Organizational Behavior Importance

    Organizations are all around us. We are born in an organization, we live, work and most probably will die in an organization. Yet most of us do not understand how people function, behave and interact between each other within these organizations. We also do not understand if people shape an organization or an organization shapes people.

    In the beginning, people create an organization and shape its mission and culture and later more people join the organization. This new group of people adjust themselves within the existing organizational culture. Sometimes they also influence organizational culture by bringing new and unique skills to the organization. Sometimes they learn from each and at other times, external forces like competition, political and cultural changes compel them to learn new technical, communication or interpersonal skills. All these internal and external factors help an organization and its people to evolve to cope with the ever-changing world.

    Until recently, managers paid little attention to Organizational Behavior or soft skill training. The industrial revolution created the need for hard (technical) skills. People worked in the production line and were not required to think or interact to each other. However, things have changed; instead of standing behind the production lines, they now sit in front of a computer and control a robot who works in the production line. Now, people need more technical skills, but they also need skills to communicate and work within a group.

    The great English poet Samuel Butler put it together more eloquently, "Any fool can paint a picture, but it takes a wise man to be able to sell it." If the "fool" is the metaphor for hard skill then the "wise man" would be the soft skill; but the soft skill of the wise man is useless without the hard skill of the fool; the harmonizing of both skills sells the picture. Therefore, the study of Organizational Behavior is not considered pop psychobabble anymore. A comparison between old and new organizations makes the picture clear.

Old Organization vs. New Organization

    In his book Power Up: Transforming Organizations Through Shared Responsibility Leadership, Stanford professor of Organizational Behavior David L. Bradford pointed out three major distinctions between an old static organization and new organization powered by Interpersonal Dynamics (cited in Zich, 1998).

    First, in old organizations, machinery used to be considered as a primary asset, and in order to maximize productivity the managers needed to concentrate on 100% usage of those machinery. Later, people became the most important asset of the new organization and organizations are finding ways to use the "whole person". According to Bradford, within last ten years, usage of human capital raised from 20 percent to 40 percent. Second, in the new organization everyone is responsible for the whole process. The old organizational attitude was "you are responsible for your area and I'm responsible for mine and if you screwed up, that helps me to look better." But the new organizational attitude is all about "powering up", according to Bradford, "increasing the total power of each individual, every unit, and the entire organization." Old organizational layers are slowly melting together and the words 'superior' and 'subordinate' are becoming obsolete. For example, in my company, everyone has the same title 'benefits consultant' and the difference between managers and consultants is defined by the word 'senior'. Finally, in the old organization it was always presumed that the bosses know the solution to all problems; according to Bradford, "the traditional organization is anti-learning." In the old organization, managers used to show up in the meetings with a solution. New organizations are constantly evolving and in this new environment, managers are not ashamed to admit they need input and assistance.

    The new organizational paradigm - people focused thinking which is based on healthy communications and supportive leadership (Hayes, 2001), has been receiving a lot of attention in recent years. At the same time, the demand for hard skills has also increased - the technologically advanced society demands more analytically and technologically savvy workforce. Therefore, the challenge is to develop human capital with the perfect combinations of hard and soft skills. Political economist Robert Reich recommended the hi-tech companies to focus more on human capital than high volume production. He said in order to attract employees and reduce turnover, companies must create an environment that fosters learning and responsibility and encourage group ownership in a common mission (cited in Ricadela, 2000).

    Therefore, the previously perceived notion that this hi-tech, high paced environment would cause stiff cutthroat competition among workers and create tyrannical corporate environment never materialized. Instead, we are observing more and more cooperation and support among workers.

OB Importance - Some Evidence

    Recent research shows that soft skill training should start at the University. Graham and Krueger (1996) pointed out that soft skills are not well-appreciated and understood among students - students consider decision making, computer and math competencies as the most important skills. However, in an extensive study done on career paths of corporate CFOs by Baker and Phillips (1999) shows high level of importance put on soft skills by the CFOs. The following table (Baker & Phillips, 1999, p. 48) shows the most important skills that someone should acquire to be a CFO:



Communication (Oral and Written)


Management and Leadership


Financial (e.g. Cash Management and Financial Analysis)


People and Interpersonal


Analytical and Critical Thinking


Technical (e.g., Mathematics and Statistics)


Accounting and Taxation






Other (e.g., Foreign Language, Strategic Planning and Organizational Skills)




    The next table (Baker & Phillips, 1999, p. 48) shows the gaps between what business schools teach and what companies need for entry-level finance positions:



Real World and Work Experience


Communication Skills (Oral and Written)


Management and Leadership Skills


People and Interpersonal Skills


Financial Skills (e.g., Cash Management)


Accounting and Taxation Skills


Analytical and Critical Thinking Skills


Computer Skills (e.g., Spreadsheet)




Other (e.g., Self-Development, Investment Theory)






    To summarize the researches on OB, there is more evidence that the teaching and implementation of soft skills should get higher priority in education and company training process, but it should only complement hard skill, not substitute for it.

    Today's postindustrial hi-tech organization requires knowledge intensive work environment and demands creativity form its workers. Most organizations are now encouraging team approach to solve problems. Workers are not only need to learn new technical skills but also how to communicate, delegate, negotiate, and motivate with each other.


Baker, H. K., & Phillips, A. L. (1999). Career Paths of Corporate CFOs and Treasurers. Financial Practice and Education [the name has changed to Journal of Applied Finance], 9(2), 38-50.

Graham, L. A., & Krueger, T. (1996). What Does a Graduate Need?: Conflict in CFO and Student Opinions. Financial Practice and Education [the name has changed to Journal of Applied Finance], 6(2), 60-67.

Hayes, J. (2001). People-focused 'organizational paradigm' lets staffers shine. Nation's Restaurant News, 35(4), 50.

Ricadela, A. (2000). Reich Touts The Human Factor. Information Week, (777), 40.

Zich, J. (1998, September). Ideas: We're All is This Together. Stanford Business. Retrieved August 10, 2003, from

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