What is Organizational Behavior, and Why is it Important?

The most successful business leaders are ones that continuously look for ways and strategies to drive performance, not just through improving employee productivity, but also their workplace experience and job satisfaction. This can be achieved by understanding how employees interact with each other and management, as well as what motivates them. One way to do this is to study the interrelationship between individual employees, teams, and management to identify what sets the most effective workers apart.

This is essentially what organizational behavior is all about.

Organizational behavior describes the behavioral dynamics that occur between groups and individuals in an organizational setting. The following five elements are key to studying organizational behavior:

  • People
  • Structure
  • Technology
  • Social system
  • Environment

Understanding these elements and their dynamic interrelationships can help business leaders achieve short and long-term goals for improving employee productivity and success by informing strategies around training, ongoing development, collaboration, and workforce processes.

The importance of studying organizational behavior

At its core, organizational behavior analyzes the effect of social and environmental factors that affect the way employees or teams work. The way people interact, communicate, and collaborate is key to an organization’s success. By analyzing and understanding these parameters, you can leverage organizational behavior to improve the effectiveness and efficiency of your workforce. It can also help you achieve the following organizational and work culture goals.

Better communication channels and protocols

Individual employees respond differently to various methods of communication and behave in certain ways due to the structure of the workplace and the organization’s culture, values, and goals. They tend to align better with teammates and managers who mirror their behavioral strengths. As such, a keen grasp of organizational behavior can enable middle management to build more effective teams and communicate better with frontline employees.

Leveraging insights from studying organizational behavior can help you understand whether your employees respond better to an autocratic or a supportive model of management. This ensures that you have a firm grasp of the policies, communication channels, and incentives that will best enable your employees to perform well.

Comfortable work environment

One of the key benefits of organizational behavioral analysis is the creation of a suitable workplace environment for employees. With many employees now working from home, it’s important for business leaders to create a positive and empowering work setting to facilitate seamless team communication and collaboration. As such, the study of organizational behavior is essential for businesses looking to adapt to the disruptions and challenges resulting from things like the pandemic or shifts in market forces.

Influencing management style

Savvy businesses use data to drive decision-making around the formation of their corporate structure. Having management looking over employees’ shoulders at every turn indicates distrust, engenders micromanagement, and leads to negative workplace culture.

By observing this trend through organizational behavioral analysis, many enterprises are adopting a flatter, more linear (rather than hierarchical) structure to provide employees with more freedom over how they perform their tasks or whom they collaborate with. Such a structure recognizes the unique differences among employees and enables employees to have a greater voice and contribute to decisions that affect them, their teams, and the larger organization. It also enables business leaders to build a stronger relationship rooted in communication, trust, and transparency with their employees.

Building a winning people strategy

Employees want to work for organizations with a positive culture and an appealing work environment. They also want to get along with other employees and management while working to achieve the organization’s goals and objectives. The challenge is creating a workplace that fosters trust, open communication, and seamless collaboration while simultaneously catering to the unique needs of individual employees or certain functions. Creating a winning people strategy requires business leaders to define how they interact with and nurture the development of employees and work culture. It is very much a relationship-focused effort, and organizational behavior is the facilitating linchpin.

Influencing human resource strategies

Business leaders can increase the value of their human capital by studying the complex nature of employees and their interrelationships with others. The insights that such a study provides can help drive human resources reforms and strategies, particularly with recent findings showing a collapse of work-life balance (due to more employees working from home). HR personnel can identify struggling groups needing more support and apply motivational tools (uniquely suited to the employees) to help them perform better by improving their workplace experience.

Conflict resolution

Proactive business leaders nip problems in the bud before they develop into full-scale confrontations. Measuring organizational behavior can help with preventive conflict resolution by identifying where and why your employees are having issues with fellow teammates and management. Behavioral dynamics can help you understand the cause of a problem, predict its course, and head off potential consequences before the issue escalates.

Wrapping Up

The core concept behind the study and application of organizational behavior is the certainty that a happy and productive workforce results in a successful organization. Drawing heavily on behavioral/social sciences and psychology, organizational behavior takes a human-centric approach to facilitating a performance-oriented workforce. As such, a deep understanding of organizational behavior and why it’s important can help business leaders increase the effectiveness of their workforce.

Last Updated 27 May 2021