CONTENTSClassical management theory: The classical management theory is a school of thought which management theorists delved into how to find the best possible way for employees to perform their duties. Furthermore, neoclassical theory is an alteration of classical theory. However, this theory is no longer in practice. Neoclassical theorists recognized theThe classical theory came into public in the 19 th century and early 20 th when businesses were more focused on large scale manufacturing and wanted to enhance the productivity and efficiency of operations.However, it emphasises specialization of labour, centralized leadership and decision-making, as well as profit maximization.The theory came into practice in the 19 th century and early 20 th century. It does not discuss job satisfaction and other social needs. Side by Side Comparison – Classical vs Neo Classical Theory in Tabular FormClassical management theory is based on the assumption that employees work to satisfy their physical and economic needs. Classical management theory focuses on the individual performance of the 5. It does not fit on today’s complex structures. Relationship Between Classical and Neo Classical TheoryClassical management theory is based upon the one best way and it is applicable to the simple organization’s structures.IncentivesThe concept describes the extrinsic motivation of employees for rewards. Thus, this concept helps to improve productivity and efficiency while avoiding multiskilled employees. The employees are specialized in a single operation. SpecializationThe entire operation is broken down to small, task specified areas. The third layer is supervisors who take part in the day to day operations and engage in employee’s activities and training. The top layer is the owners, while the middle layer is the middle management who oversees the entire operation.
Neo Classical Management Theory Free From HierarchicalIt also supports employees’ carrier growth in future. Furthermore, it allows autonomy and initiative at the lower level. DecentralizationDecentralization is more close to the flat structure because of the wider span of control. Moreover, the chain of communication is shorter, and it is free from hierarchical control.
Neo Classical Management Theory How To Find TheThus, both formal and informal organisations are interdependent upon each other.Moreover, the neo classical management theory describes human behaviour in terms of organizational functioning. Management uses the informal organisation for overcoming resistance to change on the part of workers and for a fast communication process. However, an informal organisation is necessary to find flaws of formal organisation and to satisfy the social and psychological needs of employees. The formal organisation describes the intentions of top management for the purpose of interactions among people. In contrast, neo classical theory has a flat organization structure with no layers of management. Moreover, the employees are motivated to work by an incentive system. A single person, most of the times, the owner, makes all the decisions. Classical theory has a hierarchical organization structure with layers of management.
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