Evolution of Management Thought

Neo- Classical Theory

Neo- classical theory is also referred to as behavioral scienceapproach to

modifying and improving the classical theory. While classical

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theories focused more on structure and physical aspects of the worker and
Neo-classical theory gives importance to human and social aspects of the

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worker and his relations in the organization.

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The neo-classical theory is based on the Hawthrone experiments. Elton
Mayo conducted the Hawthrone experiments at Hawthron plant
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of General Electronic Company (GEC) between 1927 and 1993 at Chicago
with 30,000 workers. The Hawthron plant was manufacturing telephone
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system bell. The objective of the experiment was to find out the behavior and
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attitude of workers at workplace under better working conditions. In the

company, when management provide the benefits of medical allowance and
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pension with recreational facilities. Even thought workers get all facilities but
the productivity was not up to expectation. So, in 1924, the professor Elton
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Mayo and his research team investigate the reasons

for dissatisfaction of employees and decrease in productivity.
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Four Phase of Hawthrone experiments:

Prof. Elton Mayo and his team conducted researches in four phases.
Illumination experiments (1924 1927)
Relay assembly room experiments (1927 1928)
Mass interviewing programme (1928 -1930)
Bank wiring room study (1931 1932)
 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 easily identified the 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

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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

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emotions. Workers began to influence their group behavior towards
management.

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Relationship: Employees do not like order and command.
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They preferred to maintain amicable relationship with their co-workers. They
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want co-operative attitude from their superiors.
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Production level: Teamwork and Group psychology

increases productivity.
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Criticism of Hawthrone Experiments:

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Hawthrone experiment was not conducted scientifically.

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In the experiment, various format and structure are not

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feasible.
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Eltone Mayo gives more importance to human aspect and

ignoring other important aspects.
Group conflict is prevalent in an organization.
Hawthrone experiment did not give any recognition to the
forces which are responsible for productivity in the organization.
During experiment, Eltone Mayo has assumed that a
satisfied employee would be productive. But the finding was different. There
is no link between working condition and productivity.
Major contributors of Neo-classical theory are:

Chris Argyris- He recommended that worker should be given freedom to

make their own judgments.

Mary Praker Follett: He referred group influence.

Dougals Me Gorgor: he referred two views.

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X-theory- it is based on classical theory and

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Y-theory- it is based on neo-classical theory.

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Abraham Maslow: He referred individual needs.
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