Neo classical school of management thoughtsneo clasical theory of management

NEO CLASSICAL SCHOOL OF
MANAGEMENT THOUGHTS

BY
MANISHA VAGHELA

vaghela_manisha13@yahoo.com BY: manisha vaghela 1

Flow of presentation
 Introduction
 Beliefsof neo classical theory
 Elements of neo classical theories
 Conclusion
 Bibliography


Introduction:

 Theterm classical refers to work done by a
group of economists in the 18th and 19th
centuries.

 the word neo meaning “new”.


 Much of this work was developing theories
about the way markets and market
economists and they are generally termed
neo-classical economists..

 The neoclassical school is the mainstream
school of thought in economics, deriving
from the work of the marginalists, who
defined value in relation to scarcity and
regarded the balance of supply and demand
as determining equilibrium prices.


 The neoclassical approach was set out by
Alfred Marshall in his Principles of
economics, published in 1890;


Beliefs of NEO CLASSICAL THEORIES:

 Classical economists were not well-known
for being a happy, optimistic bunch of
economists

 some believed that population growth
would be too rapid for the resources
available


 Some believed that the government
should not intervene to try to correct this
as it would only make things worse and so
the only way to encourage growth free
markets. This approach is known as a
“laissez – Faire” approach.

 Essentially this approach places total
reliance on markets and anything that
prevent markets clearing properly should
be done away with.


 Much of Adam-Smith‟s early work was on
this theme and he introduced the nation of
an invisible hand that guided economic
activity and led the optimum equilibrium.
Many people see him as the founding
father of modern economics.

 The Victorian period of rapid expansion
worldwide seemed to cheer the classical
economists up a little and they became a
bit more optimistic..


 but still maintained „their‟ total faith in the
role of markets.


 It may be noted here that the theories
stated by Taylor and Fayol are called by
writers as classical theories.

 while the theories stated by writers as
classical theories the human relations
movement and the behavioural science
movement are called new-classical
theories


Elements of
Neo-classical theories

 1.Individual
 2. Work Group
 3.Participative management
 4.Oreintation
 5. Motivation
 6. Leadership
 7. Employee Development


1) Individual :

 Neo-classical theory recognized the
individual differences which were ignored
by the classical theory.

 Every individual has emotions, feelings,
attitudes, hopes, aspirations, and
expectations.


 The new-classical theory advocated a
package deal of motivation, including
financial and non financial incentives, to
make the workers feel at ease at work and
increase their productivity.


2) Work Group :

 An individual in a group develops Social
wants.
 As he is a social being, he develops a
desire to belong & to be accepted by his
work group.


3) Participative Management :
 Neo-classical theory suggested workers
participation in management for
improving their productivity


4) Orientation
 Classical theory was job oriented while
neo-classical theory is employee oriented.

 There is a shift in managerial style from
product oriented approach to employee
and group centered approach


 classical theory was concerned with the
basic needs of organization and society
whereas neo-classical approach tried to
satisfy the personal security and social
needs of workers

 Neo-classical writers emphasized
satisfaction of workers whereas the
classical theory emphasized productivity.


5) Motivation :
 Neo-classical writers considered business
organization as a social system,

 The employees could be motivated by
social and psychological wants and not
solely by economic incentives.


6) Leadership :
 Democratic style of leadership is essential
to develop co-operative attitude of
employee towards management.


7) Employee Development :
 As there is a close connection between
moral and production, neo-classical
writers emphasized that management
that must take greater interest in
employee development workers
satisfaction.


Conclusion :
 Hereby I conclude that neo classical theory is
adopted by all the economists of management

 As neo classical is based on employees its
more acceptable

 In this theory all are benefited not the
manager the firm and specially the employees.


Reference books

 Students guide to management
by
Dr. Neery dashisth
 Principles of management
by
Dr. P.C tripathi.

 Theory practice of management.


Neo classical school of management thoughtsneo clasical theory of management

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