What is Organisational Behaviour Theory and its role in Management?

Organisational behaviour theory is a branch of academic study that aims to figure out how and why people act in certain ways within different types of professional groups. Its applications are relatively broad.

However, it is mainly applied within business contexts to figure out how to boost productivity and facilitate team cohesion.

The study of organisational behaviour can be split into a number of dedicated subsections including performance, job satisfaction, innovation and leadership.

By analysing each of these fundamental business areas, organisational behaviour theorists can recommend certain actions for individual companies such as how to reorganise teams, modify award structures, or alter how individual performance is evaluated.

In terms of its history, organisation behaviour theory dates back to the late 1920s when researchers at Western Electric Company in the US decided to conduct studies of its workers, with a view to bolstering their productivity.

They tried altering the design of the work environment, discovering that it made far less of an impact compared to social factors.

Indeed, it turned out that strong social bonds between workers were of paramount importance when it came to maintaining morale and ensuring that productivity remained high.

The most important finding of this study was a phenomenon known as the Hawthorne Effect, whereby workers behaviours significantly altered when they were being observed.

Whilst the Hawthorne Effect made a significant impact on further behavioural studies, it should be noted that organisational behaviour theory was not recognised as a legitimate field of academic study until at least the 1970s.

Today, organisational behaviour theory has evolved and now plays an important role in structuring businesses and helping leaders make important decisions.

It has become especially important for thinking about corporate culture and many theorists have started to study how race, gender and class structures may affect how employees interact with each other.

What is Management Theory?

Management Theory is a term encompassing a collection of notions that address how people in supervisory and management roles can implement strategies to improve business efficiency, motivate employees, and boost profits. The most influential and effective management theories to date include:

1. Taylor’s Scientific Management Theory

In 1909, Frederick Winslow Taylor published research in which he stated his belief that encouraging people to work as hard as possible was not an efficient way of boosting productivity and optimising human resources.

Instead, he argued that businesses would benefit by breaking jobs up into simple tasks and put forward the idea that managers and workers should work together rather than against each other.

Although this may sound a little obvious, it was a revolutionary idea at the time when factory managers and employees typically had very little contact. Indeed, there was no standardisation and workers were usually only incentivised by money, so only worked as hard as was minimally required.

Taylor believed that workers should be rewarded in line with their levels of productivity, an idea which has endured to this day. Indeed, his theories have changed the professional landscape over time into one where the relationships between employees and managers have become much closer and managers are more willing to reward high-quality performance.

Taylor put forward four key principles for business leaders to follow including matching workers to tasks based on their individual capabilities and monitoring worker performance with a view to advising individual workers about how to work as efficiently as possible.

2. Human Relations Management Theory

After Taylor, the aforementioned Hawthorne Studies became the go-to model to explain the ways in which social interaction between employees and managers could affect business success.

The research demonstrated how important it is for companies to demonstrate some kind of personal investment in their employees, treating them as human beings rather than productivity machines.

It became widely accepted that individuals performed much more effectively when their successes and skills were adequately rewarded, whilst also becoming clear that positive group dynamics also played an important part in maintaining company morale.

3. McGregor’s Theory X and Theory Y (staff motivation and team culture)

Working in the 1950s and 1960s, Douglas McGregor developed a thesis known as the X&Y Management Theory. He argued that all managers and supervisors could be grouped into two separate categories.

Theory X pertains to the first category and explains that all managers perceive their employees in a negative light, believing that they must be forced into working hard. Such managers tend to micromanage.

Managers that fall into the Theory Y category, on the other hand, believe that employees are inherently keen to work. They believe that it is important to help employees to thrive by offering them development opportunities and trusting them to get on with certain tasks independently.

Theory Y managers are also keen to foster welcoming workplace environments that promote employee cohesion and cooperation.

Ultimately, McGregor argued that Theory Y managers produce much better results than Theory X managers because combining a positive team environment with individualised opportunities for growth produces a better work environment, boosts company morale, and ultimately pushes up profits.

Why managers should take account of organisational behaviour theories

Although the organisational behaviour theories mentioned above were introduced a number of decades ago, they are still very relevant to the modern workplace. Technologies and ways of working have undoubtedly changed, but the intellectual tendencies and desires of the average employee have not.

As McGregor was keen to point out, for example, facilitating friendly workplace environments in which managers and employees work together side by side is an excellent way to boost motivation and ultimately improve the efficiency of a company.

This is still very true today. If you want your business to succeed in a competitive market, you need to ensure that your employees are motivated to succeed by offering them a pleasant workplace environment and plenty of opportunities for personal growth.

What is positive workplace culture and how can you get it right?

Positive workplace culture is an integral part of any successful business and alludes to a happy working environment in which employees feel content and secure in their roles.

There are plenty of ways that managers can help build a positive environment including organising company away days, advertising opportunities for staff training and personal growth, encouraging employees to recognise the value in each other’s work, and setting up a rewards system for consistently high performance.

Without such a culture, staff engagement may suffer. Staff engagement refers to the degree to which employees feel that their work matters and that they are appreciated for performing certain tasks. Without high levels of such engagement, productivity could slump, and you could see your profits suffer.

For this reason, it is important to keep staff motivation high and ask employees whether they are happy in their roles on a regular basis. It may be worth sending out regular employee surveys to ascertain whether you as a manager or supervisor could be doing things differently to improve the overall experience of working at your company, for example.

How managers can apply organisational behaviour theories to real-world situations

As a manager, it is your role to promote positive team culture and implement relevant organisational theories into your workplace environment. Here’s how you may wish to go about it:

• Offer plenty of rewards: As Taylor and McGregor were very keen to emphasise, it is imperative that managers reward their employees for all their hard work, particularly if you want to see consistent business growth. Rewards may take many different forms.

For example, you could take out your entire team for a nice meal, reward individual employees with special trophies, or offer financial incentives for hitting particularly targets. It is up to you as a manager to work out how many rewards you can afford to dole out and who deserves the most praise.

• Maintain healthy relationships with employees whilst retaining appropriate boundaries: As set out in the theories mentioned above, a successful workplace environment is one in which managers respect the humanity of employees and do not treat them as mere resources for profit.

To do this, you may wish to set up regular catch-up meetings with staff members to keep track of their progress and check that they are happy in their role. Fostering such honest conversations is fundamental for maintaining a positive business environment.

However, it is important that you do not get overfamiliar or friendly with staff members as they may start to lose respect for you and their productivity may start to fall. Try to find a happy medium.

• Encourage congenial relationships between colleagues: A happy office environment depends on much more than the relationships between employees and their managers. It also depends on the strength of the bonds between staff members on the same level.

To encourage cohesion, try setting up special break-out rooms in the office for employees to get to know each other or, perhaps, try organising regular team-building trips outside of the office.

• Resist the urge to micromanage: As McGregor pointed out, micromanaging employees can have the opposite of the desired effect. Allow employees to work independently, assessing them at regular intervals to offer feedback about how well they are performing.

As such, Management can be a complex field with many variables in how one approaches the task at hand.

Your comments and insights are welcome.

Please also check out our full list of managerial courses.

The Aptitude Team