ABSTRACT
The
research profers an appraisal of neo-classical theory of organization.The neoclassical
theory was an attempt at incorporating the behavioral sciences into
management thought in order to solve the problems caused by classical theory
practices. The premise of this inclusion was based on the idea that the role of
management is to use employees to get things done in organizations. Rather than
focus on production, structures, or technology, the neoclassical theory was
concerned with the employee. Neoclassical theorists concentrated on answering
questions related to the best way to motivate, structure, and support employees
within the organization. Studies during this time, including the popular Hawthorne Studies, revealed that social factors, such as employee relationships, were an
important factor for managers to consider. It was believed that any manager who
failed to account for the social needs of his or her employees could expect to
deal with resistance and lower performance. Employees needed to find some
intrinsic value in their jobs, which they certainly were not getting from the
job that was highly standardized. Rather than placing employees into job roles,
where they completed one specific task all day with little to no interaction
with coworkers, employees could be structured in such a way that they would
frequently share tasks, information, and knowledge with one another. The belief
was that once employees were placed into this alternate structure, their needs
for socialization would be fulfilled, and thus they would be more productive. A
Case study of UAC is conducted to
determine the application of the neo –classica theory.
CHAPTER ONE
INTRODUCTION
In
the early 1920s, classical management theorists, such as Frederick Taylor,
Henry Gantt, and Frank and Lillian Gilbreth, spent their time researching how a
specific job was done, what steps were taken by an employee to complete the
work, and the amount of time it took a worker to complete a task using
different methods. They then used this information to determine the most
effective way of completing a task. While these individuals focused on the
science of creating specialized work processes and workforce skills to complete
production tasks efficiently, critics began to scrutinize classical management
theory for its potentially harmful effects on workers. It was not so much the
methodology of finding the most efficient way to complete a task that concerned
critics, but the underlying assumption of classical management theorists that
managers and workers would meet halfway on their attitudes towards
standardization. However, many believed that placing too much emphasis on
standardization of jobs and workers had not created this 'mental revolution'
that Taylor and his associates had hoped for, but rather had inadvertently
created an attitude among managers at the time that employees were nothing more
than an appendage to a machine. While machines and processes could be
standardized, critics argued that it was unrealistic to expect that
standardization among emotional beings; the two needed to be looked at
individually. So, as Taylor and other classical management theorists continued
their work on standardization, others started to conduct research on the
worker, and thus, the neoclassical theory of management was born. The neoclassical
theory was an attempt at incorporating the behavioral sciences into
management thought in order to solve the problems caused by classical theory
practices. The premise of this inclusion was based on the idea that the role of
management is to use employees to get things done in organizations. Rather than
focus on production, structures, or technology, the neoclassical theory was concerned
with the employee. Neoclassical theorists concentrated on answering questions
related to the best way to motivate, structure, and support employees within
the organization. Studies during this time, including the popular Hawthorne Studies, revealed that social
factors, such as employee relationships, were an important factor for managers
to consider. It was believed that any manager who failed to account for the
social needs of his or her employees could expect to deal with resistance and
lower performance. Employees needed to find some intrinsic value in their jobs,
which they certainly were not getting from the job that was highly standardized.
Rather than placing employees into job roles, where they completed one specific
task all day with little to no interaction with coworkers, employees could be
structured in such a way that they would frequently share tasks, information,
and knowledge with one another. The belief was that once employees were placed
into this alternate structure, their needs for socialization would be
fulfilled, and thus they would be more productive.
1.1 BACKGROUND OF THE STUDY
The
Neoclassical perspective began with the Hawthorne studies in the 1920s. This
approach gave emphasis to “affective and socio-psychological aspects of human
behavior in organizations. The human relations movement was a movement which had the primary
concerns of concentrating on topics such as morale, leadership.Hawthorne study A number of sociologists and
psychologists made major contributions to the study of the neoclassical
perspective, which is also known as the human relations school of thought. Elton Mayo and
his colleagues were the most important contributors to this study because of
their famous Hawthorne study from the “Hawthorne plant of the Western Electric
Company between 1927 and 1932.The Hawthorne study suggested that employees have
social and psychological needs along with economic needs in order to be
motivated to complete their assigned tasks. This theory of management was a
product of the strong opposition against “the Scientific and universal
management process theory of Taylor and Fayol. This theory was a response to
the way employees were treated in companies and how they were deprived of their
needs and ambitions.In November 1924, a team of researcher – professors from
the renowned Harvard Business school of USA began investigating into the human
aspects of work and working conditions at the Hawthorne plant of Western
Electric Company, Chicago. The company was producing bells and other electric
equipments for the telephone industry. Prominent Professors included in the
research team were Elton Mayo (Psychologist), Roethlisberger and Whilehead
(Sociologist), and William Dickson (Company representative). The team conducted
four separate experimental and behavioural studies over a seven-year period.
These were:'Illumination Experiments
(1924–27) to find out the effect of illumination on worker's productivity.'Relay Assembly Test Room experiment
(1927–28) to find out the effect of changes in number of work hour and related
working condition on worker productivity.'Experiment in interviewing Working : In 1928, a number of
researchers went directly to workers, kept the variables of previous experiment
aside, and talked about what was, in their opinion, important to them. Around
20,000 workers were interviewed over a period of two years. The interviews
enabled the researchers to discover a rich and intriguing world that previously
remained undiscovered and unexamined within the Hawthorne studies undertaken so
far. The discovery of the informal organisation and its relationship to the
formal organization was the landmark of experiments in interviewing workers.
These experiment led to a richer understanding of the social, interpersonal
dynamics of people at work.'Bank
wiring Room Experiments (1931–32) to find out social system of an
organization.'Results of the Hawthorne studies
The Hawthorne studies helped conclude that “a human/social element operated in
the workplace and that productivity increases were as much an outgrowth of
group dynamics as of managerial demands and physical factors. The Hawthorne
studies also concluded that although financial motives were important, social
factors are just as important in defining the worker-productivity.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
1.2 STATEMENT OF THE PROBLEM
Critics believed that Mayo gave a lot of
importance to the social side of the study rather than addressing the needs of
an organization. Also, they believed that the study takes advantage of
employees because it influences their emotions by making it seem as if they are
satisfied and content, however it is merely a tool that is being used to
further advance the productivity of the organization
Therefore the problem confronting this research is to
profer an appraisal of the neo- classical theory with a case study of UAC PLC.
1.3
RESEARCH QUESTION
1 What is the nature of the neo- classical theory
2 What is the significance and limitations of the neo-
classical theory
3 What is the nature, significance and limitation of the
neo- classical theory in UAC PLC.
1.4
OBJECTIVES OF
THE STUDY
1 To determine the
nature of the neo- classical theory
2 To determine the significance and limitation of the neo-
classical theory
3 To determine the nature, significance, and limitation of
the neo-classical theory in UAC PLC
1.5
SIGNIFICANCE OF THE STUDY
The study shall appraise the nature,
significance, and limitations of the neo-classical theory
And it shall also serve as a source of
information of to organizational managers.
1.6
STATEMENT OF THE HYPOTHESIS
1
Ho work and productivity in
UAC is low
Hi Work and productivity in
UAC is high
2
Ho Human relation and
Behaviourial management in UAC is low
Hi Human relation and
Behaviourial management in UAC is high
3
Ho effect of Human relation and
behavioural management in UAC is low
Hi effect of Human relation
and behavioural management in UAC is high
1.7
SCOPE OF THE STUDY
The study focuses on the appraisal of the
neo-classical theory of management
With a case study of UAC PLC
1.8
DEFINITION OF TERMS
NEO-CLASSICAL THEORY DEFINED
The neoclassical theory
was an attempt at incorporating the behavioral sciences into management thought
in order to solve the problems caused by classical theory practices. The
premise of this inclusion was based on the idea that the role of management is
to use employees to get things done in organizations. Rather than focus on
production, structures, or technology, the neoclassical theory was concerned
with the employee. Neoclassical theorists concentrated on answering questions
related to the best way to motivate, structure, and support employees within
the organization. Studies during this time, including the popular Hawthorne Studies, revealed that social
factors, such as employee relationships, were an important factor for managers
to consider. It was believed that any manager who failed to account for the
social needs of his or her employees could expect to deal with resistance and
lower performance. Employees needed to find some intrinsic value in their jobs,
which they certainly were not getting from the job that was highly
standardized.
Human Relations Movement:
Human
relations movement deals with the factors which encourage higher performance on
the part of workers. The improvement of working conditions, lowering of hours
of work, improvement of social relations of workers, besides monetary gains
help in increasing productivity.
Impact of Social Factors:
The
impact of social factors was visible on the productivity of workers. The
normally known ‘monetary incentives’ for increasing output were not visible.
Elton Mayo described organization as a ‘social system’ and social norms at work
play an important role in motivating people. It was the restructuring of social
relationships that was the main cause of changes in productivity at Hawthorne
studies. It was made clear that man was primarily motivated by his social needs
i.e., a sense of security, recognition, morale and belongingness. The output
increased in Relay Room due to the effectively functioning of social group with
a warm relationship with its supervisors.
Importance of Informal Groups:
It
was observed that in order to overcome the shortcomings of formal groups,
workers create informal groups. Informal work groups have a great influence on
productivity and attitudes of the workers towards work performance. Social
pattern and pressure of a group, rather than management demands, frequently had
the strongest influence on how productive workers would be.
Leadership:
Leadership
is required to direct group activities. A formal supervisor as appointed by the
management may not be able to achieve the desired results. The ‘informal
leaders’ acceptable to t he informal groups have more influence on their
behaviour pattern because they associate themselves with the groups. A
supervisor formally appointed should associate himself with the social problems
of the group for getting co-operation and better work from the workers.
Proper
Communication:
Proper
communication system is necessary for better understanding between management
and workers. The experiments showed that if workers are explained the logic of
taking various decisions and also their participation in decision making
brought much better results. Management should understand the attitudes and
viewpoints of workers and giving them due recognition will help in overcoming
many difficulties.
Balanced Approach:
The
experiments showed that a balanced approach should be taken to the whole
situation. The problems of workers could not be explained by taking one factor
or management could not achieve the results by emphasising one aspect. All the
things should be discussed and decision be taken for improving the whole
situation. A balanced approach to the whole situation can show better result
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