Understanding Organizational Behavior

Understanding Organizational Behavior

8 minute read

Organizational behavior is an emerging field that studies group dynamics. These days, organizational behavior principles and strategies — such as how individuals contribute to a group, the creation of hierarchical structures, and employee recognition programs — are becoming increasingly common in the corporate world as businesses look to boost productivity and employee satisfaction.

For those interested in pursuing a business management or consulting career, understanding organizational behavior can be key to success. Degrees in business or psychology might include classes in organizational behavior that can boost your career prospects in this relatively new area. Read on to learn more about the most important principles of organizational behavior and how it can be a critical aspect of your career in business.

What is Organizational Behavior?

Organizational behavior is a field of study that investigates how individuals, groups, and structures influence human behavior. While organizational behavior can refer to any group dynamic, it’s typically associated with workplace behavior and corporate structure.

Organizational behavior includes the study of both business and psychology. It takes into account the idea that happy employees are more productive, and, therefore, the company as a whole runs more efficiently, making higher profits. 

The Four Areas of Organizational Behavior

There are generally four separate but connected elements within a workplace that affect a company’s organizational behavior. 


Understanding organizational behavior starts with people, with the understanding that every group is made up of individuals. Those individuals bring their own strengths, weaknesses, preferences, dispositions, histories, and styles to an organization. As such, everyone will communicate differently depending on where they are in the company structure and with whom they’re interacting (a boss versus a direct report versus a peer). These and other variables must be taken into account when considering the “People” piece of the organizational behavior puzzle.


For those studying organizational behavior, the term “structure” refers to a company’s:

  • Hierarchies
  • Roles and responsibilities
  • Departmental set-ups
  • Reporting systems
  • Compensations and benefits


An organization’s technology is what allows its employees to do their work to the best of their ability. This can refer to the apps a company uses for inter-employee communications, the actual hardware they use, the resources a company makes available, or anything else that a team member needs to do their job.


Companies offer their employees two environments: external and internal. The internal environment refers to the physical set-up of the office: desks, lighting, windows, etc. It also refers to the concept of “company culture,” or the values and guiding principles everyone is expected to honor. 

The external environment refers to things that the company has little to no control over, like politics, the economy, or customer behavior. These things influence an organization’s function and flow as much as any other aspect.

What Does Organizational Behavior Management Look Like?

One key area where a company’s upper management might apply Organizational Behavior Management (OBM) is in Performance Management (PM). Managers or outside OBM specialists analyze employee behavior and use their findings to apply OBM principles that enhance productivity and minimize unproductive behavior. For example, policies like goal setting and two-way feedback create a healthier work environment for everyone.

At a higher organizational level, Behavior Systems Analysis (BSA) looks at how different interactions between components influence overall performance. That is, looking beyond individual behaviors to an organization’s processes and structures. The company’s management can then pinpoint inefficiencies and implement new systems to streamline operations and boost productivity.

Why is Organizational Behavior Important?

Understanding organizational behavior is the key to success for any group, especially businesses. A workforce's productivity and a company's overall health depend on how its employees behave and interact with each other. It also depends on making sure that employees feel heard and respected and are given the right tools to do their jobs well. By implementing the science of organizational behavior, corporations are more likely to meet their productivity goals. These goals may include one or more of the following:

Increased Employee Satisfaction

Increased employee satisfaction includes paying attention to employee needs, whether that be higher salaries, better benefits, or a safer working environment. Being open to what employees want and finding ways to give that to them builds trust between employees and management and helps employees feel comfortable communicating their needs to management because they feel respected.

When employees trust their managers, they’re more likely to behave ethically and less likely to burnout and quit. Less burnout means a reduction in worker attrition and turnover, which is good for the company in terms of profitability, reputation, and culture.

Increased Customer Satisfaction

Satisfied employees help their company create happy customers. When an organization prioritizes the needs of its employees, everyone feels a stronger sense of belonging and loyalty. The employees are then inspired to work harder and pay closer attention to their work. They’re more likely to respond to customers quicker and feel invested in their company’s reputation for quality products and services.

Increased Innovation

A positive company culture with healthy organizational behavior management typically leads to an increase in innovation. Leaders of well-organized companies will inspire their employees to greater heights of creativity. When organizational behavior is optimized, everyone feels inspired to do their part in “steering the ship” toward new ideas and improved outcomes. This helps companies maintain leadership positions and outperform competitors.

3 Careers in Organizational Behavior

Are you interested in the science and philosophy of organizational behavior? There are many ways to turn your passion into a fulfilling career. Here are a few to consider, as well as the paths you might take to get started:

1. Employee Engagement Director

This role usually falls within a company’s HR department and is involved with making sure employees feel valued. They do this through things like positive feedback, employee surveys, or flexible work-life schedules. By having someone devoted entirely to employee engagement, companies show they’re committed to optimized organizational behavior.

Employee engagement directors usually start by earning a bachelor’s degree in human resources or a closely related field, like performance management. Experience plays a significant role in this career, too, with many starting in entry-level HR roles and working their way up. 

2. Learning & Development Director

Learning and development refers to when a company invests in upskilling or reskilling their employees. Upskilling or reskilling involves identifying an individual’s skill set and interests and giving them the tools or resources they need to develop those skills so they can find their job more fulfilling and rewarding. 

This is a key aspect of organizational behavior—ensuring employees can develop skills that are important to them helps them feel heard and respected and that they’re contributing to the larger group or organization.

A learning and development director typically oversees the upskilling or reskilling process, helping employees feel comfortable in their roles and thus improving overall company performance.

As with most roles of this type, a bachelor’s or master’s degree is usually preferred. Although this type of role is relatively new in the workforce, some experience is also necessary. Those looking to become a learning and development director might start by familiarizing themselves with the latest trends in the field or earning an OBM certification.

3. Organizational Development Consultant

An organizational development consultant is hired by a company or business to help improve their daily operations and increase productivity. Consultants are usually outside hires who are brought in to evaluate a company’s infrastructure through employee and management interviews, observations, research, and data analysis. They then offer expert recommendations for how their corporate client can improve processes and increase productivity. In short, an organizational development consultant streamlines the hierarchy of a company and promotes initiatives related to employee satisfaction and performance.

Organizational development consultants typically earn a bachelor’s degree in a specialized field, such as psychology or business management. Many also earn advanced degrees and certifications. They have years of experience in the corporate world, especially in areas like team building, project management, or meeting facilitation. 

Get Ahead in Business With StraighterLine

StraighterLine offers a course on Organizational Behavior that covers all the fundamentals as well as additional individual business classes. And if you’re really looking to kickstart your career in business, you can check out our management career bundle that can help you advance your business degree.

Learn more about the ways that StraighterLine helps students at all stages of their educational journeys earn credits that can save them time and money at traditional colleges.

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