Chapter 3

Schools of management thought

Neo classical theories
 Introduction on neo-classical theories
 In this neo-classical theories the management theory focused on human
resources rather than physical resources.

 It concentrates on the quantification of the work, economic needs of the

workers not on the social needs.

 The improvement of the working is rather concentrated but not of the

working men.

 It emphasizes human efforts behind the machine and points out the
importance of an individual as well as group behaviour in an organization.

 This Theory raised the curtain of a new era in the field of management
which was initially known as “human relations movement” and later
as“behavioral science movement.
 Themes of human behaviour theories
 Organization is basically a social system and not just a techno-
economical system.

 The behavior of employee is greatly influenced by feelings,

emotions, and attitude and hence influences his work.

 Management must take greater interest in employee

development and develop social skills.

 Management should give top priority to man to man relations,

team spirit, and group harmony.

 Democratic rather than authoritarian leadership is essential to

honour psycho–social demands.
 Themes of human behaviour theories
 Effective two-way communication network is fundamental to

establishing the common flow of understanding in any organization,

which will enable it to attain the common goals.

 Management must take greater interest in employee development

and worker satisfaction because there is a very close connection

between morale and productivity.

 Informal groups and organization must be recognized.

 Management must develop social skills in addition to technical skills.

 Management should give top priority to man-to-man relations, team

spirit, and group harmony.

Elements of behavioural (neoclassical) theory
 The individual
› It is basically focused on recognition of individual differences like
feelings,emotions, attitudes, beliefs, perceptions, and ever
changing psychology of every individual.

› These differences have their effect on the skills and work

efficiency.

› Identifying these aspects and acting accordingly plays a vital

role in productivity.

 Work groups.
› It is basically focused on effect of group psychology i.e., (how
the workers behave in a group)on productivity and to motivate
the employees accordingly.
 Elements of behavioural (neoclassical) theory
 Participative management.
› This theory of management involves workers in the problem solving
and decision making it is referred to as participative management.

› In this the leader works along with workers, alerts the workers and
motivates them.

(a)Balance in element mix in behavioural theory of management.

(b) and (c) imbalance in element mix in behavioural theory of management.
 Comparison scientific management and Human
relation management
Scientific Management Human relations Management
• This approach concentrated on the • This approach focuses on human
quantification of work elements in the management.

• It says money only can motivate the • It says that human relations and
workmen. behaviors can motivate the workmen.

• This approach uncovered individual • This approach discovered the sense of

efficiencies. belongingness.
• Human power is recognized and waste • Human relations, group behaviour, and
elements in work are eliminated. needs are recognized.

• It favours task-oriented or result- • It is in support of employee (welfare)-

oriented (or )autocratic leadership. oriented or participative/ democratic
(or) free reign leadership.

• This concept focuses on human • This concept focuses on

efficiency for enhancing the management effectiveness for
productivity. enhancing the productivity.
 Human relations Schools of
Management thought
 George Elton Mayo.

› Father of human relations Management.

› His work focused on influence of social attitudes, work group, work

group relations, psychological reactions, and human feelings on

performance.
 Hawthorne Experiments
 This experiment are concentrated on the social environment of
productivity.

 The forefront and net worthy of this study/Experiments are as follows:

› Experiments to find the effect of changes in illumination on

productivity.

› Experiments to determine the effect of changes in working hours

and working conditions such as rest periods, refreshments on
productivity.

› Experiments by conducting a plant-wide interview programmed

to determine the effect of worker attitudes and sentiments.

› Experiment of determination analysis of social organization at

work .
 Conclusions of Hawthorne experiments
 Hawthorne experiments disclosed two secrets of success of
management. These are “the sense of belongingness” and “the
management effectiveness.”

 As evident from the boosted morale and functional interrelationships

among the members of the group, the workers enjoyed more
belongingness (the sense of belongingness).

 The management was effective in terms of understanding the

human relations by motivating, counselling, and communicating
that workers’ interests were respected (management
effectiveness).

 The Hawthorne experiments insist on the point that “an individual

must be treated as the member of a group.”
Conclusions of Hawthorne experiments
 Hawthorne experiments revealed that the need for
status and belongingness to a group is more important
than monetary incentives and good physical working
conditions.
 The informal or personal groups influenced the
behaviour of the workers at work.
 To seek the cooperation of workers, the management
must be aware of and understand thoroughly their
social needs, and cater to them; otherwise, it will
adversely affect the work culture as the workers may
turn against the interests of the organization.
 Appreciation to Human Relation Theory
 It emphasized the significance of human factors, such as “sense of

belongingness” and "management effectiveness” in productivity.

 It noticed the organization as social system i.e., for human

behavioural approach, human welfare approach, social systems

approach acts as curtain raiser.

 The informal group should be recognized and supported which has

a considerable impact on productivity of the concern.

 It stresses on the fact that the “Management is for the people, of the

people and by the people”.

 Criticism on Human Relations Theory
 The main criticism of this approach is that it lays a great

emphasis on human elements than the organizational goals.

 It ignores the basic principles of formal organization.

 This approach has no universality because the behaviors (or)

human relations vary place to place and person to person.

 The theoretical aspects were not fully practicable.

 It placed certain boundaries and obligations on regular

managing process and thus affected productivity.

 Maslow’s theory of need hierarchy
 Abraham Maslow was a psychologist, popularly known for his

theory of hierarchy of human needs.

 In his theory, he found that the people work if they have needs.

These needs vary from person to person.

 One may work to earn food, while the other may work for self

actualization or some may work for status.

 A good manager is one who identifies the correct need of his

subordinate and extracts (or exploits) the work against providing

that need.
 Fundamentals of Maslow’s
theory of need hierarchy
 “Man is a wanting animal” whose needs depend on what he

already has. Only needs, which are not yet satisfied, can influence

the behaviour. i.e., satisfied need is never a motivator.

 Once a need is satisfied, another need generates, emerges, and

demands satisfaction.
Different levels of Maslow`s The needs help in
realizing one’s own

theory
potentialities for the
continued
development of self
and the organization.

• The prestige, ego and self

respect play the role of
driving these needs.
• Due to the desire of
individuals out of high
evaluation of themselves.
• Giving and taking
respect, love and
affection.
• Getting companionship,
such as wife and
children, friend, or lover
to share joy or sorrow.
• Security needs are safety
from diseases, war,
natural catastrophes
,epidemics , crime, etc.
• The fundamental needs
include Food to satisfy
hunger, Water for thirst,
Clothes to cover body, a
Shelter to live, Sleep for
relaxation.
 Appreciations of Maslow`s theory
 Humans work if they need but not by force.

 Workers are not machines but human beings. Humans unlike

machines have feelings.

 Hence a human touch is needed while managing works.

 Most times managements think that the social needs are a threat to

organizational objectives.
 Criticism of Maslow`s theory
 A need satisfied for longer time is under valued.

 The generation of new need is not a sudden phenomenon but

gradual.

 A basically satisfied person some times has no safety, love,

esteem and self actualization needs.

 Sages, saints do not have any higher needs and gets satisfied

with minimum physiological needs.

 Douglas McGregor`s theory
 Professor Douglas McGregor presented two sets of assumptions about

employees, viz.,

 Theory X and Theory Y.

 He placed the humans in the continuum of two categories of

extreme characters, the “X (No)” and the “Y (Yes).”

 According to his theory, the role of managers or the management is

to identify to which theory the subordinate (or worker or a person)

belongs closely to, or at which place the person can be placed

between the continuum of X and Y.

 Accordingly, the person is to be treated (managed).

 Douglas McGregor`s Theory - X
• The following are the assumption or beliefs that are stated in this theory are:

• Typical individuals basically dislike work as by nature they are work

avoiders, indolent.

• Most people are basically lazy, have little ambition, and avoid responsibility

whenever they can.

• They prefer to be directed or led.

• They pretend to work or escape from the duty whenever they can.

• Since most people dislike work, they have to be pushed, supervised closely,

persuaded, coerced, threatened.

• The worker identified under “Theory X” is self-centered and has little

concern for organizational goals.

 Douglas McGregor`s Theory - Y
• The following are the assumption or beliefs that are stated in this theory are:

• Typical individuals of this type like and enjoy work as by nature they are work

mongers, industrious.

• These people are basically crazy to work, ambitious, and take responsibility

whenever they get opportunity. They even create their opportunities.

• Work is as natural as a ply or rest and they develop an attitude towards work.

They do not need to be directed or led rather they encourage or direct

others.

• They attend to work punctually, promptly or never escape from the duty.

Further, they work far more than is expected of them

 Distinction between theory X and Y
type people
Aspect Theory X Theory Y
• Nature toward • These people for the • These people find work
work work distasteful. as natural as play.
• Feeling on the • Job is punishment. • Job is enjoyment.
job
• Ambition • Very little ambition. • Very ambitious.

• Motivators • Maslow's lower order • Maslow's higher order

needs. needs.
• Authority • Emphasize • Emphasize
centralization and decentralization and
scalar system participative decision
system
• Creativity • Less creative • Highly creative

• Manager's role • Threaten or manage • Manage by motivating,

by rules and appreciating and
punishment suggestions
 Appreciations of McGregor`s theory
• This theory portrays the human natures and behaviors based on which

the managers have to react.

• This theory enlightens the role of managers in acting according to the

situation and the type of person.

• The theory is curtain raiser to concept of motivation as tool to improve

productivity.

• It laid a road map for the recognition of people who work more and

identify those who are work avoiders.

 Criticism of McGregor`s theory
• It overlooks many scientific management principles, concepts and

techniques in general important to the process of management.

• It is against the basic principle of the Equity i.e. “equal treatment to all”.

• It is difficult for a new manager to differentiate among the employees

and have personal prejudices, and the manager may play a biased role

due to his preconceived attitude.

• Difficult to differentiate people as per the behaviour of person.

• Difficult for manager to observe everyday in the backdrop of his regular

works pressures and targets.

 Fredrick Herzberg’s two factor or
hygiene maintenance theory
• Fredrick Herzberg
• A famous management theorist conducted a study on the need
satisfaction of engineers and accountants in the firms in 1950.

• His theory focused on “what can motivate people to work.”

• He asked the respondents to describe two situations

“exceptionally good” or “exceptionally bad”.

• This caused a realization in the employees about their “two

feelings”.

• From the responses he categorized two factors :

• Hygiene factors

• Motivational factors
 Fredrick Herzberg’s two factor or
hygiene maintenance theory
• Hygiene Factors

• “hygiene” (as it means in the medical field) refers to those

factors that help in maintaining good health but not necessarily

improve the health.

• However, unhygienic conditions would affect the health.

• Hygiene or maintenance factors maintain good feeling if they

are present, but they may not improve the productivity directly.
Fredrick Herzberg’s two factor or
hygiene maintenance theory
• Herzberg observed the following hygiene factors:

• Company policy and administration/technical supervision,

• Interpersonal relation with supervisor,

• Interpersonal relation with peers,

• Interpersonal relation with subordinates,

• Salary,

• Job security,

• Working conditions,

• Personal life, and

• Status
 Fredrick Herzberg’s two factor or
hygiene maintenance theory
• Motivational Factors or satisfiers

› The presence of second category of factors, i.e., motivational

factors, will strongly motivate the worker but will not lower the

production, if these factors are absent (Fig. 3.4).

› Monetary benefits such as incentives will improve productivity

but will not lower the basic production level in the absence of

the incentive scheme. These are intrinsic to the job.

 Fredrick Herzberg’s two factor or
hygiene maintenance theory
• Herzberg observed the following motivators:

• Achievement,

• Recognition,

• Advancement (through creative and challenging work),

• The work itself,

• The possibility of personal growth, and

• Responsibility.
 Differences between maintenance
and motivational factors
Behaviour Maintenance factors Motivation factors

• Cause feel good

atmosphere. • Strongly motivate, so
• Effect of pressure
• May not motivate, so no productivity increases.
effect on productivity
• Strongly dissatisfy hence • May not dissatisfy
• Effect of absence
productivity decreases • no effect on productivity

• Nature • Extrinsic to job • Intrinsic to job

• Other name • Hygiene factor • Satisfier

• Cause not much

• Cause high improvement in
• Effect of providing improvement in
the production
production

• Effect of • Cause high • Cause not reduction in

withdrawing dissatisfaction production

• Salary, job security, work • Recognition, incentive,

• Examples
conditions, etc. achievement, etc.
 Difference Maslow's theory and Herzberg's theory
Maslow's theory Herzberg's theory
• Lower order needs are weak • The hygiene factors maintain
motivators and higher order needs productivity, while motivators
are strong motivators. enhance productivity.

• Maslow emphasized on human • Herzberg concentrated on job

needs. satisfiers.

• Maslow focused on individual Herzberg’s focus was on group

needs. needs.

• Maslow displayed the sequences • Herzberg explained two distinct

of dominating human needs. types of factors.

• Maslow felt that many workers Herzberg viewed that many workers
seek fundamental needs and in the modern period have satisfied
hence these are the first needs. basic needs.
 VICTOR H.VROOM`S Expectancy/
valance theory
• VICTOR H. VROOM’S
• Developed the theory expectancy/valence theory expanding

the theories developed by Maslow and Herzberg.

• This theory presents management through motivation as a

process of governing choices.

• Victor H. Vroom proposed three variables. These are as follows:

• Valence.

• Instrumentality, and

• expectancy.
 VICTOR Vroom's Expectancy/
Valance theory
 Valence (V)

› The term “valence” refers to the strength of an individual for a

particular outcome.

› A negative valence occurs when an individual prefers not to

attain that outcome.

› A zero valence occurs when the individual is indifferent toward

the outcome.
 VICTOR H.VROOM`S Expectancy/
valance theory
 Instrumentality (I)

› Instrumentality means the degree to which a first level outcome

will lead to a desired second level outcome.

› For example, the extent to which outside reading, superior

performance, etc. (first level outcomes) will help to attain

promotion (second level outcome).

 VICTOR H.VROOM`S Expectancy/
valance theory
 Expectancy (E)

› This is the probability that a particular action will lead to a first

level outcome.

› In a simple way, the expectancy/valence theory can be

expressed as a chain process as shown in figure.

Thank you