Neo classical theory

 

Neo classical management theory emerged due to the limitations of classical management theory to understand people aspect of the organizations. There are two theories under this: Human Relation theory and Behavioral Science Theory.

 

1. Human Relations

Elton Mayo, Harvard University, psychologist is the -Founder of Human Relations. This theory argues that production efficiency in the organization depends upon emotional factors involved in the workers with the managers. This experience was conducted on Hawthorne plant of western electric company. The relations between managers and workers determine the extent happiness in employee and only the happy and satisfied employee will try to give productions. 

 

2. Behavioral Science Approach

 

Maslow, F.Herzberg & D.McGregor are the main contributors of this theory. They emphasized on psychology, sociology & anthropology as the main contributing discipline of management. The thesis behind this theory is organization is basically a social system and not just techno economical system; Individuals may behave differently under different situations. Attempts should be made to connect organizational goals & human needs. Management must develop social skills in addition to technical skill to handle the people. Man to man relationship, team spirit & group harmony should be given top preference by management.

 

Contingency theory

Main contributors of these theories are Joan Woodward, Fiedler, Lorsch & Lawrence. This theory has put forward the view that management is situational and main objective of management is to identify the important variables in the situations. The three major parts of overall conceptual frame work for contingency management are: (1) Environment, (2) Management concepts, principles and techniques and (3) the Contingent relationship between the mentioned factors [(1) and (2)].

Some important contingencies for companies are (1) Technology, (2) Suppliers and distributors, (3) Consumer interest groups (4) Customers and competitors (5) Government and (6) Unions

 

John Woodward: Woodward was a leading academic and commentator in the field of Organization Theory, particularly Contingency Theory. Studied a large number of firms (100) in the South Essex area of England in the 1950s. he found that organizational form varied, and correlated with production technology. He concluded that there was not”one best way” to organize. The nature of the production process would determine which form that would be most suitable. His suggestion of organizations structure is like given below.

 

Structural Characteristic	Unit based	Mass based	Continuous based
Number of management levels	Low	Medium	High
Supervisory span of control	Low	High	Low
Ratio of managers to total workforce	Low	Medium	High
Skill level of workers	High	Low	High
Overall structure	Organic	Mechanistic	Organic

 

To Fiedler, stress is a key determinant of leader effectiveness (Fiedler and Garcia 1987; Fiedler et al. 1994)[i] Fiedler’s situational contingency theory holds that group effectiveness depends on an appropriate match between a leader’s style (essentially a trait measure) and the demands of the situation. Fiedler considers situational control the extent to which a leader can determine what their group is going to do to be the primary contingency factor in determining the effectiveness of leader behavior.

Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell:

3. Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances
4. There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.
5. Management must be concerned, above all else, with achieving alignments and good fits
6. Different types or species of organizations are needed in different types of environments

Fred Fiedler's contingency model focused on a contingency model of leadership in organizations. This model contains the relationship between leadership style and the favorableness of the situation. Situational favorableness was described by Fiedler in terms of three empirically derived dimensions

1. The leader-member relationship, which is the most important variable in determining the situation's favorableness
2. The degree of task structure, which is the second most important input into the favorableness of the situation
3. The leader's position power obtained through formal authority, which is the third most important dimension of the situation

Situations are favorable to the leader if all three of these dimensions are high. That is, if the leader is generally accepted and respected by followers (first dimension), if the task is very structured (second dimension), and if a great deal of authority and power are formally attributed to the leader's position (third dimension), then the situation is favorable.

William Richard Scott describes contingency theory in the following manner: "The best way to organize depends on the nature of the environment to which the organization must relate".[1] The work of other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson complements this statement. They are more interested in the impact of contingency factors on organizational structure. Their structural contingency theory was the dominant paradigm of organizational structural theories for most of the 1970s. A major empirical test was furnished by Johannes M Pennings who examined the interaction between environmental uncertainty, organization structure and various aspects of performance.

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[i] Fiedler, F. E. and Garcia, J. E. (1987) New Approaches to Leadership, Cognitive Resources and Organizational Performance, New York: John Wiley and Sons.