Needs for Understanding OB

As we know, organizational behavior is the study of people at work in organizations. And we study organizations because we spend our lives interacting with them. If the world is a stage, it is a stage filled with organizations. Regardless of the part we play as a student, employee, manager or customer, we play our roles/parts on an organizational stage. By acting our parts, we influence organizations and organizations also influence us.

The study of OB (Organizational Behavior) benefits us in several ways.
Firstly, the study of OB helps us understand ourselves and others in a better way. This helps greatly in improving our inter-personal relations in the organizations. Friendly and cordial relations between employees and management and also among the employees create a congenial work environment in organizations.

Secondly, the knowledge of OB helps the managers know individual employees better and motivate employees to work for better results. It helps managers apply appropriate motivational techniques in accordance to the nature of individual employees who exhibit glaring differences in many respects.

Thirdly, one of the basic characteristics of OB is that it is human in nature. So to say, OB tackles human problems humanly. It helps understand the cause of the problem predicts its future course of action and controls its evil consequences. Thus, treating employees as human beings enables the managers to maintain cordial industrial relations which, in turn, create peace and harmony in the organization.

Fourthly, the most popular reason for studying OB is to learn how to predict human behavior and, then, apply it is some useful way to make the organization more effective. Thus, knowledge of OB becomes a pre-requirement for a person like the students for a person like the students of MBA/MBS who is going to assume a managerial job and succeed as a manager.

Finally, all organizations are run by man. It is man working in the organizations makes all the difference. Then, it implies that effective utilization of people working in the organization guarantees success of the organization. This is where OB comes into the picture. OB helps managers how to efficiently manage human resources in organization. It enables managers to inspire and motivate employees towards productivity and better results.

Contributing Disciplines to OB

Organization behavior is an applied science that is built up on contribution from a number of behavioral science such as:
  1. Psychology: It is a science, which describes the change of behavior of human and other animals. It is concerned with the more study of human behavior. The major contribution of psychology in the field of OB (Organizational Behavior) have been concerned are following:
    • Learning
    • Personality
    • Perception
    • Individual decision-making
    • Performance appraised
    • Attitude measurement
    • Employee selected
    • Work design
    • Motivation
    • Emotions
    • Work strain
    • Job satisfaction
  2. Social Psychology: It is an area within psychology that blends concepts from psychology and sociology and that focuses on the influence of people on one another. The major contributions of social psychology to OB are as follows:
    • Behavior change
    • Attitude change
    • Communication
    • Group process
    • Group decision-making
  3. Sociology: It is the study of society, social institution and social relationship. The main contributions of sociology to the field of OB are as follows:
    • Group dynamics
    • Communication
    • Power
    • Conflict
    • Inter group behavior
    • Formal organizational theory
    • Organizational technology
    • Organizational change
    • Organizational culture
  4. Anthropology: It is the study of society to learn human beings and their activities. The major contributions of Anthropology in the field of OB are as follows:
    • Comparative values
    • Comparative attitudes
    • Cross-culture analysis
    • Organization environment
    • Organization culture
  5. Political Science: It is the study of the behavior of individuals and group within or political environment. The main contribution of political science in the field of OB have been concerned with:
    • Conflict
    • Intra-organizational policies
    • Power

Fundamental Concept of OB

Like all other discipline/subjects, OB (Organizational Behavior) is also based on certain key elements also called 'Fundamental concepts or assumptions'. There are four key elements in OB. These are people, structure, technology, and the environment in which organization operates.

Organizations are run by people. People consist of individuals and groups. Though people have much in common (they become happy by having gains and sad by in losing something valuable), yet they differ from each other. One can find glaring differences in people's trait, intelligence, personality or any such trait. It is, in fact, individual differences the manager cannot adopt one formula or standard across the board for dealing with employees. Instead, manager has to treat employees with individual differences differently. It is because of individual differences, the subject matter of OB begins with individual.

An individual joins organization along with his/her social background, likes and dislikes, pride and prejudices. What is to say is that an individual's family life cannot be separated from organizational life. Therefore, OB studies an individual as a whole person.

Human behavior is always caused. Behavior is directed towards some goals. There is always a cause behind every human behavior or act. For example, when a worker is absent from work, there is a cause behind. The manager must know the cause to solve the problem. People are living, thinking, feeling beings. The manager, therefore, needs to treat them with human dignity, not just like an economic tool.

Organizations are social systems. There are two types of social systems that exist side by side in an organization. One is the formal and other is the informal social system. The formal relationship of people in organizations is called structure. Different jobs are required to accomplish the organizational goals and objectives. For example, there are managers and employees, accountants and assemblers. These all people performing different jobs at different levels have to be related in some structural way so that their work can be effectively coordinated.

That people need organizations and organizations also need people also comes under the purview of OB. It means that OB is based on mutuality of interest. It is mutual interest that unities people and organization to go side by side for accomplishing individual and organization goals.

Technology provides the resources with which people work and also affects the tasks that they perform. The great benefit of technology is that it allows people to do more and better work. But, it also restricts people from doing things in various ways. In fact, it has costs as well as benefits.

All organizations operate within a given internal and external environment. In fact, no organization exists alone. An organization is a part of a larger system that contains other factors or elements, such as a government, the family, and other organizations. All of these of mutually influence one another in a complex way. Thus, organizations are influenced by the external environment. Environment, thus, affects people by influencing their attitudes, working conditions, etc. It will not be less than correct to mention that an organization is the effect for which environment is the cause. Hence, environment also becomes a key element in the study of OB.

Levels of Organizational Behavior

As we know that organization behavior is the systematic study of what people do in an organization and how their behavior affects organization's performance. Organizational behavior has three basic levels.
Fig. Levels of Organization Behavior (OB)
  1. Individual Level: Organization behavior has viewed organization as individual's behavior. It has study the individual behave of people how they react to organizational plan, policies, etc. Psychological theories like learning, motivation and leadership are also considered to study the behavior of an individual. It has also studies the factor like learning, perception, belief, and attitude of each individual.
  2. Group Level: Organization Behavior has studied the group behavior. It has studied, how the group interacts with each other? How they work? What types of task the groups are performing? How does leadership influence to the group etc.
  3. Organizational Level: Organization Behavior is the behavioral science. It has study the behavior of organization as a whole. To study the organization, it applies the knowledge of behavioral science. Organization behavior has tried to analyze how the organizational structure designs technology influence to the organizational effectiveness. It tries to focus the relationship between organization and environmental factor that directly or indirectly affect organization.

Limitations of Project Management in Nepal

Project management concept suffers from a number of limitations in Nepal. They are:
  1. Unsuitable: Nepal is a country of villages. Rural development projects are important for reducing poverty in rural areas of hills and terai. Most rural projects are small and simple. Project management concept is not suitable for such projects.
  2. Problem of Authority Delegation: Project management concept provides total authority and responsibility to project manager from inception to completion. Nepalese administrative system is "Feudocratic". The institutional capacity for project management is poor. Senior managers are unwilling to delegate authority to project manager. This constrains effect project management.
  3. Top Management Interference: In Nepal, project management generally lacks top management support. Too much interference by top management in appointment and transfer of project manager and project employees and award of contracts is common.
    • Politicians look at projects as convenient vehicles for employment of their political workers. This has led to over-staffing in projects.
  4. Lack of Professional Human Resources: Project management requires a special breed of trained professional human resources. They are in short supply in Nepal.
    • Matrix project organization structures in Nepal suffer from lack of right people. Project managers lack independence to handpick the right people. Functional managers generally depute their "favored ones" or "available ones" to the project. Project team gets staffed in incompetent people.
    • Projects generally carry extra incentive to employees. A lot of "source and force" is used to get posted to projects.
  5. Conflicts: Project management in Nepal tends to be infested with conflicts between project and functional departments. Interpersonal conflicts also abound among project team members. Discipline is poor in projects.
  6. Cultural Constraint: Nepalese culture generally lacks sense of the value of time. Administrative personnel are champions for postponing important decisions for tomorrow. This also happens in projects. The time and cost overruns due to lack of appreciation for project schedules constrain effective project management.

Benefits of Project in Nepal

Project management in Nepal is a new approach for achieving the objectives of time bound complex projects efficiently and effectively. It has been widely used in Nepal since 1970s.

The benefits of project management approach to Nepal are:
  1. Change Management: Project management approach has served as a vehicle for introducing and managing change in Nepal.
  2. Environmental Adaptation: The flexibility in operations provided by project management approach has facilitated environmental adaption. Nepalese environment is full of risks requiring flexibility.
  3. Resource Mobilization: Project management has been the prime vehicle for mobilizing foreign aid for Nepal's development. The share of foreign aid has been about 55 percent in the total planned outlay in Nepal over the last forty years.
  4. Infrastructure Development: Project management has been instrumental in developing physical and social infrastructure in Nepal.
  5. Better Resource Utilization: Project management has facilitated co-ordination and better utilization of resources across ministries in the government. Decision making has been faster.
  6. Human Resource Development: Project management has facilitated human resource development in Nepal. A pool of professional project managers and experts is available in Nepal. Professional and technical development has been facilitated by foreign training and seminars made possible through project funding. The country's human resource capability has increased.
  7. Organizational Re-engineering: Project management has facilitated pure project and the matrix organization structure to implement projects in Nepal. This has facilitated organizational re-engineering.
    • The "Development Committee" pure project structure was the outcome of the need to apply project management concept to manage development projects.

Project Planning in Nepal

Project planning is concerned with the development of a project for investment. It consists of:
  • Feasibility study to determine project implementability.
  • Appraisal to evaluate project's ability to succeed, and
  • Detailed engineering design and estimating to plan project implementation.
Most central level development projects in Nepal are planned by the donors. Most local level projects, however, are planned within the country by various agencies of the government or local authorities.
  • National Planning Commission (NPC) is responsible for preparation of five year development plan. Projects are the primary means of translating development plans into action. NPC is responsible for identification, planning, monitoring and evaluation of development projects.
  • Central level projects should have approval of NPC. Local level projects should have approval of the Secretary f the concerned Ministry within the policy guidelines of NPC. The project approval is based on the appraisal of the project proposal. A format has been prescribed for preparing project proposal. A process has also been prescribed for approval of the project.
Contents of Project Proposal
The project proposal should contain the following information:
  1. Outline of the Project: Objectives, location, duration.
  2. Total Investment of the Project: Development, construction, operation, others.
  3. Sources of Funds: Government, donors-loan, grant.
  4. Returns from the project:
    • Contribution to production increase
    • Growth in employment
    • Internal rate of return
    • Other Economic and social benefits
  5. Economic Analysis of the Project:
    • Cost/benefit ratio
    • Cost effectiveness estimates
  6. Project Implementation: Schedule and budget.
  7. Implementation Requirements: In terms of -
    • Human Resources
    • Construction materials
  8. Project Operations: After completion and handover of project:
    • Management arrangements
    • Expenditure estimates for 3 years
    • Income estimates for 3 years
    • Approval of the Project
Project Approval
The project approval process is based on:
  1. Consideration of project's fit with national objectives and sectoral strategies. If it is not included in the periodic plan, NPC concurrence should be obtained.
  2. Recommendation of department head about the reasonableness of project costs in terms of current prices and cost benefit analysis.
  3. The concerned ministry should approve and implement the project keeping in view the concurrence of NPC.
    •  If the project is not included in the periodic plan or if the financial outlay is going to increase, the concurrence of NPC and Finance Ministry is needed.
    • If the opinions of NPC and Finance Ministry differ, the project should be forwarded for cabinet approval along with project operation plan.

Historical Overview of Project Management in Developing Countries

Developing countries are characterized by low levels of economic and human development. Low per capita income is the indicator of their underdevelopment. Project management emerged in these countries as follows:
  1. The project model for managing development in the modern sense appeared with the centralized planning model of the Soviet Union in 1930s. Many developing countries adopted centralized planning model after the second World War. USA adopted this model in 1960 for Manhattan Project.
  2. The increased inflow of foreign assistance from developed to developing countries during the cold war years in 1950s and 1960s gave further impetus to the project model. Much of the foreign aid to developing countries was project-based. Projects become the primary means of translating development plans into action.
  3. During 1970s, the project management model was adopted by developing countries to implement complex development projects. Pure project and matrix project organization structures were also used. The total responsibility and accountability for the project from initiation to completion was entrusted to the project manager.
  4. The implementation of development plans and programmes in developing countries has come to depend heavily on project management. Effective project management is a dominant concern of public and private organizations. Donors insist on it to channel foreign assistance.
  5. The bureaucratic model of managing development has failed to manage change in developing countries. The project management model has been used widely by developing countries to implement projects at the national as well as local levels in present days.
Historical Overview of Project Management in Nepal
Nepal is one of the least developed countries of the world. More than 30 percent of people live below the poverty line. Its per capita income is about US 540$. It ranks low in the Human Development Index (HDI) of UNDP. The country's isolation from the outside world for more than one hundred years till 1951 kept it backward in terms of development. The project management in Nepal emerged as follows:
  1. The project concept is Nepal began in 1950/51 with a grant assistance of US $ 100,000 by USA. The planned development began with the implementation of the First Five Year Plan in 1956. Since then, Nepal had implemented nine development plans. The financing of Nepal's development plans has been heavily dependent on foreign assistance. Foreign assistance in Nepal is heavily project-based.
  2. The foreign aided projects in Nepal consist of:
    • Turnkey Project: Implemented by contractors through global bidding process. 
    • Donor Executed Projects: Donors directly execute the projects.
    • Nationally Executed Projects: Nepalese project managers execute projects.
  3. Project Management model appeared in Nepal during 1970s. The organization structure adopted for project was "Development Committee". It was an autonomous pure project organization structure for the management of a specific project. The matrix project organization structure has also been used in selected cases.
  4. INGOs and private sector are also using the project management concept since 1980s. BOT (Build, Operate, Transfer) modality has also emerged.
    • Foreign Direct Investment in Nepal has also led to greater use of project management. Nepal has approved about 900 such projects till 2003-04. But very few of them are operational.
    • Today, the implementation of Nepal's development plan depends heavily on project management. The project management model is widely used to implement projects in public, private and non-government sectors.

Financial Controls

Financial controls focus on accounting. They provide an insight into project's performance during implementation. They can be of following types:
  1. Cash Flow Statement: It is a statement of sources and uses of cash funds. It shows where cash came from and where cash was used during the given period.
  2. Ratio Analysis: Ratios are used for efficiently and profitability control. They show relationships between figures for evaluating financial performance. They can be based on balance sheet or income statement. The popularly used ratios are:
    • Liquidity Ratios: They measure ability to pay back short term debts. Current Ratio (current assets : current liabilities) is a good indicator of liquidity.
    • Debt Ratios: They measure ability to meet long term financial obligations (Total debts to Total assets). They are also known as Solvency Ratios.
    • Operating Ratios: They measure the efficiency of operations. Inventory turnover ratio is an example.
  3. Auditing: It is a comprehensive, systematic, independent and periodic examination or truth and fairness of financial statements. It examines propriety (compliance), efficiency and performance. It can be internal or external.
    • Internal Audit: It is carried out by members of the project organization. It examines accuracy and reliability of financial transactions. It evaluates operational efficiency and control system. It is a continuing activity for internal control by project management.
    • External Audit: It is independent examination of financial accounts and statements by legally authorized auditors. It takes place after the end of financial year. It is done to safeguard the interests of the project.

Budgetary Control

Budgetary control compares actual project expenditure with budgeted expenditure. Actions are taken to correct deviations.
  • Budget: A budget is a statement of future expenditures for planning and controlling project's financial resources. It focuses on input control. Activities are controlled before the operations start.
Types of Budgets
Project Budgets can be of three types:
  1. Operating Budgets: They consist of plans for the use of raw materials, goods and services. They specify quantity and costs.
    • A unit becomes a responsibility center if a single manager is responsible for its operations. Based on the concept of responsibility, operating budgets can be a cost center.
    • Cost center has its own budget and the unit manager is responsible for controlling costs. Cost centers are concerned with input costs.
  2. Financial Budgets: They consist of plans for spending and mobilizing financial resources. They ensure that project funds will be available when required. They can be :
    • Cash Budget: It estimates cash flow on a daily or weekly basis. Surpluses and shortfalls of cash can be managed by this budget.
    • Capital Expenditure Budget: It is a plan for investment in capital assets, such as building, equipment, etc. It involves sizable financial commitment over project period.
    • Master Budget: It integrates all operating and financial budgets of the project.
    • Programme Budget: (PPBS: Planning, Programming Budgeting System):
      • PPBS is Planning, Programming Budgeting System is also known as Programme Budgeting. In Economics, it is known as Output Budgeting.
      • PPBS was first introduced n US Department of Defence in 1961. In 1966, the US government adopted PPBS in all its departments and agencies. At present, PPBS is widely used by many countries and organization.
      •  PPBS allocates budget in terms of programmes and projects. Cost allocation is related to outputs rather than inputs. Traditional budgeting allocated costs according to line items, such as salaries, maintenance, equipment etc. PPBS allocates budget according to programmes which consist of a bundle of projects.
      • PPBS is based on system analysis.
It consists of four steps:
  1. Goals and priorities of each programme or project are clearly identified.
  2. Success of each programme or project in achieving its goals is reviewed.
  3. Costs of each programme or project till the end of its life.
  4. Each programme or project is selected for continuation or rejection on the basis of its effectiveness in achieving its objectives.
    • Projects make up the programme. PPBS approach is useful in project management. It is mainly needed for allocating resources to projects. It is an important tool for decision making regarding continuation or dropping of a project. It can also be used for project cost control.

Project Management Information System (PMIS)

Project operates in a dynamic environment. The project manager needs timely and accurate information to respond to environmental changes. Information is the life blood of a project. It is a prerequisite of project control. It is vital for managing stakeholder expectations.

Project Management Information System (PMIS) is a database for project. It collects, analyses, stores, retrieves and disseminated project information for making project decisions. It consists of people, equipment and procedures. It is generally of an ad-hoc nature till the life of the project.

Project Management Information System is based on various forms and reports that generate written information for decision making and control. The requirements for PMIS are:
  1. Project forms are filled-in periodically based on the measurement of progress of each activity.
  2. The forms are entered in the PMIS and analyzed to prepare a report for dissemination to all the concerned project personnel.
  3. Corrective actions are taken by the project manager based on performance deviations identified by PMIS reports. 
Project Management Information Cycle
 A project's performance is measured and recorded in prescribed forms. The forms are analyzed and combined into reports by PMIS to act for corrective actions. Data are not be collected if they are not going to be analyzed. This is essential to avoid information overload.
  • PMIS reports should identify critical control points so that corrective actions can be taken.
Elements of Project Management Information System (PMIS)
The project management information system consists of inputs-transformation-outputs-feedback.
Project Management Information System (PMIS)
  •  Inputs: It consists of data generated internally by various project forms on a periodic basis. External sources can also generate data, for example functional departments can provide data to project.
  • Transformation: It consists of analysis, storage, retrieval and dissemination of data and information.
  • Outputs: It consists of regular and special reports about project performance.
  • Feedback: It provides information to redesign PMIS for inputs and transformation activities.
Computerized PMIS are most commonly used to consolidate data in projects. Decision support system database are used to analyze data. Software is carefully selected.

Total Quality Management, Tools and Techniques for TQM

Total Quality Management (TQM)

Total quality management (TQM) is a way of managing to improve the effectiveness, flexibility and competitiveness of a business as a whole. It involves whole companies getting organized in each department, each activity, and each person, at each level. For an organization to be truly effective, every single part of it must work properly together, because every person and every activity affects and in turn is affected by others. It is in this way that Japanese companies have become so competitive and so successful.

Total quality management is also a method of removing waste, by involving everyone in improving the way things are done. TQM must be applied throughout an organization so that people from different department, with different priorities and abilities, communicate with and help each other. The method is useful in finance, design, research and development, purchasing, personnel and production/ operation.

Project Managers rely on several tools and techniques for total quality management. They are
Tools and Techniques of TQM
  1. Right First Time: Employees ensure quality while they work. They do the right things first time. They aim for zero defect.
  2. Benchmarking: It is the process of learning from best practices of other projects that produce superior performance. They do exceptionally high quality things.
  3. Outsourcing: It is subcontracting services and operations to outside firms who can do them cheaper and better.
  4. ISO 9000: They are set of quality standards created by International Organization for Standardization (ISO). Organizations obtain certification form ISO for product testing, employee training, record keeping, supplier relations and repair policies and procedures.
  5. Statistical Quality Control: It includes a set of specific statistical tools that can be used to monitor quality. It is based on sampling.
  6. Just-in-Time Inventory Management (JIT): Inventories are received just-in-time to be used up by production. They are not stored.
  7. Speed: Speed is the time needed to get the activities accomplished. TQM increases speed. Speed becomes a part of project culture.
  8. Training: Employees are provided continuous training in quality matters. Quality circles also serve as training grounds for TQM.

Quality Control

Quality control is checking errors during project implementation. Quality control inspectors are used for checking quality. Statistical quality control techniques are also applied for monitoring quality. Conformity to agreed specifications are monitored. Adjustments are made for deviations. Project outputs not meeting the standards are rejected, scrapped or reworked.

Total Quality Management (TQM)
Total quality management is a management philosophy of continuously improving project quality through everyone's commitment and involvement to satisfy customer needs. It puts quality first. Quality becomes the guiding factor for everything the project organization does.

TQM creates a project culture committed to continuous improvement in all aspects. It seeks incremental improvements.

Components of TQM
Components of Total Quality Management are:
  1. Strategic commitment
  2. Continuous quality improvement
  3. Customer focus
  4. Employee involvement
  5. Accurate measurement
  6. Improved materials, technology and methods
  • Strategic Commitment: The top management should have strategic commitment to total quality management in project. The project culture should be supportive of TQM.
  • Continuous Quality Improvement: TQM believes that quality can always be improved. Quality is a never ending concern. Everything that the project does is subject of quality improvement. It becomes a way of life.
  • Customer Focus: TQM puts intense focus on customer. Satisfaction of customer needs is the top priority. Customers can be outsiders who buy the products. Quality serves as a means to build cordial customer relationships.
  • Employee Involvement: In project, quality is everyone's responsibility for their own work. Employee involvement at all levels is critical to improving quality. Employees are empowered through work teams to find and solve problems. Teamwork is built.
  • Accurate Measurement: TQM uses statistical tools for accurate measurement of critical operations. Performance is compared against standards Causes of deviations are corrected. The important tools are:
    • Flow Chart: Graphic display of a sequence of activities.
    • Control Chart: Visual aid showing variations.
    • Histograms: Bar chart showing deviations from a standard curve.
    • Scatter Diagram: Plots relationship between two variables.
    • Trend Chart: Tracks a variable over time.
    • Fish-bone Diagram: Cause and effect analysis.
    • Pareto Analysis: Bar chart indicating problem needing most attention.
  • Improved Materials, Technology, Methods:
    • Improved quality of materials as a way of improving quality of project outputs are used.
    • New forms of technology, such as robots, computerization, digitalization to boost quality are used.
    • Improved methods, such as flexible manufacturing methods are used.