Top 8 Organizational Behavior Theories

When people feel valued and understood by their managers, they’re empowered to make positive organizational impacts. Leaders who learn about employee motivation and human behaviors by studying organizational behavior are well-positioned to create such an environment. Understanding how people and systems coexist is key to running a successful company and achieving measurable goals. Researchers studying organizational behavior aim to discover what causes people and organizations to thrive in this way and how to implement strategies to drive businesses forward.

According to Vice President of Organization Development and Operations at FMG Leading Addam Marcotte: “Effective leadership today is both art and science – it takes excellence in both the doing and the being to be an effective leader. Mastery of organizational behavior is the new currency of leading today’s businesses.”

Theory is the foundation of mastery. That’s why we review the top eight organizational behavior theories in this article.

What is organizational behavior?

Organizational behavior combines insights from the fields of psychology, sociology, and anthropology with the aim of understanding how individuals and groups act in the workplace. It’s the study of human behavior in organizational settings, group dynamics within an organization, and organizational structure. It explores behavior from multiple lenses, including the behavior of individuals, groups, and structures.

Three levels of analysis: individual, group, and organizational

Organizational behavior study takes a multi-pronged approach to analyze human behavior. It explores three levels of workplace interaction: individual, group, and organizational.

The individual level of analysis involves the study of:

• Cognition: Refers to the mental processes involved in acquiring knowledge and understanding, including thinking, memory, and problem-solving, which influence decision-making and behavior in the workplace.
• Cooperative Behavior: Involves actions that promote collaboration and teamwork among individuals, essential for achieving common organizational goals and fostering a positive work environment.
• Creativity: The ability to generate novel and useful ideas, essential for innovation and problem-solving within an organization.
• Deviant Behavior: Refers to actions that violate organizational norms and can harm the organization or its members, including unethical behavior, absenteeism, and workplace aggression.
• Ethics: Involves the principles and standards that guide individual behavior in the workplace, ensuring actions are morally sound and align with organizational values.
• Learning: The process through which individuals acquire new knowledge or skills, essential for personal development and organizational growth.
• Motivation: The internal and external factors that drive individuals to take action, affecting their level of effort, persistence, and enthusiasm in the workplace.
• Perception: The process by which individuals interpret and make sense of sensory information, influencing how they view and react to their environment and coworkers.
• Personality: The unique set of traits and characteristics that influence an individual’s behavior and interactions in the workplace, impacting job performance and interpersonal relationships.
• Task Performance: The effectiveness and efficiency with which individuals carry out their job responsibilities, critical for achieving organizational objectives.
• Turnover: The rate at which employees leave an organization, which can affect organizational stability, knowledge retention, and morale.
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The group level of analysis involves the study of group dynamics, including:

• Cohesion: The degree to which group members are attracted to each other and motivated to stay in the group, fostering unity and teamwork.
• Conflict: The presence of disagreements or tensions between group members, which can be constructive (leading to better solutions) or destructive (causing dysfunction).
• Interpersonal Communication: The exchange of information and ideas between group members, crucial for effective collaboration and understanding.
• Leadership: The ability of an individual to influence, motivate, and guide a group towards achieving its goals.
• Networks: The connections and relationships between individuals and groups within an organization, facilitating the flow of information and resources.
• Power: The capacity of an individual or group to influence the behavior and outcomes of others within the organization.
• Roles: The expected behaviors and responsibilities assigned to individuals within a group, which help organize tasks and maintain group structure.
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The organizational level of analysis focuses on:

• Change: The process by which organizations adapt to internal and external shifts, including restructuring, innovation, and strategic redirection to stay competitive and effective.
• Cooperation and Conflict: The dynamic interplay between collaborative efforts and disagreements within an organization, influencing overall performance and workplace harmony.
• Cultural Diversity: The variety of cultural backgrounds and perspectives within an organization, enhancing creativity and decision-making but also requiring effective management to integrate differences.
• External and Environmental Forces: Factors outside the organization, such as market trends, economic conditions, regulations, and competition, that impact its operations and strategies.
• Organizational Culture: The set of shared values, beliefs, and norms that influence the behavior and practices of members within the organization, shaping its identity and functioning.
• Organizational Structure: The formal arrangement of roles, responsibilities, and relationships within an organization, determining how tasks are coordinated and directed.
• Technology: The tools, systems, and processes that support and enhance organizational activities, driving efficiency, innovation, and competitive advantage.
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Organizational behavior theories

Organizational behavior theories are used to inform real-time evaluation and management of people in the workplace. Managers and human resources professionals benefit greatly from the study of organizational behavior.

1. Scientific management theory

Frederick Winslow Taylor developed the scientific management theory (often referred to as “Taylorism”). Taylor posited that processes need to be simplified and employees need direction to increase productivity. This theory emphasizes a close working relationship between managers and employees and hinges upon the importance of breaking up larger tasks into more manageable ones.

Taylor also believed in rewarding employees based upon productivity. This theory was criticized for the lack of consideration of the social aspects of management, including biases, attitudes, and expectations.

2. Bureaucracy theory

If you’ve worked anywhere, you’ve probably noticed that some people hold more influence than others. There’s a hierarchy, and people are either working on climbing the corporate ladder or are content to maintain their current status. The bureaucracy theory hinges upon the concept of authority in an organization.

There are three types of authority in any organization:

• Charismatic authority: This power derives from a special appeal that a leader possesses
• Legal authority: A person holds this authority due to their legal position or rank within the hierarchy
• Traditional authority: A person holds traditionally recognized power from long-standing customs, beliefs, or traditions; this power comes from people accepting a system’s legitimacy over time

3. Hybrid organization theory

Can a company be both altruistic and turn a profit? According to hybrid organization theory, the answer is yes. This theory focuses on issues related to organizational change toward more sustainable and responsible strategies and production processes. You can see this model in companies like TOMS, Bombas, and Sevenly.

Through hybrid organization theory, companies may aim to give back through helping the homeless, combatting human trafficking, donating their products to charities, and other altruistic behaviors.

4. Informal organizational theory

Ever notice that people tend to form their own alliances within a workplace? You may work in payroll at your company but become friends with someone in marketing who knows someone in the legal department. Soon, you’re all enjoying lunch together.

These informal groupings are the basis for informal organizational theory. It recognizes that there are often hidden systems within formal company structures. These systems can positively or negatively impact performance.

5. Five bases of power theory

Contrary to what you may believe, an organizational behavior definition of power can be more dependent on relationships than titles. Want to figure out who holds the most influence in your organization? Start with French and Raven’s five bases of power:

• Legitimate: Those with legitimate power hold official titles within your organization. They may be team leaders, managers, or executives.
• Reward: People earn this kind of power through their ability to reward others for doing what they’re supposed to do.
• Expert: Sometimes called subject matter experts (SMEs), these individuals are knowledgeable and skilled at what they do. Others lean on them to learn what they need to know in order to be successful.
• Referent: Referent power is derived from the ability to exhibit relational skills within the workplace. These are usually people who are well-liked and respected because of their personalities and ability to bring people together despite their differences.
• Coercive: People who hold coercive power gain it through the emotional manipulation of others, often through punishment.

6. Human relations management theory

Elton Mayo and Mary Parker Follet were primary contributors to human relations management theory, also known as the Hawthorne effect. Human relations management theory focuses on individual needs and resultant behaviors of individuals and groups. It highlights the concept of individual motivation. It suggests that employee productivity and motivation can be increased through positive social bonds in the workplace and acknowledgment of the worker as a unique individual. There are six basic elements associated with human relations management theory:

• Emphasis should be on people rather than machines or economics.
• The organizational environment is not an organized social context.
• Human relations are critical to incentivizing people.
• Motivation stems from teamwork, coordination, and cooperation.
• Human relations within teams must fulfill both individual and organizational goals.
• Individuals and organizations reach efficiency by achieving maximum results with minimum inputs.

7. Process management theory

Also known as “administrative theory,” process management theory was pioneered by Henri Fayol. Fayol was a French mining engineer who recorded his industry methods and eventually became a management theorist. He touted a top-down approach to organizational efficiency and decision-making. Process management theory is a basic model of how management interacts with personnel.

Instead of focusing on worker efficiency, Fayol focused on the organization and structure of work tasks. He proposed the creation of work groups and departments where unique activities are performed. Fayol believed in a direct correlation between effective management organization and workers’ productivity.

Fayol’s 14 principles of management

Fayol pinpointed 14 organizational elements that demonstrate process management theory:

• Authority: Managers have the authority to give commands and must ensure that the workers complete assigned tasks.
• Centralization: Depending upon worker competence and the characteristics of the organization, either management makes all decisions or employees also contribute to the decision-making process.
• Division of labor: Thoughtful division of labor allows workers to become more proficient in accomplishing specialized tasks.
• Discipline: There must be a clear hierarchy and line of authority wherein workers comply with directions from superiors.
• Equity: Employees should be treated with fairness, kindness, and justice.
• Esprit de corps: Employees should feel a sense of belonging within the organization. This, in turn, improves morale and creates a sense of unity.
• Initiative: Managers should encourage initiative by allowing employees to create plans and follow them through.
• Line of authority: There must be a line of authority that places managers before workers in the reporting structure. The organizational hierarchy should be well understood throughout a company.
• Order: Roles and standards must be well-defined. A safe and orderly environment leads to greater coordination and productivity.
• Remuneration: Compensation is used to motivate worker performance. This includes both financial and non-financial forms.
• Stability of tenure: This allows employees time to learn their jobs, develop skills, and build loyalty.
• Subordination of individual interest: The interests of individuals are secondary to the general interests of the department or company as a whole.
• Unity of command: There should be one boss from whom a worker receives direction.
• Unity of direction: Each department works in accordance with a singular plan that coordinates efforts. All work is guided by one supervisor.

8. X & Y management theory

Management professor Douglas McGregor proposed the X & Y management theory. The “X” and the “Y” represent two aspects of human behavior at work. Theory X represents elevated supervision by management wherein management assumes employees lack motivation and will avoid responsibility. Under theory Y, the assumption is that employees are ambitious and driven to complete their work, requiring minimal supervision.

Studying organizational behavior management

If you want to make the workplace better, studying organizational behavior is a great place to start. Colleges offering organizational behavior studies include:

• Northwestern University
• University of Pennsylvania
• Vanderbilt University
• George Washington University
• University of Michigan – Ann Arbor

Managers and business leaders can leverage organizational behavior theories to improve performance and address some of the most prevalent issues in the workplace. They can help to determine strategic direction, resolve internal conflicts, and create a healthier work environment for all employees. Armed with this knowledge, any business has a much better chance to flourish.

(Last Updated on July 16, 2024)

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