OB

ORGANISATIONAL BEHAVIOUR MEANING AND DEFINITION

TOPICS OF DISCUSSION

•Introduction •Definition and concept •Understanding OB •Contributing Fields to OB

•“The organization is above all social. It is people.” Peter Drucker
• “People are the key” – Sam Walton, the founder of Wal-Mart and the richest person in the world when he died.

•Organizational Behavior is the field of study which investigates the behaviour of individual, group and organizational structure

•at the individual level- interpersonal relations

• at the group level – group dynamics – formal teams and informal groups – inter-group relations

• at the organizational level – inter-organizational groups

OB is concerned with the emerging realities of the workplace revolution.

Knowledge is replacing infrastructure. Self-leadership is superseding command-control management. Networks are replacing hierarchies.
Virtual teams are replacing committees.

Companies are looking for employees with emotional intelligence, not for just technical smarts.

Globalization has become the mantra of corporate survival.

Co-workers are not down the hall; they are at the end of an internet connection located somewhere else on the planet

•“Effective organizational behaviour is the bedrock on which effective organizational action rests. The long-term competitive advantage comes from the rich portfolio of individual and team-based competencies of an organisation’s employees, managers and leaders.” Hellriegel and Slocum Definition 

• Organizational behaviour is “… a study and application of knowledge about human behaviour – as individuals and in groups – in the organization – strives to identify ways in which people can act more effectively.” 

• “The understanding, prediction and management of human behaviour in organizations.” 

• Is an applied science- best practices in one organization can be communicated to others Goals

 •Describe how people behave under a variety of conditions

 • Understand why people behave as they do

 • Predict future employee behaviour

• Control and develop human activity at work to improve productivity, skill improvement, team effort, etc Forces

 • People- individuals and groups

 • Structure- jobs and relationships

 • Technology-machinery, computers

 • Environment-govt, competition, social pressures. 

All the above forces interact with each other resulting in OB. 

Generalizations about human behaviour

•> happy workers are productive workers.
• > Individuals are most productive when the boss is friendly, reliable and unassuming.
•> behavior of good leaders is consistent irrespective of the situations they face.
• > Interviews are effective selection devices.
•> Everybody likes a challenging job
•> People will have to be bullied/intimidated to make them to do their jobs.
•> Money motivates all.
•> People are more concerned about their own salaries than others’
•> Members of effective groups do not quarrel among themselves. 

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The Hawthorne studies 

•The Hawthorne studies were conducted in order to find out the role of human resource in increasing the production of an organization.
•It formed the basis of the school of human relations.

Experiments Conducted

•Illumination Tests

•Relay Assembly Test

 - mass interview

•Bank Wiring Tests

•Conducted between 1924-1932

•Conducted at WESTERN ELECTRIC COMPANY, Chicago, USA

•Conducted by, 

Elton Mayo

         White Head

         Roethlisberger and others

•He was an Australian Psychologist, Sociologist and Organization Theorist.

• Lectured at University of Queensland before moving to the University of Pennsylvania Spent most of his career at Harvard Business School and was the Professor of Industrial Research 

•Known as the founder of the Human Relations Movement

•The Hawthorne experiment was first conducted in November 1924 at Western Electric Company’s Hawthorne plant in Chicago 

A team of researchers led by George Elton Mayo from the Harvard Business School carried out the studies

Illumination tests

•In 1924, with the corporation of NRC A series of test room studies were conducted to determine the relationship between illumination and worker efficiency. 
•The basic idea was to vary and record levels of illumination in the test room
•Expectation- as lightning was increased productivity would too. (hoping to encourage industries to use artificial lighting in place of natural light)
•Two test rooms were set with increased and decreased illumination
•Three series of tests were conducted from 1924 to 1927 in three departments of Hawthorne plant- relay assembling, coil winding, and inspection.
•The NRC representatives and engineers drew several conclusions-
1. Illumination was one factor in output but not the most important
2. Other factors are also responsible for productivity important points-

•1924-1927
•Funded by General Electric
•Conducted by The National Research Council (NRC) of the National Academy of Sciences with engineers from MIT
•Measured Light Intensity vs. Worker Output
•Result: – Higher worker productivity and satisfaction at all light levels – Worker productivity was stopped with the light levels reached moonlight intensity.
•Conclusions: – Light intensity has no conclusive effect on output – Productivity has a psychological component

Relay Assembly Test Experiments

•In order to observe these other factors the second set of test was begun, it was designed to evaluate the effect of rest periods an hour of work would have on efficiency.
•Volunteers were isolated in a separate room to assure accuracy in measuring output and quantity, as temperature, humidity, and other factors were adjusted.
•One variable was introduced which was additional incentives and bonus.
•They concluded factors such as lighting, hours of work, rest period, bonus and supervision, affects worker but the attitude of the employees was greater significance.

 Important points
•Experiments were conducted by Elton Mayo
•Manipulated factors of production to measure the effect on output:
•– Pay Incentives (Each Girls pay was based on the other 5 in the group)
•– Length of Work Day & Work Week (5pm, 4:30 pm, 4pm)
•– Use of Rest Periods (Two 5 minutes break)
•– Company Sponsored Meals (Morning Coffee & soup along with sandwich)

Results
•– Higher output and greater employee satisfaction

Conclusions:

       – Positive effects even with negative influences – workers’ output will   increase as a response to the attention

       – Strong social bonds were created within the test group. Workers are influenced by the need for recognition, security, and sense of belonging

Mass Interview Program

    Conducted 21,000 interviews.

• The objective was to identify areas where reasonable improvement might lead to greater job satisfaction and thus increase efficiency and productivity

• Initially used the method of Direct Questioning and later changed to Non-Directive.

Results

- Merely giving an opportunity to talk and express grievances would increase the morale.

- Complaints were symptoms of deep-rooted disturbances.

-Workers are governed by experience obtained from both inside and outside the company.

- Employee counseling program is very important to make the employee feel positive about the work environment.

Bank Wiring Tests

•The final stage of the studies was bank wiring tests, it was started in November 1931.

•The test room housed nine wires, three soldiers, and two inspectors, all male between the age of 20 to 25.

•Their job was boring and monotonous.

•Pay incentives and productivity measure were removed, the observer was introduced and interviews conducted.

•Purpose was to observe and study the social relations and social structures within the group

•Adapt social anthropology research methods to industrial conditions

Conclusion-

      Workers combined to slow down production (social relationships of workers).

      Confirms the complexity of group relations and stressed the expectations of the group over an individual’s preference.

      Employees had physical and social needs and employee counseling and improved supervision is important 

CONCLUSION
•The Hawthorne studies have had a remarkable impact on management in organizations and how workers react to various situations.
•The research carried out at the Western Electrics Hawthorne plant during the 1920’s and early 1930’s helped to initiate a whole new approach to human behavior studies.
•The final result was “the organization of sustained cooperation leads to success”.
•The test challenged prior assumption about worker behavior, workers are not motivated solely by pay.
•The importance of individual worker attitude on behavior had to be understood.
•The role of the supervisor in determining productivity and morale was more clearly defined.
•Group work and behavior were essential to organizational objectives and tied directly to efficiency and thus corporate success.
The most disturbing conclusion emphasized that how little the researcher could determine about informal group behavior and its role in industrial settings

What is the ‘Hawthorne effect’?

The term ‘Hawthorne effect’ is used to describe how the presence of researchers produce a bias and unduly influences the outcome of the experiment

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The Theory of Douglas McGregor

•McGregor developed a philosophical view of humankind with his Theory X and Theory Y in 1960.

•His work is based upon Maslow's Hierarchy of Needs, where he grouped the hierarchy into lower-order needs (Theory X) and higher-order needs (Theory Y).

•He suggested that management could use either set of needs to motivate employees, but better results would be gained by the use of Theory Y, rather than Theory X.

•These two views theorized how people view human behavior at work and organizational life.

Theory X

•Theory X assumes that employees are naturally unmotivated and dislike working, and this encourages an authoritarian style of management.

• According to this view, management must actively intervene to get things done.

      This style of management assumes that workers:

         Dislike working. 
Avoid responsibility and need to be directed.
Have to be controlled, forced, and threatened to deliver what's needed. 
Need to be supervised at every step, with controls put in place. Need to be enticed to produce results; otherwise they have no ambition or motivation to work. 

•X-Type organizations tend to be top heavy, with managers and supervisors required at every step to control workers.

• There is little delegation of authority and control remains centralized. 

•McGregor recognized that X-Type workers are in fact usually the minority, and yet in large scale production environment, X Theory management may be required and can be unavoidable.

Theory Y

•Theory Y shows a participation style of management that is de-centralized. 

•It assumes that employees are happy to work, are self-motivated and creative, and enjoy working with greater responsibility.

 Take responsibility and are motivated to fulfill the goals they are given.
 Seek and accept responsibility and do not need much direction.
Consider work as a natural part of life and solve work problems imaginatively.

This management style tends to be more widely appropriate. In Y-Type organizations, people at lower levels of the organization are involved in decision making and have more responsibility

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Monistic or Economic theory of Motivation

•Monistic theory of motivation is based upon the notion that man is essentially economic.

•Individual are assumed to be highly responsive to money reward

•Motivation is more effective and direct when based upon individual incentives rather than group incentives.

•The incentives are more effective where reward immediately follow the efforts.

•Quantum of effort is directly related to the amount of reward.
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•Leadership is a psychological process of influencing followers (subordinates) and providing guidance, directing and leading.

•The action of leading a group of people or an organization, or the ability to do this is known as leadership.

•It is a relationship between leader and his followers who are sharing a common purpose, and followers behave in the manner which is directed or determined by a leader.

Definitions of Leadership

•According to Alford and Betty “ is the ability to secure desirable actions from a group of followers voluntarily, without the use of coercion’’

•According to Chester I Bernard, “it refers to the quality of the behavior of the individuals whereby they guide people on their activities in organizes efforts’’

•According to Terry “a leader shows the way by his own example, he is not a pusher, he pulls rather than pushes.”

•According to Koontz O’Donnell- “managerial leadership is an ability to exert interpersonal influence by means of communication, towards the achievement of a goal”.

•According to Louis A Allen “a leader is one who guides and direct other people. He gives the efforts to his followers a direction and purpose by influencing their behavior”.

•According to the Encyclopedia of the social sciences- leadership is a relation between an individual and a group around some common interest and behaving in a manner directed or determine by him”.

Nature and Characteristics of Leadership

•Leadership is a process of influence.

•Leadership is a function of stimulation.

•A leader ensures absolute justice.

A leader has a leadership style or patterns

Leadership style

•Leaders exercise their authority in different ways. The way in which functions of leadership are carried out and the way a leader behaves is known as leadership style

•There has been substantial research into the types and effectiveness of various leadership styles and four most common generally accepted are: Authoritarian, Paternalistic, Democratic and Laissez-faire

Authoritarian

•Autocratic leaders hold as much power and decision-making as possible

•Focus of power is with the manager

•Communication is top-down & one-way

•Formal systems of command & control

• Minimal consultation

•Use of rewards & penalties

•Very little delegation

•Based on McGregor Theory X approach

•Most likely to be used when subordinates are unskilled, not trusted and their ideas are not valued.

•Leader decides what is best for employees

Paternalistic

•Links with Elton Mayo – addressing employee needs

•parent/child relationship – where the leader is seen as a “father figure”

•Still little delegation but more than autocratic

•A softer form of authoritarian leadership, which often results in better employee motivation and lower staff turnover

•Typical paternalistic leader explains the reasons that why he has taken certain actions

Democratic

•Focus of power is more with the group as a whole

•Leadership functions are shared within the group

•Employees have greater involvement in decision-making – potentially this slows-down decision-making

•Emphasis on delegation and consultation, but the leader still has the final say

•Perhaps the most popular leadership style because of the positive emotional connotations of acting democratically

• A potential trade-off between speed of decision, making and better motivation and morale

•Likely to be most effective when used with skilled, free-thinking and experienced subordinates

Laissez-faire

•Laissez-faire means to “put your hands off”

•Leader has little intervened in day-to-day decision-making

•Conscious decision to delegate power

•Managers and employees have the freedom to do what they think is best

•Often criticized for resulting in poor role definition for managers

•Effective when staff are ready and willing to take on responsibility, they are motivated and can be trusted to do their jobs 

Leadership skills

•Human skills- empathy, objectivity, communication skill, teaching skill, social skill

•Conceptual skill-the understanding of the organizational behavior, Understanding the competitors of the firm, knowing the financial status of the firm

•Technical skills-

•Personal skill- intelligence, emotional stability, personal motivation, integrity, the flexibility of mind.

Importance of Leadership

•Leadership is the process of influencing the activities of an individual or a group towards the achievement of a goal.

•An effective leader motivates the subordinates for a higher level of performance.

•Leadership promotes team spirit and teamwork which is quite essential for the success of any organization.

•It is an aid of authority, a leader helps in the effective use of formal authority.

Leadership creates confidence in subordinates by giving them proper guidance and advice.

Formal and Informal Leaders

•Formal leader is a member of the organization who has given authority by virtue of his position to influence other members of the organization to achieve organizational goals.

• An informal leader has no formal organizational authority to influence others but possesses special skills and talent to influence and lead other members of the organization.

•Managers, directors are formal leaders in a typical organization.

• Informal leaders possess strong self-motivation, possess a positive attitude, motivates others and puts effort to drive organizational goals.

• Informal leaders are the best candidates for future formal leaders.

Theories of Leadership

•Great Man Theory

•Trait Theory

•Behavioral Theories-Ohio state Studies and Michigan Studies -Managerial Grid

•Contingency Theory:- Fiedler’s Least Preferred Co-worker (LPC) Theory -Cognitive Resource Theory

•Situational Theory: -Hersey and Blanchard’s Situational Theory -House’s Path-Goal Theory -Leader-Participation Model 
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Vroom’s expectancy theory

Vroom’s expectancy theory differs from the content theories of Maslow, Alderfer, Herzberg, and McClelland in that Vroom’s expectancy theory does not provide specific suggestions on what motivates organization members. Instead, Vroom’s theory provides a process of cognitive variables that reflect individual differences in work motivation. From a management standpoint, the expectancy theory has some important implications for motivating employees. It identifies several important things that can be done to motivate employees by altering the person’s effort-to-performance expectancy, performance-to-reward expectancy, and reward valences.

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Need theories of motivation (Alderfer, 1972; Herzberg, 1968; Maslow, 1970; McClelland, 1976) attempt to explain what motivates people in the workplace. Expectancy theory is more concerned with the cognitive antecedents that go into motivation and the way they relate to each other. That is, expectancy theory is a cognitive process theory of motivation that is based on the idea that people believe there are relationships between the effort they put forth at work, the performance they achieve from that effort, and the rewards they receive from their effort and performance. In other words, people will be motivated if they believe that strong effort will lead to good performance and good performance will lead to desired rewards. Victor Vroom (1964) was the first to develop an expectancy theory with direct application to work settings, which was later expanded and refined by Porter and Lawler (1968) and others (Pinder, 1987).

Expectancy theory is based on four assumptions (Vroom, 1964). One assumption is that people join organizations with expectations about their needs, motivations, and past experiences. These influence how individuals react to the organization. A second assumption is that an individual’s behavior is a result of conscious choice. That is, people are free to choose those behaviors suggested by their own expectancy calculations. A third assumption is that people want different things from the organization (e.g., good salary, job security, advancement, and challenge). A fourth assumption is that people will choose among alternatives so as to optimize outcomes for them personally.

The expectancy theory based on these assumptions has three key elements: expectancy, instrumentality, and valence. A person is motivated to the degree that he or she believes that (a) effort will lead to acceptable performance (expectancy), (b) performance will be rewarded (instrumentality), and (c) the value of the rewards is highly positive (valence). (See Figure 1.)

Figure 1. Basic expectancy model.

Expectancy

Expectancy is a person’s estimate of the probability that job-related effort will result in a given level of performance. Expectancy is based on probabilities and ranges from 0 to 1. If an employee sees no chance that effort will lead to the desired performance level, the expectancy is 0. On the other hand, if the employee is completely certain that the task will be completed, the expectancy has a value of 1. Generally, employee estimates of expectancy lie somewhere between these two extremes.

Instrumentality

Instrumentality is an individual’s estimate of the probability that a given level of achieved task performance will lead to various work outcomes. As with expectancy, instrumentality ranges from 0 to 1. For example, if an employee sees that a good performance rating will always result in a salary increase, the instrumentality has a value of 1. If there is no perceived relationship between a good performance rating and a salary increase, then the instrumentality is 0.

Expectancy

Effort

Performance

Rewards

Instrumentality

Valence

Valence

Valence is the strength of an employee’s preference for a particular reward. Thus, salary increases, promotion, peer acceptance, recognition by supervisors, or any other reward might have more or less value to individual employees. Unlike expectancy and instrumentality, valences can be either positive or negative. If an employee has a strong preference for attaining a reward, valence is positive. At the other extreme, valence is negative. And if an employee is indifferent to a reward, valence is 0. The total range is from -1 to +1. Theoretically, a reward has a valence because it is related to an employee’s needs. Valence, then, provides a link to the need theories of motivation (Alderfer, Herzberg, Maslow, and McClelland).

Vroom suggests that motivation, expectancy, instrumentality, and valence are related to one another by the equation

Motivation = Expectancy x Instrumentality x Valence.

The multiplier effect in the equation is significant. It means that higher levels of motivation will result when expectancy, instrumentality, and valence are all high than when they are all low. The multiplier assumption of the theory also implies that if any one of the three factors is zero, the overall level of motivation is zero. Therefore, for example, even if an employee believes that his/her effort will result in performance, which will result in reward, motivation will be zero if the valence of the reward he/she expects to receive is zero (i.e. if he/she believes that the reward he/she will receive for his/her effort has no value to him/her.

Expectancy Theory in Practice: Key Managerial Implications

Expectancy theory has some important implications for motivating employees. The model provides guidelines for enhancing employee motivation by altering the individual’s effort-to-performance expectancy, performance-to-reward expectancy, and reward valences. Several practical implications of expectancy theory are described next (Greenberg, 2011; Hellriegel & Slocum, 2011; McShane & Von Glinow, 2011; Nadler & Lawler, 1983).

Effort-to-Performance Expectancy

Leaders should try to increase the belief that employees are capable of preforming the job successfully. Ways of doing this include: select people with the required skills and knowledge; provide the required training and clarify job requirements; provide sufficient time and resources; assign progressively more difficult tasks based on training; follow employees’ suggestions about ways to change their jobs; intervene and attempt to alleviate problems that may hinder effective performance; provide examples of employees who have mastered the task; and provide coaching to employees who lack self-confidence. In essence, leaders need to make the desired performance attainable.Good leaders not only make it clear to employees what is expected of them but also help them attain that level of performance.

Performance-to-Reward Expectancy

Leaders should try to increase the belief that good performance will result in valued rewards. Ways of doing so include: measure job performance accurately; describe clearly the rewards that will result from successful performance; describe how the employee’s rewards were based on past performance; provide examples of other employees whose good performance has resulted in higher rewards. In essence, leaders should link directly the specific performance they desire to the rewards desired by employees. It is important for employees to see clearly the reward process at work. Concrete acts must accompany statements of intent.

Compensation mechanisms can be a powerful incentive in linking performance to rewards. Compensation systems that reward people directly based on how well they perform their jobs are known as pay-for-performance plans (Berger, 2009). These may take such forms as “commission plans” used for sales personnel, “piece-rate systems” used for factory workers and field hands, and “incentive stock option (ISO) plans” for executives (Dunn, 2009; Mercer, Carpenter, & Wyman, 2010) and other employees (Baker, 2011). However, rewards linked to performance need not be monetary. Symbolic and verbal forms of recognition for good performance can be very effective as well (Markham, Dow, & McKee, 2002)

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Valences of Rewards

Leaders should try to increase the expected value of rewards resulting from desired performance. Ways of doing this include: distribute rewards that employees value, and individualize rewards. With a demographically diverse workforce, it is misleading to believe that all employees desire the same rewards. Some employees may value a promotion or a pay raise, whereas others may prefer additional vacation days, improved insurance benefits, day care, or elder-care facilities. Many companies have introduced cafeteria-style benefit plans—incentive systems that allow employees to select their fringe benefits from a menu of available alternatives. Another issue that may surface with expectancy theory is the need for leaders to minimize the presence of countervalent rewards—performance rewards that have negative valences. For example, group norms (see, e.g. the classic Hawthorne Studies, Mayo, 1933; Roethlisberger & Dickson, 1939) may cause some employees to perform their jobs at minimum levels even though formal rewards and the job itself would otherwise motivate them to perform at higher levels.

Conclusion

Vroom’s expectancy theory differs from the content theories of Maslow, Alderfer, Herzberg, and McClelland in that Vroom’s expectancy theory does not provide specific suggestions on what motivates organization members. Instead, Vroom’s theory provides a process of cognitive variables that reflects individual differences in work motivation. In this model, employees do not act simply because of strong internal drives, unmet needs, or the application of rewards. Instead, they are rational people whose beliefs, perceptions, and probability estimates influence their behavior. From a management standpoint, the expectancy theory has some important implications for motivating employees. It identifies several important things that can be done to motivate employees by altering the person’s effort-to-performance expectancy, performance-to-reward expectancy, and reward valences.

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