Neo classical theories and comparison of Classical vs neo classical theory

DEFINITION NEO CLASSICAL THEORY

HISTORY OF NEO CLASSICAL THEORY

INTRODUCTION TO NEO CLASSICAL THEORY

HAWTHORNE STUDIES

FEATURES OF NEO CLASSICAL THEORY

ELEMENTS OF NEO CLASSICAL THEORY

COMPARISON OF CLASSICAL VS NEO CLASSICAL THEORY

1. NEO CLASSICAL THEORIES OF MANAGEMENT Presented BY TARUN KASHNI

2. INDEX Definition Neo classical Theory History of Neo classical theory Introductio n to Neo classical theory Hawthorne studies Features of Neo classical theory Elements of Neo classical theory Comparison of Classical vs Neo Classical Theory

3. WHAT IS NEO CLASSICAL THEORY? The  Neo Classical Theory  is the extended version of the classical theory wherein the behavioral sciences gets included into the management. According to this theory, the organization is the social system, and its performance does get affected by the human actions.

4. HISTORY OF NEO CLASSICAL THEORY In the early 1920s, a shift away from classical management theory took place as theorists began to consider the human side of an organization and the social needs of employees . Neo Classical Approach was first done by A lfred Marshal in his book principles of economics which was published in 1890’s

5. FOUNDER OF NEO CLASSICALTHEORY George Elton Mayo (1890- 1949) is considered to be the  founder  to the  neoclassical theory . He was the leader of the team which conducted the famous Hawthorne Experiments at the Western Electric Company (USA) during 1927-1932 . George Elton Mayo (26 December 1880 – 7 September 1949) was an Australian born psychologist, industrial researcher, and organizational theorist . Mayo was formally trained at the University of Adelaide, acquiring a Bachelor of Arts Degree graduating with First Class Honours , majoring in philosophy and psychology,and was later awarded an honorary Master of Arts Degree from the University of Queensland (UQ)

6. INTRODUCTION The  neoclassical theory  was an attempt at incorporating the behavioral sciences into management thought in order to solve the problems caused by classical theory practices. The premise of this inclusion was based on the idea that the role of management is to use employees to get things done in organizations. Rather than focus on production, structures, or technology, the neoclassical theory was concerned with the employee. Neoclassical theorists concentrated on answering questions related to the best way to motivate, structure, and support employees within the organization. Studies during this time, including the popular  Hawthorne studies , revealed that social factors, such as employee relationships, were an important factor for managers to consider. It was believed that any manager who failed to account for the social needs of his or her employees could expect to deal with resistance and lower performance. Employees needed to find some intrinsic value in their jobs, which they certainly were not getting from the job that was highly standardized. Rather than placing employees into job roles, where they completed one specific task all day with little to no interaction with coworkers, employees could be structured in such a way that they would frequently share tasks, information, and knowledge with one another. The belief was that once employees were placed into this alternate structure, their needs for socialization would be fulfilled, and thus they would be more productive.

7. HAWTHORNE STUDIES Mayo is known for his work on the project which is commonly referred to as the Hawthorne studies. An extensive investigation was started in 1927 at the Hawthorne plant, near Chicago, of the Western Electric Company. These studies were conducted to determine the effect of better physical facilities on workers’ output. A number of experiments were conducted on the workers to find out the impact of different situations on their efficiency .

8. EXPERIMENT OF HAWTHORNE (i) These experiments involved five girls engaged in electrical assembly testing. These girls were separated from the rest and placed in a separate room known as Relay Assembly Test Room. A supervisor was attached to them to maintain a record of their performance and maintain a friendly atmosphere. This experiment continued for over 42 hours and changes like; extended rest periods, reducing working week from 48 to 42 hours every change showed an improvement in performance ( iii) The improvements were reintroduced. The output roared and even working for 42 hours it was more than the previous records. (ii) All the improvements introduced earlier were systematically removed. Though the output fell a little but still it was more than it was before the experiments.

9. FEATURES OF NEO CLASSICAL APPROACH (i) The business organization is a social system. (ii) Human factor is the most important element in the social system. (iii) It revealed the importance of social and psychological factors in determining worker productivity and satisfaction. (v) The aim of the management is to develop social and leadership skills in addition to technical skills. It must be done for the welfare of the workers . (iv) The behavior of an individual is dominated by the informal group of being a member. (vi) Morale and productivity go hand-to-hand in an organization.

10. ELEMENTS OF NEO CLASSICAL THEORY (i) Individual (ii) Work Group (iii) Participative Management (iv) Orientation (vi) Leadership (v) Motivation (vii) Employee Development

11. Two Movements in the Neoclassical Theory The neoclassical theory encompasses approaches and theories that focus on the human side of an organization. There are two main sources of neoclassical theory: the  human relations movement  and the  behavioral movement . The human relations movement arose from the work of several sociologists and social physiologists who concerned themselves with how people relate and interact within a group. The behavioral movement came from various psychologists who focused on the individual behavior of employees. To better understand these movements, let's take a look at how the work of these various sociologists and psychologists influenced management thought.

12. COMPARISON OF CALSSICAL AND NEO CLASSICAL THEORY

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