Neo-classical approach to PA

Presented by
Norbu T. Sherpa (40/072)
Pravakar Bhattarai(74/072)
Prakash Ghimire (124/072)
Shyam krishna Dulal(152/072)
Introduction
• Neo classical approach is based on behavioral science an approach to
modifying and improving the classical theory.
• While classical theories focused more on structure and physical aspects of
the worker and Neo-classical theory gives importance to human and social
aspects of the worker and his relations in the organization.
• It focused on the human aspects which was not earlier mentioned in the
scientific management theory.
• How they are motivated towards work, in what sorts of working
environment they are willing to work, besides salary and remuneration
what benefits do they seek are the common questions.
• From this it was concluded that an employee do not necessarily want
money and salary only but rather they want to live in society with dignity,
societal love, respect and position.
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• It emphasized human relations, the importance of individual as well
as group relationship and social aspects.
• It was further extended to the behavioral sciences approach. The
quantitative approach and the contingency approach also form a part
of the neo-classical approach.
• The classical theorist viewed people as means of production and
suggested ways to increase production. But, unfortunately, managers
could not achieve the targets of production as people at work place
did not always behave rationally.
Aspects of neo classical approach
• Human relation theory
• Behavioural theory
Human relation theory
• The theory developed by Raymond miles states to treat human as a
respectful resource.
• This theory focused to increase coordination and develop high morale
and dignity among the workers.
• Theory was introduced because of the economic recession of 1929,
labor movement and because of Hawthorne experiment.
Behavioral theory
• The behavioral school of management emphasizes the human
element in an organization.
• It put more importance on individual attitude and behavior and on
group processes.
Major Contributor to the Behavioral School
• Mary Parker
 Group influences in the workplace
• Elton Mayo
Effect of human motivation on productivity and output
• Abraham Maslow
Relates human motivation to a hierarchy of needs
• Douglas McGregor
Emphasizes human characteristics- theory X and theory Y and the
corresponding style of leadership
Mary Parker Follett :
• Pioneer of the behavioral approach to management. Follett was a
social worker and studied issues related to working conditions of
employees.
• She believed in group behavior and mutuality of interests between
employers and employees.
• She recognized the significance of the human elements and
attributed greater significance to the functioning of groups in the
workplace.
• The critical role of managers should be to bring constructive change
in the organization, following the principle of ‘power with’ rather than
‘power over’.
Elton Mayo
• He is recognized as the father of human relations approach.
• Mayo and his associates conducted their study at Western Electric's
Hawthorne Plant between 1927-1932, to evaluate the attitude and
psychological reaction of workers in on-the-job situation.
• Series of experiments were conducted to identify the different
aspects of the human.
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The Human Relations Movement :
• The human relations movement grew from the Hawthorne experiment.
• The classical management theory in particular assumed a simple stimulus-
response relationship in the workplace.
• In classical approach, if jobs were properly designed and appropriate
incentives established, predictable result would follow.
• In classical approach, workers would perform their jobs as they were told
and would maximize output to get high wages and compensation.
• Human relations school of thought, suggested a more complex process. It
proposed that workers respond primarily to the social context, including
social conditioning, sentiments and the interpersonal situation at work.
ABRAHAM A. MASLOW

• Maslow focused on human needs.

• He suggested that number of different human needs exists and he felt that people are motivated
by a sequence of needs. So organizations which solely rely on money as a motivator may be
ignoring important needs.
• He introduced a new concept, viz., hierarchy of needs. He felt that people are motivated by five
distinct types of needs which are arranged in a hierarchy in order of their power to motivate
human behavior:

1. Physical or physiological needs

2. Safety or security needs
3. Social needs
4. Ego or status needs
5. Self-actualisation, self realisation, self-fulfilment needs.
DOUGLAS McGREGOR
• McGregor’s major contribution in the emerging areas of human relations
lies in developing two alternative management views of subordinates,
popularly known as theory X and theory Y.
• Theory X managers believe that their subordinates basically try to avoid
responsibility and work assignments. So they can not be inspired or
motivated.
• Theory X takes a relatively pessimistic and negative view of workers.
• On the contrary, Theory Y managers hold progressive outlook and are
dynamic in nature. They view work as rewarding if given the chance by
superiors.
• In McGregor’s view theory Y was a more appropriate philosophy for
managers to adhere to.
Classical VS Neoclassical theory:
• Classical and neoclassical approach to management made
outstanding contribution to the development of management
thought.
• Under classical approach, attention was focused on job and machine.
On the other hand, neoclassical approach to management
emphasizes on increasing production through an understanding of
people.
• According to proponents of this theory, if managers understand their
people and adapt their organizations to them, Organization success
will usually follow. However, the classical theory stresses on task and
structure while the neoclassical theory emphasizes people aspect.
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Conclusion
• Neoclassical theory has made significant contribution to an understanding of human behavior at
work and in organization.
• It has generated awareness of the overwhelming role of human factor in industry. This approach
has given new ideas and techniques for better understanding of human behavior.
• Contributors to this approach recognize an organization as a social system subject to the
sentiments and cultural patterns of the member of the organization, group dynamics, leadership,
motivation, participation, job environmental, etc constitute the core of the neoclassical theory.
• This approach changed the view that employees are tools and furthered the belief that
employees are valuable resources. It also laid the foundation for later development in
management theory.
• Neoclassical approach is not free from limitations. First, it lacks the precision of classical theory
because human behavior is unpredictable. Secondly, its conclusions lack scientific validity and
suffer from a clinical bias, its findings are tentative.
• Lastly its application in practice is very difficult because it requires fundamental changes in the
thinking and attitude of both management and workers.