Useful Notes on Neo-Classical School of Management

The neo-classical approach is discussed as follows:

Behavioural Theories:

This school of management lays emphasis on the human element in an organization, duly recognizing its importance. It puts more stress on individual attitudes and behaviours and on group processes. Major contributors to this school of thought are in the following:

Image Source: ichef.bbci.co.uk

Mary Parker Follett is known to be the pioneer in behavioural approach to management. She recognized the significance of the human element, attributed greater significance to the functioning of the groups in workplace. As per Follett, critical role of managers should be to bring constructive change in organization, following the principle of ‘power with’ rather than ‘power over’.

She opined that power should not be based of hierarchical level but should be collectively developed, fostering a cooperative concept, involving superiors and subordinates and finally working together as a team. Hence, the focus is more on power sharing. Organizations
need to become democratic to accommodate employees and managers. People will work harder when an organization recognizes individual’s motivating desires.

Even though Follett was the pioneer in behavioural approach to management, it is Elton Mayo, who is recognized as the father of the Human Relations Approach. Mayo and his associates conducted the study at Western Electric’s Hawthorne Plant between 1927 and 1932 to evaluate the attitudes and psychological reactions of workers in on-the-job situations.

Illumination Experiments:

These experiments took place, initially between 1924 and 1927, in Hawthorne Plant of Western Electric Company, involving industrial engineers of Western Electric Company. The experiments involved manipulation of illumination for one group of workers (test group) and comparison of their performance and productivity with another group, for whom the illumination was not manipulated (control group).

In the first spell of experiment, for the test group (for whom the illumination was manipulated), performance and productivity improved. However, this did not last long. In fact, control group’s performance also rose in between with the alteration of lighting conditions of the test group, even though for the control group there was no change in the light conditions. With such contradicting results, researchers concluded that intensity of illumination was not related to productivity of workers.

There must be something besides illumination, which might have influenced the performance of workers in Western Electric Company. Elton Mayo and his associates from Harvard University were involved at this point to conduct the subsequent phases of experiments.

Relay Assembly Test Room Experiments:

These set of experiments were conducted under the guidance of Elton Mayo between 1927 and 1933. At this stage also researchers were concerned about other working conditions, like working hours, working conditions, refreshments, temperatures, etc. To start with the researchers selected six women employees of the relay assembly test room.

Their jobs were to assemble relay (a small device) using thirty-five spare parts. Selected women employees (samples) were put in a separate room and briefed about the experiments. In the test room, the number of variables was altered, like increased wages and rest period, shortened workday and workweek, etc.

In addition, the sample workers were also given the freedom to leave their workstation without permission and were also given special attention. Productivity increased over the study period. Such results, therefore, led the researchers to believe that better treatment of subordinates made them more productive.

They highlighted the significance of social relations. Finally, researchers were convinced that workers would perform better if management look after their welfare and supervisors pay special attention to them. Such syndrome was later labelled as the ‘Hawthorne Effect.’

Interview Phase:

In this phase of experiments, about 21,000 people were interviewed over three years between 1928 and 1930. The purpose of the interview was to explore attitudes of the workers in depth. Results of the interview are as follows:

(a) A complaint may not necessarily be an objective recital of facts, it also reflects personal disturbance, which may be for some deep-rooted cause.

(b) All objects, persons and events carry some social meanings. They relate to employees’ satisfaction or dissatisfaction.

(c) Workers’ personal situations are results of configuration of relationships, involving sentiments, desires and interests. Such relational variables, when related to workers’ own past and present interpersonal relations, result to their personal situations.

(d) Workers assign meaning to their status in organization and give value to the events, objects, their specific feature of environment (like hours of work, wages, etc.).

(e) Workers derive satisfaction or dissatisfaction from the social status of an organization. It means that they also look for social rewards, associating them with an organization.

(f) Workers social demands are influenced by social experiences in groups, both inside and outside the workplace.

Bank Wiring Observation Room Experiment:

This part of the Hawthorne Experiment was conducted to test some of the ideas that researchers could form during the interview phase. It was conducted between 1931 and 1932. In this experiment there were fourteen participants (samples), including wiremen, solder men and inspectors.

At this phase of experiment, there was no change in the physical working conditions. Sample workers were paid based on the incentive pay plan, relating their pay to output. Sample workers had the opportunity to earn more by increasing the output. However, researchers observed that output was constant at a certain level.

Analysis of the results showed that the group was encouraged neither too much nor too little work. They on their own enforce ‘a fair day’s work.’ Group norms, therefore, are more important to worker than money. The study thus provided some insights into the informal social relations within groups.

The Hawthorne Experiments, therefore, focused on the importance of human relations and thus contributed immensely to management theory.

Criticisms of Hawthorne Experiments:

Despite its brilliant contributions to the theories of management, it was criticized on following grounds:

(i) It is believed procedures and analysis of the findings and conclusions drawn thereon have little relevance. In fact, conclusions are not supported by adequate evidence.

(ii) The relationship between satisfaction and happiness of workers with productivity were established with simplistic assumptions, while in reality, the situation is more complex due to behavioural phenomena.

(iii) Further all these studies failed to focus on attitudes of workers, though attitudes play a crucial role in influencing workers performance and productivity.

In the behavioural school of thoughts, other contributors like Abraham Maslow, Douglas McGregor, and Chris Argyris also had made significant impact. While Maslow’s focus was on the importance of human needs—major driving force for human motivation, McGregor had made certain assumptions about people, categorizing them under Theory X and Theory Y. Theory X essentially represents negative views about people, i.e., people are, by nature, lazy, have little ambitions, dislike work, avoid responsibility and require direction to work. Theory Y, on the contrary, assumes people are more positive, capable of self-control, innovative and creative, do not inherently dislike work. The theories have not been discussed in details. They have been covered in the theories of motivation.

Chris Argyris’s contributions to the behavioural school of thoughts are extremely important. His contributions are maturity-immaturity theory, integration of individual and organizational goals and pattern of Model-I and Model-II. According to maturity-immaturity theory, people progress from a stage of immaturity and dependence to a state of maturity and independence.

If organizations keep their employees in a dependent state, they allow them to remain immature and thereby prevent them from achieving their potential. Further, he had also contended that formal organization develops a rigid structure, compelling people to behave in an immature way.

This leads to incongruence between the individual and organizational goals, hinders organizational development and results to failure and foster frustration and conflict. People, therefore, show their aggression, regression and suppression. Model-I and Model-II pattern are two different assumptions.

Workers in Model-I type of organization are motivated by the desire to manipulate others and protect themselves from others. Workers in Model-II type of organization are less manipulative and are more willing to learn and take risks. Argyris, therefore, suggested that managers should always try to create a Model-II type of organization.

Rensis Likert (1903-1972) and Peter F. Drucker had also contributed significantly to this school of thought. Likert had attributed low productivity and poor morale of employees to the typical job-centred supervision technique. He had suggested some leadership styles to ensure better productivity and improved morale of workers.

These we have discussed in our chapter on leadership. Peter F. Drucker, on the other hand, had pioneered several modern management concepts in the fields of innovation, creativity, problem solving, organization design, MBO, etc. All his principles have been acknowledged in different chapters of this book.