NEO CLASSICAL

SCHOOL OF
THOUGHT
Introduction
Human Relations Approach
Behavioral Science Approach
Advantages, Disadvantages,
Criticism

INTRODUCTION
The free will theory of classical school did not
survive for long.
The Traditional classical theory and its principles are
attacked on the ground that they are contradictory,
pay little attention to motivation, and make hasty
pronouncements on what should be done without
examining time assumptions underlying such
pronouncements. As such, these principles do not
represent the heart of knowledge of management
but a small part of the total body of administrative
management.

 As a reaction to schools of classical theory which

over-emphasized
the
mechanical
and
physiological characters of management, came up
the schools of neoclassical theory with a more
human-oriented approach and emphasis on time
needs, drives, behavior's and attitudes of
individuals.
Two important groups, namely, human relations
school and behavioral schools emerged during
1920s and 1930s under the neoclassical theory.

HUMAN RELATIONS APPROACH

Elton Mayo - considered as the father of the human
relations movement, which later became organizational
behavior. The other two important co-researchers of this
school are F.J. Roethlisberger and William J Dickson.
ELTON MAYOs VIEW
Aimed to understand how psychological and social
processes interact with the work situation to influence
performance.
Work represent the transition from scientific
management to the early human relations movement.
Emphasized on workers themselves and needs to
belong to a group.

 The neo-classical theory is based on theHawthrone experiments.

Elton Mayo and co-researchers conducted the Hawthrone
experiments at Hawthrone plant of General Electronic Company
(GEC) between 1924 - 1993 at Chicago with 30,000 workers.
Four Phase of Hawthrone experiments:
Illumination experiments (1924 1927)
This experiment involved manipulation of illumination for one
group of workers, called test group and comparing their
productivity and performance with another group for whom
illumination was not manipulated, called controlled group.
Relay assembly room experiments (1927 1928)
The researchers selected six women employees of the relay
assembly test room, and were put in a separate room. In the test
room, a number of variables were altered, like increased wages
and rest period, shortened workday and workweek etc.

 Mass interviewing programme (1928 -1930)

The purpose of the interviews was to explore the attitude of
workers in depth.
Bank wiring room study (1931 1932)
In this experiment Sample workers were paid based on an
incentive pay plan, relating their pay to output. They had the
opportunity to earn more by increasing the output. However,
it was observed that the output was constant at a certain
level.
Result of Hawthrone Experiments:
Motivation:Employees are not motivated by only money (bonus
scheme and incentive).
Communication: communication helps the management and
employees to have better mutual understanding. Through proper
communication, management can easilyidentifiedthe problem faced
by its employees and can easily solve out.
Social factors:Social factors are responsible for deciding the level of
output.

 Behavior of workers:workers are not as individual identity but

as members of a group in an organization and they have their
own norms and beliefs. Workers behavior depends upon his
mental level and emotions. Workers began to influence their
group behavior towards management.
Relationship:Employees do not like order and command. They
preferred to maintain amicable relationship with their coworkers. They want co-operative attitude from their superiors.
Production level: Teamwork and Group psychology increases
productivity.

Human relations approaches laid greater emphasis on the

work group and need for better communication between
supervisors and workers. However, they did not reject all the
classical ideas. The neoclassical writers believed that treating
employees like individuals (neoclassical) would make them
act according to the principles (classical). They said, treat
employees as if they are important and give the workers the
feeling of participation.

Limitation of Human relation school

Human relations school has several limitations as
well. It is considered to be a swing in the opposite
direction of classical theory. In other words, they saw
only human variables as critical and ignored other
variables. Thus the human relations movement
accepted many of the assumptions of the scientific
management thinkers, and it did not achieve a major
breakthrough in management theory.

Behavioral Science Approach

The human relations approach has evolved into modern
behaviourism. The term modern behaviourism refers to the
current stage of evolution of the behavioural school of
management, which gives primacy to psychological
considerations but treats fulfillment of emotional needs
mainly as a means of achieving other primary economic
goals.
Important behavioural scientists who contributed to gain
insight in ways to achieve managerial effectiveness and
developing techniques to utilize people more effectively in
organizations, are Abraham Maslow, Douglas McGregor, Chris
Argyris, Frederick Herzberg, Rensis Likert, Kurt Lewin, Chester
Barnard, Mary Parker Follett, George Homans and Warren
Bennis.

Abraham
Maslow,a
practicing
psychologist,
developed one of the most widely recognizedneed
theories,a theory of motivation based upon a
consideration of human needs.
His theory of human needs had three assumptions:
Human needs are never completely satisfied.
Human behavior is purposeful and is motivated by the
need for satisfaction.
Needs can be classified according to a hierarchical
structure of importance, from the lowest to highest.

Maslow broke down the needs hierarchy into five specific

areas:
Physiological needs.Maslow grouped all physical needs
necessary for maintaining basic human wellbeing, such as food
and drink, into this category. After the need is satisfied, however,
it is no longer is a motivator.
Safety needs.These needs include the need for basic security,
stability, protection, and freedom from fear. A normal state exists
for an individual to have all these needs generally satisfied.
Otherwise, they become primary motivators.
Belonging and love needs.After the physical and safety
needs are satisfied and are no longer motivators, the need for
belonging and love emerges as a primary motivator. The
individual strives to establish meaningful relationships with
significant others.
Esteem needs.An individual must develop selfconfidence and
wants to achieve status, reputation, fame, and glory.
Selfactualization needs.Assuming that all the previous needs
in the hierarchy are satisfied, an individual feels a need to find
himself.

Douglas McGregorwas heavily influenced by both the

Hawthorne studies and Maslow. He believed that two
basic kinds of managers exist:

Chris Argyris,
A contemporary advocate of the behavioural school of management thought,
Argyris has argued in his book Personality and Organization that people
normally progress from a stage of immaturity and dependence to maturity
and independence and that many modern organization keep their employees
in a dependent state, thus preventing the individual from achieving his or her
fullest potential . Furthermore he felt that various concepts and principles of
modern management such as specialization inhibit the natural development
of a healthy personality.

Mary Parker Follett,

a social philosopher whose ideas had clear implications for

management practice. She thought that organizations should be
based on a group ethic rather than on individualism. Individual
potential, she argued, remained as potential until released
through group association. The managers job was to harmonize
and coordinate group efforts the notion of power with rather
than power over employees. Managers and workers should
view themselves as partners as part of a common group.
Folletts humanistic ideas influenced the way we look at
motivation, leadership, power, and authority.

Chester Barnard
The contribution of Barnard is his concept of authority. He stressed
the need for workers to understand what they must do, for workers to
be convinced that what they must do are consistent to the
organizations goals and objectives, for them to think that an
organizations order or directive is consistent to their own personal
goals and objectives, and for them not to doubt that the order or
directive can be complied with using the available resources.

Frederick Irving Herzberg

Herzberg proposed the Motivator-Hygiene Theory, also known as
the Two factor theory (1959) of job satisfaction. According to his
theory, people are influenced by two sets of factors.
The idea is that hygiene factors will not motivate, but if they are not
there, they can lower motivation. These factors could be anything
from clean toilets and comfortable chairs, to a reasonable level of
pay and job security.
Motivational factors will not necessarily lower motivation, but can be
responsible for increasing motivation. These factors could involve
job recognition, potential for promotion or even the work in itself.

Rensis Likert,
was an American educator and organizational psychologist best
known for his research on management styles. He is also famous for
developing the Likert scale, a psychometric scale commonly
involved in research using questionnaires and the linking pin
model. Likert was known for his support of interdisciplinary
collaborations and emphasis on using social science research to
effect positive change.
Likert scale - is a psychometric scale commonly involved in
research that employs questionnaires. It is the most widely used
approach to scaling responses in survey research.
Linking pin model - It presents an organization as a number of
overlapping work units in which a member of a unit is the leader of
another unit. In this scheme, the supervisor/manager has the dual
task of maintaining unity and creating a sense of belonging within
the group he or she supervises and of representing that group in
meetings with superior and parallel management staff. These
individuals are the linking pins within the organization and so they
become the focus of leadership development activities.

George Homans (August 11, 1910 May 29, 1989)

was an American sociologist, founder of behavioral sociology
and the exchange theory. Homans is best known for his research in
social behavior and his works including The Human Group, Social
Behavior: Its Elementary Forms, his exchange theory and the many
different propositions he enforced to better explain social behavior.
The Human Group - This book allowed him to make certain
generalizations, including the idea that the more frequently
people interact with one another, when no one individually
initiates interactions more than others, the greater is their liking
for one another and their feeling of ease in one another's
presence. Although this wasn't Homans's greatest piece of work,
it allowed him to become more familiar with this type of
methodology and led him towards explaining elementary social
behavior.

 Social Behavior: Its Elementary Forms

This was based on the principles of behavioral psychology, and
helped explain the "sub-institutional", or elementary forms of social
behavior in small groups. Social behavior as exchange means that a
plurality of individuals, each postulated to behave according to the
stated behavioral principles, form a system of interaction. Social
approval is the basic reward that people can give to one another.

The Exchange Theory

The heart of Homans's exchange theory lies in propositions based
on economic and psychological principles. According to Homans
they are psychological for two reasons: first, they are usually
tested on people who call themselves psychologists and second,
they are psychological because of the level at which they deal
with the individual in society. He believed that society could be
studied without reducing it to individuals and their motivations.
However, Homans, through his Exchange Theory, believed that
individual beings and behavior are relevant to understanding
society.

Warren Bennis (born March 8, 1925)

is an American scholar, organizational consultant and author,
widely regarded as a pioneer of the contemporary field of
Leadership studies. Within the area of management, Bennis
sought to move from theory to practice in 1967. He authored two
books on leadership during his presidency: The Leaning Ivory
Tower, 1973, and The Unconscious Conspiracy: Why Leaders Cant
Lead, 1976.
His work On Becoming a Leader, originally published in 1989,
lays the foundation that a leader must be authentic, i.e. author of
ones own creation; a combination of experience, self-knowledge,
and personal ethics. This need for an effective leader to remain
true to their self-invention would be further expanded upon by
others into what has become known as the Authentic Leadership
approach.

They had rigorous training in various social sciences

and used sophisticated research methods. They
regard the classical management theory as highly
mechanistic, which tends to degrade the human spirit
and is non-responsive to the human needs. As against
overly specialized jobs, under-utilized people, too
much control over employees with no scope to make
decisions and little concern about subordinates
needs for recognition and self-fulfillment,
The behaviourists preferred more flexible
organization structures with jobs built around the
capabilities and aptitudes of average employees.

Advantages
By paying attention to the various needs of its
employees, organizations could improve
productivity and reduce employee-related issues
that negatively impacted the organization.
Organizations that focused on the employee rather
than the process saw jumps in productivity (which
reduced costs), fewer absentee hours and lost-time
incidents, and fewer employee-supervisor conflicts.

Disadvantages
As with any new approach, the people focus of the
Neoclassical School produced some immediate benefits
but, as the approach was used more frequently in
various situations, problems began to surface.
Changing the focus from the product to the individual
impacted production because decisions between
product and employee were resolved in favor of the
employee. It also required supervisors and managers
to be completely retrained, which added to the cost of
the product. Friction between employees and
supervisors increased because personnel issues were
often automatically resolved in favor of the employees.

CRITICISM
Various Keynesian school of thought have attempted
to meet the neoclassical criticisms, but the debate is
still unresolved: neither side has yet convinced the
other. They believe that the major neoclassical
hypothesis in three crucial areas, on which their
conclusions heavily depend, are open to challenge:
The nature of the equilibrium relevant to the
discussion of the matters at issue.
The nature of the unemployment observable in the
real world
The
implications of
the present inflationary
environment.