Guide To Organizational Behaviour Principles and Benefits

By Indeed Editorial Team

Updated August 19, 2022 | Published November 9, 2021

Updated August 19, 2022

Published November 9, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies have a particular culture that's created by the principles of management and the people working within the organization. For decades, researchers have studied the principles and factors that influence the productivity and satisfaction of a company's employees. Learning about organizational behaviour can help you understand the importance of its factors within a thriving workplace. In this article, we discuss the definition and background of this concept, identify several factors that influence behaviour in a company, and highlight the benefits of using these principles.

What is the definition of organizational behaviour?

In the simplest terms, organizational behaviour, or OB, is the study of how individuals and groups interact within a corporate environment. It uses concepts from sociology and psychology to study the interactions within a work setting for the purpose of creating a more effective company. The study of OB happens on three levels. First, it looks at the interactions on an individual level, then at a group level, and last, throughout the organization.

The background of organizational behaviour

For over 100 years, researchers, business analysts, and psychologists have studied how people interact within groups. Some of the first research studies still influence today's work to improve workplace productivity, make better decisions, and enhance negotiations. The first recorded research on behaviour within an organization began in the late 1920s.

The history of OB

The Western Electric Company in Cicero, Illinois, launched a series of studies about the behaviour of its employees. Researchers wanted to determine if employees had better productivity when the company made changes or improvements to their work environment. For example, the company installed better lighting in the workspace and made other design improvements. The studies found that the physical work environment was less critical to employee productivity and satisfaction than social factors.

For example, it became clear that when people got along with their colleagues and felt appreciated by their supervisors, there was a higher degree of happiness in the workplace. These initial investigations spawned an entire field of study called organizational behaviour. It's interesting to note that the American Psychological Association didn't recognize OB as a legitimate field of academic study until the 1970s. In contrast, OB was the precursor to human resources management, now universally recognized in business.

The modern study of OB

Because the research completed on the behaviour in organizations is so extensive, many company executives and human resources professionals use the concepts daily to improve their business and employee relations. There are three areas of modern study that are the most useful:


The personality of an individual directly affects how they interact with their colleagues and supervisors. Personality traits also influence how a person produces work output and their levels of efficiency and productivity. Many companies use personality assessments to understand the qualities of their employees better. These tests can also be helpful during the hiring process to determine if a candidate is a good fit for the company's culture. Often during a job interview, the hiring manager uses conversation as another tool to evaluate the personal characteristics of a job applicant.

Related: Guide: 16 Personality Types


There are many leadership styles, and researchers of OB widely debate what type of leadership is best. Several leadership concepts studied in OB include why people exhibit specific leadership traits and whether they are intrinsic to their personality. For example, some researchers think that leadership develops from a person's position of authority within an organization, while others believe it's inherent. Leadership has many factors that contribute to the overall success of guiding others, and studying OB can help determine more effective ways to manage and lead a team.


The interconnection of authority, power, and politics in the workplace creates a company's culture. These elements provide structure in areas such as workplace rules, company policies, and ethical guidelines. Researchers study authority from its dynamics within an organization and how individual employees respond to power, control, and command.

Related: Everything You Need to Know About the Hierarchy of a Company

What influences the behaviour of an organization?

Several factors influence the behaviour of an organization and the individuals who work in the company. The influential factors can either motivate or discourage the productivity and efficiency of employees. When an organization can identify the unique characteristics that improve corporate culture, the company can enhance workplace satisfaction and staff output. Several of these influential factors include:

Rewarding success

It's essential for employees to feel motivated and recognized for their hard work by creating a corporate culture of continuous improvement and productivity. While people want to earn a paycheque, most employees also want to feel appreciated and invested in the company's success. One way to do this is by rewarding success in the workplace. Many companies offer an incentive program based on the employee's performance.

For example, setting SMART goals during an annual performance evaluation allows the team member to define what they need to accomplish to succeed in their role. If they meet their goals, the company may offer a financial reward, such as a bonus. Public recognition for a job well done motivates other employees and provides a reward for productivity. Creating a rewarding incentive program for employees is a critical element to effective and productive behaviour within an organization. Following through is paramount to the incentive program providing positive results.

Related: SMART Goals: Objectives for Your Career

Responding to change

The response and management of change within an organization is an entire field of study on its own. As technology advances and consumer preferences and needs constantly grow, a company that responds to these changes in the marketplace can typically withstand fluctuations in their business. When management provides a coherent plan for implementing change in the organization, employees can understand the need for innovation and support the company's decisions. Offering an open-door policy that encourages questions and dialogue about organizational changes can help staff adapt and respond quickly.

Allowing employees to have a voice

When organizations allow employees to have a voice, they base the culture on respect, collaboration, and transparency. A company can ask for input from its team in various areas of business. Asking for feedback can provide valuable information from the individuals on the front line who are doing the work, talking to the customers, or dealing with the challenges. Allowing employees to have a voice encourages a feeling of openness and understanding for team members. By providing this avenue for employees to share concerns, ideas, and insights, they are also better informed to make decisions in the organization's interest.

Related: Behaviour in the Workplace for Successful Employees

Understanding of the existing culture

When planning changes to an organization's culture, it's essential to recognize the existing accepted behaviour. As new employees enter the company, they learn about the corporate culture from their colleagues. This creates a cycle of repeated conduct that's accepted as normal unless there's a drastic change.

To combat this circumstance, it's helpful to encourage an environment where freedom of expression is welcome in the workplace. For example, when a company creates a culture where team members can share their thoughts and ideas freely and collaborate instead of keeping their opinions to themselves, it encourages an open environment of mutual support and innovation.

Related: How to Learn More About a Company's Culture

Benefits of using OB principles

When companies use principles of OB in their corporate structure, there are several benefits that affect the organization and employees. Some examples include:

Effective leadership

When management and leaders within a company understand how social factors affect employee productivity and happiness, they can use this knowledge to their advantage. By managers and supervisors understanding how their leadership style can influence those around them, they can develop and improve their skills to have a positive effect. Taking seminars on leadership skills, networking with other managers, and having open conversations with team members about management can lead to better employee performance.

Related: Guidelines on Effective Leadership in the Workplace

Enhanced collaboration

Organizational behaviour principles focus on creating an open work environment where management encourages employees to share their thoughts and ideas. When there is a sharing environment created, team members feel motivated to work with others in the organization. This enhances the value of collaboration within the company. Collaboration then happens between staff members, between departments, and between levels of the company. Through collaboration, new ideas emerge, new perspectives provide insight, and the company moves towards the successful completion of its objectives.

Related: Promoting Collaboration in the Workplace: All You Need to Know

Increased innovation

Creating an open environment of sharing and collaboration provides the opportunity for increased innovation. Instead of employees being hesitant to share their ideas, they willingly step forward to express their thoughts and suggestions. Companies may miss out on brilliant ideas because they fear creating an environment where employees can openly express themselves. Those organizations that create space for expression, however, can receive powerfully innovative ideas that can thrust the company forward.

Related: A Guide to Innovation in Management (With Ways to Improve)

Employee retention

As an organization uses OB principles to influence the productivity and satisfaction of its employees, one of the side effects includes improved employee retention. Companies spend a considerable amount on the hiring process, orientation, and training new staff. Once a company has a strong candidate working in a position, they want to avoid losing them. Creating a positive corporate culture that rewards productivity, efficiency, and innovation can lead to better retention of talent in an organization.

Related: 20 Strategies for Employee Retention in the Workplace

Please note that none of the companies, institutions or organizations mentioned in this article are affiliated with Indeed.

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