Introduction to Organizational
Behavior (OB)
Savita Damle
How effective are you at what you do?
 Where do you have an edge over others?
 What makes you feel bad?

What Managers Do
Managers get things done through other
people.
 Managers make decisions, allocate
resources and direct the activities of
others to attain goals.

Allocation of Activities by Time
Open Systems View of Organization
Formal vs. Informal Organization
Formal Organization – the official,
legitimate, and most visible part of the
system
Informal Organization – the
unofficial and less visible part of the
system
Hawthorne Studies: studies conducted
during the 1920’s and 1930’s that
suggested the importance of informal
organizations.
Formal & Informal Elements of Organizations
Social Surface
Formal organization
(overt)
Goals and objectives
Policies and procedures
Job descriptions
Financial resources
Authority structure
Communication channels
Products and services
Informal organization
(covert)
Beliefs and assumptions
Perceptions and attitudes
Values
Feelings, such as fear, joy
anger, trust, and hope
Group norms
Informal leaders
Where Managers Work
Organization
A consciously coordinated social unit,
composed of two or more people, that
functions on a relatively continuous basis
to achieve a common goal or set of
goals.
Management Functions
Planning
Organizing
Management
Functions
Controlling
Leading
Mintzberg’s Managerial Roles
Mintzberg’s Managerial Roles
(cont’d)
Mintzberg’s Managerial Roles
(cont’d)
Management Skills
Technical skills
The ability to apply specialized
knowledge or expertise.
Human skills
The ability to work with, understand,
and motivate other people, both
individually and in groups.
Conceptual Skills
The mental ability to analyze and
diagnose complex situations.
Enter Organizational Behavior
Organizational behavior
(OB)
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 organization’s effectiveness.
Replacing Intuition with Systematic
Study
Intuition
A feeling not necessarily supported by research.
Systematic study
Looking at relationships, attempting to attribute causes and
effects, and drawing conclusions based on scientific evidence.
Evidence Based Management (EBM)- basing management
decisions on best available scientific evidence.
There Are Few Absolutes in OB
Contingency variables
Situational factors: variables that moderate
the relationship between two or more other
variables and improve the correlation.
x
Contingency
Variables
y
The Dependent Variables
Dependent variable
A response that is affected by an independent variable.
y
x
Sociology
the science
of society
Psychology
the science
of human behavior
Anthropology
the science of the
learned behavior of
human beings
Interdisciplinary
Influences on
Organizational
Behavior
Management
the study of overseeing
activities and supervising
people in organizations
Engineering
the applied science
of energy & matter
Medicine
the applied science
of healing or treating
diseases to enhance
health and
well-being
WorldCom Whistle – blower Cynthia
Cooper
What happened /Key Events

By 2000 WorldCom was facing a consumer price war, the rise of mobile telephone usage
and a vast over- capacity of bandwidth coverage. Consumer demand for the provision of
internet services offered over broadband networks was dwindling and the log – distance
sector was characterized by falling rates and the rise of local competition.
Ghost Profits




In June 2002 the WorldCom group admitted to overstating profits by nearly $4 billion
through the use of illusory accounting practices.
In order to improve the appearance of the company’s financial situation, Scott Sullivan
authorized the improper recording of expenses as capital investments. Operating expenses
are immediately deducted from revenue, whilst capital investments are subject to
depreciation over a number of years. This incorrect spreading of operating costs resulted in
the overstatement of WorldCom’s profits.
Manipulation of Reserves: Companies often set aside reserves in order to cover
foreseeable estimated costs and losses. WorldCom allegedly inflated the value of its
reserves so as to create a hefty ‘slush fund’ that could be used to boost profits. The
manipulation of reserves resulted in a profit irregularity of roughly $3.3billion. At the time
of WorldCom’s disastrous announcement in June 2002, Bernard Ebbers had more than $
400 million in personal loans outstanding from the company.
Subsequent investigation has brought the total losses resulting due to fraudulent behavior
by WorldCom executives to $11 billion.
The Whistle –blower

Cynthia Cooper the then – vice president of internal audit at WorldCom, decided to
investigate anomalities in the company’s accounting entries and ended by inspiring
critical – and heavily critized – legislation: the US Senate responded to revelations
about massive accounting fraud at the telecom giant. She brought it out to the world
the anomalies in the Companies Accounting.
Consequences

Shortly after WorldCom’s announcement the SEC filed a civil lawsuit
against the company, charging it with fraud.

In July 2002 WorldCom filed for bankruptcy.

The company was forced to sell off most of its peripheral business units
and cut 17,000 jobs.

In 2003 WorldCom was forced to pay a $ 500 million penalty to the SEC.
Consequences for Cynthia
 Despite being lauded moths later in Time magazine, Cooper
says she never felt like a hero. Just the opposite: In the
aftermath of the disclosure of the fraud, with the press and
lawyers and congressional investigators constantly on her
trail, Cooper was seized by depression and anxiety.
 She has come to understand that her life will never be the
same.
 These days, Cooper spends most of her time talking to high
school students and college students, urging them to be
prepared for that moment when an ethical choice presents
itself. “People don’t often realize that they’re facing a
dilemma, “Cooper says. “There are a lot of pressures that
come to bear in the workplace and people should prepare
beforehand.
In your life/job

What were/ are some of the challenges
you face?
Challenges and Opportunities for
OB

Responding to Globalization
◦
◦
◦
◦
Increased foreign assignments
Working with people from different cultures
Coping with anti-capitalism backlash
Overseeing movement of jobs to countries with lowcost labor
◦ Managing people during the war of Terror

Managing Workforce Diversity
◦ Embracing diversity
◦ Changing U.S. demographics
◦ Implications for managers
 Recognizing and responding to differences
Challenges and Opportunities for
OB (cont’d)

Improving Quality and Productivity
◦ Quality management (QM)
◦ Process reengineering

Responding to the Labor Shortage
◦ Changing work force demographics
◦ Fewer skilled laborers
◦ Early retirements and older workers

Improving Customer Service
◦ Increased expectation of service quality
◦ Customer-responsive cultures
Challenges and Opportunity for OB
(cont’d)

Improving People Skills

Empowering People

Stimulating Innovation and Change

Coping with “Temporariness”

Working in Networked Organizations

Helping Employees Balance Work/Life Conflicts

Improving Ethical Behavior