What is Organisational Behaviour (OB)? Definition, Level, History, Scope, Importance, Elements, Challenges and Opportunities

What is Organisational Behaviour (OB)?

In simple words, organizational behavior (OB) is the study of human behavior at work. It examines human behavior in an organization with regard to the interactions among individuals and groups of individuals. It assesses the political, psychological, and commercial conditions that affect the performance of an employee in an organization. It provides a humanistic approach to an organization by focusing on the human processes within the organization rather than restricting the focus to the functional or structural aspects of the organization.

Organizational Behaviour Definition

Stephen P. Robins defines “Organisational behavior as a systematic study of the actions and attitudes that people exhibit within organizations.”

There are broadly three levels of organizational behavior, which define the unique set of roles, responsibilities, and goals of people at each level of the organization.

Level of Organisational Behaviour

Individual Level

This level forms the base of organizational behavior and is related to the individuals working in an organization. It includes the study of organizational behavior at the individual level and deals with the perception, personality, learning, motivation, and attitudes of the employees in an organization.

Group Level

The next level in organizational behavior is the group level, which includes the study of group formation, team conflict, leadership, power, and politics. It helps in gaining information on how to improve teamwork, motivate employees, etc.

Organizational Level

The third level in organizational behavior is the organizational level, which includes the changes in the organization’s culture, and management and their effect on the group and individuals. The working conditions and stress-management techniques are also discussed at this level.

History of Organisational Behaviour

Organizational behavior is a key concept that is considered a fundamentally new practice in the field of management but is rather an adaptation of existing management facts. In fact, organizational behavior has its origins right from the start of human civilization when people began living in groups.

Several scholars contributed to the field of OB through their studies and research, such as the concept of scientific management in organizations given by Frederick.W. Taylor (1856-1915). The Scientific management theory evolved to specify the role of managers in Administrative management proposed by Henri Fayol (1841-1925).

Later, Max Weber (1864-1920) proposed Bureaucratic management, which focused on organizational structure, dividing organizations into hierarchies with clear lines of authority and control.

However, after the industrial revolution, OB gained importance with the development of new management concepts and practices. Elton Mayo is considered the initiator of OB owing to the series of Hawthorne experiments conducted by him and his team at Western Electrical Works in the US, from 1924 to 1932.

The Hawthorne Experiments

The first experiment was carried out in 1924-27, to assess the effect of different levels of illumination (lighting) on the productivity of labor. The brightness of the light was increased and decreased to discover its effect on the productivity level of the test group.

It was observed that labor productivity increased even with low levels of lighting, which meant that there were other factors affecting productivity apart from lighting.

These factors were identified as follows:

  • The social and psychological factors that affected labor productivity and job satisfaction.

  • The informal relations between employees influenced the employees’ behavior and performance in the organization.

  • The level of participation in the organizational decision-making process.

  • The belief amongst employees that the management was interested in their welfare.

  • The fact that employees were treated with respect and dignity.

  • Proper communication between superiors and subordinates.

  • Freedom of expression to workers.

The second experiment, which began in 1927, was carried out in the relay assembly department, where electromagnetic switches for telephone connections were produced. Western Electric manufactured about 7 million relays in a year.

As the speed of workers determined the overall production levels, the effects of factors, such as rest periods and work hours, were assessed in the experiment.

The third experiment was carried out in a separate test room with 6 women. 1 of the women prepared parts for the remaining 5 women to assemble. The women released the finished relays into a shaft, where a recording device punched a hole in the moving paper tape. The number of holes revealed the production rate for each worker.

These conclusions led to the emphasis on the human factor in the attainment of organizational goals and objectives. The Hawthorne experiments created a Hawthorne effect in organizations.

These experiments stressed the fact that the production increased or decreased not only due to the change in the working conditions but also due to the general feeling among workers that they were part of a team and that their welfare was important to the organization. It was in the late 1940s that organizational behavior emerged as a separate field of study.

Several approaches to organizational behavior were proposed in the course of time, which have been discussed later in the unit.

Scope of Organisational Behaviour

The scope of OB is continuously expanding owing to the rapid changes in the organizational set-up and the world economy. The field of OB is being applied to all areas that deal with human behavior.

The study of human behavior not only includes how an individual behaves in a certain situation but also why he or she behaves so and what would be the impact of his or her behavior on other individuals, organizations, and society as a whole.

The scope of organisational behaviour could be better explained by the contributions made by various disciplines, to understand human behavior, which is given as follows:


It is the scientific study of the mental functions and behavior of human beings. Human psychology helps in understanding motivation at work, interpersonal relationships, training needs, and the effect of personality traits on behavior.

Social Psychology

It is the scientific study to understand and explain how the behavior of individuals is affected by the actual, imagined, or implied presence of other human beings around them. Social psychology helps to gain an understanding of group behavior, social perception, prejudices, leadership, conflict, etc., in a group.

Industrial Psychology

It is the study of human behavior as employees. Industrial psychology helps in investigating workplace issues, such as employee selection, employee performance, and employee productivity.


It is the scientific study of the development, structure, and functioning of human society. Sociology helps in understanding the effect of industrialization on the social behavior of humans, labor as a class, etc.

Cultural Anthropology

It is the study of human cultures, beliefs, values, ideas, practices, etc., in the past and present. It is based on the knowledge gained from social sciences, biological sciences, humanities, and the natural sciences. Anthropology helps in understanding the effect of culture on organizational behavior.

Political Science

It is a social science discipline related to the study of the state and systems of government; the scientific analysis of political activity and behavior. Political science helps in providing insights into information regarding the organizational structure, hierarchy, power and politics, individual and group conflicts, and administration in an organization.


It is the study of the production, consumption, and transfer of wealth in nations. Economics helps in understanding the process of deciding among alternatives, the effect of economic policies on the growth of the organization, the allocation of resources, etc.


It is the study of the meanings of words and or phrases used in a language. Semantics helps in understanding and improving the communication process in an organization.


It is the study of the functions of living organisms and their body parts. It helps to understand the reasons for monotony, boredom, and lethargy among employees in an organization.

Apart from these disciplines, several other disciplines continue to contribute towards forming a general theory about human behavior at work, which marks the vast scope of organizational behavior.

Figure summarises the contribution of various disciplines to the field of OB:

Importance of Organisational Behaviour

The importance of OB in organizations can be understood with the help of OB’s major roles in an organization.

Attaining Organisational Effectiveness

Organizational effectiveness is a measure of an organization’s performance. OB helps in attaining organizational effectiveness by assessing the attitudes and behavior of employees in an organization, and how fulfilling human needs can make a significant impact on the organization’s overall performance.

Sustaining Changes in the Business Environment

Organizations need to adapt to the changes that occur in the business environment. Organizational behavior helps to understand how individuals accept the changes in policies and procedures brought about by the management to sustain the changes in the business environment.

Overcoming Competition

Organizations face fierce competition from other organizations. It is important to develop new strategies and policies to overcome competitive forces. However, changes in organizational strategies, policies, and practices can be resisted by the employees. OB helps to develop the human resource of an organization by molding their behavior for the benefit of the organization.

Fulfilling Human Needs

Employees in an organization work to accomplish certain personal objectives, the attainment of which motivates them further to serve the organization. Several theories have been laid down to establish a relationship between motivation theories and organizational behavior.

For example, an employee who has received rewards and recognition in the past may no longer be motivated to gain individual acknowledgments for his work but seeks opportunities to fulfill his self-actualization needs. OB helps to apply motivational theories in the organization for increasing employee productivity.

The following functions, of OB help in fulfilling employee needs:

  • Understanding employee objectives
  • Encouraging coordination among employees
  • Imparting training for self-development
  • Channelizing organizational objectives with employees needs to motivate them
  • Communicating organizational objectives to employees
  • Introducing new ideas

Elements of Organisational Behaviour

Organizational behavior studies human behavior at work. Most individuals spend a significant amount of their lifetime serving organizations. The majority of work takes place within a structured organization where individuals work together for the attainment of organizational objectives.

The behavior of an individual in an organization cannot be understood in isolation as it is influenced by a number of other associated factors. For example, a manager briefs his subordinates on an urgent task. The briefing would specify various aspects such as the aims and objectives, strategy to be used, a delegation of duties, details of other team members and associates, the technology to be used, etc.

The subordinates’ behavior towards the task will be an outcome of a combination of all these factors. Therefore, organizational behavior focuses on the individuals, groups, structure, technology, and environmental elements of an organization, which form the basis of human behavior at work.

The major elements of organizational behavior aredepicted in Figure :


This element includes the employees of an organization responsible for performing various tasks. Individuals in an organization working to fulfill organizational as well as individual objectives.

They are influenced by the organizational decisions and in turn affect the decision-making at various levels in the organization. The attitudes and behavior of people affect their relationships with other individuals in the organization.


This element refers to the framework of an organization, which determines the different levels of hierarchy, rules, regulations, and policies. A structure serves as a reference point to coordinate and control the activities performed within the organization.


This element refers to the technological advancements that affect the functioning of an organization. Organizations need to adapt to the rapid technological developments taking place in their external environment in order to stay ahead of the competition and perform various functions more efficiently.


This element includes the internal and external environs of an organization. An organization constantly interacts with its external environment, which includes society, government, customers, legal framework, and global influences. The external environment affects the internal strategies and functioning of the organization.

Let us discuss the two types of organizational environments in the following section:

Internal Environment

The internal environment includes the employees, management, and the corporate culture of an organization. The attitudes and behavior, perceptions, beliefs and values, and other attributes of employees affect the functioning of an organization. For example, an individual’s relationship with his peers greatly influences his participation in teamwork.

External Environment

The external environment includes the customers, suppliers, competitors, demographic factors, and political and legal systems surrounding an organization. The external environment directly or indirectly affects the functioning of an organization.

For example, the promptness of suppliers in the delivery of raw materials has a direct bearing on production. Changes in the economy, such as inflation, high-interest rates, etc., influence the organization’s decision-making.

Challenges and Opportunities of Organisational Behaviour

OB has gained considerable importance in contemporary organizations. However, several factors and issues have posed challenges in the field of OB. Nevertheless, challenges give birth to opportunities for creative solution. Some of challenges and opportunities of organisational behaviour are depicted in Figure

Responding to Globalisation

Globalization has led to the growth of multinational corporations (MNCs) making products and services available all over the world. Business nowadays is strictly driven by market demand irrespective of the boundaries and distances created between countries.

Organizations are no longer restricted to trade in a particular region. An organization’s products or services are traded across nations using technologies, such as mass communication, the Internet, e-commerce, etc. For example, Tata International is a leading distributor of Tata Motors vehicles in 11 countries in Africa.

However, globalization presents several issues for the organization such as human resource scarcity in underdeveloped nations, increased levels of competition, scarcity of resources, etc.Organizations need to overcome these issues to benefit from the process of globalization. For example, providing incentives and fringe benefits to employees can help managers to retain human resources in the organizations.

Managing Workforce Diversity

Globalization has resulted in human forces from different countries working jointly together resulting in workforce diversity. This has offered organizations the opportunity to recruit employees from different regions, gender, and ethnic backgrounds.

Organizations are becoming more heterogeneous in their human resource, however, the managers are confronted with the challenge to pacify the differences, retain employees and promote harmony in the workplace. For example, managers prefer hiring bilingual employees who can mediate and reduce language and communication barriers among employees from different cultural backgrounds.

Improving Quality and Productivity

Increased competition has enhanced the focus on quality and productivity in organizations. Managers are aware that improvement in quality and productivity cannot be achieved without the involvement of the employees. OB stresses on the importance of motivating employees to accept changes and accomplish organizational objectives.

Developing Employee Skills

Changes in the external environment, organizational structure, and increasing competition require that the knowledge and skill base of employees is constantly upgraded. Unless employees and executives are equipped to possess the required knowledge and skills, organizational objectives cannot be achieved. The development of skills and knowledge of employees can be achieved through training and development programs, career development programs, induction, socialization, etc.

Promoting Innovation and Change

In order to overcome competition, organizations constantly improve their quality and develop innovative products and services.

For example, Compaq offers powerful personal computers, which are more affordable than those offered by Apple. Similarly, Tata Nano brought about a revolution in the automobile sector by creating the cheapest car for the Indian middle class. OB is important to offer employees, the freedom to showcase their knowledge and skills and present new ideas for innovation and change.

Coping With Temporariness

Various external forces, such as technological factors, political and economic factors, the introduction of e-commerce, etc., result in constant organizational change. Earlier, organizations saw long periods of stability, interrupted by a short period of change. However, existing organizations observe continuous changes in their processes.

Organizations face the problem of temporariness in all areas. The challenge lies in updating the knowledge and skills of employees to face the changes.

Empowering People

Empowerment refers to delegating powers and responsibilities to employees by eliciting some degree of ownership among them. OB stresses the fact that encouraging employees to participate in decision-making enhances their commitment to working, significantly.

Therefore, many organizations are promoting self-managed teams, where employees operate largely without seniors. This reshapes the relationship between managers and employees. Managers mainly act as coaches, advisors, and facilitators to help employees in completing their assignments with minimal guidance.

Encouraging Ethical Behaviour

Employees face ethical dilemmas at the workplace with increasing complexity in the completion of the assigned activities. For example, discovering the discharge of untreated effluents into the river poses an ethical dilemma to a chemical industry worker of whether to whistle blow or not.

This may lead to demotivated employees and dissatisfaction. Managers need to encourage an ethically healthy climate for the employees to avoid ambiguity regarding what constitutes right or wrong behavior.

Scientific Aspects of Organisational Behaviour

Organizational behavior is a scientific discipline with several research development works adding to its knowledge base. OB is an applied science, as the knowledge about effective ways to manage human behavior in one organization is applicable to several other organizations. The scientific aspects of organizational behavior can help managers to understand and manage some contemporary issues.

Diversity at workplace

Multinational organizations, strategic alliances, and joint ventures between global organizations have brought people together at workplaces. This often results in cross-cultural differences, gender biases, and age gaps between employees.

The scientific approach of OB, which advocates reorganization, readjustments, and employee training to enhance compatibility among employees and managers, can overcome diversity in the workplace. Managers must be able to utilize the knowledge of OB to address diversity issues in order to benefit from the considerable opportunities that a diverse workforce affords.

Employee Trust in Organisation

Downsizing, restructuring, and reengineering techniques to overcome global competition and technological change decrease the trust, morale, job satisfaction, and organizational commitment and loyalties of employees.

The scientific approach of OB offers many possible solutions to these issues, thereby gaining the trust of the employees and establishing positive employee-organization relationships.

For example, keeping employees informed of the possible changes in organizational structure, technology, etc., helps them in preparing themselves and increases employees’ trust in the organization.

Quality and Flexibility at Work

To overcome competition, organizations attempt to focus on quality for the continuous improvement of products and services. Apart from quality, organizations also promote flexibility to adapt to constant changes in external and internal environments.

The scientific approach of OB helps to attain quality and flexibility through the continuous involvement of employees and teamwork. For example, several IT organizations like Infosys, and Tata Consultancy Services sponsor their employees to attain knowledge about the latest technologies from study centers or international workshops.

Employee Selection and Retention

The scientific approach of OB assists organizations to improve their recruitment and retention procedures. For example, good job design, appropriate training of the workers, opportunities for learning, recognition, and incentives help in the effective selection and retention of employees.

Various scientific types of research on OB suggest that proper job design, employee selection, training, and incentives increase employee productivity.

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