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AI · Written by Claude

Organizational Behavior – II

The key ideas of Organizational Behavior – II: leadership theories, power and politics, conflict and negotiation, decision making, organisational culture, change and development, and stress, with real-world examples.

By Claude7 min read

  • Revisit
  • Organizational Behavior
  • PGDM
  • MBA

Part I looked at individuals and small groups. Part II moves up to the organisation: who leads and how, how power and conflict work, how decisions get made, why cultures differ, and how change is managed. Each idea comes with an example.

1. Leadership

A leader influences others toward a goal; a manager plans and controls. Good managers are not always good leaders, and vice versa. Theories have moved from “who the leader is” to “what the leader does” to “what fits the situation”.

Approach Idea Example or use
Trait Leaders share traits: drive, confidence, integrity, intelligence Useful for selection, weak as a full explanation
Behavioural (Ohio State, Michigan) Two dimensions: initiating structure (task) and consideration (people) Managers need both
Blake–Mouton grid Concern for production vs concern for people; the ideal is “team management” (9,9) Leadership training
Fiedler’s contingency Task-oriented leaders do best in very favourable or very unfavourable situations; relationship-oriented ones in between Match the leader to the situation
Hersey–Blanchard situational Style (telling, selling, participating, delegating) depends on follower readiness New joiner needs direction; an expert needs freedom
House’s path–goal The leader clears the path to the goal: directive, supportive, participative or achievement-oriented Pick style by task clarity
Transformational vs transactional Inspire and develop vs exchange reward for performance (Bass) Change needs transformational; routine needs transactional
Servant, authentic, ethical leadership Serve the team, be genuine and principled Modern values-based models

In the real world: when Satya Nadella became Microsoft’s CEO in 2014 he promoted a “learn-it-all, not know-it-all” growth mindset and a more collaborative culture, which is widely credited with turning around the company’s internal dynamics. Ratan Tata’s style at the Tata Group is often described as values-driven and long-term. Leadership is shaped by situation: a crisis rewards decisiveness, a creative team rewards participation.

2. Power and politics

Power is the ability to influence others; authority is formal power. French and Raven’s five bases of power:

Base Source
Legitimate Position
Reward Control over rewards
Coercive Ability to punish
Expert Knowledge and skill
Referent Admiration and identification

Expert and referent power come from the person and usually produce more commitment than coercion. Influence tactics include rational persuasion, consultation, ingratiation, coalition and pressure. Organisational politics is the pursuit of self-interest through informal means; it rises with scarce resources, ambiguity and unclear rules. Transparency and fair processes reduce harmful politics.

In the real world: a senior engineer without formal authority who is trusted by everyone has expert and referent power, often more than a nominal manager. Steve Jobs’s return to Apple in 1997 combined position power with strong referent power.

3. Conflict and negotiation

Conflict is a perceived incompatibility of interests. Views have shifted from “conflict is bad” (traditional), to “it is natural” (human relations), to the interactionist view that moderate task conflict can improve decisions while personal conflict harms. Types: task, relationship and process conflict. Sources: scarce resources, role ambiguity, differing goals, communication problems and personality clashes.

The Thomas–Kilmann model has five handling styles by assertiveness and cooperation:

Style Use when
Competing Quick decisive action needed, or an ethical stand
Collaborating Both sides’ concerns are important; build joint solutions
Compromising Time is short; partial wins acceptable
Avoiding Issue is trivial or emotions need cooling
Accommodating Preserve harmony; you are wrong

Negotiation can be distributive (fixed pie) or integrative (expand the pie); prepare your BATNA and focus on interests, not positions. Third parties use mediation or arbitration.

In the real world: a product team and an engineering team in conflict over deadlines versus quality are in a task conflict; moving it to a collaborative style with shared goals (for example, a joint release checklist) usually helps more than escalation.

4. Decision making

The rational model lists steps: define the problem, set criteria, generate options, evaluate, choose, implement and review. Real decisions are limited by bounded rationality (Simon): people satisfice, accepting a “good enough” option because information and time are limited.

Common biases: anchoring (over-relying on the first number), availability (judging by memorable examples), confirmation (seeking supporting evidence), overconfidence, escalation of commitment (throwing good money after bad) and hindsight. Group decisions bring diversity but risk groupthink. Tools include brainstorming, the nominal group technique, the Delphi method, devil’s advocate and pre-mortems.

In the real world: the Concorde project was kept alive well past the point of commercial sense, an example of escalation of commitment. A pre-mortem (“imagine this failed; why?”) is now standard in many product teams.

5. Organisational culture

Culture is the shared assumptions, values and behaviours that define “how things are done here”. Schein’s three levels: artefacts (visible: dress, office, rituals), espoused values (stated beliefs) and basic underlying assumptions (unconscious, hardest to change). Cultures can be strong or weak, and subcultures exist within the whole.

Typology Types
Competing values (Cameron and Quinn) Clan, adhocracy, market, hierarchy
Hofstede (national) Power distance, individualism, uncertainty avoidance, masculinity, long-term orientation

Culture is sustained by founders, hiring, socialisation, stories and reward systems, and it directly affects performance, ethics and retention. Organisational climate is the shorter-term perception of the environment.

In the real world: the Netflix culture memo (“freedom and responsibility”, paying top of market, little formal policy) shows a deliberately designed culture. By contrast, a culture of fear is often cited in accounts of Nokia’s decline, where middle managers were reluctant to bring bad news upward during the smartphone shift.

6. Organisational change and development

Forces for change: technology, competition, regulation, workforce and economy. People resist change because of fear of loss, habit, uncertainty and lack of trust.

Model Steps
Lewin Unfreeze (create the need), change (move), refreeze (stabilise)
Kotter’s 8 steps Urgency, guiding coalition, vision, communicate, empower, short-term wins, consolidate gains, anchor in culture
ADKAR Awareness, Desire, Knowledge, Ability, Reinforcement

Overcoming resistance: communicate, involve people, train, support, and use negotiation where needed. Organisational development (OD) applies behavioural science to improve effectiveness through action research (diagnose, plan, act, evaluate) and interventions such as team building, survey feedback, process consultation and sensitivity training. Values of OD: participation, openness, trust and learning.

In the real world: Kodak invented the digital camera but protected its film business; its slow change is a textbook failure to unfreeze. IBM’s turnaround under Lou Gerstner in the 1990s is a case of culture change driven by a clear customer focus and a sense of urgency.

7. Stress and work-life balance

Stress arises when demands exceed resources. Sources: role overload, role conflict, long hours, poor relations, job insecurity and change. Effects: lower performance, absenteeism, health problems and burnout (exhaustion, cynicism, reduced efficacy). Remedies at the individual level: time management, exercise, rest, social support; at the organisation level: realistic workloads, clear roles, flexibility and employee assistance programmes. The Yerkes–Dodson idea says moderate stress can help performance, but too much harms it.

In the real world: always-on messaging and on-call duty make burnout a live issue in tech; sustainable rotations and a blameless culture are organisational responses.

One-minute recap

Topic Key idea Where you meet it
Leadership Trait to behaviour to contingency; transformational vs transactional Management style, crises
Power and politics Five bases; expert and referent power last Influence without authority
Conflict Task vs relationship; five handling styles Team disputes, negotiation
Decision making Bounded rationality; biases Planning, pre-mortems
Culture Schein’s levels; competing values Hiring, ethics, mergers
Change and OD Lewin, Kotter, ADKAR; action research Transformations, restructuring
Stress Sources, burnout, remedies Workload, wellbeing

Next in MBA Revisited: Managerial Accounting and Control – II.


Written by Claude, Anthropic’s AI assistant, as part of MBA Revisited, a quick refresher of the PGDM subjects one at a time.

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