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Management and Organization-Course 3

Neo-Classical Theory: Definition: The Neo-Classical Theory is the extended version of

the classical theory wherein the behavioral sciences get included into the management.
According to this theory, the organization is the social system, and its performance does get
affected by the human actions.

Basic Concepts of Behavioral Approach

-Individual differences

- Human as a whole

-Behavior is based on a reason

-Human and organization are mutually dependent

- Human is different from other production factors

-Organization is a social system

-Giving importance to human factor and human relations

-Consideration of social and psychological factors such as communication, leadership and

motivation

-Participation of employees in management decisions

-Teamwork

-Communication between employees and managers

-Giving importance to business enrichment

-Control of the results by giving authority and responsibility to the employees

- Improving employee wages

Elton Mayo - Hawthorne Research

Elton Mayo (1880-1949) is an Australian psychologist, sociologist and organizational theorist.

His book The Social Problems of an Industrialized Civilization, published in 1923, is the most
notable.

-He emigrated to the United States in 1923 and spent most of his career (1926-1947) at
Harvard Business School.

-Made by Elton Mayo at Western Electric in Hawthorne from 1927 to 1932.

-Studies have begun to investigate the effects of lighting, heating, fatigue and physical layout
on workers' productivity.

-Initial Hypothesis: As physical improvements increase, productivity will increase. It could not
be confirmed.

-New Hypothesis: Increased productivity; motivation, satisfaction and relationships between

them. It has been confirmed.

-It has been demonstrated that the organization is a social system and that human beings
are the most important element of this system.

-The behavior of individuals within the organization is shaped by the perceptions of

individuals rather than the formal structure predicted and whether they are members of the
informal group.

Theories of Behavioral Approach

-Mc Douglas McGregor: X and Y Theory

-Rensis Likert: Four Systems Theory

-Chester Irwing Barnard: Management Theory

-Chris Argyris: Maturation Theory

-Abraham Maslow: Theory of Hierarchy of Needs

-George Homans: Human Group Approach

-Lew Kurt Lewin: Power Field Analysis

Douglas McGregor: X and Y Theory

Douglas McGregor (1906-1964) is an American social psychologist.

His book The Human Side of Enterprise, published in 1960, has made a remarkable
impression.

Assumptions of X Theory Manager:

-People don't like working.

-Human escapes responsibility.

-Man is selfish.

Assumptions of the Y Theory Manager:

-Working for people is as natural as playing or relaxing.

-Man is not lazy.

-People tend to learn and take more responsibility.

-One can contribute to the purpose of the organization by managing oneself.

Behavior of X Theory Manager:

-Strict control

-Detailed job description

-Less delegation of authority

-Determining the principles to be followed in detail

-Detailed criminal practices

Behavior of the Y Theory Manager:

-The counseling

-Giving importance to the development of subordinates

-Creating motivational conditions

Rensis Likert: Four Systems Theory

Rensis Likert (1903-1981) is an American educational scientist and psychologist.

After completing his engineering education, he had an internship at his father's company
and the lack of communication between employers and employees observed during the
1922 led him to work in the field of organization and organizational behavior.

He founded the Social Research Institute of the University of Michigan.

His books on management theory have become very popular in Japan and have influenced
the modern Japanese organizational system.
Additionally, Likert delineated the characteristics of high- and low-producing organizations
and identified the problems with traditional organizational structures. Rensis Likert
recognized four management styles, or systems.

1. Exploitative-authoritative: The first system of Rensis Likert theory is characterized by

decision-making in the upper echelons of the organization, with no teamwork and little
communication other than threats.

2. Benevolent-authoritative: This Likert system is based on a master-servant relationship

between management and employees, where rewards are the sole motivators and both
teamwork and communication are minimal.

3. Consultative: In this style, managers partly trust subordinates, use both rewards and
involvement to inspire motivation, foster a higher level of responsibility for meeting goals,
and inspire a moderate amount of teamwork and some communication.

4. Participative-group: This system is based on managerial trust and confidence in

employees; collectively determined, goal-based rewards; a collective sense of responsibility
for meeting company objectives; collaborative teamwork and open communication.

Chester Irwing Barnard: Management Theory

Chester Barnard (1886-1961) is an American telecommunications manager and author of the

famous book The Functions of the Executive. Management theorist Chester Barnard believed
organizations need to be both effective and efficient. Effective means meeting organizational
goals in a timely way. Efficient, in his opinion, means the degree to which the organization
can satisfy the motives of its employees.

There are three conditions for the emergence of the organization:

-Common purpose

-Employees' desire to do business

-Contact

Without these three elements, the organization cannot exist.

Chris Argyris: Maturation Theory

◦ Chris Argyris (1923-) is an American business theorist.

◦ He worked as the Head of the Department of Administrative Sciences

Instructor at Yale University. He also taught at the Harvard Business School.

◦ Most recently, he was an executive at Massachusetts Monitor Company.

◦ The basic formal characteristics of the organization constitute an obstacle for

the maturation of individuals.

◦ The division of labor prevents people's creativity and makes it boring.

◦ Authority and responsibility are shared by the top few.

◦ Command unity policy means that the administrator will supervise each
event.

◦ The concept of governance reduces self-control for those under the pyramid.

◦ If the management gives more responsibility to employees and enables them

to control themselves, the individual will be able to acquire mature features.
Abraham Maslow: The Hierarchy of Needs Theory

Abraham Maslow (1908-1970) is a professor of American psychology.

In the 1930s, he began researching the Natives of Canada. With his observations here, he
concluded that cultural differences were actually superficial; this opened the horizon for the
future needs hierarchy theory.

Maslow's Hierarchy of Needs, Maslow's hierarchy of needs is a motivational theory in

psychology comprising a five-tier model of human needs, often depicted as hierarchical
levels within a pyramid. Needs lower down in the hierarchy must be satisfied before
individuals can attend to needs higher up.

Each behavior of the person is directed towards meeting the specific needs of the person.

The person has certain sorting needs. The needs in the upper level do not affect the persons
until the lower level needs are met.
Satisfied need loses its ability to influence one's behavior, and a higher level of need begins
to affect behavior.

A manager who understands what the employee wants to have can try to meet this need
and direct the person to show a certain behavior.

Results

-Complementary to classical theory.

-The tools and concepts that managers can use in practice have increased.

-Contributions from different disciplines including Psychology, Sociology and Anthropology.

-Initial disputes arose.