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Unit 2: Development of Management Theories

fact that the management be somewhat more sympathetic and considerate towards their Notes
workers.
2. The trade union movement got momentum and made the workers conscious of their
rights. It was no longer possible for the management to treat the human beings at work as
‘givens’.

These were two main reasons which were responsible for the change of management behaviour
from autocratic to the custodial approach which was based on offer of fringe benefits apart from
wages to meet their security needs.
Though neoclassical approach was developed as a reaction to the classical principles, it did not
abandon the classical approach altogether, rather it pointed to the limitations of the classical
approach and attempted to fill in the deficiencies through highlighting certain points which
were not given due place in the classical approach. In this regard, there were two schools of
thought—one school of thought with writers as Simon, Smithburg, and Thompson, pointed out
the limitations of the classical approach to structural aspect only and the analysts called this
group as ‘neoclassicists’. This school of thought suggested modifications to the classical principles
but did not abandon the basic principles. The other school of thought which consisted of large
number of writers focused on the human aspect neglected by the classicists. This group was
called as human relationists or behaviourists. Both these schools were reactions to the classical
theory but failed to suggest or develop any new theory except providing some points of criticism
on varying counts. Both of them could be referred as neoclassicists.

Neoclassicists endeavoured to identify the weaknesses of classicists through empirical research
and most of the criticisms of classical theory have emerged through researches. Howthorne
studies were the beginning of the series. The other contributors are Roethlisberger, Dickson,
Whitehead, Lippitt and White, Coach and French Jr., etc.
Neoclassical approach is based on two main points: (i) Organisational situation should be viewed
in social as well as in economic and technical terms, and (ii) The social process of group behaviour
can be understood in terms of clinical method analogous to the doctor’s diagnosis of human
organism. The neoclassicists view organisation as combination of formal and informal forms of
the organisation. The informal form was missing in classical approach. They also introduced
behavioural science to diagnose human behaviour and showed how the pillars of classical
doctrines—division of labour, functional processes, structure and scalar chain are affected and
modified by human actions. The main prepositions of neoclassical organisation theory are as
follows:

1. The organisation in general is a social system composed of numerous interacting parts.
2. The social environment on the job affects the workers and is also affected by them.
Management is not the only variable.

3. The informal organisation also exists within the framework of formal organisation and it
affects and is affected by the formal organisation.
4. There is always a conflict between organisational and individual goals that always increases
the importance of integration between these two.
5. People are interdependent and their behaviour can be predicted in terms of social factors.
6. Money is one of the motivators but not the sole motivator of the human behaviour. Man
is diversely motivated and socio-psychological factors are more important.
7. Man’s approach is not always rational. He behaves irrationally as far as rewards from the
job are concerned.

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