Interrelationship Between Management Functions

NEO-CLASSICAL OR HUMAN RELATIONS APPROACH

The classical theory concentrated on formal organization and ignored the ‘human factor'. The neo-classical or human relations approach was proposed as a reaction to the classical approach which ignored human relations. The neo-classicists focussed on the human aspect of industry. They modified the classical theory by emphasizing the fact that organization is a social system and the human factor is the most important element within it. They conducted some experiments (known as Hawthorne Experiments) and investigated informal groups, informal relationships, patterns of communication, patterns of informal leadership, etc. This led to the development of human relations approach. Elton Mayo is generally recognized as the father of the Human Relations School. Other prominent contributors to this school include. Roethlisberger, Dickson, Dewey, Lewin, etc.

Contributions of Human Relations or Neo-classical Approach

The salient features of neo-classical approach are as follows:

1. Social System. Organization in general is a social system composed of numerous interacting parts. The social system defines individual roles and establishes norms that may differ from those of the formal organization. The workers follow a social norm determined by their co-workers, which defines the proper amount of work, rather than trying to achieve the targets management thinks they can achieve, even thought this would have helped them to earn as much as they physically can.
2. Social Environment. The social environment on the job  affects the workers and is also affected by them. Management is not the only variable.
3. Informal Organisation. The informal organization does also exist within the framework of formal organization and it affects and is affected by the formal organization.
4. Group Dynamics. At the workplace, the workers often do not act or react as individuals but as members of groups. A person who resists pressure to change his behaviour as an individual often changes it quite readily if the group of which he is a member changes its behaviour. The group plays an important role in determining the attitudes and performance of individual workers.
5. Leadership. There is an emergence of informal leadership as against formal leadership, and that sets and enforces group norms. He helps the workers to function as a social group and the formal leader is rendered ineffective unless he conforms to the norms of the group of which he is supposed to be in charge.
6. Communication. Both way communication is a necessary because it carries necessary information downward for the proper functioning of the organization and transmits upward the feelings and sentiments of people who work in the organization.
7. Role of Money. Money is only one of the motivators, but not the sole motivator of human behaviour. Man is diversely motivated and socio-psychological factors act as important motivators.
8. Conflict. There is always a conflict between organizational and individual goals. For the smooth functioning of the organization, it is necessary to achieve the integration between the goals of the organization and those of the individuals.

Criticism of Neo-classical Approach

The neo-classical theory is not free from its shortcomings. Scott observed that “like classical theory, neo-classical theory suffers from incompetency, a short-sighted perspective, and lack of integration among many facets of human behaviour studied by it.” The criticisms range from ‘human relations as a tool for cynical puppeteering of people', to ‘human relations is no more than a trifling body of empirical and descriptive information.’ Trade unionists ridiculed it as a form of ‘cow psychology'. Human relations are also nick named as ‘happiness boys' who ignored the economic realities.

The neo-classical theory has been criticised on the following grounds:

1. Invalid Assumptions. Certain assumptions on which the neo-classical theory is based do not seem to be true. For example, the assumption that there is a solution to every problem which satisfies everyone in the organisation is not true. Often there are conflicts of interests among various groups in the organization that are structural and not merely psychological.
2. Lack of Scientific Validity. The human relationiats drew conclusions from Hawthorne studies. These conclusions are based on clinical insight than on scientific evidence. The groups chosen for study were not representative in character. The findings based upon temporary groups do not apply to groups that have continuing relationship with one another. Moreover, the experiments focused on operative employees only.
3. Limited Application. The various structures of organization given by neo-classicists are not universal. There application is limited. There is no particular structure which may serve the purpose of all the organization. The relationists also overlooked some of the environmental constraints which managers cannot ignore and this lapse makes the practicability of the theory limited.
4. Limited Focus on Work. It lacks adequate focus on work. Human relations approach puts all the emphasis on interpersonal relations and on the informal group. It tends to overemphasise the psychological aspects at the cost of the structural and technical aspects.
5. Over-concern with Happiness. Neo-classicists have been criticized for single minded attention to the concept of ‘happiness’ of employees. The Hawthorne studies suggested that happy employees will be productive employees. This equation between happiness and job satisfaction is unfortunate as it represents a naive and simplistic view of the nature of man. Studies have failed to show a consistent relationship between happiness or morale and productivity. It is quite possible to have a lot of happy but unproductive workers.
6. Fragmented Approach. The theory lacks the unified approach. In fact, it is not a theory at all. All that was done in neo-classical theory is simply a modification of classical theory rather than organizational transformation. So this theory has almost the same limitations as the classical theory has.
7. Other Shortcomings. The neo-classical theory also suffers from incompetency, a short-sighted perspective and lack of integration among many facets of human behaviour studied by it. Some other modern thinkers also opine that this theory is bankrupt and unable to suggest any thing new.