What Is Organizational Behavior (OB)?

Organizational behavior explores and analyzes workplace interactions. It is a social science field that evaluates how factors such as decision-making, communication preferences, motivation techniques, management structures, and leadership styles influence behavior in work environments. 

It also uses concepts from related disciplines, including sociology, anthropology, and psychology, to reveal how these behavioral influences affect employee engagement, satisfaction, and performance.

A good example is how an organization’s promotion policies encourage employees to work harder or leave. Organizational behavior studies have also helped companies understand the reasons for high employee turnover and low engagement.

Brands can use their understanding of these connections to boost communication, improve teamwork, keep workers engaged, and unlock new productivity levels.

Why is Organizational Behavior Important for Business?

A strong understanding of organizational behavior allows businesses to formulate better policies, organizational processes, and work cultures that build and strengthen such employee trust and loyalty. These factors pre-define the importance of organizational behavior. OB studies can also provide valuable insights on the best ways to navigate periods of change and transitions, especially when introducing modern technologies, workflows, and business methods.

“The greater the loyalty of a group toward the group, the greater is the motivation among the members to achieve the goals of the group, and the greater the probability that the group will achieve its goals.” — Rensis Likert.

Likert’s connection between loyalty, motivation, and success emphasizes how a strong sense of belonging among team members is the best way to create and maintain thriving and high-achieving workplaces. 

The results of well-implemented strategies drawn from OB studies are far-reaching. In addition to improved performance, brands can enjoy stronger and more effective workplace traditions, better decision-making, reduced employee turnover, improved engagement, and competitive advantage. 

Historical Roots of Organizational Behavior Theory 

As mentioned earlier, organizational behavior has strong historical ties to psychology, management, anthropology, and sociology. 

Its beginning dates back to the 19th and early 20th centuries, when Frederick Taylor pioneered scientific management, which focused on observing and analyzing how people worked. It laid the foundations for understanding the relationship between work processes and employee behavior and productivity.

The Hawthorne studies explored how things like supervision and lighting affected productivity in the 1920s and 1930s. They highlighted how psychological and social influences shaped employee behavior. The human relations movement from the 1930s to the 1950s further examined the importance of human motivations and needs in work environments.

In the mid-1900s, systems theory of management viewed companies as interconnected parts, where changes in one area affected everything else. By the 1960s, contingency theory argued that organizational practices should be adapted to each company’s unique situation.

4 Elements of Organizational Behavior

Organizational behavior focuses on key elements that shape any company’s identity, guide its actions, power its operations, and determine its success. These elements provide a roadmap for understanding the various components of workplace interactions and how they influence employee behavior.

The four organizational behavior elements are interconnected and influence each other. Changing any aspect of one element can affect the rest. So, businesses must ensure they consider every element when making even a single decision.

Let’s cover the elements.

People

The individuals who bring their unique talents, experiences, and perspectives to the workplace make up the first—and most important—element. Each person’s uniqueness shapes how they interact with the workplace and other colleagues. This element assesses how such interactions will influence work behavior.

The people element also focuses on group dynamics and team interactions, so businesses can better understand communication patterns, leadership styles, and cooperation within teams. 

The element helps companies identify the best strategies to build teamwork, boost motivation, ensure employee well-being, enrich brand culture, and strengthen loyalty.

Structure

This element analyzes how resource allocation, task division, and hierarchical arrangements influence workplace behavior. Structure helps people understand how to navigate a work environment when doing their jobs.

Businesses can assess how roles and relationships within the work environment affect people’s behavior. This assessment can help determine the work model and authority structures that best suit each brand and its employees. 

Still, the structure must also align with the organization’s current technological and human capabilities.

Technology

These are the tools, resources, gadgets, and machines that power every organization’s operations. Technology is now at the heart of almost every business process, from communication and collaboration to production and core service delivery. It touches every other element of organizational behavior, as people must operate these machines and use them in compliance with organizational structure.

Studying this element allows brands to identify the best ways to implement training and the ideal resources to use. They can create a framework for choosing which technology suits their workforce and processes better. For example, brands can look for things like learning curves, remote work support, user-friendliness, and other specific features when considering which applications and devices to use.

Environment

This element covers the internal and external environmental issues and dynamics that can influence a company’s operations and workforce. The internal environment includes the organization’s culture, values, leadership style, and communication patterns. It also includes components like lighting, sitting arrangements, and other physical factors. 

The external environment covers issues beyond the organization’s control. They include economic conditions, industry trends, government regulations, and social norms. They can significantly affect a company’s strategy, operations, and workforce. 

For example, economic downturns may force layoffs or budget cuts, while an employee’s personal issues may necessitate resignation. 

Organizations must assess and understand these elements to prepare sustainable contingency plans, so they are not caught by surprise. 

Organizational Behavior Metrics

The following metrics will help you measure how workers are responding to company policies, organizational structure, leadership styles, and work processes.

• Employee engagement and satisfaction: are workers truly invested in the company’s goals? Do they feel a sense of purpose and connection to their work? Are they satisfied and happy? You can answer these questions by listening to their feedback, conducting satisfaction surveys, using eNPS (employee net promoter score), and observing how they interact within the workplace.  You can also measure satisfaction by exploring their feelings and perceptions toward their role, compensation, work environment, and management. A truly engaged workforce is the lifeblood of any thriving organization.
• Absenteeism and turnover: these are not mere numbers but rather a reflection of your organization’s overall cultural health. High rates often serve as a warning sign, indicating deeper issues like dissatisfaction with roles and responsibilities, leadership styles, or even the overall company culture.
• Employee productivity: you can take a data-driven approach here to analyze key performance indicators like output levels, sales figures, and project completion rates. These metrics provide valuable insights into your workers’ efficiency and effectiveness, and they show you areas where processes can be optimized and support can be provided to boost productivity.
• Leadership effectiveness: leaders are the backbone of any organization. Their impact goes far beyond just making decisions. They shape the culture, inspire their teams, and drive results. Evaluating their communication skills, decision-making abilities, and overall influence helps you identify opportunities for growth and development.
• Diversity and inclusion: diverse and inclusive workplace is a vibrant one, enriched by a multitude of perspectives and experiences. You can examine your workforce demographics and the policies and practices in place to confirm whether everyone feels valued and has equal opportunities to succeed. Building an environment where everyone feels they belong is not just a moral imperative but also a strategic advantage.
• Organizational culture: this is the invisible thread that binds your organization together. It’s the shared values, beliefs, and norms that guide behavior and interactions. Through surveys and assessments, you can identify areas where your organization’s culture needs strengthening and complete overhauls.

Tips for Improving Organizational Behavior

There are different ways to boost employee engagement and productivity using effective organizational behavior techniques. 

Hire great candidates

The employee selection process is crucial for your business’s success. Start by identifying the ideal candidate. The next step involves creating a compelling job description that accurately portrays the role’s responsibilities and aligns with your company’s unique culture and values. 

Remember, skills can be taught, but personality and values are often inherent. Prioritize candidates who not only possess the necessary qualifications but also resonate with your organization’s ethos. And, of course, be prepared to offer competitive compensation that reflects their worth. 

Transform your onboarding and orientation process

The onboarding process is the first opportunity to positively influence employee behavior. Personalize it for each recruit to help them settle into their roles and buy into your company’s culture. Go beyond basic induction procedures and paperwork. Create an experience that whips up excitement, builds connections, and primes them for long-term engagement.

You can use team-building, mentorship, and skill-sharing activities. You should also provide the resources and support they need to thrive, from digestible training materials to a designated buddy or mentor. Executing the ideal onboarding experience will not only boost productivity but also instill a sense of belonging and loyalty from day one.

Adopt better communication policies

Use clear, real, and easy-to-understand communication methods. Stay consistent across all your communication channels, whether it’s email, instant chats, company memos, or meetings. Communication also involves listening. Ask employees what they think, collect valuable feedback (such as their communication preferences), and use the gathered information to deliver real change.  

Good communication takes effort, but it’s worth it. When you take the time to communicate openly and honestly with your team, you’ll create a workplace where everyone feels heard, valued, and motivated to succeed.

Clearly define goals, objectives, and expectations

A shared understanding of goals, objectives, and expectations lays the groundwork for a high-performing team. Ensure that everyone is on the same page by clearly communicating what success looks like.

Use the SMART goals method: Specific, Measurable, Achievable, Relevant, and Time-bound. Breaking down goals into smaller, actionable objectives that align with your overall vision can streamline employee perspective and help them understand where they fit in the broader picture.

Providing constructive feedback on a team and individual level can also help employees understand how they’re progressing and where they can improve.

Provide opportunities for professional development

You are more likely to engage and motivate employees when you show them support and clear paths for professional growth. You can do that by providing opportunities for career development and demonstrating your commitment to their success.

Use each person’s unique strengths and talent to create tailored development goals and provide the right resources. You should also clearly define the metrics and achievements that qualify anyone for promotions and other growth opportunities.

Recognize and appreciate employees

Feeling valued and appreciated is a basic human need. Recognizing your employees’ contributions boosts their performance and dedication. It’s more than just a pat on the back; it’s about acknowledging their hard work, their unique talents, and their commitment to your organization’s success.

Make recognition a regular practice, not just a yearly event. Celebrate big wins and small victories. Recognize on individual and team levels too. Sometimes, sending a public shout-out might be the perfect boost, and in other situations, a handwritten note or a private “well done” will be enough to strengthen loyalty.

Use organizational behavior metrics to create better work policies

Organizational behavior metrics can help you identify pitfalls and areas for improvement in your current work structure, systems, and other processes. You can use these insights to deploy optimizations or create new policies from the ground up.

Ensure you use metrics that align with your goals, especially in areas where you notice underperformance. That way, you can address employee concerns and turn things around.

Organizational Behavior Examples

Different management styles and company structures affect organizational behavior. Let’s go through six examples.

Leadership styles

How managers and company higher-ups choose to communicate, delegate tasks, and collaborate shapes organizational behavior. It can either rub employees the wrong way or significantly boost engagement.

For example, a tech CEO who adopts transformational leadership communicates their visions passionately, keeps themselves accountable, provides mentorship and support, and involves employees in decision-making processes. This leadership style can improve innovation and motivation in work-from-home and in-person environments.

Power and influence

Power refers to any individual or group’s ability to control the actions of others, while influence demonstrates how this power affects people’s behavior. Higher-ups and lower-level employees can obtain power through control over resources, expertise, personal charisma, and formal authority. 

These dynamics shape how employees interact and feel about the company.

For instance, a senior executive with formal decision-making authority who never consults subordinates can significantly hurt employee engagement and drive up the organization’s turnover rate.

Conflict resolution

Every workplace experiences one form of conflict or another. It’s one of the many interplays that provide opportunities for organizational growth. How they are addressed goes on to shape workplace behavior.

A neutral team leader can use their emotional intelligence, negotiation abilities, active listening skills, and assertiveness to help two disagreeing workers find common ground. That way, employees can feel respected, learn from the episode, and enrich their work experience.

Motivation and job satisfaction 

Workplace factors like recognition, growth opportunities, supportive work environments, job roles, compensation, and relationships with management and colleagues can affect employees’ drive and how they enjoy their work.

Companies that offer competitive salaries, invest in professional development and recognize contributions see lower turnover rates and have happier employees.

Diversity and inclusion

Representing different demographic groups within an organization and creating an environment where everyone feels valued and respected benefits companies in various ways.

Teams will be more creative and innovative since they benefit from a broad range of perspectives and ideas. For example, when a diverse team works on a marketing campaign, they can create more appealing strategies that speak directly to target audiences.

Summing Up

Leveraging organizational behavior’s core elements and metrics allows you to create a thriving work culture, increase engagement, reduce turnover, and boost productivity. You’ll also have employees who are satisfied and happy to work in your organization.