Soft Copyneoclassical Management Theory

Neoclassical management theory
Classic management theory (19th – 20th century)
• It refers to a set of principles and practices that were developed during the late 19th and early
20th centuries to improve the efficiency and productivity of organizations.
• It emphasizes hierarchy, specialization of labor, centralized decision-making, and profit

maximization.
• The classical management theory is based on the belief that workers have physical and economic
needs, and it does not consider social needs or job satisfaction.
Some classical management theory
• Frederick W. Taylor Propounded the theory that people will be highly motivated if their reward
is tied directly to performance. “Money is the best motivation”.
• Henri Fayol, emphasizes improving organizational performance through managerial practices

and coordination of internal elements.
• Max Weber, promotes a hierarchical structure, clear rules and regulations, and a division of
Classical Management Theory
Neoclassical management theory(1930)
• Emerged in the mid-20th century as a critique of classical management approaches. It blended

classical principles with insights from behavioral sciences, recognizing the importance of human
factors in organizations.
Introduction
• The neoclassical management theory is a branch of management theory that evolved as a

reaction to the criticisms of the classical management theory. It seeks to integrate the human
and social aspects of workers' lives into management. This theory places emphasis on the social
and psychological needs of employees in addition to their economic needs.
• It is like a new way of looking at how to manage people at work. It came about because the old
way, called classical management, was too focused on tasks and didn’t consider the feelings and
needs of the workers.
Comparison of Classical management theory and neoclassical management theory
Classical Management Theory Neoclassical Management Theory

• The focus of classical management theory • Neoclassical management theory shifts
is on improving efficiency, productivity, the focus from efficiency to the social and
and profit maximization through psychological needs of employees. It
principles such as hierarchy, emphasizes creating a positive work
specialization, and standardization of environment, fostering effective
tasks. communication, and considering
employee satisfaction and motivation.
Key principles:
1. Emphasis on Human Relations
• Neoclassical theorists recognized that workers were not just economic entities but also
individuals with psychological and social needs. They stressed the importance of communication,
motivation, and employee satisfaction.
2. focus on participative decision-making
• Neoclassical theorists advocated for decentralized decision-making, involving lower-level

managers and employees in the process. This aimed to improve employee morale and
commitment.
3. Integration of formal and informal structures
• They recognized the existence of both formal and informal structures within organizations.
Neoclassical theorists emphasized the need to integrate these structures to improve
organizational efficiency.
4. importance of organizational culture
• They acknowledged the influence of organizational culture on employee behavior and

organizational performance.
5. Emphasis on organizational goals
• While recognizing the importance of human relations, neoclassical theorists also stressed the
need to align employee efforts with organizational goals.
Key contributors
• Elton Mayo
• Conducted the Hawthorne Studies, which highlighted the impact of social factors on
productivity.
• Abraham Maslow
• Developed the theory of human needs, emphasizing the importance of higher-level

needs such as self-actualization.
• Douglas McGregor
• Proposed Theory X and Theory Y, contrasting traditional and modern views of human
nature in organizations.
• Frederick Herzberg
• Developed the Two-Factor Theory of Motivation, identifying factors that lead to job
satisfaction (motivators) and dissatisfaction (hygiene factors).
• Chester Barnard (1886-1961)

• Developed acceptance theory of authority
• He argued that the employees would only follow orders that they believed were in their
best interests and the best interest of the organization
• His works helps public administrators to understand the importance of leadership and
communication
Limitations
• Overemphasis on Human Factors
• While recognizing human importance, neoclassical theory may have neglected the role
of technological and economic factors in organizational success.
• Lack of Rigorous Research
• Some of the ideas proposed by neoclassical theorists were based on limited research
and anecdotal evidence.
• Potential for Soft Management
• The focus on human relations could lead to overly lenient (tolerance) management
styles, compromising organizational efficiency.
Here’s what neoclassical theory believes:
• 1. People Matter: It says that every worker is important and their feelings, needs, and ideas
should be considered.
2. Teamwork: It believes that people work better in groups or teams.
3. Listening to Workers: It suggests that bosses should involve workers in making decisions. This
makes workers feel valued and can make the business run better.
4. Understanding Behavior: It uses ideas from psychology to understand why workers behave
the way they do.
5. Good Communication: It stresses the importance of good communication between bosses
and workers.
6. Flexibility: It believes that rules should be flexible and consider the needs of the workers.
For the conclusion
• the neoclassical management theory is all about treating workers as people who have feelings
and needs, and not just as machines who do tasks. It believes that when workers are happy and
feel valued, they will work better.
Reference
• Marketing91
• Villanova University
• Indeed.com
• Bokas Tutor
• HRDQ Blog
• Management Study Guide
• Cleverism
• Your Article Library
Elton Mayo
Reporter: Emie Pandes
Human relations theory
• The human relations approach to motivation is commonly credited to the studies of Elton Mayo.
• Elton mayo is a psychologist and professor of industrial research at Harvard Graduate School of
Business, at the Hawthorne Works of the Western Electric Company between the years 1927 and
1932.
• His research attempted to determine why some groups of worker did much poorer work thank
others.
• It states that informal groups exists alongside the formal organization and that those informal
groups could exert a greater pull on the worker’s motivation than the combined strength of
money, discipline and job security.
• Further, these informal groups are inclined to set their own level of output, often in disregard of
organizational requirements.
• Any member who fails to conform is subject to sanctions applied by the group.
• Mayo pointed out that instead of suppressing the instinct of forming groups, management
should be encourage it and that it should court these groups by showing a sympathetic, active,
firsthand interest in each individual member.
• Moreover, management should give the group a reasonable share of control over its own work.
• To achieve these goals, managers should be trained in the skills of listening, understanding, and
eliciting cooperation- quite a departure from classical image of a ‘straw boss’

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Neoclassical management theory

Classic management theory (19th – 20th century)

• It emphasizes hierarchy, specialization of labor, centralized decision-making, and profit

Some classical management theory

• Henri Fayol, emphasizes improving organizational performance through managerial practices

Neoclassical management theory(1930)

• Emerged in the mid-20th century as a critique of classical management approaches. It blended

• The neoclassical management theory is a branch of management theory that evolved as a

Comparison of Classical management theory and neoclassical management theory

Classical Management Theory Neoclassical Management Theory

2. focus on participative decision-making

• Neoclassical theorists advocated for decentralized decision-making, involving lower-level

3. Integration of formal and informal structures

4. importance of organizational culture

• They acknowledged the influence of organizational culture on employee behavior and

5. Emphasis on organizational goals

• Developed the theory of human needs, emphasizing the importance of higher-level

• Chester Barnard (1886-1961)

• Overemphasis on Human Factors

• Lack of Rigorous Research

• Potential for Soft Management

Here’s what neoclassical theory believes:

For the conclusion

Human relations theory

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