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Internal and External Factors Affecting Organisational Behaviour

Organisation behaviour is a chief component of any business school core curriculum because it sets out to help students comprehend how human beings deal with being part of organisations, large or small, working in teams and so forth. It is, fundamentally, the study of the 'soft' end of business.  The theories derive from a diversity of disciplines including sociology and psychology. It disquiets itself with the problematical patterns of individual and group working. Thus the apparent aim of the study of organisational behaviour is to understand why people work in positive ways and then working out how to use this knowledge to improve the use of resources. 

Factors Effecting behaviour at work:

The role of work has changed throughout the world due to economic conditions and social demands. Originally, work was a matter of necessity and survival. Throughout the years, the role of “work” has evolved and the composition of the workforce has changed. Today, work still is a necessity but it should be a source of personal satisfaction as well. One of the vehicles to help provide attainment of personal and professional goals is work-life benefits and programs which also helps to assess the behaviour of an individual and the factors affecting the behaviour at work.

When it comes to behaviour at work, most people with the right attitude tend to think that pushing their all, is the way to go. It is important to push and give your best but it is equally important to rest and know how to recharge your batteries. One may have very good behaviour at work and strive hard to increase your efficiency but if you do not know when to say stop, you will soon see your productivity drop. But there are many factors which affect the behaviour at work which eventually affects the performance.

In December 2006 the British petroleum conducted a work life balance workshop which highlighted the factors effecting people’s behaviour at work. Following are the key factors which affect the behaviour and which are also interrelated to each other.

Change is inevitable in the life of an organisation. In today’s business world, most of the organisations are facing a dynamic and changing business environment. They should either change or die, there is no third alternative. Organizations that learn and cope with change will thrive and flourish and others who fail to do so will be wiped out. The major forces which make the changes not only desirable but inevitable are technological, economic, political, social, legal, international and labour market environments.

In very simple words, we can say that change means the alteration of status quo or making things different. “The term change refers to any alterations which occurs in the overall work environment of an organisation.”

“When an organizational system is disturbed by some internal or external force, change frequently occurs. Change, as a process, is simply modification of the structure or process of a system. It may be good or bad, the concept is descriptive only.”

There are a number of factors both internal and external which affect organizational functioning. Any change in these factors necessitates changes in an organisation. The more important factors are as follows:

External Forces

Every organization exists in some context; no organization is an island in itself. Each must continually interact with other organizations and individuals- the consumers, suppliers, unions, shareholders, government and many more. Each organization has goals and responsibilities related to each other in the environment. The present day environment is dynamic and will continue to be dynamic. Changes in social, political, economic, technology, and legal environment force organizations to change themselves. Such changes may result in organizational changes like major functions production process, labour-management relations, nature of competitions, economic constraints, organizational methods etc. In order to survive in the changing environment, organization must change. How the change in various environmental, organizations, must change. How the changes in various environmental factors necessitate change in the organization may be seen in following context:-

.Technology:

 When there is a change in technology in the organizational environment and other organizations adopt the new technology, the organizations under focus become less cost effective and its competitive position weakens. Therefore, it has to adopt new technology, its work structure is affected and a new equilibrium has to be established.

. Marketing conditions: 

Since every organization exports its outputs to the environment, an organization has to face competition in the market. There may be two types of forces which may affect the competitive position of an organization –other organizations supplying the same products and, buyers who are not buying the product. Any changes in these forces may require suitable changes in the in the organization. For example, when Indian economy was liberalized, there were many foreign organizations that entered the Indian market. This forced many Indian organizations to realign themselves with the new situations. The result in that there have been many cases of divesting the business and concentrating on the core business, acquiring core business, and developing competitive competence to face competitive threats. Similarly, there may be changes in buyers in terms of their needs, liking –disliking and income disposal for a product. These changes are from the organizations to bring those products which meet buyer’s requirement.

. Social changes: 

Social changes reflect in terms of people’s aspirations, the needs, and their ways of working. Social changes have taken place because of the several forces like level of education, urbanization, feeling of autonomy, and international impact due to new information sources. These social changes affect the behavior of people in the organization. There, it is required to make adjustment in its working so that it matches with people.

. Political and legal changes:

 Political and legal factors broadly define the activities which an oganisation can undertake and the methods which will be followed by it in accomplishing those activities. Any changes in these political and legal factors may affect the organization operation.

2.0. Internal Forces

It is not only the changes in external factors, which may necessitate organizational changes; any change in organization’s internal factors may also necessitate changes. Such a change is required because of two reasons: changes in managerial personnel and deficiency in existing organizational practices.

2.1. Conflict:

Conflict exists in every organization and to a certain extent indicates a healthy exchange of ideas and creativity. However, counter-productive conflict can result in employee dissatisfaction, reduced productivity, poor service to clients, absenteeism and increased employee turnover, increased work-related stress or, worse case scenario, litigation based on claims of harassment or a hostile work environment.

2.2. Demographic Factors:

The demographic factors are socio economic background, education, nationality, race, age, sex, etc. Organizations prefer persons that belong to good socio-economic background, well educated, young etc as they are believed to be performing better than the others. The young and dynamic professionals that have good academic background and effective communication skills are always in great demand.

2.3. Abilities and Skills:

The physical capacity of an individual to do something can be termed as ability. Skill can be defined as the ability to act in a way that allows a person to perform well. The individual behavior and performance is highly influenced by ability and skills. A person can perform well in the organisation if his abilities and skills are matched with the job requirement.

2.4. Perception:

The cognitive process meant for interpreting the environmental stimuli in a meaningful way is referred to as perception. Every individual on the basis of his/he reference can organize and interpret environmental stimuli. There are many factors that influence the perception of an individual. The study of perception plays important role for the managers.

2.5. Changes in the managerial personnel:

Besides environmental changes there is a change in managerial personnel. Old managers are replaced by new mangers, which necessitated because of retirement, promotion, transfer or dismissal. Each new manager brings his own ideas and way of working in the organization. The relationships more in the organization, the relationships more particularly informal ones, changes because of changes in managerial personnel. Moreover, attitude of the personnel change even though there is no changes in them. The result in that an organization has to change accordingly.

2.6. Deficiency in Existing organization: 

Sometimes, changes are necessary because of deficiency in the present organizational arrangement ad process. These deficiencies may be in the form of unmanageable span of management, large number of managerial levels, lack in co-ordination between various departments, obstacles in communication, multiplicity of committees, lack of uniformity in policy decisions, lack of cooperation between the line and staff, and so on. Beside these internal factors, there are two more internal factors that give rise to organizational changes.

2.7. Nature of the work force: 

The nature of work force has changed over a passage of time. Different work values have been expressed by different generations. Workers who are in the age group of 50 plus value loyalty to their employers. Workers in their mid thirties to forties are loyal to themselves only. The youngest generation of workers is loyal to their career. The profile of the workforce is also changing fast. The new generation of workers has better educational; they place greater emphasis on human values and questions authority of managers. Their behaviour has also become very complex and leading them towards organizational goals is a challenge for the managers. The employee turnover is also very high which again put strain on the management.

2.8. To avoid developing inertia:

In many cases, organizational changes take place just to avoid developing inertia or inflexibility. Conscious manager take into account this view of organization that organization should be dynamic because any single method is not the best tool of management every time. Thus, changes are incorporated so that the personnel develop liking for change and there is no unnecessary resistance when major change in the organization are brought about.

Psychological Contract:

3.0 Psychological Contract:

The term 'psychological contract' was first used in the early 1960s but became more popular following the economic downturn in the early 1990s. It has been defined as '…the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other'1. These obligations will often be informal and imprecise: they may be inferred from actions or from what has happened in the past, as well as from statements made by the employer, for example during the recruitment process or in performance appraisals. Some obligations may be seen as 'promises' and others as 'expectations'. The important thing is that they are believed by the employee to be part of the relationship with the employer. 

The psychological contract lies at the heart of your relationship with the organisation you work for. It is the deal you make with your employer and colleagues at work; it is about your mutual expectations and their fulfilment.

Too often this contract is implicit and left to chance, resulting in misunderstanding, stress, lower commitment and performance. The author demonstrates how to use the psychological contract to raise the business game and increase personal fulfilment.

The author's ideas are based on his own research and consultancy experience as well as the latest business school research. The book has a number of case studies showing how different organisations use the psychological contract.

Managing the Psychological Contract is an important and extremely readable book for all those concerned with the improved performance of people and organisations.

The theory of psychological contracts in organizational employment - and wider 'psychological contracting' in relationships, communications and societies 'The Psychological Contract' is an increasingly relevant aspect of workplace relationships and wider human behaviour. Descriptions and definitions of the Psychological Contract first emerged in the 1960s, notably in the work of organizational and behavioural theorists Chris Argyris and Edgar Schein. Many other experts have contributed ideas to the subject since then, and continue to do so, either specifically focusing on the Psychological Contract, or approaching it from a particular perspective, of which there are many. The Psychological Contract is a deep and varied concept and is open to a wide range of interpretations and theoretical studies.

Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes. The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it to be understood from both sides. Simply, in an employment context, the Psychological Contract is the fairness or balance (typically as perceived by the employee) between: how the employee is treated by the employer, and what the employee puts into the job.

The words 'employees' or 'staff' or 'workforce' are equally appropriate in the above description. At a deeper level the concept becomes increasingly complex and significant in work and management - especially in change management and in large organizations. Interestingly the theory and principles of the Psychological Contract can also be applied beyond the employment situation to human relationships and wider society.

Unlike many traditional theories of management and behaviour, the Psychological Contract and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood, and are far from widely recognized and used in organizations. The concept of 'psychological contracting' is even less well understood in other parts of society where people and organizations connect, despite its significance and potential usefulness. Hopefully what follows will encourage you to advance the appreciation and application of its important principles, in whatever way makes sense to you. It is a hugely fertile and potentially beneficial area of study. At the heart of the Psychological Contract is a philosophy - not a process or a tool or a formula. This reflects its deeply significant, changing and dynamic nature.

Changes to psychological:

Changes to psychological contract of hurricane are arising as a result of business pressure. Dramatically changes in the global economy including the development of low cost, high quality and now also services in China and India are accompanied by ever-fast changes in technology, liberalisation of market and changing consumer expectations. As organisation is pushed to innovate, increase markets and customers responsiveness and reduce cost, they are being forced to bring about equally dramatic changes in work practices and in turn employee behaviour.

The impact and the nature of changes are described well by Hamel when he says

“We now stand on the threshold of new age- the age revolution. In our mind we now the new age have already arrived; in our bellies we’re not sure we like it... for change has changed. No longer it is additive. No longer does it move in straight lines. In the twenty first century change is discontinuous, abrupt, seditious ....Today we live in world that is all punctuation and no equilibrium.”

Recent research by the UK chartered Institute of Personal Development add weight to the conclusion that broad change are taking place in the psychological contract operated across different organisation in the UK. At a headline level the research suggest that organisations are now more successful in delivering against the board expectation they encourage employees to believe: they are fulfilling their sides of psychological contract more than before. CIPD conclude that employees today seek one of three types of psychological contract with their employees:

Traditional: those who seek long term tenure and work long hours.

Disengaged: those for whom work is not a central life interest and seek no emotional tie to their employer.

Independent: those who are well qualified, and seek short tenure and high rewards.

When the psychological contract was relatively straightforward and stable, as in bureaucratic organisations, it was less important to understand others’ expectation as these become apparent over time and day misunderstanding could be dealt with gradually.

Is your company going through a period of change right now? If you’re managing that change, one of the key things to consider is how this will impact on the unwritten rules. When you’re in the driving seat it’s difficult to see beyond the logistics of making the decision a reality; you have myriad strategic deliberations, struggles with theoretical alternatives and challenges to overcome complex problems. When you finally communicate the vision for the future, you may not fully anticipate the strength of resistance to what is, after all, the best way forward for the company.

Some of the causes for resistance are obvious, in fundamental change this could be job loss, increased work load, change of location etc while others are less tangible like fear of damage to prestige, working relationships or job satisfaction. The impact of this resistance is very real causing disengagement, reduced performance, increased turnover and sometimes even wilful sabotage of the new way of working.

A major step you can take in reducing resistance is unearthing those hidden reasons that could cause problems. Try this little exercise: think about the main 5 things you value in your job (e.g. being empowered to make decisions, the challenge and variety of your role) and then consider how you would feel if your company removed these; it could be that a new level of management is brought in above you meaning decisions have to be authorised or perhaps some of your more enjoyable duties are delegated elsewhere.

These 5 things are likely to be clauses in your psychological contract; they may not comprise your actual employment contract but are the unwritten expectations you have of your employer – the ‘real deal’ [Although you need to be careful here, for instance, significant changes to status could be a legitimate reason for an aggrieved employee to leave and claim constructive dismissal]. In exchange, you provide your employer with unwritten benefits such as being very loyal and committed. If your employer proposes a new way of working which breaks these unwritten clauses, you are unlikely to welcome such a change.

Have a think about the transformation you are undergoing or planning and how they might affect the values your staff hold dear.  Psychological contracts are highly subjective and differ from individual to individual; managers are more likely to know their teams’ underlying beliefs and can help to manage the process by taking them into account. Of course, you can’t avoid violating the psychological contract in every or even most cases, but what you can do is demonstrate understanding of what the implications are going to mean, clarify what the psychological contract involves and engage people in shaping or implementing the change wherever possible.

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