Influences from outside the organization, that is, the external environment, clearly influence employee behavior. Factors from the external environment include the economy, various governmental laws, regulations, and regulatory agencies, the activities of other organizations or competitors plus the many global and technological issues. In addition to factors in the external environment, there are also factors within the organization that influence employee behavior.

The supervisor’s approach to leadership can influence employee performance. Leadership is the use of noncoercive influence to direct and coordinate the activities of a group toward accomplishing a goal. The organization itself can influence employee behavior through its reward structure, culture, and job design. Reward structure focuses on the types of rewards an organization uses, how rewards are distributed, and the criteria for reward distribution. Rewards include not only tangible things, such as financial bonuses and plaques, but also intangible things, such as recognition and acceptance.

An organization’s culture can also have a strong effect on individual behavior. Organizational culture is a set of values, norms, and patterns of behavior that are shared by organization members and that guide their behavior. Job design is the development and alteration of the components of a job (such as the tasks one performs, and the scope of one’s responsibilities) to improve productivity and the quality of employee work life. Teamwork both amplifies the importance of coworkers’ influences on individual behavior and brings other dynamics to the forefront.