Organizational behavior can make or break a company. It’s the pulse of how companies operate, the intricate web of natural human behavior at work. At its core, it shapes the way companies can grow.

It’s an area of study nearly 100 years old, and there’s a lot to take in from a century of business analytics. We’ll look at the importance of early groundbreaking developments in organizational behavior, and break the subject down into its 4 key elements.

So join us as we delve deep into the dynamic realm of organizational behavior that shapes the soul of a company.

What exactly is ‘organizational behavior’?

Organizational behavior is the study of how people interact within groups, and how these group dynamics influence the business. The information learned allows companies to create new working methods so that their businesses can operate more effectively. 

One of the best ways to illustrate it is the famous Hawthorne research. Almost 100 years ago, researchers at Western Electric’s Hawthorne Works in Chicago were curious about how changes in the work environment affected productivity. They stripped away the standard business ethos of the time, which was simply ‘man as machine’ and involved workers in the decision-making process. They found that productivity shot up from just paying attention to them, even when no actual workplace changes were made! 

The phenomenon, now known as the Hawthorne effect, highlighted the profound impact of social factors on behavior within organizations. In simple terms, OB showed how people aren't just cogs in a machine. They're complex beings whose performance can be influenced by their surroundings, interactions, and even the attention they receive.

What separates organizational culture from organizational behaviour?

There’s a ton of research on OC (culture) and OB (behaviour), and a lot of it shares common ideas, but there’s a slight difference between the two.

Organizational culture is more like a company’s shared values (including what they display outwardly to customers), beliefs, customs and practices. OC is seen as the system of rules, (which can sometimes even be unwritten), on a company-wide scale.

Organizational behaviour is smaller in scope. It’s focused on the attitudes and behaviours of individuals and groups inside an organization. OB is concerned with studying interactions between the staff, and getting the most out of them.

Organizational behavior in decision making

A clear example of organizational behavior is a company’s decision-making process. The clothing brand Patagonia is vocal about its transparency in decision-making. They have made sure that their meeting rooms feel open for discussions and that everyone has a voice, from the newly welcomed interns to the seasoned veterans. 

A different approach to decision-making is with the Martha Stewart Living company. They rely on higher authority figures to make decisions towards their goals. Having decisions made by those at the top means the responsibilities of company changes are more straightforward, and risks are decreased.

These differing approaches illustrate the difference in organizational behavior, and while words like transparency and openness might be seen as more positive on the surface, it’s important to consider the pros and cons that come with different organizational behavior types.

The four elements of organizational behavior

Organizational behavior might seem like a grand area of study, but to simplify we can break it down into its four elements. These 4 are seen as the most foundational attributes.

1. People 

In the world of organizational behavior, one of the pillars on which the company rests is its people. Modern, globalized companies are made up of cross-cultural minds and diverse personalities. The workforce breathes life into the offices, and so their interpersonal relationships and dynamics really matter.

How they interact can make or break the organizational ecosystem. Let’s create an example to illustrate. You’ve made a team to handle a work project, including a programmer named Sarah, and a marketer, Alex. Sarah works in a generally introverted way, and to get the most out of her, she needs commands and actionable goals. Her worth to the team is crucial, and her style of work behavior means she likes to get into her zone and churn out code alone.

Alex works best by bouncing ideas off his colleagues. He’s proven himself as a marketing master and his sales enthusiasm could sell sand in a desert. His soft skills in marketing can’t be denied, and you know he carries the project’s vision well. He thrives off keeping an open mind to input from his colleagues, and Sarah’s behavior doesn’t really gel with his, at least not to its fullest potential.

So here, organizational behaviour looks at how the two interact, and how their work styles can come closer together to improve the company’s efficiency. One suggestion might be for Sarah to try more free-form brainstorming sessions with Alex, to allow her the chance to get out of her usual working style. Perhaps you ask Alex to watch a video explaining exactly what Sarah does, so that he can get a better understanding without using up Sarah’s time. OB’s aim is to bring the two closer together to create deeper bonds between colleagues.

2. Structure

Structure in organizational behavior refers to the framework of roles, responsibilities, and relationships within the company. It encompasses more formal aspects like hierarchy, reporting lines, departmentalization, and informal aspects like communication patterns and social networks.

A great way to contextualise it is with start-up companies. An example of a small group of friends creating an app they think will shake the market up. Their business meetings are done at a member’s house. They launch their product and receive a good early response. As the company grows, it becomes clear they need more structure to keep up with the demand.

Structure influences how decisions are made. In a hierarchical structure, like a traditional corporation, decisions trickle down from the top. In a flatter structure, as many startups prefer, decisions might be made more collaboratively.

Organizational behavior studies show that structures shouldn’t just be set in stone. They change and evolve with external and internal developments. What if our example start-up company adapts to early demand increases and creates a more intricate superiority structure, only to later find it is overly complicated? They might pivot back to a simpler hierarchy. They could even adopt a network structure, where teams form around projects rather than fixed departments.

Structure is a key element that influences how people behave within a company. By making sure you really get how structure works in OB, systems can be set up to make it easy for ideas to flow and for teams to gel. Everyone feels like they’re where they need to be in the team, and stronger teams create a more effective workplace. Keep your structure strong and well-balanced.

3. Technology

Technology is OB’s third element, and most adaptable to changes. With the right technology setup, positive influences on staff productivity and satisfaction can be made. 

Technology in OB relates to the tools, systems and digital platforms you use. Companies have been making the most of advancements in mailing systems and project management software to prove technology’s integral place in the workplace landscape. These things together keep your communication channels up, promote collaboration and keep your staff feeling engaged. 

Without going too far back in time to imagine the business world before the personal computer, let’s consider the development of remote work technology on organizational behavior. Zoom, Microsoft Teams and Slack have revolutionized virtual collaboration. Nearly 80% of Fortune 100 companies use Slack. Without virtual communication tools like these, hybrid and remote teams would still be struggling through mountains of emails. Now they have a digital arena where they can chat, share files and plan projects in one slick interface.

Technology has majorly influenced workplace behavior. Remote working technology means employees have newfound work flexibility, as many staff can better balance work and personal life. These advancements have also presented new challenges to previously understood ideas of team cohesion and dynamics. An effective manager must continue to adapt to breakneck changes in technology, just as the field of organizational behavior does too.

4. Environment

The final element of organizational behavior is the environment your company is in. This element of OB usually relates to the study of external environments, but businesses also benefit from making sure their physical environments, internal to the office, are well-equipped. Objects in the internal environment like lighting, space and furniture really shouldn’t be overlooked when considering the environment. 

Then comes the study of the external environment. While the external environment can affect the company, it has to be said that only a certain amount of it can be controlled. Everything from socio-cultural factors, economic conditions, legal frameworks and even the technological landscape can massively affect the behavior of an organization. 

All of this big-picture stuff influences how an organization functions and interacts with the world around it. Let’s create an example of a young tech startup setting up shop in the heart of Silicon Valley. It has the talent and the vision to disrupt industries, but external factors come into play.

For this start-up, imagine that a new data privacy law just rolled out, changes the game for all tech companies. This startup has to scramble to adjust its product roadmap to stay compliant while staying ahead of the curve. If it isn’t a law change, it might be an economic factor. Perhaps the scene heats up with a wave of fresh investment flooding into the market. It’s easy to see how not understanding external environmental changes can make it hard for a company to stay afloat.

By staying up-to-date with these external changes and adapting accordingly, a company can navigate the twists and turns of the business landscape with finesse.

How to improve your organizational behavior

So now that the 4 elements are understood, let’s wrap up with some clear ways to improve your organizational behavior. Here are some takeaway reminders:

• Put your people first: Invest in their growth, encourage them to speak up, and create an atmosphere where everyone feels valued. Happy employees are productive employees.
• Streamline your setup: Take a good hard look at how your company is structured. Are there too many layers of management? Could communication be smoother? Simplify where you can and give your staff the freedom to own their work.
• Tech, but make it human: Technology can shake up your organizational behavior, but there’s no one-size-fits-all. Use specified tools that make life easier for your team and don’t forget the ways in which virtual coffee breaks can be utilized to build connections.
• Keep the vibe positive: Focus on creating a workplace where people want to be. Celebrate wins, show appreciation, and make sure your office (or virtual workspace) feels like a place where staff can thrive.

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