Neoclassical theory of management

To: Rajiv Gupta

By: Poonam SomraSakshi Bishnoi

History of neoclassical theory

Neo classical approach was first set out by Alfred Marshall in his book principles of economics, published in 1890’s.

George Elton Mayo is considered as founder of neo classical theory.

INTRODUCTION The word neo means “new”

The word classical refers to work done by group of economists in the back (18 & 19) century

Neo classical approach Human relation movement behavioral system

Human relation movement Proposed by Elton Mayo.

He mainly focused was on the people working in an organization.

Human relation development contributed to:

Employee-centric, democratic and participative style of leadership is more efficient.

Behavioral system It can also be called as mature version of

human relation theory. This theory is how the managers should behave

to motivate the employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

Points of distinction Classical approach Neoclassical approach

Focus functions and economic demand of workers

Emotion and human qualities of workers

Structure Impersonal and mechanistic

Social system

Application Autocratic management and strict rules

Democratic process

Emphasize Discipline and rationality Personal security and social demand

Work goal of worker Maximum remuneration and reward

Attainment of organizational goal

Concept about men Economic being Social being Content Scientific management,

administrative management, and bureaucratic management

Hawthorne experiment , human relation movement and organizational behavior

Relation Formal InformalNature Mechanistic Organistic

conclusion Hereby I conclude that neo classical

theory is adopted by all economists of management.

As neo classical is based on employees its more acceptable.

In this theory all are benefitted not the manager the firm, and specially the employees.