Organizational behavior terminology and concepts

Schermerhorn et al (2005), define organizational behavior (OB) as “the study of human behavior in organizations” (p. 3). OB uses scientific methods to test hypotheses. OB is also a multi-disciplinary study, taking knowledge from social and behavioral sciences and applying it to real-world situations.

Why is organizational behavior important to study? If people are an organizations most important asset then understanding how humans behave in organizations will improve productivity. Understanding OB allows better worker relations, more realistic expectations and improves job satisfaction.

Organizational Culture

An organizations culture stems from “the shared beliefs and values that influence the behavior of organizational members” (Schermerhorn, Jr et al., 2005, 9). Every organization has a different culture. For example, at (name changed) Grey Valley Inc., the corporate culture expects employees in any position to learn constantly about the industry and then teach clients. The culture also encourages direct communications with any other employee no matter what level on the org chart they are. Other company’s cultures may expect employees to only do their job and not give input at all.


Organizations which do not have a culture of encouraging diversity are at a decided disadvantage. In the modern world of global business, not hiring the best person for the job solely because of gender, race, ethnicity, religion or age is not only foolish, but probably illegal.

Some organizations are even going to the extreme of trying to eliminate all subcultures and become truly multicultural. “The multicultural organization is a firm that values diversity but systematically works to block the transfer of societally based subcultures into the fabric of the organization” (Schermerhorn, Jr et al., 2005, 440).


Two types of organizational communication exist, formal and informal. Organizations of all sizes make use of both, whether directly or indirectly. Formal channels of communication generally follow the chain of command or org chart and are top down. Informal channels on the other hand tend to be more open and spontaneous. Scuttlebutt or gossip is also considered forms informal organizational communication.

Many small companies such as Grey Valley Inc. rely more on informal communications channels. Small organizations by and large adhere less to formal command structures and all employees are generally more active in feedback and decision making.

Organizational Effectiveness and Efficiency

Organizational effectiveness measures how well an organization is in sync. Even with the best management, superior strategy and flawless execution an organization can be less successful than it could be. Organizations who understand employees as partners stand a much better chance of achieving high organizational effectiveness and efficiency. “Organizational effectiveness is about each individual doing everything they know how to do and doing it well” (NIH, 2004).

Smaller organizations should exhibit more organizational efficiency due to less bureaucratic management. This is not always the case as smaller organizations oftentimes have less clear strategic goals and incomplete systems. Grey Valley Inc. tends to not have as many mature systems in place for employees. This creates inefficiency as several, and oftentimes conflicting, methods are created by employees and not management. These systems may also conflict with management’s strategic plan.

Organizational Learning

In today’s fast paced, global business environment, organizations need to adapt quickly to threats and opportunities. How an organization learns directly affects the speed and efficiency of an organization to handle opportunities and threats. Richard Karash supplies this definition, “A “Learning Organization” is one in which people at all levels, individually and collectively, are continually increasing their capacity to produce results they really care about” (Karash, 2002).

At Grey Valley Inc., employees are constantly learning and experimenting. New products are created and new markets serviced based on employee suggestions. Gluten-free bread, a new product, was conceived by a team who were researching new product ideas. The bread was then created by the master baker. After a one year test phase, in which many iterations of the bread were baked and sampled, a final product was introduced. All employees of the company contributed and in the process learned about the baking process, helping them both professionally and personally.


Understanding organizational behavior increases the opportunity for a successful organization. Gaining an awareness of an organizations culture is necessary for continued diverse growth. In order to attract the best talent to an organization, a culture of diversity and open communication is needed. Once an organization has the best talent it can find, the organization can improve efficiency and have more wide-spread viewpoints to learn from.


NIH (2004). Organizational Effectiveness and Efficiency. Retrieved October 10, 2007, from

Karash, R. (2002). What is a “Learning Organization”. Retrieved October 10, 2007, from

Schermerhorn, J. R., Jr, Hunt, J. G., & Osborn, R. N. (2005). Organizational Behavior (9th ed.). Hoboken, NJ: John Wiley & Sons, Inc..