1. IntroductionThere are three different questions of social organizations that are usually confounded, but which need to be considered separately. The first is the question of the relative efficiency of markets and organizations. The second is the question of the consequences of having a society's organizations owned by profit-making organizations, by nonprofit organizations, or by public organizations, respectively.

The third is the question of the consequences of using central planning instead of markets to regulate relations among organizations (Simon 1997). The issue I would like to address in this paper is a concern with the first question: what makes organizations work as well or badly as they do? How organizational behavior can be used by an organization and its leaders to improve performance. Why organizational behavior study is important for performance management?Many managers and other organizational decision makers view academic researches as abstract rather than practical, useful, and readily applicable to their jobs and needs. In other words, scholarly research is often seen as lacking in relevance (Aguinis ; Pierce 2007).

I would argue that effectively managing organizational behavior in the way of theory and application can improve performance management. Because performance management is a prevalent organizational practice, new scholarly knowledge on performance management is likely to be relevant and readily applicable in organizations, which would in turn help bridge the existing science-practice gap (Aguinis ; Pierce 2007).An organization is not just an arrangement of functions, or an organization chart, or a vision statement, or a set of accounts. An organization consists of people and so it is also a social system. And organizations are not closed systems anymore. Today, globalization makes hierarchical communications too slow and the environment is changing rapidly making adaptation and change crucial to survival of any organization.

Therefore, study of organization and organizational behavior and being able to apply them in reality is becoming a very important issue for improving quality and productivity and improving ethical behavior.Organizational behavior examines how and why people act, think, and feel in corporate and other organized settings. The field is concerned with timeless and evolution questions such as the nature of leadership, how to motivate people, how to restructure workplace. Organizations use this kind of study to build strategies, and define aims, and spell out the roles that they expect their employees to play in the organization. They understand why and how people behave in a certain manner, and above all they learn how to use this knowledge to improve the workings of their organization.

Some people state that the field’s roots go back thousands of years. For example, ancient Chinese emperors grappled with how to efficiently organize a vast work force of civil servants. And in the Roman Empire, experiments with tenure-based wage classifications (what are called tiered wage systems today) created problems. And we can see many examples proving that organizational behavior have always been with us.

The history of the study of organizational behavior is a history of a large number of attempts to construct theories to explain and predict a wide variety of individual and group behavior. In fact, diversity is one of its chief characteristics, where the variety is reflected both in the languages and the techniques with which its theories are formulated and discussed. And all these efforts were done for the purpose of better understanding and using of results of the study for managing people and organizations, for better results. First of all, I would like to address the major theoretical perspectives of organizational behavior.2?Theoretical Perspectives1.

Classical Organization TheoryClassical organization theory represents the merger of scientific management, bureaucratic theory, and administrative theory. Henri Fayol was responsible for developing the major classical management concepts of planning, organizing, developing, staffing, coordinating, and budgeting. He also was the first to develop the importance of lateral communications with his gang plank theory of communications in organization. He developed Fourteen Management Principles.

While subsequent organizational research has created controversy over many of Fayol's principles, they are still widely used in management theory.Frederick Taylor (1917) developed scientific management theory developing four basic principles: 1) find the one "best way" to perform each task, 2) carefully match each worker to each task, 3) closely supervise workers, and use reward and punishment as motivators, and 4) task of management is planning and control. His methods involved getting the best equipment and people, and then carefully scrutinizing each component of the production process. Taylor was able to find the right combinations of factors that yielded large increases in production. While Taylor's scientific management theory proved successful in the simple industrialized companies, it has not faired well in modern companies.

Max Weber (1947) expanded on Taylor's theories, and stressed the need to reduce diversity and ambiguity in organizations. The focus was on establishing clear lines of authority and control. Weber's bureaucratic theory emphasized the need for a hierarchical structure of power. It recognized the importance of division of labor and specialization. A formal set of rules was bound into the hierarchy structure to insure stability and uniformity. Weber also put forth the notion that organizational behavior is a network of human interactions, where all behavior could be understood by looking at cause and effect.

Classical management theory was rigid and mechanistic. The shortcomings of classical organization theory quickly became apparent. Its major deficiency was that it attempted to explain peoples' motivation to work strictly as a function of economic reward.2.

Neoclassical Organization TheoryThe human relations movement evolved and addressed many of the problems inherent in classical theory. The most serious objections to classical theory are that it created over-conformity and rigidity, thus squelching creativity, individual growth, and motivation. Neoclassical theory displayed more concern for human needs.One of the first experiments that challenged the classical view was conducted by Mayo and Roethlisberger in the late 1920's at the Western Electric plant in Hawthorne, Illinois (Mayo, 1933). While manipulating conditions in the work environment (e.g.

, intensity of lighting), they found that any change had a positive impact on productivity. The act of paying attention to employees in a friendly and non-threatening way was sufficient by itself to increase output.Barnard (1968) proposed one of the first modern theories of organization by defining organization as a system of consciously coordinated activities. He stressed in role of the executive in creating an atmosphere where there is coherence of values and purpose. Organizational success was linked to the ability of a leader to create a cohesive environment. He proposed that a manager's authority is derived from subordinates' acceptance, instead of the hierarchical power structure of the organization.

Barnard's theory contains elements of both classical and neoclassical approaches. Since there is no consensus among scholars, it might be most appropriate to think of Barnard as a transition theorist. (Stephen Hartman 1997)Herbert Simon (1945) made an important contribution to the study of organizations when he proposed a model of "limited rationality" to explain the Hawthorne experiments. The theory stated that workers could respond unpredictably to managerial attention.

The most important aspect of Simon's work was the rigorous application of the scientific method. Reductionism, quantification, and deductive logic were legitimized as the methods of studying organizations. Simon states decision makers perform in an arena of bounded rationality and that the approach to decision making must be one of satisficing where satisfactory rather than optimum decisions are often reached. Satisficing successfully adapts to and is a realistic solution for the limited time and resources a manager has when considering alternatives in the decision making process.

(Stephen Hartman 1997)Taylor, Weber, Barnard, Mayo, Roethlisberger, and Simon shared the belief that the goal of management was to maintain equilibrium. The emphasis was on being able to control and manipulate workers and their environment.3. Contingency TheoryClassical and neoclassical theorists viewed conflict as something to be avoided because it interfered with equilibrium. Contingency theorists view conflict as inescapable, but manageable.Chandler (1962) studied four large United States corporations and proposed that an organization would naturally evolve to meet the needs of its strategy -- that form follows function.

Implicit in Chandler's ideas was that organizations would act in a rational, sequential, and linear manner to adapt to changes in the environment. Effectiveness was a function of management's ability to adapt to environmental changes. Lawrence and Lorsch (1969) also studied how organizations adjusted to fit their environment. In highly volatile industries, they noted the importance of giving managers at all levels the authority to make decisions over their domain.

Managers would be free to make decisions contingent on the current situation.4. Systems TheorySystems theory was originally proposed by Hungarian biologist Ludwig von Bertalanffy in 1928, although it has not been applied to organizations until recently (Kast & Rosenzweig, 1972; Scott, 1981). The foundation of systems theory is that all the components of an organization are interrelated, and that changing one variable might impact many others. Organizations are viewed as open systems, continually interacting with their environment.

They are in a state of dynamic equilibrium as they adapt to environmental changes.Renesis Likert's research is based on employee interviews in separate departments in different organizations where a scale of feelings is developed, the Likert scale, regarding employee attitudes toward their supervisors. This was correlated with their productivity. Likert developed a four level managerial classification system. System 1 utilizes a supervisory system based primarily on fear and punishment.

In System 2 organizations rewards are used to motivate employees with some freedom being allowed to comment on organizational decisions. System 3 organizations are more open to employee consultation on the managerial decision making process and overt managerial threats are avoided. System 4 organization is the most open and participative and is the ideal state managers should strive to achieve. Likert states the more an organization's management approximates the System 4 model, the more productive it will be.

A central theme of systems theory is that nonlinear relationships might exist between variables. One of the most salient arguments against systems theory is that the complexity introduced by nonlinearity makes it difficult or impossible to fully understand the relationships between variables. (D.Walonick)Organizational behavior theories are a result of the research done by experts in this field. These experts studied and attempted to quantify research done about actions and reactions of employees, with regard to their work environments.

There are various aspects of these theories, since each one deals with complex human behavior. The most important ones are the theories about motivation. All of them are aimed towards motivating the members of the organization into optimizing their performance and thereby resulting in better and more improved performances. The more popular theories in this field are:- Maslow’s Theory of MotivationAbraham Maslow's need hierarchy theory is reconstructed on the basis of a second-order, cognitive-systemic framework.

A hierarchy of basic needs is derived from the urgency of perturbations which an autonomous system must compensate in order to maintain its identity. It comprises the needs for homeostasis, safety, protection, feedback and exploration. Self-actualization is redefined as the perceived competence to satisfy these basic needs in due time. This competence has three components: material, cognitive and subjective. Material and/or cognitive incompetence during childhood create subjective incompetence, which in turn inhibits the further development of cognitive competence, and thus of self-actualization.

Maslow's hierarchy of needs theory helps the manager to visualize employee motivation. It helps in understanding the motivations and needs employees have and the requirement to satisfy basic needs in order to achieve higher level motivation.In 1969, Clayton Alderfer's revised Abraham Maslow's Hierarchy of Needs, and developed ERG Theory" (Existence, Relatedness, and Growth), and was created to align Maslow's motivation theory more closely with empirical research.- Theory X and Theory YDouglas McGregor’ Theory X, has a negative view of employees assuming they are lazy, untrustworthy and incapable of assuming responsibility while the other type of Manager.

Theory Y, assumes employees are trustworthy and capable of assuming responsibility having high levels of motivation. Theory X and Y is appealing to managers and dramatically demonstrate the divergence in management viewpoints toward employees. As such, Theory X and Y has been helpful in promoting management understanding of supervisory styles and employee motivational assumptions.- Expectancy theoryExpectancy theory is about choice and explains the processes that an individual undergoes to make choices. Expectancy theory predicts that employees will be motivated when they believe that: putting in more effort will yield better job performance, better job performance will lead to organizational rewards, such as an increase in salary or benefits these predicted organizational rewards are valued by the employee in question.Vroom's theory assumes that behavior results from conscious choices among alternatives whose purpose is to maximize pleasure and to minimize pain.

Together with Edward Lawler and Lyman Porter, Vroom suggested that the relationship between people's behavior at work and their goals was not as simple as was first imagined by other scientists. Vroom realized that an employee's performance is based on individual factors such as personality, skills, knowledge, experience and abilities.(D.Walonick)- Motivation-Hygiene TheoryHerzberg proposed the Motivation-Hygiene Theory, also known as the Two factor theory (1959) of job satisfaction. According to his theory, people are influenced by two factors: Satisfaction, which is primarily the result of the motivator factors.

These factors help increase satisfaction but have little effect on dissatisfaction. Dissatisfaction is primarily the result of hygiene factors. These factors, if absent or inadequate, cause dissatisfaction, but their presence has little effect on long-term satisfaction.