What is organisational behaviour? (Definition and examples)

Updated 14 March 2023

Organisational behaviour (OB) is the study of human behaviour within an organisational setting, comparing and offering insights into people in an organisation. OB focuses on improving job performance, balancing work and life, increasing job satisfaction and creating leaders. If you're part of an organisation, you may benefit from learning about OB. In this article, we discuss what organisational behaviour is, explain what the four elements and three levels of OB are and provide tips for improving it.

What is organisational behaviour?

The answer to, 'What is organisational behaviour?' is it's the study of how people behave in organisational contexts. Two of OB's key objectives are reviving organisational theory and improving society's understanding of life in a corporate. OB is a multidisciplinary field. Advancements in several related fields, like sociology, psychology, economics and engineering, as well as practitioner experience, created the field of OB. The idea of OB dates back to the Industrial Revolution in the United States, with a study called the Hawthorne Effect.

Related: What is organisational development? (With examples)

What is the Hawthorne Effect?

During the Industrial Revolution, researchers began to study workers and work environments to improve firm performance. For example, researchers sought to determine if workers would be more productive in settings where they had better lighting. Through their tests known as the Hawthorne Study, the researchers ultimately determined that workers' productivity relies more on social than environmental factors.

Ultimately, the Hawthorne Effect describes how employees' behaviour may change in an organisational environment if they know another party is observing them. When researchers study employees in organisations, they determine the validity of their findings depending on the likelihood of the Hawthorne Effect influencing the employees' behaviour. The study concluded that workers' performance changes are based on many factors, including lighting, work breaks, encouragement, isolation and several other elements.

Factors of OB

Today, researchers consider factors like race, age, ethnicity, background, class and gender roles that can impact organisations. Researchers consider how background, upbringing and other life experiences can affect an employee's decision-making process. Academic programmes use quantitative, qualitative and computer models for concept exploration and hypothesis testing. They draw on the disciplines like anthropology, ethnography and leadership studies to create a holistic programme of study.

Cognition, decision-making, learning, motivation, negotiation, impressions, group process, stereotyping, power and influence are the specific subjects discussed within OB. Social systems, the dynamics of change, markets, connections between organisations and their surroundings, how social movements affect markets and the influence of social networks are some of the more general study areas.

4 elements of OB

OB comprises four components you may study to find areas of improvement within a company. It's possible to make improvements by comprehending how these components interact. The four factors are:

  1. People: when considering people, you may look at their background, race, age, gender identification and other factors.

  2. Structure: structure refers to the hierarchical organisation within a business. For example, one organisation may have a flat design, meaning it lacks a significant amount of hierarchy, while another might be tall, indicating a substantial amount of order

  3. Technology: when considering technology, you may research what technology a firm uses and how it influences how employees communicate with each other.

  4. The outside environment: lastly, you may consider all external environmental factors to gain a holistic perspective. This includes things like the current economy and politics in the area.

Related: Business organisational structures and how they help you

3 levels of OB

There are three levels on which to study OB, these are:

1. Individuals

The first level is all the individuals in the organisation. This level comprises organisational psychology and knowledge of motivations and human behaviour. The individual level is the lowest, most detailed level you can study as it analyses how people act individually. It can range distinctly depending on each person and their personality, motivation and goals.

Related: How to set and achieve career goals (With examples)

2. Groups

The second level is groups, which includes sociological and social-psychological understandings of interpersonal relationships and group dynamics. The group level of study considers how multiple individuals work together. Depending on the size of the organisation, the number of groups can vary significantly. Additionally, the organisation's culture may produce a more significant number of groups due to job roles, personality or interests.

3. The organisation

The highest level is the organisational level. In this level of OB study, you may use sociology and organisational theory to conduct system-level analyses and research how businesses interact with one another in the marketplace. This level also considers the system of the organisation and interactions with other organisations.

Tips for improving OB

If you're seeking to improve an organisation, you may consider looking at OB as a way of doing so. Here are some tips for getting started with OB:

Start at the individual level

The first step to understanding an organisation is looking at the employees. If you have a greater understanding of each of the employees, you can better understand how they work together in groups and form the entire organisation. You may consider having individual meetings with the employees to understand better how they work, what they want out of work and their background and interests.

Hire external consultants

Some companies have internal employees qualified to conduct an OB audit, like HR managers or specialists. Depending on your role and expertise, you may benefit from finding an external consultant as a completely objective third-party examiner to assess the organisation. The external consultant may offer you recommendations to implement to improve the culture.

Related: What does an HR manager do? (Role and responsibilities)

Restructure the organisation

Another way you may change an organisation's behaviour is by restructuring. After finding an external consultant, you may identify that the employees are unsatisfied with the current hierarchical scheme. Therefore, you may work with company leaders to implement a taller or flatter organisational structure to best suit the existing staff. Some employees may be better suited to working in peer groups, while others prefer to have a direct supervisor overseeing their daily tasks. Understanding the employees is integral to your restructuring efforts.

Recruit new employees

After receiving recommendations from a consultant, you may have determined that the organisation would benefit from recruiting new employees. Some of the employees may work better by having a more narrow job focus, so employing someone else to fulfil part of a role can be beneficial. Additionally, you may identify that one manager may be better suited in another department, so you may move the manager to the department and recruit a replacement, depending on your role.

Benefits of improving OB

There are many benefits to understanding a firm's OB, including:

Improves company performance

At its core, understanding OB can help you improve an organisation's performance. Gaining knowledge of the inner workings of the company can offer you insight into potential problem areas and their corresponding solutions. By implementing changes, you can witness positive effects across the entire organisation, ultimately improving its outputs.

Increase job satisfaction

By studying the organisational culture and behaviour, you can better understand what the employees want from their jobs. After gaining this knowledge, you can implement changes to improve working conditions. If employees are happy, they're more likely to be loyal to the organisation and have positive outputs.

Improve organisational culture

OB and culture are closely related. Studying the OB can help you identify new ways to improve the culture. An organisation's culture can have an immense impact on profitability, job satisfaction and job retention.

Related: What is corporate culture and why is it important?

Clarify strategic vision

By analysing the company's OB, you can better identify the organisation's strategic mission. In particular, stage three where you analyse the organisational level can help you identify the company's overall goals for the future. A clear vision can help improve processes and employee productivity as team members can work towards shared goals.

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