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Organizational Behavior (OB)


Organizational Behavior (OB) refers to the study of how people interact within groups in a work environment. It involves understanding, predicting, and managing human behavior in organizations. The primary focus is on employee behavior and how it can be influenced by organization structures, roles, and management practices.


Organizational Behavior (OB) can be phonetically transcribed as: /ˌɔːrɡənaɪˈzeɪʃənl bɪˈheɪvjər/ in International Phonetic Alphabet (IPA).

Key Takeaways


  1. Understanding Human Behavior: One of the main takeaways of Organizational Behavior (OB) is the understanding of human behavior in an organizational setting. It helps in understanding how individuals behave, interact, and perform in an organizational milieu. This understanding can play a critical role in enhancing productivity and job satisfaction among employees.
  2. Improving Organizational Efficiency: OB plays a significant role in improving the overall efficiency of an organization. By applying the principles and theories of OB, managers can better manage their teams, resolve conflicts, motivate employees, and create a positive working environment. This not only increases the efficiency of an organization but also boosts its overall profitability.
  3. Facilitating Change and Innovation: As businesses operate in dynamic environments, change is inevitable. OB can provide valuable insights into how to manage and facilitate change in an organization effectively. Moreover, the theories and concepts of OB can foster innovation by understanding and promoting behaviors that lead to creative thinking and novel problem-solving strategies.



Organizational Behavior (OB) is a crucial concept in business and finance because it directly impacts the efficiency and productivity of an organization. It involves the study of how individuals and groups behave within an organizational setting, ensuring better understanding of employee behaviour, attitudes, and job performance. This knowledge can be harnessed to improve employee motivation, engagement, collaboration, and overall workplace environment. Effectively managing and utilizing OB can lead to enhanced job satisfaction, increased profitability, improved customer satisfaction, and reduced employee turnover, making it integral to the organization’s success.


Organizational Behavior (OB) is vital in the realm of business and finance as it helps in understanding, predicting, and controlling human behavior in an organizational setting. The purpose of OB is to build a more robust understanding of the factors that can influence how individuals, groups, and the structure of organizations operate. This allows for more effective management within a company as it can aid in navigating the complexities of employee interactions and their resulted impacts on a company’s success. Leveraging OB strategies can effectively foster improved performance, motivate employees, stimulate innovation, and promote leadership.The application of OB goes beyond simply boosting productivity, encompassing elements of workforce morale, motivation, efficiency, and job satisfaction. This discipline takes into account aspects such as organizational culture, behavior, leadership styles, and inter-personal communication among employees, and also investigates the effect of these elements on the individual and team performance, productivity, job satisfaction and overall business success. By closely monitoring and adjusting these elements, businesses can cultivate an environment that promotes growth and development, both at an individual and organizational level. Overall, OB is used to understand group dynamics and organizational structures which helps in improving operating procedures, job satisfaction, customer relations, and overall business profitability.


1. Google: Google’s organizational behavior is quite well-known – they encourage an open and participatory workforce, providing spaces for creativity, relaxation, and teamwork within their campuses. Google encourages a culture of transparent communication and values employee feedback and innovation. All these employee-centric strategies result in increased employee satisfaction and productivity, reflecting the company’s understanding and positive implementation of Organizational Behavior.2. Zappos: Zappos, an online shoe and clothing retailer, places great emphasis on company culture and customer service. This company prioritizes hiring the right individuals who align with their core values and fit within their organizational culture. They have a unique approach towards customer service, believing that all employees are a part of the customer service team. This sort of understanding of organizational behaviour not only enhances their customer service but also strengthens their organizational culture.3. Southwest Airlines: Southwest Airlines is known for its organizational behavior of valuing its employees. The company believes in investing and appreciating its employees which, in turn, motivates the employees to deliver top-notch customer service. They are also famed for their unique hiring practices where they hire for behavior and train for skill, recognizing that it is easier to nurture skills than to change fundamental behaviors. This positively impacts both the satisfaction level of the employees and the customers, distinguishing the company from its competitors in the airline industry.

Frequently Asked Questions(FAQ)

What is Organizational Behavior (OB)?

Organizational Behavior is a field of study that investigates the impact that individuals, groups, and structures have on behavior within an organization. Its primary purpose is to enhance organizational efficiency and effectiveness.2.

What are the key components of Organizational Behavior?

Organizational Behavior includes three key components: individuals, groups, and structures. The field studies these areas’ interactions within a company and how they influence performance, job satisfaction, innovation, and overall business success.3.

What is the importance of Organizational Behavior in a business?

Understanding Organizational Behavior is critical to optimizing business performance, improving communication, increasing job satisfaction, and fostering innovation. It also helps leaders and managers to manage their teams effectively, enabling a positive, productive organizational environment.4.

How is Organizational Behavior related to Human Resource Management?

Human Resource Management and Organizational Behavior are closely related. HRM focuses on recruiting, training, and maintaining employees, while OB aids in understanding and managing employees’ behavior in an organization, impacting HRM strategy and decisions.5.

What some are common areas of study within Organizational Behavior?

Common areas of study within OB include leadership, motivation, teamwork, organizational culture, decision-making processes, and job design. It also evaluates aspects like employee attitudes, behavior, job satisfaction, and performance management.6.

Can Organizational Behavior improve company culture?

Yes, understanding and applying Organizational Behavior principles can significantly improve company culture. It involves a deep understanding of human behavior, teamwork, and communication, all of which contribute to a company’s culture.7.

What are some factors that influence Organizational Behavior?

A range of internal and external factors can influence Organizational Behavior, including leadership style, organizational structure, company policies, employee attitudes and behaviors, and environmental factors such as market conditions and competition.8.

What are the limitations of Organizational Behavior?

While OB has many benefits, it comes with certain limitations. For instance, it might not fully account for all individuals’ uniqueness or the unpredictability of human behavior. Additionally, implementing behavioral changes can be time-consuming, and results are not always immediate.9.

Is Organizational Behavior relevant to all businesses?

Yes, Organizational Behavior is relevant to any business that involves people. Regardless of the size or nature of an organization, understanding people’s behavior can contribute greatly to managing and motivating employees effectively.10.

How can one apply the principles of Organizational Behavior in a real business scenario?

Examples of applying OB principles could include leadership development programs, improving communication channels, fostering teamwork through group activities, and implementing employee motivation and reward systems. It all depends on the specific challenges and objectives of the organization.

Related Finance Terms

  • Job Satisfaction
  • Team Dynamics
  • Leadership Styles
  • Workplace Ethics
  • Conflict Resolution

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