An understanding of organizational behavior is important to managers, who have the responsibilities of improving organizational effectiveness, the ability of an organization to achieve the goals. A goal is desired future outcome that an organization seeks to achieve. In the last 10 years, the challenges facing managers in effectively utilizing human resources and managing organizational behavior have increased. These challenges stem from changing forces in the technological, global, and social or cultural environments. Organization can obtain a competitive advantage, a way of outperforming other organizations providing similar goods and services. They can pursue any or all of the following goals: increase efficiency, increase quality; increase innovation and creativity; and increase responsiveness to customers.

Organizational efficiency is increased by reducing the amount of resources, such as people or new materials, needed to produce a quality of goods or services. Organizations try to find better ways to utilize and increase the skills and abilities of their workforce. Cross training workers to perform different tasks and finding new ways of organizing workers to use their skills more efficiently improve efficiency. The global competitive challenge facing organizations is to invest in the skills of the workers because better-trained workers make better use of technology. Increased competition has also put pressure on companies to increase the quality of the goods and services they provide. One approach to increasing quality is called Total Quality Management, a technique borrowed from the Japanese. Total Quality Management involves a whole new philosophy of managing behavior in organizations and includes elements like giving workers the responsibility for finding ways to do their job more efficiently and ways to improve quality.

An organization’s ethics are rules, beliefs, and values that outline ways in which managers and workers should behave when confronted with a situation that may help or harm other people inside or outside an organization. Ethical behavior enhances the well-being of individuals, groups, organizations, and the organizational environment. Ethics establish the goals and behaviors appropriate to the organization. Many organizations have the goal of making a profit, to be able to pay workers, suppliers, and shareholders. Ethics specifies what actions an organization should take to make a profit and what limits should be put on organizations and their managers to prevent harm.

The challenges managing a diverse workforce increase as organizations expand their operations internationally. There are several issues that arise in the international arena. First, managers must understand cultural differences to interact with workers and associates in foreign countries. Understanding the differences between national cultures is important in any attempt to manage behavior in global organizations to increase performance.

Second, the management functions of planning, organizing, leading, and controlling become more complex in a global environment. Planning requires coordination between managers in the home and those abroad. Organizing, the allocation of decision-making authority and responsibility between headquarters and the foreign country is a significant function of global managers. Leading requires tailoring their leadership styles to suit differences in the attitudes and values of foreign workers. Controlling involves establishing the evaluation, reward, and promotion policies of the organization and training and developing a globally diverse workforce.