roles and they have certain relationships with others.
Organization structure leads to division of work so that people can
perform their duties to accomplish the organization goals. Under the
structure, different duties are to be performed by different people. Some
may be managers others may be supervisors, clerks, peons or workers.
All are related to each other to accomplish the goals in a co-coordinated
manner. The structure relates to authority-responsibility relationships.

3) Technology: Technology provides the resources with which

people work and affects the tasks...

Organizational Theory

Organizational theory is the study of the structures of

organizations. Four major theories contribute to this study -- classical
theory, human relations or neo-classical theory, contingency or decision
theory and modern systems theory. Over time, the emphasis in
organizational theory has shifted from stiff, hierarchical structures
rampant in the industrial age to broader, more flexible structures more
prevalent in the technological, modern age.
Classical Theory
Classical organization theory evolved during the first half of the
20th century. It represents the merger of scientific management,
bureaucratic theory and administrative theory. Scientific management
theory has four basic principles: a scientific method exists to perform
each task; select, train and develop workers for each task; closely
supervise employees; and management's role is planning and control.
Bureaucratic theory and administrative theory expanded on these
principles. However, over time academics and practitioners began to
view classical organization theory as too rigid and authoritative. It
focused on structure and economic rewards and ignored individual
freedom and the working environment.

Human Relations Theory

Human relations theory also is referred to as neoclassical theory. It
uses some of the beliefs of classical theory as its base but expands those
beliefs to incorporate other principles. Key principles include
emphasizing differences between people to create different effective
motivators; and resolving creative conflict to help develop new ideas
and build stronger working relationships. Another principle involves
emphasizing social interactions, participative management and decision-
making.

Classical Organization Theory

Classical organization theory was developed in the first half of the
20th century as a way of bringing together scientific management,
bureaucratic theory and administrative theory. Scientific management
focused on getting the best people and equipment, and scrutinizing each
production task. Bureaucratic theory involved establishing a hierarchy to
describe the division of labor in a company and recognizing the
importance of specialization. Administrative theory worked to establish
a set of management principles that applied to all organizations.
Classical organization theory didn't work because it described
motivation only as a function of economic rewards.
Neoclassical Organization Theory
Improvements in organization theory led to consideration of the work
environment. Productivity improves in an environment with coherence
of values and purpose. Organizations can succeed with a cohesive
environment where subordinates are accepting of managerial authority.
The key to this theory is maintaining equilibrium. Of course, there can
be unpredictable responses to managerial authority.

Contingency Theory
Contingency theory deals primarily with conflict, which previous
theories considered something to be avoided at all costs. Conflict is
unavoidable, but according to contingency theory it is manageable.
Organizations evolve to meet their own strategic needs in rational,
sequential and linear ways. Adapting to changes in the environment is
important to managerial and organizational success. Managers must be
able to make decisions contingent on current circumstances.

Systems Theory
Systems theory describes the interrelatedness of all parts of an
organization and how one change in one area can affect multiple other
parts. Systems may not always interact in a lineal manner. Small
changes in one part may cause big changes in another part, while large
changes in one area may only result in small changes in another.
Organizations act as systems interacting with their environment. Any
equilibrium is constantly changing as the organization adapts to its
changing environment.

Principles of Organizational Structure

by George N. Root III; Updated April 16, 2018
Organizational structure is the framework by which a company
communicates, develops goals and then works on achieving those goals.
Within the framework of organizational structure are the principles by
which that structure operates. The principles of organizational structure
are the methods by which the organization maintains that structure, and
the processes it uses to keep the structure efficient.
Hierarchy of Command
One of the principles that holds an organizational structure
together is the hierarchy of command. Respect for the authority of
management and the executive team creates a functional line of
communication. Instructions and decrees given by the upper echelon are
validated by the belief in the hierarchy structure of the organization.
Everyone in the company can follow the trail of responsibility for
projects, and employees understand who they report to and how the
management structure affects their jobs.

Role Definition
According to the University of York in York, England, an efficient
organizational structure helps to properly define everyone's role within
the company. A clear definition of the responsibilities and standing of
each person within the company creates an understanding of what is
expected from each individual, and how individual performance can
affect the efficiency of the entire organization.

Evaluating Outcomes
The RAND Corporation points out that monitoring the outcome of
individual projects, as well as the ongoing performance evaluation of
individual employees, helps to determine the strengths and weaknesses
in the organizational structure. The weaknesses can be dealt with either
through training, reallocation of company assets such as equipment, or
eliminating ineffective employees or those performing duplicate tasks.
The strengths of the organization can be amplified to help identify future
managers of the company, determine successful processes that can be
used in future projects, and improve the processes used to reach future
company goals.
Altering Organizational Structure
One of the key principles of organizational structure is the ability
to remain dynamic and change to suit the needs of the company. Some
of the elements that necessitate change in an organizational structure
include changing customer needs, a change in company management,
new technology, and reacting to the activities of your competition.

Behavioral Organizational Theories

by Sampson Quain; Updated June 11, 2018
As a small business owner, it’s important for you to understand
how your employees interact and behave within your organization.
Behavioral organizational theories can help you develop workplace
protocols that can increase efficiency and productivity. These theories
apply scientific principles of interactions within a system to employee
management by analyzing how race, class, gender, and internal and
external influences affect decision making.
Human Relations Behavioral Theory
Organizations function best when employees feel valued and
empowered. The human relations behavioral theory is based on studying
employee productivity under different work circumstances. The theory
states that employees are more likely to increase productivity and
efficiency, if they feel satisfied and validated at work. For example,
benefits such as free lunch or free daycare service for employee children
could help workers feel more secure and content, because their company
is meeting their needs. When employees believe that management cares
about their wants and needs, they tend to feel a greater sense of loyalty
and buy-in, which often leads to a boost in productivity.
Decision-Making Behavioral Theory
The decision-making behavioral theory is most often applied to
managers and supervisors, because they make more of the daily
decisions that affect your company. The theory states that people within
organizations can only make decisions based on the information that
they have at hand. However, for the decision to achieve a specific goal,
that information must be accurate and complete. Most importantly, the
person making the decision must have the ability to sort through the
information and process it correctly. Bad decision-making is often the
result of poor or insufficient information, coupled with a manager who
isn’t strong in synthesizing information to make good decisions.
Servant Leadership Behavioral Theory
Over the past few decades, the servant leadership behavioral theory
has gained influence. The central tenet is that leaders within an
organization will only achieve success, if they first become servants of
their employees. Unlike managers, leaders wield influence and create the
vision and principles that drive a company forward. The servant
leadership model allows executives to view all work processes and
protocols from the point of view of their staff members. If you’re the
owner of your company, your primary task as a servant leader is to view
the wants, needs, and goals of your employees as more important than
your own wants and needs. This means that you provide employees with
all the resources necessary for them to achieve the performance
standards you’ve established for your company. Servant leadership
behavior can create stronger bonds between you and your team
members, but it’s important to remember that your focus must remain on
your employees’ wants and needs, and not on their feelings. If you focus
too much on the feelings of your workers, it may restrict you from
making difficult decisions and from providing honest critiques of their
work.

Principles of Organizational Theory

by Tiffany C. Wright
Theories About Organizational Structure
by Kathryn Keep

Behavioral Organizational Theories

by Sampson Quain; Updated June 11, 2018

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