Neoclassical Theory of Management

The Neoclassical Theory grew with the Hawthorne studies in the 1920s. It was the result

of the limitations of classical theory. In Classical Theory, the main motive was focused on

productivity and to achieve targets. But soon after workers resisted this approach as it did

not provide social and job satisfaction.

Then few thinkers' attention shifted toward the human side of management. George

Elton Mayo (1890-1949) is considered to be the father of Neoclassical theory. He

conducted the famous Hawthorne Experiments at the Western Electric Company (USA)

during 1927-1932. These three elements of the neoclassical theory of management are

Hawthorne Experiment, Human Relation Movement, and Organizational Behavior.

Elements of Neoclassical Theory

Hawthorne Experiments

The Hawthorne studies were a chain of experiments conducted at the Western Electric

Company (USA) between 1927 and 1932. This study provided new perceptions of

individual and group behavior. The research was conducted by Elton Mayo and was

sponsored by General Electric. The study's main aim was to focus on human behavior in

the workplace.

In one experiment researchers observed and came to the conclusion that productivity

rate changed because of changes in the working environment. The Hawthorne studies and

experiments changed the perceptions of scientists and they declared that the human element

is very important in the workplace.

The Hawthorne experiments were divided into four stages: Illumination experiments,

Relay assembly best room experiments. Mass interviewing program, Bank wiring

observation room study.

Human relation movement

After the results of the Hawthorne Experiments, several theorists conducted research in the

field of interpersonal and social relations among the co-workers of a particular

organization. Interpersonal and social relations are part of human relations.

The human relations movement advocated that workers respond to the social context of

the workplace including social conditioning, group norms, and interpersonal dynamics.

A series of studies done by Abraham H. Maslow, Douglas Mc Gregor, Frederick Herzberg,

Keth Davis, Rensis Likert, and others led the human relations movement.

Organizational behavior

Psychologists and sociologists studied group dynamics. Chris Argyris, Homans Kurt Lewin,

R.L. Katz and others developed a new field called Organizational Behavior. This study

focused on human attitudes, behavior, and performance of individuals and groups in an

organization. This approach is known as the Behavioral Approach. It is an extended version of the

human relations movement. It deals with the multidimensional and interdisciplinary

application of knowledge drawn from behavioral sciences.

Assessment of Neoclassical Theory

The neoclassical theory has made everybody understand the importance of human

behavior at work, in an organization. It created awareness among people of the

importance of human factors in the organization. This approach gave a topic to think

about different ideas and techniques for a better understanding of human behavior.

Supporters and Thinkers of this approach recognize an organization as a social system,

where sentiments, culture, participation, leadership, motivation, etc constitute the core of

the neoclassical theory. This approach changed the view that employees are tools like

machines and strengthened the belief that employees are valuable resources.

Classical Theory's main focus is on productivity and target but neoclassical Theory

emphasizes increasing production through an understanding of people. According to

thinkers of this theory, if managers understand their workers and keep them happy, then

automatically efficiency of work will be increased and the organization will achieve

success.

Conclusion

Neoclassical Theory has a crucial role in the advancement of management theories

and practices. This approach is important as it understands human behavior and does not

think of humans as tools or machines. It regards workers as an important element of the

organization.

Neoclassical Theory advocates awareness among workers, that they are an important

element and cannot be exploited. Management's views changed regarding their workers.

Production depends on the efficiency of workers and so their needs are to be taken care of

by management.

Classical Theory came to an end after the Neoclassical Theory came into existence.

Neoclassical Theory became popular as it gave importance to human values and human

relations. It stressed human behavior and relations as both of them are

important for working efficiently in an organization and achieving success.