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Principles and Practices of Management

Notes
The workers stressed that they are prepared to create a timeline of rationing and make it
public, as the population has the right to know such information so that they can take
necessary previsions while the electrical problems in the country are being solved.
Electrical workers agree with the statements by [Venezuelan president Hugo] Chavez,
that, "the problem isn't just technical, the problem is also political. Much of the management
in the electrical companies are resisting the changes. Not all of them resist, but there's a
kind of knot, a Gordian knot, that resists the full participation of the workers."
Source: www.venezuelanalysis.com

2.5 Neo-classical Theory

Human Relations Approach

The classical writers including Weber, Taylor and Fayol neglected the human relations aspect.
The neo-classicists focussed on the human aspect of industry. They modified the classifical
theory by emphasizing the fact that organisation is a social system and the human factor is the
most important element within it. They conducted some experiments (known as Hawthorne
Experiments) and investigated informal groupings, informal relationships, patterns of
communication, patterns of informal leadership, etc. This led to the development of human
relations approach. Elton Mayo is generally recognized as the father of the Human Relations
School. Other prominent contributors to this schools include Roethlisberger, Dickson, Dewey,
Lewin, etc.
The human relations approach is concerned with recognition of the importance of human element
in organisations. It revealed the importance of social and psychological factors in determining
workers’ productivity and satisfaction. It was instrumental in creating a new image of man and
the work place The neo-classical or human relations approach put stress on inter-personal
relations and informal groups at the work-place.
The human relationists argued that achievement of organisational objectives is impossible
without the willing cooperation of people and such cooperation cannot be automatically secured
or ordered. It has to be consciously achieved. The neo-classical approach advocated people-
oriented organisation structure which will integrate both informal and formal organisations.

The basic tenets of neo-classical theory or human relations approach are as under:
1. The business organisation is a social system.
2. The behaviour of an individual is dominated by the informal group of which he is a
member.

3. An individual employee cannot be motivated by economic incentives alone. His social
and psychological needs must be satisfied to improve the level of motivation.
4. In an organisation, it is ultimately cooperative attitude and not the more command which
yields result.
5. Management must aim at developing social and leadership skills in addition to technical
skills. It must take interest in the welfare of workers.

6. Morale and productivity go hand in hand in an organisation.
Hawthrone Studies

In 1927, a group of researchers led by George Elton Mayo and Fritz J. Roethlisberger at the
Harvard Business School were invited to join in the studies at the Hawthorne Works of Western

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