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PTU SYLLABUS
Organizational Behavior: Definition of OB, Contributing discipline to OB. Challenges and Opportunities for OB. Foundations of Individual Behavior: Biographical characteristics, Ability, and Learning. Values, Attitudes and Job Satisfaction Personality and Emotions Perception

HAND BOOK CONTENTS

Chapter 1.1: Introduction to Organization Behavior
Meaning and Definition of Organizational Behavior Determinants of Organizational Behavior Limitations of Organizational Behavior Basic Approaches of OB Models of Organizational Behavior Types of Organizational Behavior Models Contribution of Various Disciplines/Role of Behavioral Science in Management Challenges and Opportunities for OB

Chapter 1.2: Behavior

Foundation

of

Individual

Individual Behavior Meaning of Individual Behavior Foundation of Individual Behavior Personal Factors/ Biographical Factors Environmental Factors Organizational Factors Psychological Factors Models of Individual Behavior Ability Types of Ability Learning Meaning and Definition of Learning Learning Process Theories of Learning

Chapter 1.3: Values, Attitudes and Job Satisfaction

Values Meaning and Definition of Values Sources of Values System Attitudes Meaning and Definition of Attitude Sources of Attitudes Formation of Attitude Attitude Theories and Models Job Satisfaction Meaning and Definition of Job Satisfaction Determinants of Job Satisfaction Theories of Job Satisfaction

Chapter 1.4: Personality and Emotions

Meaning and Definition of Personality
Determinants of Personality Personality Types Theories of Personality Emotion Meaning of Emotion Determinants of Emotions Theories of Emotion

Chapter 1.5: Perception

Meaning and Definition of Perception Components of Perception Perceptual Process

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CHAPTER 1.1

Introduction to Organization Behavior

ORGANIZATIONAL BEHAVIOR
Meaning and Definition of Organizational Behavior
Human behavior in organization is determined partly by the requirements of the formal organization and partly by the personal systems of the individuals forming the organization. The behavior that emerges from this interaction defines the field of the organizational behavior. Organizational behavior is the study and application of knowledge about how peopleas individuals and as groupsact within organizations. It strives to identify ways in which people can act more effectively. Organizational behavior is a scientific discipline in which a large number of research studies and conceptual developments are constantly adding to its knowledge base. It is also an applied science, in that information about effective practices in one organization is being extended to many others. According to Fred Luthans Organizational behavior is understanding, predicting and controlling human behavior at work. According to Stephen Robins OB is a field of study that investigates the impact that individuals, groups and structure have on behavior in organizations for the purpose of applying such knowledge towards improving an organizations effectiveness. According to Callahan, Organizational behavior is subset of management activities concerned with understanding, predicting and influencing individual behavior in organizational setting.

Assumptions of Organizational Behavior

The study of Organization Behavior has certain basic assumptions. They are: 1) An industrial enterprise is an organization of people; 2) These people must be motivated to work effectively; 3) The goals of the employee and the employer may not necessarily coincide; 4) The policies and procedures adopted in an enterprise may influence people in the directions not always foreseen by the policy makers.

Goals of Organizational Behavior

Most sciences share four goalsto describe, understand, predict, and control some phenomenon. Organizational behavior also embraces these goals. 1) Describe People Behavior: The first objective is to describe, systematically, how people behave under a variety of conditions. Achieving this goal allows managers to communicate about human behavior at work using a common language. 2) Understand People Behavior: A second goal is to understand why people behave as they do. Managers would be highly frustrated if they could only talk about behaviors of their employees, but not understand the reasons behind those actions. Therefore, inquisitive managers learn to probe for underlying explanations. 3) Predict Employee Behavior: Predicting future employee behavior is another goal of organizational behavior. Ideally, managers would have the capacity to predict which employees might be dedicated and productive or which ones might be absent, tardy, or disruptive on a certain day (so that managers could take preventive actions). 4) Control Human Activity: The final goal of organizational behavior is to control (at least partially) and develop some human activity at work. Since managers are held responsible for performance outcomes, they are vitally interested in being able to make an impact on employee behavior, skill development, team effort, and productivity. Managers need to be able to improve results through the actions they and their employees take, and organizational behavior can aid them in their pursuit of this goal.

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Some people may fear that the tools of organizational behavior will be used to limit their freedom and take away their rights. Although that scenario is possible, it is not likely, for the actions of most managers today are subject to intense scrutiny. Managers need to remember that organizational behavior is a human tool for human benefit. It applies broadly to the behavior of people in all types of organizations, such as businesses, government, schools, and service organizations. Wherever organizations are, there is a need to describe, understand, predict, and better manage human behavior.

Features/ Nature of Organizational Behavior

The essential characteristics of organizational behavior are as follows: i) An Integral Part of Management: OB is a part of general management and not the whole of management. It represents behavior approach to management. It is significant to note that because of the importance of human behavior in organizations, OB has assumed the status of a distinct field of study. ii) A Field of Study: OB is a field of study backed by a body of theory, research and application associated with a growing concern for people at the workplace. Its study helps in understanding the human behavior in work organizations. It inculcates creative thinking among the managers to solve human problems in organizations. iii) Inter-Disciplinary Approach: The field of organizational behavior is heavily influenced by several other behavior sciences and social sciences. The prominent among these are psychology, sociology and anthropology. Organizational behavior draws a rich array of research from these disciplines. What makes it a field in its own right is the attempt to integrate various aspects and levels of behavior. iv) Levels of Analysis: OB involves three levels of analysis of behavior individual behavior, group behavior and behavior of the organization itself. It helps in demolishing incorrect assumptions one may hold about behavior. It provides a rational thinking about people. v) Goal-Oriented: OB is an action-oriented and goal-directed discipline. The major goals of organizational behavior are to understand, explain and predict human behavior in the organizational context so that it may be moulded into result-yielding situations. It provides a rational thinking about people and their behavior. vi) Human Tool: OB is a human tool for human benefit. It helps in understanding and predicting the behavior of individuals. It provides generalizations that managers can use to anticipate the effects of certain actions on human behavior. vii) Science and Art: OB is both a science as well as an art. The systematic knowledge about human behavior is a science. The application of behavioral knowledge and skills clearly learns towards being an art. However, organization behavior is not an exact science like physics or chemistry. It cannot provide specific answers to all organizational problems. The exact prediction of behavior of people in organizations is also not possible. It is possible to predict relationships between variables on a broad scale, but it is difficult to apply predictive models in all situations. viii) Satisfaction of Employees Needs: OB seeks to fulfill employees needs and aspirations. Every employee in the organization wants to fulfill his needs through organizational activities. It is the organizations responsibility to provide congenial climate in the organization so that people may get need satisfaction and the organization may attain its objectives. Thus, both organization and individuals can be benefited by each other. ix) Humanistic and Optimistic: OB focuses the attention on people from humanistic point of view. It is based on the belief that needs and motivation of people are of high concern. There is an acceptance of the value of the individual as thinking, feeling organism, and without these considerations the organizations may not be fully operational as a social entity. Further, there is optimism about the innate potential of man to be independent, creative, productive, and capable of contributing positively to the objectives of the organization. The man will actualize these potentials if given proper conditions and environments. x) Oriented towards Organizational Objectives: OB, being an applied science and emphasizing human aspect of the organization, is oriented towards organizational objectives. Though an organization may have several objectives and sometimes conflicting with individual objectives, it should not be understood that OB only emphasizes the achievement of individual objectives at the cost of organizational objectives. In fact, OB tries to integrate two types of objectives so that both are achieved simultaneously. For this purpose, it suggests various behavioral approaches. xi) Total Systems Approach: OB is a total systems approach wherein the living system of an organization is viewed as an enlargement of a man. The systems approach is an integrative approach which takes into account all the variables affecting organizational functioning. In fact, the systems thinking in organizational analysis has been developed by behavioral scientists. Behavioral science, while analyzing organizational behavior, does not take human being in isolation but as the product of socio-psychological factors. Thus, his behavior can be analyzed keeping in view his psychological framework, interpersonal orientation, group influence, and social and cultural factors. Thus mans nature is quite complex and OB by applying systems approach tries to find solution of this complexity.

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Scope of Organizational Behavior

The scope of OB may be summed up in the words of the S.P. Robbins as follows: OB is a field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organizations effectiveness. 1) Increasing Organizational Effectiveness: Organizational behavior is a field of study. It is relatively a new discipline which has a distinct area of expertise with a well-defined body of knowledge. OB studies three determinants of behavior in organizations: individuals, groups and structure. The behavior of individuals and groups and the impact of structural design on the behavior of individuals and groups are the major concern of organizational behavior. The knowledge of all these is applied to make the organization work more effectively. 2) Understanding Human Behavior in an Organizational Setting Organizational behavior is concerned with understanding and describing human behavior in an organizational setting. It seeks to shed light on the complex human factor in organizations by identifying causes and effects of human behavior. It is called a social science because its main concern is people and their behavior. It is the field of study that integrates behavioral sciences like psychology, sociology and anthropology for the study of human behavior in and around organizations.

Determinants of Organizational Behavior / Key Forces Affecting OB / Elements of OB

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-ordinated 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.
People Individual Group

Environment Government Competition Social pressures

Structure Jobs Relationships

Organizational behavior

Technology Machinery Computer hardware and software Key Forces Affecting Organizational Behavior

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 organizations. 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 organizational 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-ordinated manner. The structure relates to authority-responsibility relationships.

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3) Technology: Technology provides the resources with which people work and affects the tasks that they perform. They cannot accomplish much with their bare hands, so they build buildings, design machines, create work processes, and assemble resources. The technology used has a significant influence on working relationships. The great benefit of technology is that it allows people to do more and better work, but it also restricts people in various ways. It has costs as well as benefits. 4) Environment: All organizations operate within an internal and an external environment. A single organization does not exist alone. It is part of a large system that contains many other elements, such as government, the family, and other organizations. Numerous changes in the environment create demands on organizations. Individual organizations, such as a factory or a school, cannot escape being influenced by this external environment. It influences the attitudes of people, affects working conditions, and provides competition for resources and power. It must be considered in the study of human behavior in organizations.

Fundamental Concept of Organizational Behavior

Every discipline of study has certain set of fundamental concepts. These concepts are priorate. They do not lend themselves to the question why so. They are something, which have to be accepted and not questioned. They are the foundation stones on which the entire edifice of the discipline is developed. In the discipline of Accountancy the fundamental concept is for every debit entry there will be a credit entry.
Individual Differences Whole Person OB Caused Behavior Human Dignity Holistic Concept Mutuality of interest Social Systems

Foundation of OB The discipline of Organizational Behavior has fundamental concepts revolving round the (a) nature of people and (b) the nature of the organization. 1) The Nature of People With regard to people, there are six basic concepts: i) Individual Difference: People have much in common (they become excited by the arrival of a new child in the family or they are grieved by the loss of a loved one), but each person in the world is also individually different. Each person is different from all others, probably in millions of ways, just as each persons DNA profile is different, as far as we know. And these differences are usually substantial rather than meaningless. All people are different, and this diversity needs to be recognized and viewed as a valuable asset to organizations. Individual differences mean that management can motivate employees best by treating them differently. Individual differences require that a managers approach to employees be individual, not statistical. This belief that each person is different from all others is typically called the law of individual differences. ii) Perception: People look at the world and see things differently. Even when presented with the same object, two people may view it in two different ways. Their views of their objective environment is filtered by perception, which is the unique way in which each person sees, organizes, and interprets things. People use an organized framework that they have built out of lifetime experiences and accumulated values. They tend to act on the basis of their perceptions. Essentially each person seems to be saying, I react not to an objective world, but to a world judged in terms of my own beliefs, values, and expectations. This way of reacting leads to the process of selective perception, in which people tend to pay attention to those features of their work environment which are consistent with or which reinforce their own expectations. Selective perceptions can not only cause misinterpretations of single events at work, but also lead to future rigidity in the search for new experiences.

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iii) Whole Person: When an individual is appointed, his/her skill alone is not hired, his/her social background, likes and dislikes, pride and prejudices-are also hired. A persons family life cannot be separated from his or her work life. It is for this reason that managers should endeavor to make the workplace a home away from home. They not only strive hard to develop a better employee out of a worker, but also a better person in terms of growth and fulfillment. iv) Caused Behavior: From psychology we learn that normal behavior has certain causes. These may relate to a persons needs and/or the consequences that result from acts. In the case of needs, people are motivated not by what we think they ought to have but by what they, themselves want. To an outside observer, a persons needs may be unrealistic, but they are still controlling. This fact leaves management with two basic ways to motivate people. It can show them how certain actions will increase their need fulfillment, or it can threaten decreased need fulfillment if they follow an undesirable course of action. Clearly, a path toward increased need fulfillment is the better approach. Motivation is essential to the operation of organizational. v) Desire for Involvement: People wish to feel good about them. This desire is reflected in their drive for self-efficacy, or the belief that one has the necessary capabilities to perform a task, fulfill role expectations, make a meaningful contribution, or meet challenging situation successfully. They hunger for the chance to share what they know and to learn from the experience. Organizations need to provide opportunities for meaningful involvement, a practice which will result in mutual benefit for both parties. vi) Human Dignity: Because of a higher order, people want to be treated with respect and dignity. The concept tells that every person should be respected simply because he happens to be an employee just as the manager is. They refuse to accept the old idea that they are simply economic tools. They want to be valued for their skills and abilities and to be provided with opportunities to develop themselves. 2) The Nature of the Organization i) Organization is a Social System: An organization is a social system which co-ordinates the activities of its members for the achievement of common goals. It is a part of the society and consists of people who are social beings. People have many psychological needs and play different types of roles. Their behavior is influenced not only by their individual drives, but also by the groups of which they are members. That is why; organizational behavior is dynamic in nature. A change in the social system is reflected in the organizational behavior through the behavior of individuals and groups. ii) Mutuality of Interests: Organizations need people, and people need organizations. Organizations have a human purpose. They are formed and maintained on the basis of some mutuality of interests among the participants. Organizations help people achieve their own personal objectives at the same time people help organizations achieve its objectives. It is a symbiotic relation. Everybody must bear in mind that the organizational and employees interests are intertwined in such a way that if the interests of one suffer the interests of another do suffer. Both the employees and organization can prosper if they help each other to prosper. Mutual interest provides a super-ordinate goalone that can be attained only through the integrated efforts of individuals and their employers. iii) Ethics: In order to attract and retain valuable employees in an era in which good workers are constantly recruited away, ethical treatment is necessary. To succeed, organizations must treat employees in an ethical fashion. More and more firms are recognizing this need and are responding with a variety of programs to ensure a higher standard ethical performance by managers and employees alike. Companies have established codes of ethics publicized statements of ethical values, provided ethics training, rewarded employees for notable ethical behavior, publicized positive role models, and set up internal procedures to handle misconduct. They have began to recognize that since organizational behavior always involves people, ethical philosophy is involved in one way or another in each action they take. When the organizations goals and actions are ethical, mutuality creates a triple reward system in which individual, organizational, and social objectives are all met. People find more satisfaction in work when there is cooperation and teamwork. They are learning, growing, and contributing. The organization is also more successful, because it operates more effectively.

Conceptual Framework for Organizational Behavior

Organizational behavior consists of a very broad body of knowledge with permeable boundaries. A conceptual framework for understanding organizational behavior is presented by Dubrin consisting of four core propositions, which are: i) Organizational Behavior Follows the Principles of Human Behavior: Human beings in the organization are governed by the same physiological mechanisms both on and off the job. Internal mechanisms provide people an extra spurt of the appropriate harmone during times of stress, whether this stress is job or nonjob related. Similarly, people at work are governed by the same psychological principles both inside and outside organizational life. Organizational behavior is human behavior in a particular setting.

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ii)

Organizational Behavior is Situational: Psychologists and other behavioral scientists have emphasized for years that individual behavior is a function of the interaction between personal characteristics of the individual and environmental variables. In order to understand a persons behavior, the pressures placed upon him in a given situation must be understood. Aggressive behaviors, for example, surfaces when a normally calm individual is forced into constant and close physical proximity with other people.

iii) Organizational Behavior is Based on System Approach: System thinking is an integral part of modern organization theory. Organizations are viewed as complex systems consisting of inter-related and inter-locking sub-systems. Changes in any part of the system have both known and unknown consequences in other parts of the system. When modifications in the system lead to desired, positive consequences, they are called functions. Unintended consequences in response to modifications in the system are called dysfunctions. According to the systems point of view, every interaction has both functions and dysfunctions. iv) Organizational Behavior Represents a Constant Interaction between Structure and Process Variables: Structure refers to organizational design and positions. Process refers to what happens, with or without the structure. A retail store may use both formal advertising and public relations functions (structure) to help build its image in the community. However, most of the stores image is formed by words of mouth from satisfied and dissatisfied customers and employees (process variables). Processes emerging within a group or organization are often evident only after they are heading towards completion. It is almost structural requirement in any organization that managers deal with the discontents of their people, yet employees sometimes find other processes for handling them.

Need of Studying Organizational Behavior/Importance of Organizational Behavior

Organizational behavior is an exciting field of study, which can help the managers in effective handling of human resources for the realization of organizational goals. Specifically, it helps in understanding and managing human behavior as discussed below: 1) Understanding of Self and Others: The behavioral sciences help an individual understand himself and others better. This will improve interpersonal relations considerably. Of particular significance are topics like attitude, perception, leadership, communication, transactional analysis and conflict. An understanding of these will be very helpful to the individual in shaping his personality and dealing with others effectively. Organization behavior is a useful tool of understanding human behavior in all the directions in which human beings interact. Human behavior can be studied at the individual level, inter-personal level, and group level and inter-group level as discussed below: i) Individual Behavior: The main focus of psychology is the study of individual behavior. It tries to analyze why and how an individual behaves in a particular way. Human behavior is affected by a number of psychological, social and cultural factors. Organizational behavior integrates these factors to understand individual behavior. ii) Inter-Personal Behavior: Inter-personal interaction takes place because of individuals natural desire of socialization. Behavioral sciences provide means for understanding the interpersonal relations in the organization. By studying the behavioral sciences, an individual can understand himself and others better. This will help him to improve interpersonal relations considerably. Understanding of inter-personal behavior is facilitated by the study of attitude, perception, role analysis, transactional analysis, etc.

iii) Group Behavior: An individual behaves differently as an individual and as a member of the group as revealed by Hawthorne Studies. His behavior is often modified by group norms. Therefore, study of group dynamics has assumed greater importance in organizational behavior. It helps in knowing how groups are formed, why people join groups and how groups exert pressures on the individuals, groups and management. Management can use group dynamics for better communication, effective leadership and building high morale. 2) Motivation of Human Resources: The job of a manager in an organization is to get things done through others. He will be successful in his job when he can motivate his subordinates to work for organizational goals. Organizational behavior will help the manager understand the needs and desires of the subordinates and other forces, which affect their motivation. He can use suitable incentives to motivate the subordinates. 3) Effective Communication: Behavioral sciences help in improving communication in the organization. It is communication through which people come in contact with each other. To achieve organizational effectiveness, the communication must be effective. The communication process and how it works in interpersonal dynamics is evaluated by behavioral sciences. The analysis of factors that influence communication will suggest measures to make communication effective.

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4) Effective Organizational Climate: Behavioral sciences suggest the creation of organizational climate in totality rather than merely improving the physiological conditions or increasing employee satisfaction by changing isolated work-process. Satisfactory working conditions, adequate compensation, and better equipments for the job are viewed as only a small effort in creating a sound organization climate. Of greater importance are the creation of an atmosphere of participative leadership, two-way communication, the opportunities for the realization of personal goals, congenial relations with others at the work-place, and the like. 5) Good Human Relations: Organizational behavior can be useful to achieve and maintain cordial relations in the organization. If an employee is slow in his work, it is not always because of denial of promotion or poor work environment. Similarly, if the union gives a strike call, the basic issue may not be a demand for more wages, higher bonus, a better canteen or entertainment facilities. Reluctance of the management to talk to union leaders about workers problems might provoke them to give a strike call. In other words, relations between management and employees are quite often strained for reasons, which are psychological and not rational. Organizational behavior helps understand the causes of poor industrial relations in the organization and suggest suitable measures for their improvement. 6) Introduction of Change in the Organization: Change is the law of nature. Organizations have also to undergo changes as a result of technological, social, political and other environment. Changes are often resisted by the organizational members. This problem can be successfully handled by the use of behavioral science knowledge. Change can be introduced through group dynamics and by proper education of employees through effective communication. The benefits of change should be highlighted and information should be shared with all those likely to be affected by the change.

Limitations of Organizational Behavior

Improved organizational behavior will not (by itself) solve unemployment. It will not make up for our own deficiencies. It cannot substitute for poor planning, inept organizing, or inadequate controls. It is only one of many systems operating within a larger social system. There are three major limitations of OB (behavioral bias, diminishing returns, and unethical manipulation). 1) Behavioral Bias People who lack system understanding and become superficially infatuated with OB may develop a behavioral bias, which gives them a narrow viewpoint that emphasizes satisfying employee experiences while overlooking the broader system of the organization in relation to all its publics. Concern for employees can be so greatly overdone that the original purpose of bringing people togetherproductive organizational outputs for society is lost. Sound organizational behavior should help achieve organizational purposes, not replace them. The person who ignores the needs of people as consumers of organizational outputs while championing employee needs is misapplying the ideas of organizational behavior. To assume that the objective of OB is simply to create a satisfied workforce is a mistake, for that goal will not automatically translate into new products and outstanding customer service. Moreover, the person who pushes production outputs without regard for employee needs is misapplying organizational behavior. Sound organizational behavior recognizes a social system in which many types of human needs are served in many ways. Behavioral bias can be so misapplied that it harms employees as well as the organization. Some people, in spite of their good intentions, so overwhelm others with care that the recipients of such care are emotionally smothered and reduced to dependentand unproductiveindignity. They become content, not fulfilled. They find excuses for failure rather than take responsibility for progress. They lack self-discipline and self-respect. As happened with scientific management years ago, concern for people can be misapplied by overeager partisans until it becomes harmful. 2) The Law of Diminishing Returns Overemphasis on an organizational behavior practice may produce negative results, as indicated by the law of diminishing returns.8 It is a limiting factor in organizational behavior the same way that it is in economics. In economics the law of diminishing returns refers to a declining amount of extra outputs when more of a desirable input is added to an economic situation. After a certain point, the output from each unit of added input tends to become smaller. The added output eventually may reach zero and even continue to decline when more units of input are added. The law of diminishing returns in organizational behavior works in a similar way. It states that at some point, increases of a desirable practice produce declining returns, eventually zero returns, and then negative returns as more increases are added. The concept implies that for any situation there is an optimum amount of a desirable practice, such as recognition or participation. When that point is exceeded, there is a decline in returns. In other words, the fact that a practice is desirable does not mean that more of it is more desirable.

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Diminishing returns may not apply to every human situation, but the idea applies so widely that it is of general use. Furthermore, the exact point at which an application becomes excessive will vary with the circumstances, but an excess can be reached with nearly any practice. Why does the law of diminishing returns exist? Essentially, it is a system concept. It applies because of the complex system relationships of many variables in a situation. The facts state that when an excess of one variable develops, although that variable is desirable, it tends to restrict the operating benefits of other variables so substantially that net effectiveness declines. For example, too much security may lead to less employee initiative and growth. This relationship shows that organizational effectiveness is achieved not by maximizing one human variable but by combining all system variables together in a balanced way. 3) Unethical Manipulation of People A significant concern about organizational behavior is that its knowledge and techniques can be used to manipulate people unethically as well as to help them develop their potential. People who lack respect for the basic dignity of the human being could learn organizational behavior ideas and use them for selfish ends. They could use what they know about motivation or communication in the manipulation of people without regard for human welfare. People who lack ethical values could use people in unethical ways. The philosophy of organizational behavior is supportive and oriented toward human resources. It seeks to improve the human environment and help people grow toward their potential. However, the knowledge and techniques of this subject may be used for negative as well as positive consequences. This possibility is true of knowledge in almost any field, so it is no special limitation of organizational behavior. Nevertheless, we must be cautious so that what is known about people is not used to manipulate them. The possibility of manipulation means that people in power in organizations must maintain high ethical and moral integrity and not misuse their power. Without ethical leadership, the new knowledge that is learned about people becomes a dangerous instrument for possible misuse. Ethical leadership will recognize such principles as the following: i) Social Responsibility: Responsibility to others arises whenever people have power in an organization. ii) Open Communication: The organization will operate as a two-way, open system, with open receipt of inputs from people and open disclosure of its operations to them. iii) Cost-benefit Analysis: In addition to economic costs and benefits, human and social costs and benefits of an activity will be analyzed in determining whether to proceed with the activity. As the general population learns more about organizational behavior, it will be more difficult to manipulate people, but the possibility is always there. That is why society desperately needs ethical leaders.

Basic Approaches of OB
1) Human Resources (Supportive) Approach: The human resources approach is developmental. It is concerned with the growth and development of people toward higher levels of competency, creativity, and fulfillment, because people are the central resource in any organization and any society. The nature of the human resources approach can be understood by comparing it with the traditional management approach of the early 1900s. In the traditional approach, managers decided what should be done and then closely controlled employees to ensure task performance. Management was directive and controlling. The human resources approach, on the other hand, is supportive. It helps employees become better, more responsible people, and then it tries to create a climate in which they may contribute to the limits of their improved abilities. It assumes that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Work satisfaction also will be a direct result when employees make fuller use of their abilities. Essentially, the human resources approach means that better people achieve better results. 2) Contingency Approach: The contingency approach also is more interdisciplinary, more system-oriented, and more research-oriented than the traditional approach. Thus it helps managers use in the most appropriate manner all the current knowledge about people in organizations. Traditional management searched for principles to provide one best way of managing. There was a correct way to organize, to delegate, and to divide work. The correct way applied regardless of the type of organization or situation involved. Management principles were considered to be universal. As the field of organizational behavior developed, many of its followers initially supported the concept of universality. Behavioral ideas were supposed to apply in any type of situation. One example was the belief that employee-oriented leadership should consistently be better than task-oriented leadership, whatever the circumstances. An occasional exception might be admitted, but in general early ideas were applied in a universal manner. The more accepted view in the twenty-first century is that few across-theboard concepts apply in all instances. Situations are much more complex than first perceived, and the different variables may require different behavioral approaches. The result is the contingency approach to organizational behavior, which means that different situations require different behavioral practices for greatest effectiveness.

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3) Results-Oriented Approach: All organizations need to achieve some relevant outcomes, or results. A dominant goal for many is to be productive, so this results orientation is a common thread woven through organizational behavior. Productivity, at its simplest, is a ratio that compares units of output with units of input, often against a predetermined standard. If more outputs can be produced from the same amount of inputs, productivity is improved. Or if fewer inputs can be used to produce the same amount of outputs, productivity has increased. Productivity often is measured in terms of economic inputs and outputs, but human and social inputs and outputs also are important. For Example: If better organizational behavior can improve job satisfaction, a human output or result occurs. In the same manner, when employee development programs lead to a by-product of better citizens in a community, a valuable social result occurs. 4) Systems Approach: Treating an organization as a system is critically important to its success. The fundamental elements of the systems approach include: i) There are many variables within a system. ii) The parts of a system are interdependent (one part affects many others parts and is affected by many in a complex way). iii) There are many subsystems contained within larger systems. iv) Systems generally require inputs, engage in some process, and produce outputs. v) The input-process-output mechanism is cyclical and self-sustaining (it is ongoing, repetitive, and uses feedback to adjust itself). vi) Systems produce both positive and negative results. vii) Systems produce both intended and unintended consequences. viii) The consequences of systems may be short-term, long-term, or both.

Models of Organizational Behavior

Meaning and Overview
Organizational behavior is concerned with understanding, predicting and regulating human behavior in organizations. A model describes the abstraction of reality and simplifies the representation of real life phenomenon called organizational behavior. Models are framework of descriptions of how things work and are also known as paradigms. Figure below presents the skeleton on which we will construct our OB Model. It propose that there are three levels of analysis in OB and that , we move from the individual level to the organizational systems level, we add systematically to our understanding of blocks, each level is constructed on the previous level
Human Behavior Organization System Level Group Level Individual Level OB at Different Levels Individual Behavior 1) Perception 2) Personality Attitudes 3) Values, and Job satisfaction 4) Motivation 5) Learning Group Behavior 1) Group Dynamics 2) Teamwork 3) Power and Politics 4) Communication 5) Leadership 6) Decision-Making Organization Factors 1) Organization Theory 2) Organization Design and Structure 3) Organizational Culture 4) Organizational Effectiveness

Basic OB Model

Figure : Basic OB Model

According to Greenberg and Baron, Organizational behavior is the field that seeks knowledge of behavior in organizational settings by systematically studying individual, group and organizational processes. Thus, organizational behavior focuses on three levels of analysis, viz., (i) individuals, (ii) groups, and (iii) organization. 1) Behavior at the Individual Level: Organizations are made up of their individual members. The individual is a central feature of organizational behavior and a necessary part of any behavioral situation, whether acting in isolation or as part of a group, in response to expectations of the organization, or as a result of influence of the external environment.

Organizational Behavior

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The behavior of individuals is a complex phenomenon and is affected by a large number of factors such as personality, attitudes, perception, learning and motivation, social, cultural and other factors. OB integrates these factors to provide simplicity in understanding human behavior. The study of behavior of an individual working in the organization is also known as micro organizational behavior. 2) Behavior at the Group Level: Though people interact with the outside world at their individual level, their behavior pattern is also influenced by the groups to which they belong. Several research studies have shown people behave differently in groups than as individuals. Several factors influence the behavior of groups such as group goals, norms, communication, leadership, cohesiveness, etc. Understanding of group dynamics is essential to reduce conflicts and improve morale and productivity. This is also known as meso organization behavior. 3) Behavior at the Organization Level: An organization is a system composed of several interdependent individuals and groups. Individuals and groups operate within the structure of formal organization. They participate in shaping the culture of the organization and also in organization development. At times, they may resist change, while they may fight for change in certain situations. Stress caused by the activities of individuals and groups has to be managed at the organizational, group and individual levels. The study of behavior from the perspective of the whole organization is also referred to as macro organizational behavior.

Types of Organizational Behavior Models

Organizations differ in the quality of the systems they develop and maintaining and in the results they achieve. Varying results are substantially caused by different models of organizational behavior. These models constitute the belief system that dominates managements thought and affects managements actions in each organization. Therefore, it is highly important that managers recognize the nature, significance, and effectiveness of their own models, as well as the models of others around them. Four models of organization behavior are: 1) Autocratic Model: Might is right is the motto of the theory. It depends upon power. Those who are in command must have power to demand. Employees are to follow their boss otherwise they are to be penalized. The theory is based on the assumption that only management knows what is wrong and what is right and employees are to follow orders without any argument. Management thinks that employees are passive and resistant to organizational needs. It is just like theory X developed by McGregor. Under autocratic conditions the employee orientation is obedience to a boss, not respect for a manager. The psychological result for employees is dependence on their boss, whose power to hire, fire, and perspire they is almost absolute. The boss pays minimum wages because minimum performance is given by employees. They are willing to give minimum performancethough sometimes reluctantlybecause they must satisfy subsistence needs for themselves and their families. The autocratic model was an acceptable approach to guide managerial behavior when there were no wellknown alternatives, and it still can be useful under some conditions. 2) Custodial Model: Workers being managed under the autocratic model often feel insecurity and frustration. They may even show aggression towards their boss and their families and neighbors. That is why progressive managers felt that there must be some way to develop better employee relationships so that insecurity and frustration could be dispelled. The custodial model provides employees dependence on organization rather their dependence on their boss. The model emphasizes economic reward, security, organizational dependence, and maintenance factors. The custodial approach leads to employee dependence on the organization. Rather than being dependent on their boss for their weekly bread, employees now depend on organizations for their security and welfare. Employees working in a custodial environment become psychologically preoccupied with their economic rewards and benefits. As a result of their treatment, they are well maintained and contented. However, contentment does not necessarily produce strong motivation; it may produce only passive cooperation. The result tends to be that employees do not perform much more effectively than under the old autocratic approach. 3) Supportive Model: The basic idea behind this theory is that leadership motivates the people to work and not the power of money as in custodial model. Through leadership, management provides a climate to help employees grow and accomplish in the interest of the organization, the things of which they are capable. Managements orientation, therefore, is to support the employees job performance, rather than to simply support employee benefit payments as in the custodial approach. Supportive behavior is not the kind of behavior that requires money. Rather, it is a part of managements lifestyle at work, reflected in the way that it deals with other people. The managers role is one of helping employees solve their problems and accomplish their work. Under the supportive model, the workers feel a sense of participation and task involvement in the organization. The manager's role is one of helping employees solve their problems and accomplish their

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work. This model has been found to be effective in affluent countries where workers are more concerned about their higher level needs affiliation and esteem. This model has limited application under Indian conditions because a vast majority of operative workers are still working for the satisfaction of their physiological and security needs. 4) Collegial Theory: A useful extension of the supportive model is the collegial model. The term collegial relates to a body of persons having a common purpose. The collegial model, which embodies a team concept, first achieved widespread applications in research laboratories and similar work environments. The collegial model traditionally was used less on assembly lines, because the rigid work environment made it difficult to develop there. The theory is based on the principle of mutual contribution by employer and employees. Each employee should develop a feeling that he is a part of the whole and contributing something to the whole and recognizes the others contribution. Management is supported to be joint contribution and not the boss. The managerial orientation is toward teamwork. Management is the coach that builds a better team. The employee response to this situation is responsibility. The collegial approach for the employee is selfdiscipline. In this kind of environment employees normally feel some degree of fulfillment, worthwhile contribution, and self-actualization, even though the amount may be modest in some situations. This selfactualization will lead to moderate enthusiasm in performance. Autocratic Custodial 1) Basis of Model Power Economic resources 2) Managerial Orientation Authority Money 3) Employee Orientation Obedience Security 4) Employee Dependence on Dependence on Psychological Result organization boss 5) Employee Needs Met Subsistence Maintenance 6) Performance Result Minimum Supportive Leadership Support Job performance Participation Collegial Partnership Teamwork Responsibility Self-discipline

Status and Self-actualization Recognition Passive cooperation Awakened drives Moderate enthusiasm

Interpretation of Different Models

Various conclusions may be drawn from the study of different models as follows: i) As soon as the understanding of human behavior develops or social conditions change, the model is bound to change. No one model is best for all times. ii) Models of organizational behavior are related to hierarchy of human needs. As society advances on the need hierarchy, new models are developed to serve the higher order need that is paramount at that time. iii) Present tendency towards more democratic models of organizational behavior will continue to develop for long run. iv) Different models will remain in use though new model predominates as most appropriate for general use at any given time as task conditions differ from time to time and organization to organization.

Contribution of Various Disciplines/Role of Behavioral Science in Management

Organizational behavior is an applied behavioral science that is built upon contributions from a number of behavioral disciplines. The predominant areas are: 1) Psychology: The term psychology is derived from the Greek work psyche, which means soul or spirit. Modern authors define psychology as the science of individual behavior. Psychology has a great deal of influence on the field of organizational behavior. The reason is the focus of psychology what determines the behavior of an individual? The attempt to answer this question in different settings has engendered a multitude of sub disciplines industrial psychology, clinical psychology, and experimental psychology. The major areas researched to understand the determinants of behavior are attitudes, motivation and learning. Motivation refers to the mental and emotional processes that precede actual behavior under consideration. Learning is concerned with the changes and adaptations of behavior that occur over time. Obviously, understanding of motivation and learning would help clarify the individual behavior in the organization. 2) Medicine: Medicine is perhaps the newest field affecting organizational behavior. The primary area of interest is work related stress, tension and depression. The study of causes and consequences of stress and use of medicinal drugs to reduce stress is fast becoming an area of study within the organizational setting.

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3) Sociology: Sociology as an academic discipline utilizes scientific method in accumulating knowledge about the social behavior of groups. It specifically studies social groups, social behavior, society, customs, institutions, social classes, status, social mobility and prestige. Sociology addresses itself to the study of group behavior. It studies the behavior of people in relation to their fellow human beings. Sociologists have enriched organizational behavior through their contribution to the study of interpersonal dynamics like leadership, group dynamics, communication, formal and informal organization, and the like.
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 1) 2) 3) 1) 2) 3) 4) 5) Sociology 1) 2) 3) 4) Organizational Structures Formal and Informal Organizations Organizational Culture Organizational Change Personality Perception Attitude Learning Motivation Job Satisfaction Training Leadership Effectiveness Performance Appraisal Employee Selection Work Design Stress Tension Depression Group Dynamics Communication Leadership Power and Politics Conflict

Psychology

Individual

Medicine

Group

Study of OB

Social Psychology

1) 2) 3) 4) 5) 1) 2) 3) 1) 2) 3) 1) 2) 3) 4)

Behavioral Change Attitude Change Communication Group Processes Group decision - Making Individual Culture Organizational Culture Organizational Environment Organizational Power Politics Conflicts Work Measurement Productivity Measurement Workflow Analysis and Design Labor Relations

Anthropology

Political Science

Organizations

Industrial Engineering

Economics

1) 2)

Government Policies Allocation of Scare Resources

Major Disciplines and their Contribution to OB

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4) Social Psychology: Social psychology is an important branch of psychology, which blends concepts from both psychology and sociology. Its area of focus is on influence of group members on one another. The contribution of social psychology to OB lies in the study of overcoming resistance to change and introduction of change in organization. It also studies changes in attitude and behavior of groups, patterns of communication, group decision-making, etc. 5) Anthropology: Anthropology studies the origin and development of human cultures, how those cultures have functioned in the past, and how they continue to function in the present. This information is very useful in understanding the behavior of individuals and groups in organizations. Culture has significant influence on human behavior. It dictates what people learn and how they behave. Thus, Anthropology contributes a lot in understanding the cultural effect on OB. Value systems; norms, sentiments, interactions, group cohesiveness, etc. are the concern of anthropology. 6) Political Science: Political science has also contributed to the understanding of OB. The themes of interest to political scientists include how and why people acquire power and such topics as political behavior, group decision-making, conflict behavior of interest groups, formation of coalition, etc. 7) Engineering: This discipline, too, has influenced OB. Industrial engineering, in particular, has long been concerned with work measurement, productivity measurement, workflow analysis and design, and labor relations. Obviously, all these are important for OB. 8) Economics: Economics aids in the understanding of economic conditions at a given time, economic policies of the government, allocation of scarce resources to different competing alternatives, and all these factors affect the organizational climate. Organizational behavior has learned a great deal from such economic factors as labor market dynamics, cost-benefit analysis, marginal utility analysis, human resource planning and forecasting and decision making.

Psychological Contract
There are two types of contracts of an employee with the organization economic and psychological. Economic contract is related to salary and other monetary rewards and psychological contracts are related to the state of individuals psychology for the system. He works hard with loyalty and expects security, human treatment and support in addition, to economic reward. If employer, honors such psychological but unwritten contract, organization will be favored with higher productivity. The psychological contract is governed by exchange theory, which states that in order for people to join and remain with the organization, the benefits they receive must be more than their cost. If it is not so or they feel that the exchange relationship is not rewarding, they will like to withdraw from it. The more rewarding it is, other things being equal, the more money they will be attached to the organization and support it.

Research on Organizational Behavior

With the availability of computer technology, thousands of research studies relating to management and organizational behavior are conducted all over the globe. The Internet, intranet, websites and electronic data collection have considerably facilitated the conduct of research. Theory building and empirical research co-exist and reinforce each other. Arm chair theories evolved from astute observation lead to empirical testing. When the hypotheses developed from the theories are substantiated empirically, the results offer further scope for theory building. Where empirical testing does not substantiate the theories, the latter are modified and refined for further empirical analysis. Good theories have to be of practical use and empirical validation confirms their worth. Likewise, good empirical research should have its foundation in a viable theory and add to the body of existing knowledge. Researchers have and continue to invest substantial amounts of time to develop good theories and substantiate them. They also develop valid and reliable measures to tap multidimensional abstract concepts. Much of what we know about effective managerial styles, job design, organizational change processes, employee attitudes and performance and organizational effectiveness comes from systematic and scientific research inquiries. Being knowledgeable about the theories developed and their validation through empirical studies helps the experienced and intelligent manager to wisely assess the significant variables operating in the environment and then match his or her style, technique and behavior to fit the situation, so that the desired end results are achieved. The effective management of organizational behavior is not an exact science but an interesting challenge facilitated by a good knowledge of the theories and research findings.

Implications for Managers

Managers are responsible for the final outcomes by making the right decisions and playing their different roles effectively. These are greatly facilitated by the knowledge of research, which heightens their sensitivity to the innumerable variables operating in the situation.

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Managers would be able to solve the problems they encounter based on the findings of published research studies. Through an understanding of the nature of scientific studies, they would be able to generalise the findings to their own setting. Recognition of the concept of multicausality opens their eyes to the innumerable factors they have to contend with, instead of taking a simplistic approach.

Trends in Organization Behavior

The social and technological changes, knowledge explosion, product and service obsolescence and globalization have immense effects on organizations. Based on a systematic analysis of past and current events, Naisbitt predicts the following megatrends which appear relevant to the study of OB a) Conversion of an industrial society into a society based on knowledge and information. b) High level of diversity among people, groups, institutions and geographic locations. c) Decentralization of business, government, political and social institutions. d) Reduced dependence on institutions and movement towards old-fashioned self-reliance. e) Replacement of the traditional 'top-down' corporate authority system with the innovative bottom-up system, having built-in mechanisms for employee participation. f) Acceptance of computers as liberators rather than as tyrants and slave drivers. g) Reliance on personal contacts and human relationships, with increasing exposure to high technology, i.e. accomplishment of a balance between technology and human contacts. Based on the above megatrends, Luthans identifies at least six specific trends relevant to the fields of OB: 1) Declining Productivity and the Japanese Threat: The challenge is to reverse declining trends; ensuring better interplay between management approaches and techniques, and employees. 2) Revolution in Middle Management: A big cut in the middle management cadre; restructuring and redefining the roles of those who are left out; emphasis on knowledge and skills of people in manufacturing and marketing. 3) Computerized Offices and Factories: The use of personal computers; revolution in the way organizations are structured and the way the managers function. 4) Equal Opportunities Far Minorities and Women: Need for research on minorities and women in management. 5) Union-Management Cooperation: Growing competition, arising from globalization, generates unionmanagement cooperation; the challenge is to understand whether the management and the union can establish a mutually beneficial, win-win relationship. 6) Innovative Plans for Special Career Needs: With more dual-career families and growing concern for quality of work life, there is an increasing use of innovative approaches: flexitime and four-day (40-hour) weeks; job sharing (two or more people share a job and determine their schedules themselves) and personal time-bank plan (saving sick leave time, regular leave time and holiday time and utilizing it in any other way or encashing it).

Future Prospect of OB
Based on the above trend analysis, the following future prospects of OB can be inferred: i) OB has reached the status of identifiable fields of study and applications respectively, with explicit implications for human resource management in complex organizations. This legitimate recognition as academic (OB) and applied (HR) fields is likely to be reinforced in future. ii) OB can clearly be distinguished from other areas, such as general management and personnel administration. There will be an increased interplay of macro-structural variables and the environment in these fields. iii) There will be a movement in the topical coverage of the fields (i.e., perception, personality and group dynamics, etc.) to those more specifically identified with OB per se (i.e., job design, OB Modification (OB Mod), job conflict and stress, organizational power and politics, management leadership, organizational development, etc.). iv) The trend of making OB more application oriented will continue. Conclusively, the study of OB and the application of HR in the identical areas covered by them produce more efficient human resource managers, especially needed for the 21st century. The effective management of human resources is really what HR & OB are all about.

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Challenges and Opportunities for OB

There are a lot of challenges and opportunities today for managers to use OB concepts. Some of the more critical issues confronting managers for which OB offer solutions or at least some meaningful insights toward solutions are discussed below. 1) Globalization of Business There is no denying the fact that the world economy is becoming increasingly global in character. Barriers to trade between different countries have been reduced to a great extent. India which is also a member of the World Trade Organization (WTO) has also removed most of the barriers 10 trade which has paved the way for free competition. Many foreign multinational corporations have brought technology and capital into India and are now competing among themselves and with the Indian firms. Several Indian firms have opened their subsidiaries in foreign countries and have also entered into alliance with local companies in foreign countries. Managing in a global economy poses many challenges and opportunities. For example, at a macro level, property ownership arrangements vary widely in different countries. So does the availability of natural resources and components of the infrastructure, as well as the role of government in business. For our purposes, a very important consideration is how behavioral processes vary widely across cultural and national boundaries. Norms, values and beliefs differ sharply among cultures and these shape patterns of work-related behavior of the workers to a great extent. They also affect the nature of supervisory relationship, decision-making styles and processes, and organizational configurations. Group and inter-group processes, responses to stress, and the nature of political behavior also differ from culture to culture. Thus, globalization has posed both challenges and opportunities for the managers. The global managers must work to understand the local culture and the behavioral forces that affect the workforce in order to manage the workers more effectively. Even if the global manager is working in his own country, he might have to manage the workers who belong to different cultures. In this case also, the manager will have to learn to adapt his management style to deal effectively with such workers. Similarly, one has to master the art of interacting with bosses and peers belonging to different cultures. 2) Workforce Diversity Another serious challenge that managers face involves workforce diversity, i.e., the increasing heterogeneity of organizations with the inclusion of workers from different groups such as women, physically disabled persons, retired defense personnel, backward classes, ethnic groups etc. Whereas globalization focuses on differences between personnel from different countries, workforce diversity addresses differences among people within the same country. For instance, more and more women have been joining the organizations in India and women executives have also been occupying important positions at the middle and top levels in the organizations. This in itself is a challenge for organizations as, traditionally, the Indian society has been male dominated. Earlier, the managements followed melting pot approach to differences in workforce. It was assumed that people who were different would somehow assimilate with the majority group. But it is now recognized that employees don't set aside their values, beliefs, lifestyle preference, etc. when they come to work. Therefore, it is desirable to recognize and value such differences by adapting management practices to different life and work styles, etc. of the diverse groups. Thus, workforce diversity has significant implications for the management. The managers will be required to shift their approach fro treating each group of workers alike to recognizing differences among them and following such policies so as to improve productivity, reduce labor turnover and avoid any sort of discrimination. When workforce diversity is managed properly, there would be better communication, better human relations and congenial work culture in the organization.
Globalization Increasing Quality Consciousnes s Managing Change Ethics and Social Responsibility Challenges of OB

Workforce Diversity

OB Challenges

Changed Employee Expectations

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3) Changed Employee Expectations With the changes in workforce demographics, employee expectations and attitudes have also changed. Traditional allurements such as job-security, attractive remuneration, housing, and the like do not attract, retain or motivate today's workforce. Employees today demand empowerment and expect quality of status with the management. Previous notions on managerial authority are giving way to employee influence and involvement along with mechanisms for upward communication. Empowerment results in redefining jobs, both on the shop floor as a well as in boardrooms. As workmen are given more control over their jobs, a whole class of supervisors may become redundant, not because they will do a bad job, but because there shall be no need for them. Empowerment also means that the worker can bring his or her children to the workplace, look around, and can even gain knowledge about work methods. This is a privilege enjoyed till now only by owners of enterprises whose children can access even vital documents. Expectations of equality are breaking up the traditional relationships between employees and owners. 4) Increasing Quality Consciousness Because of increased competition, both from indigenous as well as from foreign organizations, there is increased emphasis on quality of products and services, that too at competitive cost. Today, the buzz words in quality are total quality management, kaizen (improvement upon improvement), six sigma standard, and quality certification. Because of increased emphasis on quality, organizations have to change not only their technology but way of their working. Such a change results into behavioral problems in employees as they perceive that such a change would affect them adversely. Therefore, the managers have to adopt suitable practices to ensure that employees accept change willingly and become part of the mission of spreading quality consciousness throughout the organization. 5) Managing Change Nothing is permanent except change. In the contemporary environment, organizations must plan and implement change to survive and grow. As a result, demands and expectations placed on managers and their organizations are greater than ever before, as is the complexity of the environment within which they must operate. While in the past managers might have seen change as something that must be addressed periodically, it has now become a fact of everyday life for everyone in the business world. And human resources are keys to successful introduction of any change. The challenge before managers is to prepare organizational members for change. They must play the role of 'change, agents' or 'facilitators of change', to improve organizational effectiveness. 6) Ethics and Social Responsibility Although scams, scandals, and frauds, in business are not really new, media attention focused on them in recent years (e.g., Bofors gun deal, Bihar fodders scam, Tehlaka dot com, Bombay stock scam, etc.) has increased public sensitivity about them. Many organizations today are taking steps to enhance the ethical standards of their employees and to avoid legal and/or public opinion problems. There is also increased concern for carrying out social responsibility by the managements of business organizations. Ethics denote the socially accepted beliefs about what is right and wrong or good and bad. Social responsibility is the organizations obligation to protect and contribute to interests of various stakeholders such as investors and owners, employees, customers, suppliers, government, society, etc. Various trade associations and chambers of commerce and industry have developed codes of ethics for their member-organizations to increase the credibility of business. From the point of view of social responsibility, increasing attention has been focused in the recent years on business obligation to help avoid pollution, and contribute to social causes. However, clearly defining ethical behavior and social responsibility is a great challenge. Nevertheless it is expected of managers to create an ethically healthy climate for their subordinates where they can perform their duties efficiently and confront a minimal degree of ambiguity regarding what constitutes good and bad behavior.