Evolution of Management - Neoclassical Approach

Hawthorne Effect

The Hawthorne effect is named after what was one of the most famous experiments (or, more accurately, series of experiments) in industrial history. It marked a sea change in thinking about work and productivity. Previous studies, in particular Frederick Taylor's influential ideas, had focused on the individual and on ways in which an individual's performance could be improved. Hawthorne set the individual in a social context, establishing that the performance of employees is influenced by their surroundings and by the people that they are working with as much as by their own innate abilities.

The experiments took place at Western Electric's factory at Hawthorne, a suburb of Chicago, in the late 1920s and early 1930s. They were conducted for the most part under the supervision of Elton Mayo, an Australian-born sociologist who eventually became a professor of industrial research at Harvard.

The original purpose of the experiments was to study the effects of physical conditions on productivity. Two groups of workers in the Hawthorne factory were used as guinea pigs. One day the lighting in the work area for one group was improved dramatically while the other group's lighting remained unchanged. The researchers were surprised to find that the productivity of the more highly illuminated workers increased much more than that of the control group.

The employees' working conditions were changed in other ways too (their working hours, rest breaks and so on), and in all cases their productivity improved when a change was made. Indeed, their productivity even improved when the lights were dimmed again. By the time everything had been returned to the way it was before the changes had begun, productivity at the factory was at its highest level. Absenteeism had plummeted.

The experimenters concluded that it was not the changes in physical conditions that were affecting the workers' productivity. Rather, it was the fact that someone was actually concerned about their workplace, and the opportunities this gave them to discuss changes before they took place.

A crucial element in Mayo's findings was the effect that working in groups had on the individual. At one time he wrote:

The desire to stand well with one's fellows, the so-called human instinct of association, easily outweighs the merely individual interest and the logic of reasoning upon which so many spurious principles of management are based.

Hawthorne Effect was the improvement of productivity between the employees, it was characterized by:

• The satisfactory interrelationships between the coworkers
• It classifies personnel as social beings and proposes that sense of belonging in the workplace is important to increase productivity levels in the workforce.
• An effective management understood the way people interacted and behaved within the group.
• The management attempts to improve the interpersonal skills through motivations, leading, communication and counseling.
• This study encourages managers to acquire minimal knowledge of behavioral sciences to be able to understand and improve the interactions between employees

Neoclassical theory of management

 Principles of the neoclassical approach

The classical approach stressed the formal organization. It was mechanistic and ignored major aspects of human nature. In contrast, the neoclassical approach introduced an informal organization structure and emphasized the following principles:

· The individual An individual is not a mechanical tool but a distinct social being, with aspirations beyond mere fulfillment of a few economic and security works. Individuals differ from each other in pursuing these desires. Thus, an individual should be recognized as interacting with social and economic factors.

· The work group The neoclassical approach highlighted the social facets of work groups or informal organizations that operate within a formal organization. The concept of 'group' and its synergistic benefits were considered important.

· Participative management: Participative management or decision making permits workers to participate in the decision making process. This was a new form of management to ensure increases in productivity.

Note the difference between Taylor's 'scientific management' - which focuses on work - and the neoclassical approach - which focuses on workers.

There are 3 neoclassical theories: 

Human Relations theory :

The above theory explains the modern advancement of Human Relations 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 experiments 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 has become known as the human relations school of management. The core aspect of Human Relations Theory is that, when workers were being observed and included in the research, they felt more important and valued by the company. As a result, their productivity levels went up significantly. This represented 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 by engaging with workers and considering their requirements and needs, company’s could benefit from increased productivity.

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, expectations, and group dynamics, improved productivity. 
The theorists who contributed to this school viewed 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.

Social systems theory:
Developed by Niklas Luhmann is an option for the theoretical foundation of Human Resource Management (HRM).Five major contributions to a theoretical foundation 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 system's environment; (3) the abstention form 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 analyses of HR phenomena and (5) the openness for additional theories for which social systems theory provides the overall framework.