  Chapter 

Organizational behavior is defined below and it is clear that this topic is important. Due to the many changes in the world outside of the organization, the way of working within the organization also changes. The behavior and performance of an organization are discussed below.

How can you define organizational behavior?

An organization is a group of people who work together to achieve individual goals or group goals. Individual goals are goals that members within the group aim to achieve, for example earning money, getting respect and so on. Examples of goals for an organization are profit, development of a particular drug or ensuring that a particular product is promoted. Organizations exist to offer resources and services. The quality of these goods and services are the result of the behavior and performance of the employees within an organization.

Organizational behavior (OB), is the study of factors that influence the behavior of individuals and groups within organizations and also the way an organization responds to their environment. The study of organizational behavior provides concepts and theories that help to understand, analyze and describe the behavior within organization and provides tools for making decisions in order to achieve organizational goals.

At what levels is behavior in organizations examined?

Behavior in organizations is examined at three levels: the individual, the group and the organization as a whole. Most research is focused on the characteristics of the individual. The effects of a team or group on OB are also examined. A group consists of two or more people who interact to achieve their goals. A team is a group in which the members work together intensively and develop a specific routine to achieve a common goal. A virtual team is a group in which the members collaborate intensively with the help of electronic tools and who may never meet each other in real life.

The number of group members, the group composition, the diversity of the group members and the tasks they have to perform influence not only the behavior of the group as a whole but also the behavior of the individuals within the group.

Two characteristics of an organization as a whole have important effects on the behavior of individuals and groups:

  1. Organizational culture (values and beliefs). The organizational culture influences the attitudes of people and therefore their will to achieve goals.

  2. Organizational structure. The main purpose of an organizational structure is to promote the hard work of people and to coordinate their efforts to ensure a high level of performance of the organization.

What is the relationship between organizational behavior and management?

The study of behavior in organizations has a goal to better understand behavior and on the other hand to provide insights that can be applied in achieving the organizational goals. A manager is someone who supervises the activities of one or more employees. Managers are expected to understand the behavior of their employees and respond appropriately to this behavior. A top management team consists of a number of senior managers who together determine the strategy of an organization/company with which the set goals can be achieved.

For managers, it must be a challenge to come up with good ideas for achieving organizational goals. The effectiveness of an organization (organizational effectiveness) means the ability of an organization to achieve the set goals. OB can prevent this using three techniques:

  1. The manager can try to improve the self-confidence and/or beliefs of an employee so that he/she is able to produce more and be more satisfied with the work.

  2. The manager can change the remuneration system, changing the employees' beliefs about the extent to which remuneration depends on their performance.

  3. The manager can change the design of an employee's work and/or the rules and procedures to make tasks more attractive or easier.

An important challenge for all organizations is to encourage employees to do their work as effectively as possible for their own benefits, the benefit for their working groups and those for the organization.

Management functions

Management is the process of planning, organizing, managing and controlling the human, financial and material resources of an organization and other resources that are necessary for increasing the effectiveness of an organization.

Four functions of the management are:

  1. Planning; this is making the best strategies for achieving the set organizational goals. This is a difficult and complicated process because there is much uncertainty and therefore risks have to be taken when making decisions. OB can contribute to planning by showing how decisions can best be made.

  2. Organizing; putting together a structure that defines how employees of an organization must work together to achieve organizational goals.

  3. Leading; Encouraging and guiding individuals and groups so that everyone is on the same wavelength in achieving the goals of the organization. The way managers manage situations is changing more and more because employees often work in self-managed teams. These are groups of employees who have been given the authority and responsibility to manage different aspects of their own organization behavior.

  4. Controlling; the tracking and evaluation of individual, group and organization performance in order to see if the set organizational goals are achieved. If this is not the case then action will be taken. The controlling function also ensures that managers can evaluate how they themselves perform in the area of planning, organizing and managing.

Management roles

Managers perform their above functions by taking on certain roles in organizations. A role means all kinds of behaviors and tasks that a person should perform because he or she holds a certain position in the group or organization.

According to Mintzberg there are 10 broad roles:

  1. Figurehead; the person who takes on the visible role of a leader but does not have any authority, for example, give a speech or open a new building.

  2. Leader; makes decisions and mobilizes people.

  3. Liaison; coordinates the work of all managers under him.

  4. Monitor; evaluates the work of others and keeps an eye on the market.

  5. Disseminator; keeps the employees informed about the situation within the organization.

  6. Spokesperson; Speaks on behalf of the company to the general public

  7. Entrepreneur; decides whether to expand the business and reserves money for certain projects.

  8. Disturbance handler; solves problems/crises as quickly as possible.

  9. Resource allocator; determines salaries, bonuses, and budgets of the various departments.

  10. Negotiator; works with customers, distribution traders, etc. to resolve conflicts and build a long-term relationship.

Management skills

The study of organizational behavior not only provides managers with tools to improve their functions and roles but also to improve their own skills in managing organizational behavior.

A skill is the ability to act in a certain way so that this person can perform his or her role well. Managers need three skills to perform well as a manager:

  1. Conceptual skills; the ability to analyze and diagnose situations and to see a clear distinction between cause and effect. Examples are 'planning' and 'organizing'.

  2. Human skills; the ability to work with people, to guide them, to understand them and to control their behavior.

  3. Technical skills; job-specific knowledge and techniques that a manager needs to be able to perform within his/her role. Examples are accounting, marketing, etc.

An effective manager must have all three characteristics. The absence of one or more characteristics causes the manager 's downfall.

What are the challenges for the management of an organization?

In recent decades, organizations face more and more challenges related to changes in the social and cultural environment, the global environment, the technological environment, and the working environment. In order to properly reflect the influence of changes in the environment on organizational behavior an open system approach is often used. In an open system, organizations use resources from their environment and convert these resources or change them into goods and services that are brought back into the environment where customers will buy them. An 'open system' consists of three phases:

  1. Input stage: the organization extracts resources from the environment, such as using raw materials, hiring employees etc. Organizational procedure is a rule or a routine that an employee must adhere to in order to fulfill a certain task as effectively as possible.

  2. Conversion stage: changing the 'inputs' and assigning a value to the 'inputs'.

  3. Output stage: the organization brings back products and services to the environment.

Below is an explanation of the four most important challenges:

Challenge 1

An important challenge for organizations relates to the changing social and cultural environment. Changes occur in the way people live and work, changes in values, attitudes, and beliefs that are caused by the culture in a particular country and the characteristics of the inhabitants. A national culture is a collection of values that a society considers important and the norms that indicate which behavior is accepted or rejected. Organizations must be receptive to the changes in society because these changes affect all facets of the organization.

There are two major challenges for organizational behavior that arise from changes in the social and cultural environment, namely the impairment of ethical values and the greater diversity of employees in organizations.

  1. Impairment of ethical values. Due to the many ethical scandals that recently occurred at many companies where managers enriched themselves, the development of organizational ethics within companies was considered very important. Ethics means the values, attitudes and moral rules that managers and employees should apply to analyze or interpret situations. On this basis, they must decide what is the "right" or appropriate way to act. Managers may have to deal with ethical dilemmas. This means that they are faced with the choice of choosing between ethical conduct and a course of action that will benefit them. Ethical organizational behavior is important for people's well-being. Well-being is determined by a feeling of happiness, health, and prosperity. Ethics also determines the social responsibility of an organization. These are the obligations of an organization towards people or groups that are directly affected by the actions of that organization.

  2. Increasing diversity among staff. Diversity means individual differences arising from age, gender, race, ethnicity, religion, sexual orientation, and socioeconomic background.

Three different challenges arise from this. To begin with, challenges that have to do with honesty and justice. Managers are challenged to distribute jobs, promotions, and rewards in an honest and equitable manner. Secondly, challenges that relate to decision making and performance. Here managers are challenged to take advantage of attitude differences and perspectives of people who differ in age, gender or race, in order to improve decision making and to increase the performance of the organization. Finally, the challenge of flexibility. The manager must be sensitive to the different needs of employees such as needing flexible hours or needing to work from home. This can improve the well-being of the employees.

Challenge 2

An important challenge has to do with a changing global environment. Many companies expand their activities to a global level. A global organization is an organization that manufactures or sells products in countries or regions around the world (Toyota, IKEA, Pepsi, Sony). Companies that operate worldwide are confronted with differences between countries and are challenged to use these differences to their advantage.

Companies have to consider many different factors when they operate worldwide. First, there is a difference in organizational behavior in different countries around the world. Secondly, there are problems with coordinating activities for example, decision-making becomes more difficult. Finally, one has to deal with the consequences for the company in their home country when it is decided to go abroad (outsourcing).

To start a successful organization abroad, time has to be spent on 'global learning'. 'Expatriate managers' are employees who live, work and are responsible for the company abroad developing relationships between organizations around the world. They can improve OB by:

  1. Learning about 'low-cost inputs' and the places where they can best assemble their products.

  2. Learning the skills that are provided by local employees.

'Global learning' is also important to find more effective methods to respond to a global crisis or disaster, this is called 'global crisis management'. Examples include dealing with natural or man-made disasters and geopolitical tensions.

Challenge 3

The rapid development in information technology (IT) has greatly changed organizational behavior and procedures. IT is the different types of computer and communication hardware and software, and the skills of their developers, programmers, managers, and technicians.

IT, first of all, affects the effectiveness of an organization. Through the internet (a global network of connected computers) and intranet (a network of IT in an organization that connects all members) more information is available and knowledge can be exchanged more easily and problems can be solved.

Routine work is taken over by the computer so that more time is left for other activities such as the development of new products. Through IT, a company can respond better to the needs of its customers (banks, for example, have introduced internet banking).

Second, IT plays an important role in stimulating creativity (the emergence of new, useful ideas) from people, groups and organizations. This can then result in innovations that benefit the end result (product or service) (innovations).

Challenge 4

In the last decades, globalization and IT have changed the relationship between organizations and their employees. The first major change in organizational behavior included downsizing. This is the process by which an organization fires managers and employees to save costs. Empowerment is the process whereby employees are given the authority to make important decisions and where they are responsible for the consequences. Secondly, there is an increase in temporary workers and temporary employees. More and more 'contingent workers' are also being used. 'Contingent workers' are temporary workers and do not receive benefits such as health insurance and/or pensions. The third change is outsourcing, redistributing certain work or an activity that was first carried out by the company itself, e.g. outsource the work to freelancers.

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