Tuesday 31 March 2015

Classical And Neoclassical Theories Of Management in Full Explaination



Definition of  Management:  This is the art, or science, of achieving goals through people. as explained by Classical and neoclassical Theories of Management. Management  can be interpreted to mean literally “looking over” i.e., making sure people do what they are supposed to do. Managers are therefore, expected to ensure greater productivity.

                More broadly, management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims (Koontz and Weihrich 1990, p. 4). In its expanded form, this basic definition means several things. First, as managers, people carry out the managerial functions of planning, organizing, commanding, coordinating, and controlling. Second, management applies to any kind of organization. Third, management applies to managers at all organizational levels. Fourth, the aim of all managers is the same – to create surplus. Finally, managing is concerned with productivity – this implies effectiveness and efficiency.
Why Study Management Theory?
Theories are perspectives with which people make sense of their world experiences (Stoner et. al. 1995, pp. 31-2). Theory is a systematic grouping of interdependent concepts (mental images of anything formed by generalization from particulars) and principles (are generalizations or hypotheses that are tested for accuracy and appear to be true to reflect or explain reality) that give a framework to, or tie together, a significant area of knowledge. Scattered data are not information unless the observer has knowledge of the theory that will explain relationships. Theory is “in its lowest form a classification, a set of pigeon holes, a filing cabinet in which fact can accumulate. Nothing is more lost than a loose fact” (Homans 1958, p. 5).
              The theory of management is grouped into the five functions of management. In summary, there are basically three main reasons why we have to study management theory. First, theories provide a stable focus for understanding what we experience. A theory provides criteria for what is relevant. Second, theories enable us to communicate efficiently and thus move into more and more complex relationships with other people. Third, theories make it possible – indeed, challenge us – to keep learning about our world
CLASSICAL MANAGEMENT THEORY
There are three well established theories of classical management which are as follows:
                   Taylor’s theory of scientific management, Fayol’s theory of administrative management and weber’s theory of bureaucracy. Although these schools or theories developed historical sequence later ideas have not replaced earlier ones. Instead each new school has tended to complement or co-exist with previous ones.
                 Theories recognizing the role that management plays in an organization. The importance of the functions of management was first recognized by French industrialist, Henri Fayol in the early 1990’s
 In contrast to the purely scientific examination of work and organizations conducted by f.w. Taylor, fayol proposed that any industrial undertaken has six function:
1-Technical
2- Commercial
3- Financial
4- Security
5- Accounting
6- Managerial
Of these he believed the managerial function, to forecast and plan, to recognize, to command, to co-ordinate and control, to be quite distinct from the other five. Fayol also identified general principles of management: division of work; authority and responsibility; discipline. Unity of command. Unity of direction; subordination of individual interest to general interest; remuneration of personnel; centralization; scalar chain of authority; order; equity; stability of tenor of personnel; initiative; and exprit de corps. Fayol’s views on management remained popular throughout a large part of the twentieth century.

Evolution of classical approach to management
                Traditional process of learning is either through observation and experiment. Nature or environment is considered uniform and when we consider certain phenomenon or even uniformly leading to the same result or results, we conclude a course and effect relationship between the two. This is learning and observation or in other words by experience.
 Earlier tinkers or management follow this approach in developing theories of management. Learning principally is through empirical processes and through analysis of the data collected through observation. Draw the principles of management by looking at and analyzing the jobs that all managers commonly do. This approach served as a starting point for pioneers or management science to verify the validity and improve the applicability of the principles and practices of management. Analysis of observed data is what constitute a case study. The observational method of case study help’s arriving at logical conclusions about past experience and protest the same out standards for future events. The Germans socialist, max weber followed the classical approach and developed his theory of bureaucracy, which portrays the structure and design of organization characterized by a hierarchy of authority, formalized rules and regulations that served to guide the coordinated functioning of an organization.

Basic postulates of the classical approach by max weber
1- Management of an organization is considered as a chain of interrelated functions. The study of the scope and features of this functions, the sequence through which these are performed and there interrelationship leads one to draw principles of management suitable for universal application.
2- Learning principle of management is done through the past experiences of actual practicing managers.
3- As business environment consists of uniform cycles exhibiting an underline units of realities, functions and principles of management derived through process of empirical reasoning are suitable for universal application
4- Emerging new managers through formal education and case study can develop skill and competency in management concept and practices
5- The classical approach also recognize the importance of economic efficiency and formal organizational structure as guiding pillars of management effectiveness.
6- Business activities is based on economic benefits. Organizations should therefore control economic incentives
Roles and operations of a classical manager
1- He must have good understanding of business functions
               A classical manager must know the prerequisites of the organization, its requirements, the right things to do and the right timing for them to be done. He must know the working principles of the organization. Talking about the business functions I am talking about what the business dose. 
2- Structure the organization according to task and assign workers in view of that
              The classical manager has to departmentalize the organization into several departments according to the task he has assigned to different workers, thereby creating division of labor which will enable the work to be done speedily.
3- Break down the process of producing the products the organization makes
              A classical manager has to categorize in great details the process of producing the organizational products for the case of simplicity.  
4- List out what work needs to be completed and the type of skill a worker will need to complete that work
             He has to give an account of the number of works which needs completion and the type of manpower needed to complete the work.
5- Access his current workforce for the appropriate individuals and place them in a suitable job role
               A classical manager has to checkmate the capability and the level of productivity of each employees in the organization so as to ascertain the particular department he or she fits in appropriately.
 Neoclassical theory of management
There are three neoclassical theories of management which are as follows:
1- Human relation theory:
                 Explains the modern advancement of human relation management theory which takes into account human factors like the employer/employee relationship. Human relations theory is largely seen to have been born as a result of the Hawthorne experiment which Elton mayo conducted at the western electrical company. The important strand in the development of modern management was the increase in attention to the human factors, which have become known as the “human relation school of management”. The core aspect of human relations theory is that, when workers where been observed and included in the research, they felt more important and valued by the company.as a result, their productivity levels went up significantly. These presented a significant departure from many of the classical theories, particularly Fordism, as it went against the notion that management needed to control workers, and remove their autonomy at every step. Instead, it showed that engaging with workers and considering their requirements and needs, companies could benefit from increased productivity.
2-Behavioral theory:
          The behavioral management theory is often called the human relations movement because it addresses the human dimension of work. Behavioral theorists believed that a better understanding of human behavior at work, such as motivation, conflict, expectation, and group dynamics, improved productivity. The theorists who contributed to these school employees as individuals, resources, and assets to be developed and worked with not as machines, as in the past. Several individuals and experiments contributed to this theory.
3-Social system theory:
Developed by Niklas Luhmann is an option for the theoretical foundation of human resource management (HRM). After clarifying the advantages of using a grand (social) theory as the basic theoretical perspective, the root of this social system theory –the deterministic view of systems as machines, the open system approach and non- linear system theory- are addresses. Based on the view of social systems as autopoieticaly closed systems, five major contributions to a theoretical foundations of HRM are identified
1- The conceptualization of organizing and managing human resources as social processes, thus overcoming an individualistic angle
2- The new importance of individuals as essential element in the systems environment
3- The abstention from far reaching or highly unrealistic assumptions about the nature of human beings
4- The interaction between various levels and units of analysis built into the theory which is essential for comprehensive and in-depth analysis or HRM phenomenon
5- The openness for additional theories for which social systems theories provides the overall framework.
           George Elton Mayo was in charge of certain experiments on human behavior carried out at the Hawthorne works of the western electric company in Chicago between 1924 and 1927. His research findings have contributed to organizational development in terms of human relations and motivation theory. Elton Mayo contributions came as part of the Hawthorne studies, a series of experiment that rigorously applied classical management theory only to reveal its short comings. The Hawthorne experiments consisted of two studies conducted at the Hawthorne works of the western electric company in Chicago from 1924 to 1932. The first study was conducted by a group of engineers seeking to determine the relationship of lighting levels of workers’ productivity. Surprisingly enough, they discovered that worker productivity increased as the lighting level decreased- that is until the employees were unable to see what they were doing, after which performance naturally declined. A few years later a second group of experiments began. Harvard researchers Mayo and F.J. Roethlisberger supervised a group a five women in bank wiring room. They gave the women special privileges such as the right to leave work stations without permissions, take rest periods, enjoy free lunches and have variations in pay levels and works days. This experiment also resulted in significantly increased rates of productivity, in this case Mayo and Roethlisberger concluded that the increase in productivity resulted from the supervisory arrangement rather than the changes in lighting of other associated worker benefits. Because the experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was the basis for the increased motivations and resulting productivity. Essentially, the experimenters became a part of the study and influenced its outcome. This is the origin of the term Hawthorne effect which describes the special attention research give to a study’s subject and the impact that attention has on the study’s findings.
Role and operation of neoclassical managers in modern organizations
1 they are concerned on answering questions related to the best way to motivate structure
2 to use employees to get things done in organization rather than focus on production, structures or technology.

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