1. THEORIES AND CONCEPTS OF ORGANIZATION
NEOCLASSICAL THEORY OF ORGANIZATION
Presented by
MUHAMMAD YAHYA AHMAD
CEdAP STUDENT OF PCU MANILA

2. The Appearance of Neoclassical Organizational Theories
The human relations movement evolved as a reaction to the tough, authoritarian structure of classical theory.
It is addressed many of the problems inherent in classical theory
Neoclassical theories of organization state that classical organizational theories created over-conformity and rigidity, thus squelching creativity, individual growth, and motivation.
Neoclassical theory displayed genuine concern for human needs

3. Neoclassical Organization Theory
The neoclassical theorists gained their reputation by attacking the classical theories.
Important source of the power and politics, organizational culture, and systems theory.
Herbert Simon.
Bounded rationality and satisfying.
Programmed and unprogrammed decision-making.
Management information systems.

4. Neoclassical Organization Theory
It is an attempt to improve classical organizational theory that argues employee satisfaction as well as economic effectiveness are the goals of organizational structure
The impact of sociology.
Philip Selznick – Organizations are made up of individuals whose goals and aspirations may not coincide with the organization’s.

5. Neoclassical Organization Theory
Herbert Simon
1960- Decisions
Studied decision-making within organizations
Programmed vs. un-programmed
Developed the “science” of improved organizational decision-making through quantitative methods such as operations research and computer technology

6. Neoclassical Organization Theory
Herbert Simon ( through 1990s)
First Neoclassicalist to seriously challenge the tenets of Classical Organizational Theory
Criticized the “General Principles of Management” (see Fayol) approach
They were inconsistent, conflicting, & inapplicable to many administrative situations facing managers
Said that “so-called principles” could, with equal logic, be applied in diametrically opposed ways to the same set of circumstances.
“so-called principles” really were proverbs

7. Classical vs Neoclassical
Before World War ll
Derived intellectually
Universally applicable scientific principles
The starting point of organisational theory, its birth.
After World War ll
Derived empirically
Anti theory, critical to the classical organisational theory, but not really a theory of its own.
The early evolution of organisational theory, its youth.

8. Classical vs Neoclassical
Individuals needed to be structured in order to create an organisation.
A number of positions for the management to control.
A formal goal for the entire organisation that everyone naturally work towards.
Individuals in need for cooperation holds an organisation together.
A number of individuals with aspirations of there own to manage.
Individuals with different goals, not always in line with the formal goal of the organisation.

9. Classical vs Neoclassical
Classical Organizational Theory: The approach that assumes that there is a single best way to design organizations.
This approach assumes that managers need to have close control over their subordinates and calls for designing organizations with tall hierarchies and a narrow span of control.
Neoclassical Organizational Theory: An attempt to improve on the classical organizational theory that argues that not only economic effectiveness, but also employee satisfaction, should be goals of an industrial organization.
This approach assumes that managers do not have to carefully monitor their subordinates and calls for designing organizations with flat hierarchies and a wide span of control.

10. Classical vs Neoclassical
Neoclassical organizational theory is a criticism of classical theory; attempt to humanize the rigid structure
Follows workflow and productivity of classical, but meets employee needs
According to neoclassical organizational theory, effective organizations are designed with flat hierarchical structures and a high degree of decentralization

11. Human Relations Theory
The human relations theory was developed by Elton Mayo and his associates from 1924 to 1932 at the Hawthrone plant of Western Electric Company.
the Hawthorne effect, where people feel the pride of belonging to a group. 
The Hawthorne experiments brought about the conclusions that the business organization also includes social and psychological factors.  It considered organization as a social process where feelings, sentiments and attitudes were given due importance.
Human relations theory concentrates on morale and productivity,.

12. Behavioral Science Theory
Behavioral science theory lays emphasis on inter-personal roles and relationships
McGregor, Arguris and Likert believed that self-actualized man would contribute to the development of management
Develop new insights and brings about a congenial environment in the factory whereby new thinking and new techniques put forward by employees are welcome.

13. Contribution of Neoclassical Theories
Individual Behavior: respective feelings, perception, learning and personality.
Group Behavior: group inter-relationships, group objectives, group systematic approach to work, cultural and social backgrounds of employees have a significant role to play in management.
Task: coordinated activities, coordinated efforts and achievement.

14. Contribution of Neoclassical Theories
Participative Management:
employees have the right to take part in management decisions,
recognition of human values increase productivity and efficiency. 
Motivation: self-motivation and job satisfaction, management has been honest and helpful, monetary and non-monetary incentives
Communication: effective communication, two-way communication, formal and informal communications, group communication, team spirit, man-to-man relations and group harmony