ORGANIZATIONS AND ORGANIZATIONAL BEHAVIOR
THREE LEVELS OF UNITS TO STUDY “PEOPLE”
In the field of Organizational Behavior (OB), understanding human behavior is essential for improving performance, motivation, teamwork, and overall organizational success. To gain a complete understanding of how people behave within an organization, researchers and managers study behavior at three distinct levels — the Individual Level, the Group Level, and the Organizational Level.
Each level focuses on different aspects of behavior, but they are interconnected and together provide a holistic understanding of people at work.
1. Individual Level of Analysis
At the individual level, the focus is on understanding the behavior, attitudes, personality, and motivation of a single employee.
Every person is unique in terms of their background, skills, values, emotions, and perception, which significantly affect how they perform and interact at the workplace.
Key Areas Studied:
Personality and Attitudes: Understanding traits like introversion, extroversion, openness, and how they influence job performance.
Perception: How individuals interpret situations and people differently based on their experiences and mindset.
Motivation: Why people behave the way they do and what drives them to perform well (theories like Maslow’s hierarchy of needs, Herzberg’s motivation theory, etc.).
Learning and Emotions: How employees learn from experience, manage stress, and handle emotions in professional environments.
Importance:
Studying individuals helps managers understand why employees behave differently, how to motivate them effectively, and how to improve their job satisfaction and performance. It forms the base for all other levels of analysis in OB.
2. Group (or Team) Level of Analysis
Humans are social beings who rarely work in isolation. Most organizational activities are carried out in teams or groups. Therefore, the second level focuses on group dynamics — how individuals behave when they are part of a team and how group interactions influence performance and decision-making.
Key Areas Studied:
Group Formation and Roles: How groups are formed, what roles individuals play (leader, follower, coordinator, etc.), and how norms develop.
Communication Patterns: How members exchange ideas, resolve conflicts, and make collective decisions.
Leadership: The style and behavior of leaders, and how leadership affects motivation and productivity within the group.
Conflict and Cohesion: Understanding how conflicts arise and how cooperation and team spirit can be built.
Importance:
At this level, the focus is on team effectiveness, collaboration, and leadership styles that encourage unity and productivity. Studying group behavior helps organizations enhance teamwork, resolve conflicts, and improve coordination among members.
3. Organizational (or System) Level of Analysis
At the organizational level, behavior is examined from a broader perspective, focusing on how the structure, culture, and policies of the organization affect people’s behavior and performance.
Key Areas Studied:
Organizational Structure: The hierarchy, division of labor, and reporting relationships that influence communication and control.
Organizational Culture: Shared values, beliefs, and norms that shape employee attitudes and actions.
Change and Development: How organizations adapt to changes, innovate, and manage transformation successfully.
Policies and Environment: How external factors (market conditions, competition, technology) and internal policies affect employee behavior.
Importance:
Studying behavior at this level helps management understand how the overall system impacts individual and group performance. It also helps in developing effective strategies, designing efficient structures, and creating a positive culture that aligns employee goals with organizational objectives.
Interrelationship Between the Three Levels
Although each level focuses on a specific aspect of behavior, they are deeply interconnected:
Individual behavior influences group performance.
Group dynamics affect the overall organizational outcomes.
Organizational policies and culture shape both individual and group behaviors.
To fully understand and improve organizational effectiveness, managers must analyze behavior across all three levels simultaneously. A problem at the organizational level (like poor culture) may affect group morale and individual motivation, showing how closely these levels are related.
Organizational Structure
Introduction
An organizational structure is the formal system that defines how tasks are divided, grouped, and coordinated within an organization. It provides a clear framework that shows the hierarchy of authority, communication flow, and responsibility distribution among employees. In simpler terms, organizational structure determines who reports to whom, how work is assigned, and how decisions are made.
Every organization—whether small or large—needs a structure to operate efficiently. Without a well-defined structure, confusion and miscommunication can occur, leading to inefficiency and low productivity. Thus, the organizational structure acts as the backbone of an organization, guiding both employees and managers in performing their duties effectively.
Meaning and Definition
An organizational structure can be defined as:
“A system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include task allocation, coordination, and supervision.”
In other words, it is a blueprint showing how different departments, positions, and roles are linked together to achieve the overall objectives of the organization.
Objectives of Organizational Structure
The main objectives of having an organizational structure are:
Clarify roles and responsibilities – It defines what each employee is supposed to do.
Establish hierarchy – It shows the chain of command and reporting relationships.
Facilitate coordination – It helps integrate the efforts of different departments.
Improve communication – A clear structure allows proper flow of information from top to bottom.
Enhance efficiency – Proper division of work reduces duplication and confusion.
Support growth and control – As organizations expand, structure ensures that control and management are maintained effectively.
Key Elements of Organizational Structure
An organization’s structure is built upon several key elements. Understanding these elements is essential to design a good and effective structure.
Work Specialization (Division of Labor):
This refers to the degree to which tasks are divided into smaller jobs. Each employee performs a specific part of the overall task, which increases efficiency and productivity.Departmentalization:
After work is divided, similar tasks are grouped together into departments. For example, there can be separate departments for marketing, finance, human resources, and production.Chain of Command:
It defines the line of authority from top management to the lowest level of the organization. It clarifies who reports to whom and ensures that everyone knows their superior.Span of Control:
It refers to the number of employees that a manager can effectively supervise. A narrow span means few subordinates per manager; a wide span means many subordinates under one manager.Centralization and Decentralization:
Centralization means decision-making authority is concentrated at the top levels of management.
Decentralization means authority is distributed among various levels for faster decisions.
The right balance between the two depends on the nature and size of the organization.
Formalization:
It indicates the extent to which rules, procedures, and policies are written and strictly followed. A highly formalized structure has strict rules, whereas a less formalized one allows flexibility.
Types of Organizational Structures
Organizations adopt different types of structures depending on their size, goals, and activities. The major types are:
1. Functional Structure
In a functional structure, the organization is divided based on different functions or departments such as marketing, finance, operations, and human resources.
Example: A manufacturing company may have departments for production, sales, HR, and accounting.
Advantages:
Clear specialization of work
Efficient use of skills
Better supervision
Disadvantages:
Poor communication across departments
Slow decision-making
2. Divisional Structure
In a divisional structure, the organization is divided based on products, services, or geographical areas. Each division works as a semi-autonomous unit with its own resources and objectives.
Example: A company like Samsung may have separate divisions for mobiles, electronics, and home appliances.
Advantages:
Better accountability of results
Flexibility and quick decision-making
Focus on specific markets or products
Disadvantages:
Duplication of resources
High operational cost
3. Matrix Structure
A matrix structure combines elements of both functional and divisional structures. Employees report to both a functional manager and a project or product manager.
Advantages:
Efficient use of resources across projects
Encourages teamwork and flexibility
Disadvantages:
Confusion due to dual authority
Possibility of conflict between managers
4. Line and Staff Structure
This structure combines the line authority (direct chain of command) with staff specialists who provide advice and support.
Example: Line managers handle operations, while staff experts (like HR or legal advisors) support them.
Advantages:
Better decision-making with expert advice
Clear hierarchy
Disadvantages:
Possible conflicts between line and staff personnel
5. Network or Virtual Structure
A network structure is a modern type where the organization outsources many of its functions to external firms. The central organization coordinates the work of partners and contractors using technology.
Advantages:
Flexibility and cost-effectiveness
Focus on core activities
Disadvantages:
Lack of control over outsourced tasks
Risk of communication gaps
Importance of Organizational Structure
An effective organizational structure offers several benefits to both management and employees:
Enhances Coordination: Ensures smooth collaboration between departments.
Defines Authority: Everyone knows their role and reporting relationships.
Improves Efficiency: Clear division of work reduces duplication and confusion.
Facilitates Growth: Helps manage expansion and diversification effectively.
Improves Communication: Provides clear communication channels.
Supports Decision-Making: Helps determine where and how decisions should be made.
Modern Trends in Organizational Structure
Modern organizations are adopting flexible and adaptive structures to respond quickly to changing environments. These include:
Flat Structures: Reducing layers of management to speed up communication.
Team-Based Structures: Emphasizing collaboration over hierarchy.
Boundaryless Organizations: Removing barriers between departments and external partners.
Such structures promote innovation, faster decision-making, and higher employee involvement.